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EXHIBIT 10.1
EXECUTION COPY
WAIVER AND AMENDMENT
DATED AS OF JUNE 9, 2000
This WAIVER AND AMENDMENT (this "Agreement") is among PRISON REALTY
TRUST, INC., a Maryland corporation (the "Borrower"), the subsidiaries of the
Borrower party to the Credit Agreement referred to below (collectively, the
"Subsidiary Guarantors"), the Lenders (as defined below), and LEHMAN COMMERCIAL
PAPER INC. ("LCPI"), as administrative agent for the Lenders (in such capacity,
the "Administrative Agent").
PRELIMINARY STATEMENTS:
1. The Borrower, the Subsidiary Guarantors, the Lenders, and the
Administrative Agent have entered into that certain Amended and Restated Credit
Agreement, dated as of August 4, 1999, by and among the Borrower, the Subsidiary
Guarantors, the lenders party thereto (the "Lenders"), the Administrative Agent,
Societe Generale, as documentation agent, Lehman Brothers Inc., as advisor, book
manager and lead arranger, The Bank of Nova Scotia, as syndication agent, and
Southtrust Bank (formerly known as Southtrust Bank, N.A.), as co-agent (the
"Credit Agreement"; capitalized terms used and not otherwise defined herein have
the meanings assigned to such terms in the Credit Agreement).
2. The Borrower has informed the Lenders that certain Events of Default
currently exist under the Credit Agreement, as more particularly described below
(the "Existing Events of Default").
3. The Borrower has informed the Lenders that it wishes to engage in
certain transactions currently prohibited under the terms of the Credit
Agreement, including, without limitation, the Rent Deferral, the Management Opco
Merger, the Change in Tax Status, the Agecroft Securitization, the Headquarters
Sale-Leaseback and the Service Company Mergers, each as defined below
(collectively, the "Transactions").
4. The Borrower has requested that the Required Lenders and the
Required Tranche C Term Lenders (i) waive the Existing Events of Default, (ii)
consent to the Transactions and (iii) agree to certain amendments to the Credit
Agreement, as more particularly described below.
5. Subject to the terms and conditions set forth below, the Required
Lenders and the Required Tranche C Term Lenders are willing to agree to certain
waivers, consents and amendments as more particularly described below.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
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1. Defined Terms. For purposes of this Agreement, the following terms
shall have the meanings set forth below:
a. "Agecroft Facility" means the prison facility located in Salford,
England, owned by Agecroft.
b. "Agecroft Securitization" means any transaction pursuant to which
the Borrower obtains cash in consideration of its direct or indirect ownership
interest in the Agecroft Facility and/or the Agecroft Note, including, without
limitation, any issuance of securities or incurrence of Indebtedness by Agecroft
or any of its Subsidiaries, any sale of the Agecroft Facility or of the capital
stock of Agecroft, or any sale-leaseback of the Agecroft Facility; provided,
that (i) any Indebtedness incurred or issued in connection with any such
transaction shall be Non-Recourse Debt and (ii) the Net Cash Proceeds received
by the Borrower in any such transaction shall be not less than 45,000,000 Pounds
Sterling (or the equivalent in United States Dollars on such date).
c. "Amendment Effective Date" means the date on which all of the
conditions precedent to the effectiveness of this Agreement have been satisfied.
d. "Build-to-Suit Capital Expenditures" means capital expenditures
necessary to complete "build-to-suit" contracts entered into with the United
States Bureau of Prisons or any other federal or state governmental agency (such
other federal or state governmental agency to be reasonably satisfactory to the
Required Lenders and the Required Tranche C Term Lenders).
e. "C Corporation" has the meaning attributed thereto in the Code.
f. "Change in Tax Status" means the Borrower's election not to be
taxed as a REIT, but rather as a C Corporation, commencing with its taxable year
ending December 31, 2000 and thereafter, all in connection with the Management
Opco Merger.
g. "Disqualified Stock" means any Capital Stock of any Credit Party
that any Credit Party is or, upon the passage of time or the occurrence of any
event (in each case prior to December 31, 2006), may become obligated to redeem,
purchase, retire, defease or otherwise make any payment in respect of, in
consideration other than Capital Stock (other than Disqualified Stock).
h. "Headquarters Sale-Leaseback" means the sale by the Borrower of
the Borrower's headquarters building in Nashville, Tennessee, which results in
Net Cash Proceeds to the Borrower of at least $12,000,000, and the subsequent
leasing of such headquarters by the Borrower from the purchaser thereof, all on
terms and conditions reasonably satisfactory to the Required Lenders and the
Required Tranche C Term Lenders.
i. "Management Opco Merger" means the legal and valid merger of
Management Ocpo with and into Management Sub, with Management Sub as the
surviving entity, for consideration consisting only of the Borrower's common or
preferred stock (other than Disqualified Stock), as more particularly described
in the Proxy and in a manner reasonably satisfactory to the Administrative
Agent, subject to the continued perfection and priority of the Liens of the
Administrative Agent.
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j. "Management Opco Merger Date" means the earlier of (i) September
15, 2000, and (ii) the date that is five (5) Business Days after the date on
which all consents and authorizations necessary to validly and legally
consummate the Management Opco Merger have been obtained.
k. "Management Sub" means the wholly-owned subsidiary of the
Borrower formed in connection with the Management Opco Merger.
l. "MDP" means MDP Ventures IV, LLC, together with any other or
successor holder of the notes issued under the MDP Note Purchase Agreement.
m. "MDP Defaults" means, collectively, (i) the Borrower's failure to
deliver to MDP under Section 10.1 of the MDP Note Purchase Agreement a
"Repurchase Right Notice" (as defined therein) in connection with the Pacific
Life Agreement or the Securities Purchase Agreement, dated as of December 26,
1999, by and between the Borrower and Prison Acquisition Company LLC, (ii) the
Borrower's failure to comply with Section 8.5 of the MDP Note Purchase Agreement
and (iii) in connection with the Management Opco Merger and the Change in Tax
Status, the Borrower's (a) failure to maintain its status as REIT and (b)
conduct of business other than financing, owning and developing prisons and
other correctional facilities, each as required by the MDP Note Purchase
Agreement.
n. "MDP Note Purchase Agreement" means that certain note purchase
agreement, dated as of December 31, 1998, between the Borrower and MDP, relating
to the Borrower's 9.5% convertible subordinated notes due December 31, 2008.
o. "Pacific Life Agreement" means that certain Securities Purchase
Agreement, dated as of April 5, 2000, and executed as of April 16, 2000, among
the Borrower, certain of the Borrower's subsidiaries, and Pacific Life Insurance
Company.
p. "PMI" means PMI Mezzanine Fund, L.P.
q. "PMI Defaults" means (i) the Borrower's failure to comply with
certain financial covenants under the terms of the PMI Note Purchase Agreement
related to: (a) the Borrower's debt service coverage ratio, (b) the Borrower's
interest coverage ratio, and (c) the Borrower's ratio of total indebtedness to
total capitalization and (ii) in connection with the Management Opco Merger and
the Change in Tax Status, the Borrower's failure to maintain its status as a
REIT as required by the PMI Note Purchase Agreement.
r. "PMI Note Purchase Agreement" means that certain note purchase
agreement, dated as of December 31, 1998, between the Borrower and PMI, relating
to the Borrower's 7.5% Convertible Subordinated Notes due February 28, 2005.
s. "Proxy" means the Borrower's Amendment No. 1 to Proxy Statement,
to be filed with the United States Securities and Exchange Commission (the
"SEC") that, if approved by the Borrower's common shareholders, would permit,
among other things, the Change in Tax Status and the Management Opco Merger.
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t. "Rent Deferral" means (i) the deferral (with interest) of cash
lease payments due to the Borrower under the Master Lease in December 1999 until
February 14, 2000 ($12,945,205) and April 7, 2000 ($11,946,692), and (ii) the
deferral (with interest) of cash lease payments due to the Borrower under the
Master Lease for the months of January 2000 through and including September 2000
until September 30, 2000, except for payments of (A) $4,000,000 within five (5)
Business Days of May 5, 2000, (B) $2,000,000 within five (5) Business Days of
June 16, 2000, (C) $12,000,000 within five (5) Business Days of July 5, 2000,
(D) $8,000,000 within five (5) Business Days of August 5, 2000, and (E)
$5,000,000 within five (5) Business Days of September 5, 2000.
u. "Rights Offering" means an offering made in accordance with all
applicable federal and state laws by the Borrower to its then-current common
shareholders through the distribution of rights to purchase shares of common
stock of the Borrower (based on each shareholder's then-current pro rata share
of the Borrower's common stock), which, if consummated, would result in Net Cash
Proceeds to the Borrower of at least $50,000,000.
v. "Service Company Mergers" means the merger of Service Company A
and Service Company B with and into the applicable Service Company Subs for
aggregate consideration of not more than $10,600,000 (plus up to $2,000,000 to
be paid to certain wardens and other employees of Service Company A and Service
Company B), in each case in the form of the Borrower's common or preferred stock
(other than Disqualified Stock) only, and otherwise on terms and conditions
reasonably satisfactory to the Administrative Agent.
w. "Service Company Subs" means the two wholly-owned subsidiaries of
the Borrower created in connection with the Service Company Mergers.
x. "Statement of Sources and Uses" means the chart or table that
will be added as Schedule 6.15 to the Credit Agreement.
2. Waiver. Upon the terms and subject to the conditions set forth in
this Agreement and in reliance on the representations and warranties of the
Credit Parties set forth in this Agreement, the Required Lenders and Required
Tranche C Term Lenders hereby waive the following Events of Default:
a. Change of Control. The Borrower's failure to comply with Section
9.1(n) of the Credit Agreement to the extent that a "Change of Control" may have
arisen by virtue of (i) the Borrower's execution and delivery of the Pacific
Life Agreement, (ii) the replacement of Doctor R. Crants as Chairman of the
Board of Directors and Chief Executive Officer of the Borrower with Thomas W.
Beasley, (iii) the replacement of D. Robert Crants, III as President of the
Borrower with J. Michael Quinlan and (iv) the resignation of Michael Devlin as,
and the elimination of the position of, chief development officer;
b. Financial Covenants. The Borrower's failure to comply (i) with
the financial covenants contained in Sections 7.11(i) through 7.11(vii) of the
Credit Agreement (Sections 7.11(a)(i) through 7.11(a)(vii) of the Credit
Agreement as amended by this Agreement) for the periods ending December 31,
1999, March 31, 2000 and June 30, 2000, and (ii) with the requirement set forth
in Section 7.1(a) of the Credit Agreement that the opinion of the
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Borrower's accountants delivered with the Borrower's annual financial statement
for the year ended December 31, 1999, be unqualified as to the status as a going
concern of the Consolidated Parties and Management Opco; and
c. Restricted Payments. The Borrower's failure to comply with the
covenant contained in Section 8.7 of the Credit Agreement by virtue of the
dividend on its series A preferred stock declared on March 22, 2000, and paid on
April 17, 2000.
3. MDP Defaults and PMI Defaults. Upon the terms and subject to the
conditions set forth in this Agreement and in reliance on the representations
and warranties of the Credit Parties set forth in this Agreement, the Required
Lenders and Required Tranche C Term Lenders hereby agree that, so long as
neither MDP nor PMI exercises any remedies or takes any other action adverse to
the Borrower or the Lenders (in the reasonable opinion of the Administrative
Agent) in connection with either or both of the MDP Defaults or the PMI
Defaults, as between the Borrower and the Lenders only, the existence of either
the MDP Defaults or the PMI Defaults will not, in and of themselves, directly or
indirectly, prevent the Borrower from Borrowing under the Credit Agreement or
permit the Administrative Agent or the Lenders to exercise any remedies against
any Credit Party under the Credit Agreement or any other Credit Document that
would normally be available upon an Event of Default (except with regard to the
Lenders' right to charge default interest under Section 3.1 of the Credit
Agreement (as amended by this Agreement)), it being understood that (i) the
Lenders are not waiving the MDP Defaults or the PMI Defaults and, for purposes
of establishing or maintaining the Secured Parties' rights against third parties
(including, without limitation, MDP and PMI), the MDP Defaults and PMI Defaults
shall continue to exist and (ii) the provisions of this Section 3 shall not be
construed as a consent by the Lenders (A) to the issuance by the Borrower of a
Repurchase Right Notice under the MDP Note Purchase Agreement, (B) to the
repurchase by the Borrower of any of the notes issued under the MDP Note
Purchase Agreement or the PMI Note Purchase Agreement, or (C) to the payment or
repayment by the Borrower to MDP or PMI, as applicable, of any amounts owing
under either the MDP Note Purchase Agreement or the PMI Note Purchase Agreement.
4. Consents. Upon the terms and subject to the conditions set forth in
this Agreement and in reliance on the representations and warranties of the
Credit Parties set forth in this Agreement, the Required Lenders and Required
Tranche C Term Lenders hereby consent to the following transactions:
a. the Rent Deferral;
b. the Management Opco Merger on the Management Opco Merger Date;
c. the Change in Tax Status;
d. the Agecroft Securitization;
e. the Headquarters Sale-Leaseback; and
f. the Service Company Mergers.
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5. Amendments to Credit Agreement. Upon the terms and subject to the
conditions set forth in this Agreement and in reliance on the representations
and warranties of the Credit Parties set forth in this Agreement, the Borrower,
the Required Lenders and the Required Tranche C Term Lenders hereby agree to the
following amendments to the Credit Agreement:
a. Schedules 6.9, 6.13, 6.20(a), 6.20(b), and 6.20(c) are hereby
deleted in their entirety and replaced with the corresponding schedules attached
hereto as Exhibit A.
b. Schedules 6.15, 7.23, and 8.18 attached hereto as Exhibit B are
hereby added to the Credit Agreement in proper numerical order.
c. Section 1.1 of the Credit Agreement is hereby amended by adding
the following definitions in proper alphabetical order:
1. ""Account Transfer Deadline" shall have the meaning
assigned to such term in Section 7.23."
2. ""Agecroft Facility" means the prison facility located in
Salford, England, owned by Agecroft."
3. ""Agecroft Securitization" means any transaction pursuant
to which the Borrower obtains cash in consideration of its direct or
indirect ownership interest in the Agecroft Facility and/or the
Agecroft Note, including, without limitation, any issuance of
securities or incurrence of Indebtedness by Agecroft or any of its
Subsidiaries, any sale of the Agecroft Facility or of the capital stock
of Agecroft, or any sale-leaseback of the Agecroft Facility; provided,
that (i) any Indebtedness incurred or issued in connection with any
such transaction shall be Non-Recourse Debt and (ii) the Net Cash
Proceeds received by the Borrower in any such transaction shall be not
less than 45,000,000 Pounds Sterling (or the equivalent in United
States Dollars on such date)."
4. ""Amendment Effective Date" means the date on which all of
the conditions precedent to the effectiveness of the Waiver and
Amendment have been satisfied."
5. ""Availability" means, at any time, the Revolving Committed
Amount minus the Revolving Obligations at such time."
6. ""Availability Reserve" means (a) $42,000,000 through but
not including June 30, 2000, (b) $27,000,000 from and including June
30, 2000, through but not including July 21, 2000, (c) $22,000,000 from
and including July 21, 2000, through but not including September 30,
2000, (d) $17,000,000 from and including September 30, 2000, through
but not including December 31, 2000, and (e) $0.00 from and after
December 31, 2000, provided that (x) if the Agecroft Securitization is
consummated on any date prior to September 15, 2000, the amounts set
forth in (a) through (c) above shall on such date be increased by an
amount equal to fifty percent (50%) of the Net Cash Proceeds therefrom
and (y) if the Pacific Life Investment is not consummated on or before
September 15, 2000, the amounts set forth in each of (c) and (d) above
shall on such date be decreased by $12,000,000."
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7. ""Build-to-Suit Capital Expenditures" means capital
expenditures necessary to complete "build-to-suit" contracts entered
into with the United States Bureau of Prisons or any other federal or
state governmental agency (such other federal or state governmental
agency to be reasonably satisfactory to the Required Lenders and the
Required Tranche C Term Lenders)."
8. ""C Corporation" has the meaning attributed thereto in the
Code."
9. ""Change in Tax Status" means the Borrower's election not
to be taxed as a REIT, but rather as a C Corporation, commencing with
its taxable year ending December 31, 2000, and thereafter in connection
with the Management Opco Merger."
10. ""Consolidated Current Assets" means at any date, all
amounts (other than cash and Cash Equivalents) which would, in
conformity with GAAP, be set forth under the caption "total current
assets" (or any like caption) on a consolidated balance sheet of the
Consolidated Parties at such date."
11. ""Consolidated Current Liabilities" means at any date, all
amounts that would, in conformity with GAAP, be set forth under the
caption "total current liabilities" (or any like caption) on a
consolidated balance sheet of the Consolidated Parties at such date,
but excluding the current portion of any Funded Debt of the
Consolidated Parties."
12. ""Consolidated Working Capital" means at any date, the
excess of Consolidated Current Assets on such date over Consolidated
Current Liabilities on such date."
13. ""Disqualified Stock" means any Capital Stock of any
Credit Party that any Credit Party is or, upon the passage of time or
the occurrence of any event (in each case prior to December 31, 2006),
may become obligated to redeem, purchase, retire, defease or otherwise
make any payment in respect of, in consideration other than Capital
Stock (other than Disqualified Stock)."
14. ""Excess Cash Flow" means for either of (x) the first and
second fiscal quarters of any fiscal year of the Consolidated Parties
or (y) the third and fourth fiscal quarters of any fiscal year of the
Consolidated Parties, the excess, if any, of Post Merger EBITDA for
such two fiscal quarters plus any decrease in Consolidated Working
Capital during such two fiscal quarters, minus (i) the aggregate amount
of cash actually paid by the Consolidated Parties during such two
fiscal quarters on account of capital expenditures, (ii) the aggregate
amount of cash actually paid by the Consolidated Parties during such
two fiscal quarters on account of taxes, (iii) any increase in
Consolidated Working Capital during such two fiscal quarters, (iv) any
regularly-scheduled amortization of the Term Loans and the Tranche C
Term Loans during such two fiscal quarters, (v) Consolidated Interest
Expense for such two fiscal quarters, and (vi) any repayment of
Indebtedness during such two fiscal quarters (other than any repayment
of current Indebtedness and any mandatory repayment of Term Loans and
Tranche C Term Loans during such two fiscal quarters)."
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15. ""Excluded Credit Party Accounts" shall have the meaning
assigned to such term in Section 7.23."
16. ""Excluded Management Opco Accounts" shall have the
meaning assigned to such term in Section 7.23."
17. ""Fixed Charge Coverage Ratio" means, as of the end of
each fiscal quarter of the Consolidated Parties, for the twelve month
period ending on such date, the ratio of (i) Post Merger EBITDA for
such period minus capital expenditures made during such period to (ii)
Consolidated Interest Expense for such period plus cash taxes actually
paid during such period plus any regularly-scheduled amortization of
the Term Loans and the Tranche C Term Loans during such period."
18. ""Funded Debt" means, as to any Person, all Indebtedness
of such Person of the types described in clauses (a) through (d) and
(m) and (n) of the definition of "Indebtedness" in this Section 1.1."
19. ""Headquarters Sale-Leaseback" means the sale by the
Borrower of the Borrower's headquarters building in Nashville,
Tennessee, which results in Net Cash Proceeds to the Borrower of at
least $12,000,000, and the subsequent leasing of such headquarters by
the Borrower from the purchaser thereof, all on terms and conditions
reasonably satisfactory to the Required Lenders and the Required
Tranche C Term Lenders."
20. ""LTM Post Merger EBITDA" shall have the meaning assigned
to such term in Section 7.11(b)."
21. ""Management Opco Merger" means the legal and valid merger
of Management Opco with and into Management Sub, with Management Sub as
the surviving entity, as more particularly described in the Proxy and
in a manner reasonably satisfactory to the Administrative Agent,
subject to the continued perfection and priority of the Liens of the
Administrative Agent on the Collateral."
22. ""Management Opco Merger Date" means the earlier of (i)
September 15, 2000, and (ii) the date that is 5 Business Days after the
date on which all consents and authorizations necessary to validly and
legally consummate the Management Opco Merger have been obtained."
23. ""Management Sub" means the wholly-owned subsidiary of the
Borrower formed in connection with the Management Opco Merger."
24. ""MDP" means MDP Ventures IV, LLC, together with any other
or successor holder of the notes issued under the MDP Note Purchase
Agreement."
25. ""MDP Defaults" means, collectively, (i) the Borrower's
failure to deliver to MDP under Section 10.1 of the MDP Note Purchase
Agreement a "Repurchase Right Notice" (as defined therein) in
connection with (a) the Securities Purchase Agreement, dated as of
April 5, 2000, and executed as April 16, 2000, among the Borrower,
certain of
<PAGE> 9
the Borrower's subsidiaries, and Pacific Life Insurance Company or (b)
the Securities Purchase Agreement, dated as of December 26, 1999, by
and between the Borrower and Prison Acquisition Company LLC, (ii) the
Borrower's failure to comply with Section 8.5 of the MDP Note Purchase
Agreement and (iii) in connection with the Management Opco Merger and
the Change in Tax Status, the Borrower's (a) failure to maintain its
status as REIT and (b) conduct of business other than financing, owning
and developing prisons and other correctional facilities, each as
required by the MDP Note Purchase Agreement."
26. ""MDP Note Purchase Agreement" means that certain note
purchase agreement, dated as of December 31, 1998, between the Borrower
and MDP, relating to the Borrower's 9.5% convertible subordinated notes
due December 31, 2008."
27. ""New CEO" shall have the meaning assigned to such term in
Section 9.1(q)."
28. ""Pacific Life Investment" means the cash investment in
the Borrower by Pacific Life Insurance Company and/or existing holders
of the Borrower's common stock of at least $200,000,000, pursuant to
the terms and conditions of that certain Securities Purchase Agreement,
dated as of April 5, 2000, and executed as of April 16, 2000, among the
Borrower, certain of the Borrower's subsidiaries, and Pacific Life
Insurance Company, as amended or otherwise modified with the prior
consent of the Required Lenders and the Required Tranche C Term
Lenders."
29. ""PMI" means PMI Mezzanine Fund, L.P."
30. ""PMI Defaults" means (i) the Borrower's failure to comply
with certain financial covenants under the terms of the PMI Note
Purchase Agreement related to: (a) the Borrower's debt service coverage
ratio, (b) the Borrower's interest coverage ratio, and (c) the
Borrower's ratio of total indebtedness to total capitalization and (ii)
in connection with the Management Opco Merger and the Change in Tax
Status, the Borrower's failure to maintain its status as a REIT as
required by the PMI Note Purchase Agreement."
31. ""PMI Note Purchase Agreement" means that certain note
purchase agreement, dated as of December 31, 1998, between the Borrower
and PMI, relating to the Borrower's 7.5% Convertible Subordinated Notes
due February 28, 2005."
32. ""Post Merger Adjusted Cash Flow" means, with respect to
any Real Property, as of the end of each fiscal quarter of the
Consolidated Parties, Post Merger EBITDA (as herein defined) for the
fiscal quarter ending on such date with respect to such Real Property
only."
33. ""Post Merger Borrowing Base Value" means, at any date of
determination with respect to each Borrowing Base Property, an amount
for such Borrowing Base Property equal to 75% of the Post Merger
Implied Value of such Borrowing Base Property."
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34. ""Post Merger EBITDA" shall mean for any fiscal period, an
amount equal to (a) Consolidated Net Income for such period, minus (b)
the sum of (i) income tax credits, (ii) interest income, (iii) gains
from extraordinary items for such period, (iv) any aggregate net gain
(but not any aggregate net loss) during such period arising from the
sale, exchange or other disposition of capital assets (including any
fixed assets, whether tangible or intangible) and (v) any other
non-cash gains which have been added in determining Consolidated Net
Income, in each case to the extent included in the calculation of
Consolidated Net Income for such period in accordance with GAAP,
but without duplication, plus (c) the sum of (i) any provision for
income taxes, (ii) Consolidated Interest Expense, (iii) loss from
extraordinary items for such period, (iv) the amount of non-cash
charges (including depreciation and amortization) for such period, in
each case to the extent included in the calculation of Consolidated Net
Income for such period in accordance with GAAP, but without
duplication. In addition "Post Merger EBITDA" will include payments
representing principal and interest under management agreements or
direct financing leases, where such principal and interest represent
reimbursement for construction of a facility the title to which is
required to be transferred to a governmental authority."
35. ""Post Merger Implied Value" means, with respect to any
Real Property on any date, an amount equal to the Post Merger Adjusted
Cash Flow of such Real Property for the immediately preceding four full
fiscal quarters, based on multiplying the most recently ended quarter
on or prior to such date times 4, divided by the Capitalization Rate.
For purposes of determining the Post Merger Implied Value of any Real
Property which has not been operational for a full fiscal quarter, the
Post Merger Adjusted Cash Flow attributable to such Real Property shall
be deemed to be the result obtained by extrapolating from the
components of the actual Post Merger Adjusted Cash Flow attributable to
such Real Property for the period that such Real Property has been
operational. The opening calculation of Post Merger Implied Value will
be based on the Post Merger Adjusted Cash Flow for the quarter ended
March 31, 2000."
36. ""Post Merger Interest Coverage Ratio" means, as of the
end of each fiscal quarter of the Consolidated Parties, the ratio of
Post Merger EBITDA for such period to Consolidated Interest Expense for
such period."
37. ""Proxy" means the Borrower's Amendment No. 1 to Proxy
Statement, to be filed with the United States Securities and Exchange
Commission (the "SEC") that, if approved by the Borrower's common
shareholders, would permit, among other things, the Change in Tax
Status and the Management Opco Merger."
38. ""Rights Offering" means an offering made, in accordance
with all applicable federal and state laws, by the Borrower to its
then-current common shareholders through the distribution of rights to
purchase shares of common stock of the Borrower (based on each
shareholder's then-current pro rata share of the Borrower's common
stock), which, if consummated, would result in Net Cash Proceeds to the
Borrower of at least $50,000,000."
<PAGE> 11
39. ""Service Company Mergers" means the merger of Service
Company A and Service Company B with and into the applicable Service
Company Subs for aggregate consideration of not more than $10,600,000
(plus up to $2,000,000 to be paid to certain wardens and other
employees of Service Company A and Service Company B), in each case in
the form of the Borrower's common or preferred stock (other than
Disqualified Stock) only, and otherwise on terms and conditions
reasonably satisfactory to the Administrative Agent."
40. ""Service Company Subs" means the two wholly-owned
subsidiaries of the Borrower created in connection with the Service
Company Mergers."
41. ""Total Beds Occupied Ratio" means the ratio (expressed as
a percentage) of (i) the average number of total beds occupied (or for
which the Borrower has been otherwise compensated)during any calendar
month (which beds are located in facilities that are both owned by a
Credit Party and managed by a Credit Party or Management Opco ("Beds"))
to (ii) the average number of total Beds available during such calendar
month."
42. ""Waiver and Amendment" means that certain Waiver and
Amendment, dated as of June 9, 2000, among the Borrower, certain of the
Borrower's subsidiaries, the Lenders, and the Administrative Agent."
d. Section 1.1 is hereby further amended by deleting in its entirety
the definition of "Funds from Operations".
e. Section 1.1 is hereby further amended as follows:
1. The definition of "Adjusted Cash Flow" is hereby amended by
deleting the word "cash" immediately preceding the words "lease
payments" in the first line thereof, and by adding the words "or
accrued" immediately following the words "payments received" and
immediately preceding the words "with respect to" in the first line
thereof.
2. The definition of "Agecroft Investment" is hereby deleted
in its entirety and replaced with the following new definition:
""Agecroft Investment" means that certain Investment by the
Borrower in Agecroft in connection with the Agecroft
Transaction in an aggregate amount not exceeding $81,000,000
consisting of a combination of a loan (evidenced by the
Agecroft Note) and an equity investment (plus the
capitalization of interest on the Agecroft Note, not involving
the transfer of funds from any Credit Party , in an aggregate
amount not exceeding $5,000,000)."
3. The definition of "Asset Disposition" is hereby deleted in
its entirety and replaced with the following new definition:
""Asset Disposition" means the disposition of any or all of
the assets (including without limitation the Capital Stock of
a Subsidiary) of any Consolidated Party whether by sale,
lease, transfer or otherwise (including pursuant to any
casualty or
<PAGE> 12
condemnation event). The term "Asset Disposition" shall
include the Agecroft Securitization and the Headquarters
Sale-Leaseback, but shall not include (a) the sale of
inventory in the ordinary course of business and (b) any
single disposition of non-prison facility assets which does
not yield Net Cash Proceeds of at least $1,000,000, provided
that all such dispositions excluded under this clause (b)
shall not in the aggregate yield Net Cash Proceeds exceeding
$3,000,000 during any fiscal year of the Borrower. Asset
Dispositions shall not include (i) any disposition of cash or
Cash Equivalents in the ordinary course of business, (ii) any
lease of Real Property complying with Section 7.15 or (iii)
any disposition of property by the Borrower to a Restricted
Subsidiary that is a Credit Party or by a Restricted
Subsidiary to the Borrower or to another Restricted Subsidiary
that is a Credit Party."
4. The definition of "Borrowing Base" is hereby deleted in its
entirety and replaced with the following new definition:
""Borrowing Base" means, (A) as of any day prior to
consummation of the Management Opco Merger, the sum of the
Borrowing Base Values of each Borrowing Base Property, in each
case as set forth in the most recent Borrowing Base
Certificate delivered to the Administrative Agent and the
Lenders in accordance with the terms of Section 7.1(e), and
(B) as of any day on or after consummation of the Management
Opco Merger, the sum of the Post Merger Borrowing Base Values
of each Borrowing Base Property, in each case as set forth in
the most recent Borrowing Base Certificate delivered to the
Administrative Agent and the Lenders in accordance with the
terms of Section 7.1(e); provided, however, that in the case
of either (A) or (B) above, so long as any First Union Letters
of Credit or NationsBank Letters of Credit are outstanding,
the Borrowing Base shall be deemed reduced by the aggregate
face amount of such First Union Letters of Credit and
NationsBank Letters of Credit that remain outstanding except
to the extent any amount borrowed hereunder (and not repaid)
is used to cash collateralize the Borrower's obligations under
the First Union Letters of Credit or the NationsBank Letters
of Credit."
5. The definition of "Borrowing Base Properties" is hereby
deleted in its entirety and replaced with the following new definition:
""Borrowing Base Properties" means (i) each of the Existing
Properties identified on Schedule 5.1(f)(i) that satisfies each of the
following conditions and (ii) each New Property of a Credit Party that
satisfies each of the following conditions:
(a) The property shall qualify as Eligible Real
Estate.
(b) The Administrative Agent shall have received a
pro forma compliance certificate with respect to the property
which includes an annualized calculation of the projected
quarterly Consolidated Adjusted EBITDA of such property and
the projected quarterly Adjusted Cash Flow with respect to any
property that is proposed to be added to the Borrowing Base
prior to
<PAGE> 13
consummation of the Management Opco Merger, as applicable, of
such property in form and substance satisfactory to the
Lenders.
(c) The Administrative Agent shall have received and
be satisfied with, in its sole discretion, any lease or
sub-lease, as appropriate, entered into by the Borrower (as
lessor or sublessor, as applicable) in leasing such property.
(d) The Administrative Agent shall have received, in
form and substance satisfactory to the Administrative Agent, a
fully executed and notarized Mortgage in favor of the
Administrative Agent encumbering the ownership interest of the
Borrower in the property, together with such UCC-1 financing
statements as the Administrative Agent shall deem appropriate
with respect to the property.
(e) The Administrative Agent shall have received, in
form and substance reasonably satisfactory to the
Administrative Agent, an opinion of counsel in the state in
which the property is located with respect to the
enforceability of the form of Mortgage and sufficiency of the
form of UCC-1 financing statements to be recorded or filed in
such state and such other matters as the Administrative Agent
may request, in form and substance reasonably satisfactory to
the Administrative Agent.
(f) The Administrative Agent shall have received, in
form and substance reasonably satisfactory to the
Administrative Agent, a Mortgage Policy issued by the Title
Insurance Company in an amount satisfactory to the
Administrative Agent with respect to the property, assuring
the Administrative Agent that the applicable Mortgage creates
a valid and enforceable first priority mortgage lien on the
property, free and clear of all defects and encumbrances
except Permitted Liens, which Mortgage Policy shall contain
such coverage and endorsements as shall be reasonably
satisfactory to the Administrative Agent and for any other
matters that the Administrative Agent may request and provide
affirmative insurance and such reinsurance as the
Administrative Agent may request, all of the foregoing in form
and substance reasonably satisfactory to the Administrative
Agent.
(g) The Administrative Agent shall have received, in
form and substance satisfactory to the Administrative Agent, a
map or plat of a survey of the site of the property certified
to the Administrative Agent and the Title Insurance Company in
a manner satisfactory to them, dated a date satisfactory to
the Administrative Agent and the Title Insurance Company by an
independent professional licensed land surveyor reasonably
satisfactory to the Administrative Agent and the Title
Insurance Company, and otherwise in form and substance
satisfactory to the Administrative Agent.
(h) The Administrative Agent shall have received, in
form and substance reasonably satisfactory to the
Administrative Agent, a current certification from the
Borrower's registered engineer land surveyor in a form
<PAGE> 14
acceptable to the Administrative Agent as to whether any of
the improvements on the property are located within any area
designated by the Director of the Federal Emergency Management
Agency as a "special flood hazard" area and if any
improvements on such parcel are located within a "special
flood hazard" area, evidence of a flood insurance policy from
a company and in an amount satisfactory to the Administrative
Agent for the applicable portion of the premises, naming the
Administrative Agent, for the benefit of the Lenders, as
mortgagee.
(i) The Administrative Agent shall have received, in
form and substance satisfactory to the Administrative Agent, a
copy of the management agreement between the owner, lessee or
sublessee of the property, as applicable, and the appropriate
governmental entity (if applicable).
(j) The Administrative Agent shall have received, in
form and substance satisfactory to the Administrative Agent,
(i) for the twelve month period preceding the date of such
property's admittance as a Borrowing Base Property (or if such
property has not been in operation for twelve months, for the
period from the date of its opening through the date of its
admittance as a Borrowing Base Property) historical operating
statements and occupancy reports with respect to such property
(and, if available, historical operating statements and
occupancy reports with respect to such property for the three
year period preceding the date of such property's admittance
as a Borrowing Base Property), together with (ii) operating
statements and occupancy reports with respect to such property
for the first projected year following the property's
admittance as a Borrowing Base Property.
(k) The Administrative Agent shall have received, in
form and substance satisfactory to the Administrative Agent,
an environmental site assessment report for the property dated
not more than twelve (12) months prior to the date of the date
of the admittance of such property as a Borrowing Base
Property.
(l) With respect to each Real Property owned by the
Borrower and leased to Management Opco, the Administrative
Agent shall have received, in form and substance satisfactory
to the Administrative Agent, a subordination of lease
agreement from Management Opco with respect to such property.
(m) With respect to each Real Property which has been
in operation for at least five (5) years, the Administrative
Agent shall have received, in form and substance satisfactory
to the Administrative Agent, a current engineering report for
the property.
(n) With respect to each New Property, the Borrower
shall, subject to the proviso below, provide the Lenders with
each of the items identified in subsections (b) through (m)
above and the Aggregate Required Lenders shall have approved
the admittance of such New Property as a Borrowing Base
Property;
<PAGE> 15
provided, however, a Lender's failure to notify the
Administrative Agent of its objection to the admittance of
such New Property as a Borrowing Base Property within fifteen
(15) days of such Lender's receipt of notice from the
Administrative Agent of its receipt of all of the items
identified in subsections (b) through (m) above shall be
deemed to constitute such Lender's consent to such New
Property's admittance as a Borrowing Base Property. The
Administrative Agent agrees to forward to any Lender copies of
the items identified in Subsections (b) through (m) above upon
the request of such Lender.
Notwithstanding the foregoing, the Credit Parties hereby
acknowledge and agree that prior to consummation of the Management Opco
Merger (i) any property which fails to maintain an occupancy rate of at
least 75% for two consecutive fiscal quarters shall no longer be
considered a Borrowing Base Property; provided, however, subject to
satisfaction of the conditions set forth in subsections (a) through (n)
above, with respect to any New Property that does not achieve at least
a 75% occupancy level during the six month period commencing on the
date such New Property commences operations, such New Property shall
constitute a Borrowing Base Property during such six month period and
75% of such New Property's Borrowing Base Value will be included in the
Borrowing Base during such six month period, (ii) the sum of the
Borrowing Base Values of the justice facilities of the Borrower shall
not constitute more than five percent (5%) of the sum of the Borrowing
Base Values of the Borrowing Base Properties and (iii) irrespective of
the Borrower's failure to satisfy the occupancy requirement set forth
above as to such below-listed New Properties, the Borrowing Base shall
include 100% of Borrowing Base Value of (A) the, California City
Correctional Facility, located in California City, California and (B)
the Florence Correctional Center, located in Florence, Arizona. In the
event the aggregate value of the justice facilities of the Borrower
included in the Borrowing Base exceeds five percent (5%) of the
Borrowing Base, the Borrowing Base will be reduced by an amount equal
to such excess."
6. The definition of "CCA Entities" is hereby deleted in its
entirety and replaced with the following new definition:
""CCA Entities" means each of Management Opco (prior to
consummation of the Management Opco Merger) and Service
Company A and Service Company B (in each case prior to
consummation of the Service Company Mergers) and any Affiliate
of any of them (other than the Borrower or any of its
Subsidiaries), but not Management Sub or the Service Company
Subs."
7. The definition of "Change of Control" is hereby deleted in
its entirety and replaced with the following new definition:
""Change of Control" means the occurrence of any of the
following events: (i) any Person or two or more Persons acting
in concert shall have acquired "beneficial ownership,"
directly or indirectly, of, or shall have acquired by contract
or otherwise, or shall have entered into a contract or
arrangement that, upon consummation, will result in its or
their acquisition of, control over, Voting Stock of the
Borrower (or other securities convertible into such Voting
Stock)
<PAGE> 16
representing 9% or more of the combined voting power of all
Voting Stock of the Borrower, (ii) during any period of up to
24 consecutive months (such period commencing at any time on
or after the Original Closing Date), individuals who at the
beginning of such 24 month period were directors of the
Borrower (together with any new director whose election by the
Borrower's Board of Directors or whose nomination for election
by the Borrower's shareholders was approved by a vote of at
least two-thirds of the directors then still in office who
either were directors at the beginning of such period or whose
election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the
directors of the Borrower then in office, (iii) there shall
have occurred under any indenture or other instrument
evidencing any Indebtedness in excess of $1,000,000 any
"change of control" (as defined in such indenture or other
evidence of Indebtedness) obligating a Credit Party to
repurchase, redeem or repay (or offer to repurchase, redeem or
repay) all or part of the Indebtedness or capital stock
provided for therein (other than under the MDP Note Purchase
Agreement with respect to the MDP Defaults or under the PMI
Note Purchase Agreement with respect to the PMI Defaults), or
(iv) subject to Section 9.1(q), any of the Chairman of the
Board of Directors, Chief Executive Officer or President of
the Borrower as of the Amendment Effective Date ceases to
continue to hold such office or continue with management
responsibilities substantially similar to those existing on
the Amendment Effective Date and a replacement for such Person
reasonably satisfactory to the Aggregate Required Lenders and
possessing substantially similar qualifications and reputation
to the Person being replaced is not employed by the Borrower
within ninety (90) days after such first Person ceases to hold
such office or continue to have such management
responsibilities. As used herein, "beneficial ownership" shall
have the meaning provided in Rule 13d-3 of the Securities and
Exchange Commission under the Securities Act of 1934."
8. The definition of "Consolidated Interest Expense" is hereby
deleted in its entirety and replaced with the following new definition:
""Consolidated Interest Expense" means, for any period,
interest expense (including without limitation any fees
payable in respect of any Hedging Agreement, the interest
component under Capital Leases, the implied interest component
under Synthetic Leases and dividends paid on preferred stock)
of the Consolidated Parties on a consolidated basis for such
period, as determined in accordance with GAAP."
9. The definition of "Consolidated Parties" is hereby deleted
in its entirety and replaced with the following new definition:
""Consolidated Parties" means a collective reference to the
Borrower and its Restricted Subsidiaries, and "Consolidated
Party" means any one of them. For purposes of this Credit
Agreement, Service Company A (prior to consummation of the
Service Company Mergers), Service Company B (prior to
consummation of the Service Company Mergers), Management Opco
(prior to consummation of the
<PAGE> 17
Management Opco Merger) and any Special Affiliates of the
Borrower shall not be considered a Consolidated Party,
notwithstanding the treatment of such Special Affiliates under
GAAP (including without limitation any requirement that such
Special Affiliates be accounted for as a Subsidiary for
purposes of consolidated financial statements under GAAP), but
Management Sub and the Service Company Subs shall be
considered Consolidated Parties."
10. The definition of "Eligible Real Estate" is hereby deleted
in its entirety and replaced with the following new definition:
""Eligible Real Estate" means, as of any date of
determination, any correctional, justice or detention property
that satisfies the following criteria: (a) except as provided
in clause (c) below, the property must be located in the
United States or a United States territory, (b) except as
provided in clause (c) below, the property must be wholly
owned by the Borrower (which may include a leasehold property
of the Borrower subject to a lease acceptable to the Required
Lenders and the Required Tranche C Term Lenders in their
reasonable discretion), (c) with respect to any New Property,
(i) if the property is not wholly owned by the Borrower, it
must be located in the United States or a United States
territory or (ii) if the property is not located in the United
States or a United States territory, it must be wholly owned
by the Borrower; provided that the value of all such
properties included in this clause (c) may not exceed five
percent (5%) of Total Value, (d) the property must be
unencumbered other than any lien securing the Credit Party
Obligations, (e) the property must be free of structural and
title defects and have passed a structural inspection
conducted by an architect or engineer engaged by the
Administrative Agent or the Borrower shall have provided to
the Lenders other written evidence of structural integrity
with respect to the property reasonably acceptable in form and
substance to the Required Lenders and the Required Tranche C
Term Lenders, (f) the Lenders must have received an
environmental site assessment report for the property in form
and substance reasonably satisfactory to the Required Lenders
and the Required Tranche C Term Lenders dated not more than
twelve (12) months prior to the acquisition of such property
by the Borrower, (g) the property must be fully operating and
generating revenue, (h) any lessee leasing the property from
the Borrower must be in compliance with all material terms of
the facility management agreement between such lessee and the
appropriate governmental entity, (i) the Borrower must have
leased the property to a lessee or sublessee (where
applicable) reasonably acceptable to the Required Lenders and
the Required Tranche C Term Lenders pursuant to the terms and
conditions of a lease agreement reasonably acceptable in form
and substance to the Required Lenders and the Required Tranche
C Term Lenders (it being understood that, after consummation
of the Management Opco Merger, all leases between the Borrower
and Management Sub will be cancelled) and (j) the Borrower and
lessee or sublessee (where applicable) of the property must be
in compliance with all material terms and conditions contained
in the lease or sublease (where applicable) agreement between
the Borrower and such lessee or sublessee (where applicable).
For purposes of this definition, the parties hereby agree that
a Lender's failure to
<PAGE> 18
notify the Administrative Agent of its objection to any of the
items identified in this definition within fifteen (15) days
of notice from the Administrative Agent of its receipt of all
items identified in clauses (e), (f) and (i) of this
definition shall be deemed to constitute such Lender's
approval of such items. The Administrative Agent agrees to
forward to any Lender copies of the items identified in
clauses (e), (f) and (i) upon the request of such Lender."
11. The definition of "Existing Properties" is hereby amended
by deleting the word "has" immediately preceding the words "the meaning
assigned" and replacing it with the words "shall have".
12. The definition of "Interest Payment Date" is hereby
deleted in its entirety and replaced with the following new definition:
""Interest Payment Date" means (a) as to Base Rate Loans, the
last day of each calendar month, the date of repayment of
principal of such Loan and the Revolving Loan Maturity Date,
Term Loan Maturity Date or Tranche C Term Loan Maturity Date,
as applicable, and (b) as to Eurodollar Loans, (i) from July
31, 2000, through and including December 31, 2000 (and,
thereafter, during any period that an Event of Default has
occurred and is continuing), the last day of each calendar
month, the date of repayment of principal of such Loan and the
Revolving Loan Maturity Date, Term Loan Maturity Date or
Tranche C Term Loan Maturity Date, as applicable, and (ii) on
and after January 1, 2001, in addition to the provisions of
clause (b)(i), the last day of each applicable Interest
Period, the date of repayment of principal of such Loan and
the Revolving Loan Maturity Date, Term Loan Maturity Date or
Tranche C Term Loan Maturity Date, as applicable, and in
addition where the applicable Interest Period for a Eurodollar
Loan is greater than three months, then also the date three
months from the beginning of the Interest Period and each
three months thereafter."
13. The definition of "Material Adverse Effect" is hereby
deleted in its entirety and replaced with the following new definition:
""Material Adverse Effect" means a material adverse effect on
(i) the condition (financial or otherwise), operations,
business, assets or liabilities of the Consolidated Parties
taken as a whole or (ii) the rights and remedies of the
Administrative Agent or the other Secured Parties under the
Credit Documents, provided that, for purposes of Sections
5.2(e) and 6.2 only, any failure to consummate the Pacific
Life Investment shall not, in and of itself, be deemed to
constitute a Material Adverse Effect (it being understood that
this proviso shall not apply to any circumstances affecting
any of the Consolidated Parties that may have given rise to
such failure)."
14. The definition of "Net Cash Proceeds" is hereby deleted in
its entirety and replaced with the following new definition:
<PAGE> 19
""Net Cash Proceeds" means (i) the aggregate cash proceeds
received by the Consolidated Parties in respect of any
incurrence of Indebtedness under Section 8.1(e), any Equity
Issuance or any Asset Disposition, net of (a) direct costs
(including, without limitation, legal, accounting and
investment banking fees, and sales commissions) and (b) taxes
paid or payable as a result thereof and (ii) any cash amounts
received (or deemed received) by the Borrower in repayment of
the Agecroft Note or otherwise in connection with the Agecroft
Securitization; it being understood that "Net Cash Proceeds"
shall include, without limitation, any cash received upon the
sale or other disposition of any non-cash consideration
received by the Consolidated Parties in any of the
transactions described above."
15. The definition of "Permitted Investments" is hereby
amended as follows:
(i) the word "and" is added at the end of
clause (vi) thereof, immediately following the words
"with respect to such Subsidiary,";
(ii) clauses (vii) and (viii) are deleted in their
entirety; and
(iii) clause (ix) is renumbered as clause (vii),
which shall be the final clause.
16. The definition of "Permitted Liens" is hereby amended as
follows:
(i) in subparagraph (x), the word "and" is deleted
immediately following the semicolon in the last line
thereof;
(ii) in subparagraph (xi), the period at the end
thereof is replaced with a semicolon, followed by the
word "and"; and
(iii) immediately following subparagraph (xi), the
following new subparagraph (xii) is added:
"(xii) Liens on certain government contracts, related
accounts receivable and other assets of Management
Opco or Management Sub, in each case pledged to
secure the Management Opco Credit Agreement or any
replacement credit facility, all as contemplated by
and in accordance with Section 7.14(B)."
17. The definition of "Revolving Committed Amount" is hereby
deleted in its entirety and replaced with the following new definition:
""Revolving Committed Amount" means FOUR HUNDRED MILLION
DOLLARS ($400,000,000) or such lesser amount as the Revolving
Committed Amount may be reduced from time to time pursuant to
Section 3.4; provided that, if the Pacific Life Investment has
not been consummated on or prior to September 15, 2000, the
Revolving Committed Amount will be reduced on such date to
$388,000,000 (subject to further reduction upon consummation
of the Agecroft
<PAGE> 20
Securitization by an amount equal to fifty percent (50%) of
the Net Cash Proceeds resulting from the Agecroft
Securitization)."
18. The definition of "Total Value" is hereby deleted in its
entirety and replaced with the following new definition:
""Total Value" means, as of any date of determination, an
amount equal to the sum of (a) the aggregate Implied Value or
Post Merger Implied Value, as applicable, of all Real
Properties plus (b) one hundred percent (100%) of all cash and
Cash Equivalents of the Consolidated Parties."
f. Section 2.1(a) of the Credit Agreement is hereby deleted in
its entirety and replaced with the following new Section 2.1(a):
"(a) Revolving Commitment. To the extent any Revolving Loans
(as defined below) are outstanding under the Original Credit Agreement
on the Restatement Effective Date, such Revolving Loans shall be deemed
to constitute Revolving Loans outstanding hereunder from and after the
Restatement Effective Date. In addition, subject to the terms and
conditions hereof and in reliance upon the representations and
warranties set forth herein, each Revolving Lender severally agrees to
make available to the Borrower such Revolving Lender's Revolving
Commitment Percentage of revolving credit loans requested by the
Borrower in Dollars ("Revolving Loans") from time to time from the
Restatement Effective Date until the Revolving Loan Maturity Date, or
such earlier date on which the Revolving Commitments shall have been
terminated as provided herein; provided, however, that (i) with regard
to the Lenders collectively, the aggregate principal amount of the
Obligations outstanding shall not at any time exceed the lesser of (A)
the Aggregate Committed Amount minus the Availability Reserve and (B)
the Borrowing Base; and (ii) with regard to each Revolving Lender
individually, the amount of such Revolving Lender's Revolving
Commitment Percentage of the Revolving Obligations outstanding shall
not exceed such Revolving Lender's Revolving Commitment Percentage of
the Revolving Committed Amount minus the Availability Reserve.
Revolving Loans may consist of Base Rate Loans or Eurodollar Loans, or
a combination thereof, as the Borrower may request; provided, however,
that no more than six Eurodollar Loans shall be outstanding under this
Section 2.1 at any time (it being understood that, for purposes hereof,
Eurodollar Loans with different Interest Periods shall be considered as
separate Eurodollar Loans, even if they begin on the same date,
although borrowings, extensions and conversions may, in accordance with
the provisions hereof, be combined at the end of existing Interest
Periods to constitute a new Eurodollar Loan with a single Interest
Period). Revolving Loans hereunder may be repaid and reborrowed in
accordance with the provisions hereof."
g. Section 2.1(b)(ii) of the Credit Agreement is hereby
amended by adding the words "minus the Availability Reserve" immediately
following the words "Revolving Committed Amount" in the fourth line thereof.
<PAGE> 21
h. Section 2.1(d) of the Credit Agreement is hereby amended by
deleting the word "Section" in the first line thereof and replacing it with the
word "Sections", and by adding the words "and 3.17" immediately following "3.1"
in the first line thereof.
i. Section 2.2(a) of the Credit Agreement is hereby amended by
adding the words "at any time" immediately following the words "Obligations
outstanding shall not" in the twelfth line thereof, and by adding the words
"minus the Availability Reserve" immediately following the words "Aggregate
Committed Amount" in the thirteenth line thereof.
j. Section 2.3(a) of the Credit Agreement is hereby amended by
adding the words "at any time" immediately following the words "Obligations
outstanding shall not" in the ninth line thereof, and by adding the words "minus
the Availability Reserve" immediately following the words "Aggregate Committed
Amount" in the ninth line thereof.
k. Section 2.4(c) of the Credit Agreement is hereby deleted in its
entirety and replaced with the following new Section 2.4(c):
"(c) Interest. Subject to the provisions of Sections 3.1 and
3.17, Eurodollar Loans comprising all or a part of the Term Loans shall
bear interest at a per annum rate equal to the Eurodollar Rate plus
4.00% and Base Rate Loans comprising all or part of the Term Loans
shall bear interest at a per annum rate equal to the Base Rate plus
2.50%; provided, however, (i) if the Borrower shall have a Senior Debt
Rating by S&P greater than or equal to BBB- and a Senior Debt Rating by
Moody's greater than or equal to Baa3, the Term Loans shall bear
interest at a per annum rate equal to the Eurodollar Rate plus 3.75% in
the case of Eurodollar Loans, or the Base Rate plus 2.25% in the case
of Base Rate Loans. Interest in respect of Term Loans shall be payable
in arrears on each applicable Interest Payment Date (or at such other
times as may be specified herein)."
l. Section 2.5(e) of the Credit Agreement is hereby deleted in its
entirety and replaced with the following new Section 2.5(e):
"(e) Interest. Subject to the provisions of Sections 3.1 and
3.17, Eurodollar Loans comprising all or a part of the Tranche C Term
Loans shall bear interest at a per annum rate equal to the Eurodollar
Rate plus 4.00% and Base Rate Loans comprising all or part of the
Tranche C Term Loans shall bear interest at a per annum rate equal to
the Base Rate plus 2.50%; provided, however, (i) if the Borrower shall
have a Senior Debt Rating by S&P greater than or equal to BBB- and a
Senior Debt Rating by Moody's greater than or equal to Baa3, the
Tranche C Term Loans shall bear interest at a per annum rate equal to
the Eurodollar Rate plus 3.75% in the case of Eurodollar Loans, or the
Base Rate plus 2.25% in the case of Base Rate Loans. Interest in
respect of Tranche C Term Loans shall be payable in arrears on each
applicable Interest Payment Date (or at such other times as may be
specified herein)."
m. Section 3.1 of the Credit Agreement is hereby deleted in its
entirety and replaced with the following new Section 3.1:
"3.1 DEFAULT RATE.
<PAGE> 22
(i) Upon the occurrence, and during the continuance, of an
Event of Default, (ii) for any period during which the Borrower pays to
MDP a rate in excess of 9.5% per annum under the MDP Note Purchase
Agreement (other than Contingent Interest (as defined therein)), and
(iii) for any period during which the Borrower pays to PMI a rate in
excess of 7.5% per annum under the PMI Note Purchase Agreement, then,
in any such case (except, in the case of (ii) and (iii) above, to the
extent that the interest rate under either such agreement is increased
in a manner satisfactory to the Required Lenders and the Required
Tranche C Term Lenders in connection with a written waiver of the MDP
Defaults or the PMI Defaults, as the case may be), the principal of
and, to the extent permitted by law, interest on the Loans and any
other amounts owing hereunder or under the other Credit Documents shall
bear interest, payable on demand, at a per annum rate 2% greater than
the rate which would otherwise be applicable (or if no rate is
applicable, whether in respect of interest, fees or other amounts, then
the Adjusted Base Rate plus 2%)."
n. Section 3.2 of the Credit Agreement is hereby amended by adding
the words "(other than with respect to the MDP Defaults or the PMI Defaults)"
immediately following the words "is in existence" and immediately preceding the
words "and the Aggregate Required Lenders" in the eighth line thereof.
o. Section 3.3(b)(i) of the Credit Agreement is hereby deleted in
its entirety and replaced with the following new Section 3.3(b)(i):
"(i) Committed Amounts. If at any time, (A) the sum of the
aggregate principal amount of the Obligations outstanding shall exceed
the lesser of (x) the Aggregate Committed Amount minus the Availability
Reserve and (y) the Borrowing Base, (B) the amount of LOC Obligations
outstanding shall exceed the LOC Committed Amount or (C) the amount of
Swingline Loans outstanding shall exceed the Swingline Committed
Amount, the Borrower shall immediately make payment on the Revolving
Loans, the Swingline Loans and/or to a cash collateral account (any
such account into which cash collateral is deposited by the Borrower, a
"Cash Collateral Account") in respect of the LOC Obligations, in an
amount sufficient to eliminate the deficiency; provided, however, to
the extent payment on the Revolving Loans and/or to a cash collateral
account in respect of the LOC Obligations is not sufficient to
eliminate such deficiency, the Borrower shall make payment on the Term
Loans in an amount sufficient to eliminate the deficiency and a
corresponding permanent reduction in the Revolving Committed Amount.
The Borrower hereby grants to the Administrative Agent, for the ratable
benefit of the Secured Parties, a continuing security interest in all
amounts at any time on deposit in any and all cash collateral accounts
to secure all LOC Obligations from time to time outstanding and all
other Credit Party Obligations hereunder.
p. Section 3.3(b)(ii) of the Credit Agreement is hereby deleted in
its entirety and replaced with the following new Section 3.3(b)(ii):
"(ii) Asset Disposition; Etc. Immediately upon receipt by any
Consolidated Party of proceeds from any Asset Disposition, any
incurrence of Indebtedness under Section 8.1(e), a Rights Offering or
repayment of the Agecroft Note (other than in
<PAGE> 23
connection with the Agecroft Securitization), the Borrower shall prepay
the Loans in an aggregate amount equal to the Net Cash Proceeds of the
related Asset Disposition, incurrence of Indebtedness, Rights Offering
(subject to Section 7.22) or repayment (such prepayment to be applied
as set forth in clause (iii) below).
Notwithstanding the foregoing, the Borrower shall not be
required to make a prepayment pursuant to Section 3.3(b)(ii) with
respect to (x) up to $42,000,000 of Net Cash Proceeds from the sale of
the Polk County, Florida, correctional facility, and (y) up to
$5,000,000 per annum of Net Cash Proceeds from any Asset Dispositions
(other than the Agecroft Securitization and the Headquarters
Sale-Leaseback); provided, that, in the case of (x) and (y) above, the
Borrower advises the Administrative Agent at the time the Net Cash
Proceeds from such Asset Dispositions or repayment are received that it
intends to reinvest such Net Cash Proceeds into replacement assets
(including pursuant to any acquisition) within 180 days after such
Asset Disposition or repayment and such Net Cash Proceeds are applied
to repay the Revolving Loans (or, if no Revolving Loans are
outstanding, to provide cash collateral for the Credit Party
Obligations by deposit in a cash collateral account) until such time as
such reinvestment occurs (or such 180 day period expires); provided,
however, if such Net Cash Proceeds are not so reinvested within such
180 day period, the Borrower shall be obligated to apply such Net Cash
Proceeds to the prepayment of the Loans at the end of such 180 day
period in accordance with the terms of Section 3.3(b)(iii)."
q. Section 3.3(b)(iii) of the Credit Agreement is hereby
amended by deleting the word "Section" in the second line thereof and replacing
it with the word "Sections", and by adding the words "and 3.3(b)(v)" immediately
following "3.3(b)(ii)" in the second line thereof.
r. Section 3.3(b) of the Credit Agreement is hereby further
amended by adding, immediately after subparagraph (iii), the following new
subparagraphs:
"(iv) Agecroft Securitization. Notwithstanding the foregoing,
the Net Cash Proceeds received by the Borrower or any other Credit
Party in connection with the Agecroft Securitization shall be
immediately applied to the repayment of the Revolving Loans."
"(v) Excess Cash Flow. Unless the Required Lenders and the
Required Tranche C Term Lenders otherwise agree, if for any period
comprised of either (a) the first and second fiscal quarters of any
fiscal year of the Consolidated Parties, commencing with the fiscal
year beginning January 1, 2001 or (b) the third and fourth fiscal
quarters of any such fiscal year of the Consolidated Parties, there
shall be Excess Cash Flow, the Borrower shall apply seventy-five
percent of such Excess Cash Flow to the prepayment of the Loans and the
reduction of the Revolving Committed Amount as set forth in Section
3.1(b)(iii). Each such prepayment and commitment reduction shall be
made on a date no later than the date that is three (3) Business Days
after delivery of the officer's certificate that would otherwise be
due, pursuant to Section 7.1(c), at the end of the second and fourth
fiscal quarters of the Consolidated Parties."
<PAGE> 24
s. Section 3.5(a) of the Credit Agreement is hereby deleted in
its entirety and replaced with the following new Section 3.5(a):
"Non-Merger Default Fee. If the Management Opco Merger has not
been consummated on or before September 15, 2000 (or any later date as
may be consented to by the Required Lenders and the Required Tranche C
Term Lenders), the Borrower agrees to pay to the Administrative Agent
on such date for the pro rata account of each Lender a fee equal to
0.375% of the Obligations outstanding as of such date."
t. Section 3 of the Credit Agreement is hereby further amended
by adding, immediately following Section 3.16, the following new Section 3.17:
"3.17 Additional Consideration.
Without diminishing or otherwise affecting the provisions of
Section 3.1, and in partial consideration for the consents, waivers and
amendments contained in the Waiver and Amendment, through and including
September 15, 2000 (subject to extension by the Required Lenders and
the Required Tranche C Term Lenders until December 31, 2000, and for
successive 3-month periods thereafter) all Loans under this Credit
Agreement shall bear interest at a per annum rate 0.50% greater than
the rate that would otherwise be applicable (by way of example only,
9.00% in lieu of 8.50%)."
u. Section 5.2(e) of the Credit Agreement is hereby amended by
replacing the number "1998" with the number "1999" in the second line thereof.
v. Section 6.1 of the Credit Agreement is hereby deleted in
its entirety and replaced with the following new Section 6.1:
"6.1. FINANCIAL CONDITION.
The financial statements delivered to the Lenders pursuant to
Section 5.1(c) and Section 7.1(a) and (b)(i), (A) have been prepared in
accordance with GAAP and (B) present fairly (on the basis disclosed in
the footnotes to such financial statements) the consolidated financial
condition, results of operations and cash flows of the Consolidated
Parties and Unrestricted Subsidiaries as of such date and for such
periods. The financial statements delivered to the Lenders pursuant to
Section 7.1(b)(ii), (A) have been prepared in accordance with GAAP
(other than the combined nature thereof) and (B) present fairly the
consolidated results of operations of the Consolidated Parties and
Unrestricted Subsidiaries as of such date and for such periods."
w. Section 6.2 of the Credit Agreement is hereby amended by
replacing the number "1998" with the number "1999" in the first line thereof.
x. Section 6.3 of the Credit Agreement is hereby deleted in
its entirety and replaced with the following new Section 6.3:
"6.3. ORGANIZATION AND GOOD STANDING.
<PAGE> 25
Each of the Consolidated Parties and Unrestricted Subsidiaries
(a) is duly organized, validly existing and is in good standing under
the laws of the jurisdiction of its incorporation or organization,
except, with respect to any Unrestricted Subsidiary, to the extent the
failure to be so organized, existing or in good standing could not
reasonably be expected to have a Material Adverse Effect, (b) has the
corporate or other necessary power and authority, and the legal right,
to own and operate its property, to lease the property it operates as
lessee and to conduct the business in which it is currently engaged,
except, with respect to any Unrestricted Subsidiary, to the extent the
failure to have such power, authority or right could not reasonably be
expected to have a Material Adverse Effect and (c) is duly qualified as
a foreign entity and in good standing under the laws of each
jurisdiction where its ownership, lease or operation of property or the
conduct of its business requires such qualification, other than in such
jurisdictions where the failure to be so qualified and in good standing
could have a Material Adverse Effect. Furthermore, the Borrower has
conducted its business so as to qualify as a REIT for its 1999 taxable
year, and subsequent to qualifying as a REIT for its 1999 taxable year
the Borrower will, until consummation of the Management Opco Merger,
conduct its business so as to preserve its ability to elect to be taxed
as a REIT. After consummation of the Management Opco Merger the
Borrower will conduct its business so as to qualify as a C Corporation
commencing with its 2000 taxable year."
y. Section 6.6 of the Credit Agreement is hereby deleted in
its entirety and replaced with the following new Section 6.6:
"6.6. NO DEFAULT.
Except with respect to the MDP Defaults and the PMI Defaults,
no Consolidated Party or Unrestricted Subsidiary is in default in any
respect under any contract, lease, loan agreement, indenture, mortgage,
security agreement or other agreement or obligation to which it is a
party or by which any of its properties is bound which default could
reasonably be expected to have a Material Adverse Effect."
z. Section 6.13 of the Credit Agreement is hereby amended by
replacing the word "Restatement" in the first line thereof with the word
"Amendment".
aa. Section 6.15 of the Credit Agreement is hereby deleted in
its entirety and replaced with the following new Section 6.15:
"6.15. PURPOSE OF LOANS AND LETTERS OF CREDIT.
Attached hereto as Schedule 6.15 is a true and correct
schedule setting forth the uses to which the Borrower will apply
proceeds of Loans made hereunder and other funds available to the
Borrower hereunder until consummation of a Rights Offering (or other
Equity Issuance by the Borrower satisfactory to the Required Lenders
and the Required Tranche C Term Lenders) which in any case yields Net
Cash Proceeds to the Borrower of at least $100,000,000. The proceeds of
any other Loans made hereunder will be used solely by the Borrower (i)
for working capital, (ii) to provide funds for the development and
construction of correctional, justice and detention centers, (iii) for
refinancing
<PAGE> 26
existing Indebtedness of the Borrower, (iv) to acquire Real Properties,
(v) for general corporate purposes and (vi) to make dividend payments
to its shareholders necessary to preserve its ability to elect to be
taxed as a REIT for its 1999 taxable year only; provided, however, that
proceeds of the Tranche C Term Loan shall be used only for the purposes
set forth in clauses (iii) and (v) above, and for payment of the
one-time special dividend in fiscal year 1999, as described in, and
subject to, Section 8.7. The Letters of Credit shall be used only for
or in connection with appeal bonds, reimbursement obligations arising
in connection with surety and reclamation bonds, reinsurance, domestic
or international trade transactions, bid or proposal bonds and
obligations not otherwise aforementioned relating to transactions
entered into by the applicable account party in the ordinary course of
business, including credit enhancement for financing incurred by the
Borrower in connection with the acquisition, construction and
development of real property."
bb. Section 6.26 of the Credit Agreement is hereby deleted in
its entirety and replaced with the following new Section 6.26:
"6.26. LEASES.
Each of the leases entered into between a Credit Party and any
lessee of real property owned by a Credit Party (a) has a minimum
initial lease term of five years (except for leases entered into with a
governmental entity) and (b) requires that the lessee remain solely
responsible for all operations and other liabilities with respect to
the applicable property. Furthermore, (i) eighty percent (80%) of all
lease revenues of the Credit Parties are derived from leases with
Management Opco and with lessees (other than Management Opco and with
respect to current leases with Community Education Partners, Inc.)
having a senior unsecured non-credit enhanced long term debt rating of
at least BBB+ (or higher) from S&P or Baa1 (or higher) from Moody's or
if such ratings from S&P and Moody's are unavailable, an equivalent
rating from Fitch or Duff & Phelps, (ii) at least ninety percent (90%)
of all lease revenues of the Credit Parties are derived from leases
with Management Opco and with lessees (other than Management Opco and
with respect to current leases with Community Education Partners, Inc.)
having a senior unsecured non-credit enhanced long term debt rating of
at least BBB- (or higher) from S&P or Baa3 (or higher) from Moody's or
if such ratings from S&P and Moody's are unavailable, an equivalent
rating from Fitch or Duff & Phelps, and (iii) prior to consummation of
the Management Opco Merger, at least ninety percent (90%) of all lease
revenues of the Credit Parties are derived from triple net leases that
are noncancelable by the lessee."
cc. Section 7.1(a) of the Credit Agreement is hereby amended
by adding, at the end thereof, the sentence "Notwithstanding the foregoing, for
any entity that becomes a Consolidated Party in any fiscal year, audited
financial statements shall not be required for such entity for the portion of
such fiscal year prior to the date on which such entity becomes a Consolidated
Party."
dd. Section 7.1(b) of the Credit Agreement is hereby deleted
in its entirety and replaced with the following new Section 7.1(b):
<PAGE> 27
"(b) Quarterly, Monthly and Weekly Financial Statements.
(i) Quarterly Financial Statements. As soon as available, and in any
event within 45 days after the close of each fiscal quarter of the Consolidated
Parties, Management Opco, Service Company A, Service Company B and each
Unrestricted Subsidiary (other than the fourth fiscal quarter, in which case 90
days after the end thereof) a consolidated balance sheet and income statement of
the Consolidated Parties, Management Opco, Service Company A, Service Company B
and each such Unrestricted Subsidiary, as of the end of such fiscal quarter,
together with related consolidated statements of operations and retained
earnings and of cash flows for such fiscal quarter, in each case setting forth
in comparative form consolidated figures for the corresponding period of the
preceding fiscal year, all such financial information described above to be in
reasonable form and detail and reasonably acceptable to the Administrative
Agent, and accompanied by a certificate of the chief financial officer of the
Borrower to the effect that such quarterly financial statements fairly present
in all material respects the financial condition of the Consolidated Parties,
Management Opco, Service Company A, Service Company B and the Unrestricted
Subsidiaries, as applicable, and have been prepared in accordance with GAAP,
subject to changes resulting from audit and normal year-end audit adjustments.
(ii) Monthly Financial Statements. As soon as available, and in any
event within 45 days after the close of each calendar month, a combined
consolidated income statement and EBITDA summary of the Consolidated Parties,
Management Opco, Service Company A, Service Company B and each Unrestricted
Subsidiary, as of the end of such calendar month, in each case setting forth in
comparative form combined consolidated figures for the preceding calendar month,
all such financial information described above to be in reasonable form and
detail and reasonably acceptable to the Administrative Agent, and accompanied by
a certificate of the chief financial officer of the Borrower (which certificate
may be based in part on an accompanying certificate of the chief financial
officer of Management Opco, Service Company A, Service Company B, or each
Unrestricted Subsidiary, as applicable) to the effect that such monthly
financial statements fairly present in all material respects the financial
results of the Consolidated Parties, Management Opco, Service Company A, Service
Company B and the Unrestricted Subsidiaries, as applicable, and have been
prepared in accordance with GAAP (other than the combined nature thereof),
subject to changes resulting from audit and normal year-end audit adjustments.
(iii) Weekly Forecasts and Reports. Prior to consummation of the
Management Opco Merger, as soon as available and in any event within five (5)
Business Days after the end of each calendar week, a statement of actual cash
receipts and disbursements of the Consolidated Parties, Management Opco and each
Unrestricted Subsidiary, as of the end of such calendar week, in each case
setting forth in comparative form the combined consolidated figures set forth in
the forecasted statement of cash flows as provided to the Lenders prior to the
Amendment Effective Date, all such financial information described above to be
in reasonable form and detail and reasonably acceptable to the Administrative
Agent, and accompanied by a certificate of the chief financial officer of the
Borrower to the effect that such weekly forecasts and reports are
<PAGE> 28
complete and accurate in all material respects (which certificate may
be based in part on an accompanying certificate of the chief financial
officer of Management Opco, Service Company A, Service Company B, or
each Unrestricted Subsidiary, as applicable)."
ee. Section 7.1(c) of the Credit Agreement is hereby deleted
in its entirety and replaced with the following new Section 7.1(c):
"(c) Officer's Certificate. At the time of delivery of the
financial statements provided for in Sections 7.1(a) and 7.1(b)(i)
above, a certificate of the chief financial officer of the Borrower
substantially in the form of Exhibit 7.1(c), (i) demonstrating
compliance with the financial covenants contained in Sections 7.11(a)
and (b) by calculation thereof as of the end of each such fiscal period
(ii) stating that no Default or Event of Default exists, or if any
Default or Event of Default does exist, specifying the nature and
extent thereof and what action the Credit Parties propose to take with
respect thereto and (iii) stating that such person has reviewed
Sections 8.1, 8.5 and 8.6 and detailing the Borrower's compliance
therewith. In addition, within five (5) Business Days of the end of
each calendar month, a certificate of the chief financial officer of
the Borrower, demonstrating compliance with the financial covenants
contained in Sections 7.11(a)(viii) and 7.11(c) (which certificate may
be based in part on an accompanying certificate of the chief financial
officer of Management Opco, Service Company A, Service Company B, or
each Unrestricted Subsidiary, as applicable)."
ff. Section 7.1(e) of the Credit Agreement is hereby amended
by adding the words "(or, on or after consummation of the Management Opco
Merger, within 15 days)" immediately following the words "fiscal quarter" and
immediately preceding the words "of the Consolidated Parties" in the second line
thereof.
gg. Section 7.1 of the Credit Agreement is hereby further
amended by adding, immediately following subparagraph (n), the following new
subparagraph (o):
"(o) Business Plan. Within seventy-five (75) days after the
Amendment Effective Date, and in any event no later than September 1,
2000, the Borrower shall deliver to the Administrative Agent and the
Lenders a business plan setting forth, among other things, short and
long term financial projections (including a summary of assumptions
made in the preparation of such projections), capital expenditure
plans, a discussion of the industry and key business drivers, and key
turnaround initiatives in the areas of strategy, operations and
finance."
hh. Section 7.2 of the Credit Agreement is hereby deleted in
its entirety and replaced with the following new Section 7.2:
"7.2. PRESERVATION OF EXISTENCE AND FRANCHISES.
Except as a result of or in connection with a merger of a
Subsidiary permitted under Section 8.4, each Credit Party will, and
will cause each of its Restricted Subsidiaries to, do all things
necessary to preserve and keep in full force and effect its existence,
rights, franchises and authority. Subject to the provisions of Section
8.7, the Borrower will conduct its business so as to qualify as a REIT
for its 1999 taxable year,
<PAGE> 29
and subsequent to qualifying as a REIT for its 1999 taxable year, will
preserve its ability to elect to qualify as a REIT until consummation
of the Management Opco Merger and, thereafter, will operate so as to be
taxed as a C Corporation."
ii. Section 7.8 of the Credit Agreement is hereby deleted in its
entirety and replaced with the following new Section 7.8:
"7.8. PERFORMANCE OF OBLIGATIONS.
Other than with respect to the MDP Defaults and PMI Defaults,
each Credit Party will, and will cause each of its Subsidiaries to,
perform in all material respects all of its obligations under the terms
of all material agreements, indentures, mortgages, security agreements
or other debt instruments to which it is a party or by which it is
bound (including, without limitation, the Agecroft Transaction
Documents); provided, however, that no Credit Party nor any of their
respective Subsidiaries shall be required to perform any such
obligation which is being contested in good faith by appropriate
proceedings (or which, in the case of agreements other than for
borrowed money, such Credit Party has determined in its reasonable
business judgment not to perform) and, in each case, as to which
adequate reserves therefor have been established in accordance with
GAAP, unless the failure to perform such obligation (i) could
reasonably be expected to give rise to an immediate right to foreclose
on a Lien securing such obligation or (ii) could reasonably be expected
to have a Material Adverse Effect. The Borrower will at all times
ensure that Agecroft complies with the Agecroft Charter."
jj. Section 7.11 of the Credit Agreement is hereby deleted in its
entirety and replaced with the following new Section 7.11:
"7.11 FINANCIAL COVENANTS.
(a) Prior to consummation of the Management Opco Merger, the
following financial covenants shall apply (subject to the waiver
contained in the Waiver and Amendment):
(i) Debt Service Coverage Ratio. The Debt Service
Coverage Ratio, as of the last day of each fiscal quarter of
the Consolidated Parties, shall be greater than or equal to
2.0 to 1.0.
(ii) Interest Coverage Ratio. The Interest Coverage
Ratio, as of the last day of each fiscal quarter of the
Consolidated Parties, shall be greater than or equal to 3.0 to
1.0.
(iii) Leverage Ratio. The Leverage Ratio, as of the
last day of each fiscal quarter of the Consolidated Parties,
shall be less than or equal to 3.5 to 1.0.
(iv) Total Indebtedness to Total Value. The ratio of
Total Indebtedness to Total Value, as of the last day of each
fiscal quarter of the Consolidated Parties, shall be less than
or equal to 0.50 to 1.0.
<PAGE> 30
(v) Net Worth. At all times Net Worth shall be greater
than or equal to the sum of an amount equal to 95% of the Net Worth of
the Borrower (based on the audited December 31, 1998 financial
statements of the Borrower), increased on a cumulative basis as of the
end of each fiscal quarter of the Borrower, commencing with the fiscal
quarter ending March 31, 1999 by an amount equal to 85% of the Net Cash
Proceeds from any Equity Issuance subsequent to the Original Closing
Date less an amount equal to the dividends paid by the Borrower during
the first twelve months subsequent to the Merger which are (i) based
solely on the retained earnings of CCA prior to the Merger and (ii)
required by the Borrower to be paid to maintain its status as a real
estate investment trust; provided, however, notwithstanding the
foregoing, at no time shall the Net Worth of the Borrower be less than
$1,200,000,000.
(vi) Non-Conforming Investments. The Consolidated Parties
shall at no time have Non-Conforming Investments which in the aggregate
constitute more than 5% of Total Assets.
(vii) Total Indebtedness to Total Capitalization. At all
times the ratio of Total Indebtedness to Total Capitalization shall be
equal to or less than .50 to 1.0.
(viii) Minimum Liquidity. Cash and Cash Equivalents of the
Consolidated Parties plus Availability under Section 2.1(a) shall be at
least (i) $5,000,000 as of June 30, 2000; (ii) $5,100,000 as of July
31, 2000; and (iii) $14,700,000 as of August 31, 2000.
(b) Upon and after consummation of the Management Opco Merger, the
following financial covenants shall apply:
(i) Maximum Total Leverage. At all times the ratio of
Total Indebtedness to Post Merger EBITDA of the Consolidated Parties
for the immediately preceding four full fiscal quarters ("LTM Post
Merger EBITDA") shall be equal to or less than the ratio set forth
below for such fiscal quarter, provided that for any fiscal quarter
after fiscal year 2001, such ratio shall be equal to or less than
4.50:1.00. For purposes of determining compliance with this Section
7.11(b)(i), (A) during the third quarter of 2000, LTM Post Merger
EBITDA shall be calculated by multiplying Post Merger EBITDA for the
third quarter of 2000 by four (4), (B) during the fourth quarter of
2000, LTM Post Merger EBITDA shall be calculated by multiplying (i) the
sum of Post Merger EBITDA for the third quarter of 2000 plus Post
Merger EBITDA for the fourth quarter of 2000 by (ii) two (2), and
(C) during the first quarter of 2001, LTM Post Merger EBITDA shall be
calculated by multiplying (i) the sum of Post Merger EBITDA for the
third quarter of 2000 plus Post Merger EBITDA for the fourth quarter
of 2000 plus Post Merger EBITDA for the first quarter of 2001 by
(ii) four-thirds (4/3):
<PAGE> 31
<TABLE>
<CAPTION>
Fiscal Quarter Ratio
-------------- -----
<S> <C>
----------------------------------------
Q3 - 2000: 7.00:1.00
----------------------------------------
Q4 - 2000: 6.50:1.00
----------------------------------------
Q1 - 2001: 5.75:1.00
----------------------------------------
Q2 - 2001: 5.25:1.00
----------------------------------------
Q3 - 2001: 4.75:1.00
----------------------------------------
Q4 - 2001: 4.50:1.00
----------------------------------------
</TABLE>
(ii) Post Merger Interest Coverage Ratio. The Post Merger
Interest Coverage Ratio, as of the last day of each fiscal quarter of
the Consolidated Parties, shall be equal to or greater than the ratio
set forth below for such fiscal quarter, provided that for any fiscal
quarter after fiscal year 2001, such ratio shall be equal to or greater
than 1.75:1.00:
<TABLE>
<CAPTION>
Fiscal Quarter Ratio
-------------- -----
<S> <C>
----------------------------------------
Q3 - 2000: 1.00:1.00
----------------------------------------
Q4 - 2000: 1.25:1.00
----------------------------------------
Q1 - 2001: 1.50:1.00
----------------------------------------
Q2 - 2001: 1.50:1.00
----------------------------------------
Q3 - 2001: 1.75:1.00
----------------------------------------
Q4 - 2001: 1.75:1.00
----------------------------------------
</TABLE>
(iii) Fixed Charge Coverage. The Fixed Charge Coverage
Ratio, as of the last day of each fiscal quarter of the Consolidated
Parties, shall be equal to or greater than the ratio set forth below
for such fiscal quarter, provided that for any fiscal quarter after
fiscal year 2001, such ratio shall be equal to or greater than
1.50:1.00:
<TABLE>
<CAPTION>
Fiscal Quarter Ratio
-------------- -----
<S> <C>
Q3 - 2000: 0.75:1.00
----------------------------------------
Q4 - 2000: 1.25:1.00
----------------------------------------
</TABLE>
<PAGE> 32
<TABLE>
<S> <C>
Q1 - 2001: 1.25:1.00
----------------------------------------
Q2 - 2001: 1.25:1.00
----------------------------------------
Q3 - 2001: 1.25:1.00
----------------------------------------
Q4 - 2001: 1.25:1.00
----------------------------------------
</TABLE>
(iv) Total Indebtedness to Total Capitalization. At all
times the ratio of Total Indebtedness to Total Capitalization shall be
equal to or less than 0.50:1.00.
(v) Minimum Post Merger EBITDA. As of the last day of
each fiscal quarter of the Consolidated Parties, Post Merger EBITDA
shall be equal to or greater than the amount indicated below for such
fiscal quarter, provided that for any fiscal quarter after fiscal year
2001, Post Merger EBITDA shall be equal to or greater than $57,200,000.
<TABLE>
<CAPTION>
Fiscal Quarter Amount
-------------- ------
<S> <C>
Q3 - 2000: $40,600,000
------------------------------------------
Q4 - 2000: $49,400,000
------------------------------------------
Q1 - 2001: $54,300,000
------------------------------------------
Q2 - 2001: $54,700,000
------------------------------------------
Q3 - 2001: $58,200,000
------------------------------------------
Q4 - 2001: $57,200,000
------------------------------------------
</TABLE>
Pro Forma Adjustments. To the extent that the Management Opco Merger is
consummated on a date in a fiscal quarter of the Consolidated Parties
other than the final day of such fiscal quarter, the financial
covenants contained in (i) through (v) above shall be calculated as if
the Management Opco Merger had occurred on the first of day of such
fiscal quarter.
(c) Total Beds Occupied Ratio. Both before and after consummation
of the Management Opco Merger, at the end of each calendar month the average of
the Total Beds Occupied Ratios for each of the immediately preceding three
calendar months shall be equal to or greater than the amount indicated below for
such calendar month.
<PAGE> 33
<TABLE>
<CAPTION>
Month Ratio
----- -----
<S> <C>
June 2000: 74.0%
------------------------------------
July 2000 75.0%
------------------------------------
August 2000 76.0%
------------------------------------
September 2000 79.0%
------------------------------------
October 2000 82.0%
------------------------------------
November 2000 84.0%
------------------------------------
December 2000 86.0%
------------------------------------
January 2001: 87.0%
------------------------------------
February 2001 88.0%
------------------------------------
March 2001 91.0%
------------------------------------
April 2001 92.0%
------------------------------------
May 2001 92.0%
------------------------------------
June 2001: 92.0%
------------------------------------
July 2001 91.0%
------------------------------------
August 2001 91.0%
------------------------------------
September 2001 91.0%
------------------------------------
October 2001 91.0%
------------------------------------
November 2001 91.0%
------------------------------------
December 2001 90.0%
------------------------------------
</TABLE>
kk. Section 7.12 of the Credit Agreement is hereby amended by
adding the words "(including, without limitation, Management Sub and the Service
Company Subs)" immediately following the words "after any Person" in the first
line thereof, and by adding the words "and the Agecroft Securitization"
immediately following the words "the Agecroft Transaction" and immediately
preceding the words "shall be permitted" in the last line thereof.
ll. Section 7.14 of the Credit Agreement is hereby deleted in its
entirety and replaced with the following new Section 7.14:
<PAGE> 34
"(A) If, subsequent to the Restatement Effective Date, any
Credit Party shall acquire (a) any real property having a book value in
excess of $500,000 or (b) any intellectual property, securities
instruments, chattel paper or other personal property required to be
delivered to the Administrative Agent as Collateral hereunder or under
any of the Collateral Documents, the Borrower shall notify the
Administrative Agent of same in each case as soon as practicable after
the acquisition thereof. Each Credit Party shall take such action as
requested by the Administrative Agent and at its own expense, to ensure
that the Administrative Agent shall have a first priority perfected
Lien in (i) all owned and developed real property of the Credit Parties
(whether now owned or hereafter acquired) having a book value in excess
of $1,000,000, (ii) to the extent deemed to be material by the
Administrative Agent and either the Required Lenders or the Aggregate
Required Lenders in their sole discretion, all owned and undeveloped
real property of the Credit Parties (whether now owned or hereafter
acquired) and (iii) all personal property of the Credit Parties
(whether now owned or hereafter acquired), subject in each case only to
Permitted Liens. In addition, upon the request of the Administrative
Agent, the Borrower will assist the Administrative Agent with such
post-closing lien searches (conducted at the Borrower's expense) as the
Administrative Agent shall deem necessary or desirable to confirm the
perfection and priority of the Administrative Agent's Lien on the
Collateral.
(B) In accordance with subsection (A) above and with
Section 7.12, upon consummation of the Management Opco Merger and the
Service Company Mergers, as the case may be, the Management Sub and the
Service Company Subs will each become Guarantors, by way of execution
of a joinder agreement as contemplated in the definition of "Subsidiary
Guarantor", and substantially all of the assets formerly owned by
Management Opco, Service Company A, and Service Company B, as
applicable, (including, without limitation, all government contracts
and accounts receivable), will be pledged to the Administrative Agent
as additional Collateral for the Obligations; provided that government
contracts, related accounts receivable and other assets of Management
Opco currently pledged to secure the Management Opco Credit Agreement
need not be pledged as additional Collateral so long as such assets
continue to secure the Management Opco Credit Agreement or any
replacement credit facility in form and substance reasonably
satisfactory to the Required Lenders and the Required Tranche C Term
Lenders, subject in each case to the completion of intercreditor
arrangements reasonably satisfactory to the Administrative Agent."
mm. Section 7.15 of the Credit Agreement is hereby
amended by deleting "7.1(k)" and replacing it with "7.1(l)" immediately
following the words "in accordance with Section" and immediately preceding the
words "and be satisfactory" in the ninth line thereof.
nn. Section 7 of the Credit Agreement is hereby further
amended by adding, immediately following Section 7.18, the following new
sections:
"7.19. MANAGEMENT OPCO MERGER. The Borrower and the Credit
Parties will cause the valid and legal consummation of the Management
Opco Merger (including, without limitation, obtaining all necessary or
advisable material government and third-party consents) no later than
the Management Opco Merger Date.
<PAGE> 35
7.20. AGECROFT SECURITIZATION. The Credit Parties will
cause the consummation of the Agecroft Securitization no later than
February 28, 2001; provided that, any Event of Default caused solely by
the failure of the Borrower to comply with this requirement will not,
in and of itself, entitle the Lenders to receive interest on the Loans
at the default rate specified in Section 3.1.
7.21. TERMINATION OF CERTAIN AGREEMENTS. The Borrower will
cause the termination of each of the Business Development Agreement,
the Tenant Incentive Agreement, the Services Agreement, the Trade Name
Use Agreement, the Opco License Agreement and the Master Lease (and all
related supplemental leases) in connection with, and at the time of the
consummation of, the Management Opco Merger and the Service Company A
License Agreement and the Service Company B License Agreement in
connection with, and at the time of consummation of, the Service
Company Mergers.
7.22. RIGHTS OFFERING. The Borrower will (i) use
commercially reasonable efforts to consummate the Rights Offering on or
before December 31, 2000 and (ii) upon receipt of the Net Cash Proceeds
of the Rights Offering, immediately apply forty percent (40%) of such
Net Cash Proceeds to the repayment of the Loans in accordance with
Sections 3.3(b)(ii) and (iii), with the remaining sixty percent (60%)
being used by the Borrower for capital expenditures and general
corporate purposes (subject, however to the interim repayment of the
Revolving Loans).
7.23. CASH MANAGEMENT. The Credit Parties will (i) within
forty-five (45) days after the Amendment Effective Date (the "Account
Transfer Deadline"), transfer all depository and other non-disbursement
accounts of the Credit Parties (other than those accounts set forth on
Schedule 7.23 (the "Excluded Credit Party Accounts")) to accounts held
at any bank that is a Revolving Lender and cause such accounts to
become subject to a perfected lien in favor of the Administrative Agent
for the benefit of the Secured Parties in a manner reasonably
satisfactory to the Administrative Agent, provided that from and after
the Account Transfer Deadline, the average daily balance in all
Excluded Credit Party Accounts (other than any such accounts which on
the date hereof constitute cash collateral for obligations) shall at no
time exceed $500,000 (plus the amount of any outstanding checks) in the
aggregate for a period of 5 consecutive days, and (ii) as soon as is
reasonably practicable after consummation of the Management Opco
Merger, (a) transfer all depository accounts of Management Opco and
Management Sub (other than (A) commissary accounts and inmate trust
accounts and (B) accounts listed on Schedule 7.23 (such accounts in
this clause (B), the "Excluded Management Opco Accounts")) to accounts
held at any bank that is a Revolving Lender and cause such accounts to
become subject to a perfected lien in favor of the Administrative Agent
for the benefit of the Secured Parties in a manner reasonably
satisfactory to the Administrative Agent, and (b) transfer all
centralized disbursement accounts and concentration accounts of
Management Opco and Management Sub to accounts held at any bank that is
a Revolving Lender and cause such concentration accounts (but not the
centralized disbursement accounts) to become subject to a perfected
lien in favor of the Administrative Agent for the benefit of the
Secured Parties in a manner reasonably satisfactory to the
Administrative Agent, provided that the average daily balance in the
Excluded Management Opco Accounts and the centralized disbursement
accounts shall at no time after the date that is ten (10)
<PAGE> 36
Business Days after the date of consummation of the Management Opco
Merger exceed $3,000,000 (plus the amount of any outstanding checks) in
the aggregate for a period of 5 consecutive days.
In addition to the foregoing, (i) within fifteen (15) Business
Days after the Amendment Effective Date, the Borrower shall cause its
investment account at First Union (Account #22762322) to become subject
to a lien in favor of the Administrative Agent for the benefit of the
Secured Parties in a manner reasonably satisfactory to the
Administrative Agent, and (ii) on and after the date that is fifteen
(15) Business Days after the Amendment Effective Date, the average
daily balance in the Borrower's operating account at First Union
(Account #2020000174639) shall at no time exceed $500,000 (plus the
amount of any outstanding checks) in the aggregate for a period of 5
consecutive days."
oo. Section 8.1(e) of the Credit Agreement is hereby
amended by adding at the beginning thereof the clause "subject to the provisions
of Section 3.3(b)(ii),".
pp. Section 8.1(j) of the Credit Agreement is hereby
amended by deleting the word "and" immediately following the semicolon in the
last line thereof.
qq. Section 8.1(k) of the Credit Agreement is hereby
amended by replacing the period at the end thereof with a semicolon followed by
the word "and"
rr. Section 8.1 of the Credit Agreement is hereby further
amended by adding, immediately following subparagraph (k), the following new
subparagraph (l):
"(l) Indebtedness of Management Sub under the Management
Opco Credit Agreement or any replacement credit facility, in each case
as contemplated by and in accordance with Section 7.14(B), provided
that any such Indebtedness shall remain subject to the limitations set
forth in Section 9.1(o)."
ss. Section 8.3 of the Credit Agreement is hereby deleted
in its entirety and replaced with the following new Section 8.3:
"8.3. NATURE OF BUSINESS.
Except as may be necessary in order to consummate, and as
contemplated by, the Management Opco Merger and the Service Company
Mergers, the Credit Parties will not permit any Consolidated Party or
any other Subsidiary to substantively alter the character or conduct of
the business conducted by such Person as of the Original Closing Date.
Specifically, (i) prior to the date of consummation of the Management
Opco Merger, neither the Borrower nor any Subsidiary of the Borrower
shall engage in any business other than the ownership of correctional,
justice and/or detention facilities (which may include secured charter
schools) that are managed by the lessees of the Borrower or such
Subsidiary, as the case may be (or agent of any such lessee in the
event any lessee is a governmental entity) and (ii) after consummation
of the Management Opco Merger, the business of the Borrower and its
subsidiaries may include, in addition to those activities
<PAGE> 37
listed in clause (i), the operation and management of correctional,
justice and detention facilities."
tt. Section 8.4 of the Credit Agreement is hereby deleted
in its entirety and replaced with the following new Section 8.4:
"8.4. CONSOLIDATION, MERGER, DISSOLUTION, ETC.
The Credit Parties will not permit any Consolidated Party to
enter into any transaction of merger or consolidation or liquidate,
wind up or dissolve itself (or suffer any liquidation or dissolution);
provided that, notwithstanding the foregoing provisions of this Section
8.4, (a) the Borrower may merge or consolidate with any of its
Restricted Subsidiaries provided that (i) the Borrower shall be the
continuing or surviving corporation, (ii) the Credit Parties shall
cause to be executed and delivered such documents, instruments and
certificates as the Administrative Agent may request in order to
maintain the perfection and priority of the Administrative Agent's
liens on the assets of the Credit Parties as required by Section 7.14
after giving effect to such transaction and (iii) after giving effect
to such transaction, no Default or Event of Default exists (other than
with respect to the MDP Defaults and the PMI Defaults), (b) any Credit
Party other than the Borrower may merge or consolidate with any other
Credit Party other than the Borrower provided that (i) the Credit
Parties shall cause to be executed and delivered such documents,
instruments and certificates as the Administrative Agent may request in
order to maintain the perfection and priority of the Administrative
Agent's liens on the assets of the Credit Parties as required by
Section 7.14 after giving effect to such transaction and (ii) after
giving effect to such transaction, no Default or Event of Default
exists (other than with respect to the MDP Defaults and the PMI
Defaults), (c) any Consolidated Party which is not a Credit Party may
be merged or consolidated with or into any Credit Party provided that
(i) such Credit Party shall be the continuing or surviving corporation,
(ii) the Credit Parties shall cause to be executed and delivered such
documents, instruments and certificates as the Administrative Agent may
request in order to maintain the perfection and priority of the
Administrative Agent's liens on the assets of the Credit Parties as
required by Section 7.14 after giving effect to such transaction and
(iii) after giving effect to such transaction, no Default or Event of
Default exists (other than with respect to the MDP Defaults and the PMI
Defaults), (d) any Consolidated Party which is not a Credit Party may
be merged or consolidated with or into any other Consolidated Party
which is not a Credit Party provided that, after giving effect to such
transaction, no Default or Event of Default exists, (e) Management Opco
may be merged or consolidated with and into Management Sub provided
that (i) Management Sub shall be the continuing or surviving
corporation, (ii) the Credit Parties shall cause to be executed and
delivered such documents, instruments and certificates as the
Administrative Agent may request in order to perfect or maintain the
perfection and priority of the Administrative Agent's liens on the
assets of the Credit Parties as required by Section 7.14 after giving
effect to such transaction, (iii) both before and after giving effect
to such transaction, no Default or Event of Default (other than with
respect to the MDP Defaults and the PMI Defaults) exists, (iv) such
transaction shall be conducted in accordance with the terms and
conditions of the Proxy, and (v) the consideration paid in connection
with such merger shall consist solely of the Borrower's common or
preferred
<PAGE> 38
stock (other than Disqualified Stock), and (f) Service Company A and
Service Company B may be merged or consolidated with or into the
Service Company Subs provided that (i) the Service Company Subs each
shall be the continuing or surviving entity, as applicable, (ii) the
Credit Parties shall cause to be executed and delivered such documents,
instruments and certificates as the Administrative Agent may request in
order to perfect or maintain the perfection and priority of the
Administrative Agent's liens on the assets of the Credit Parties as
required by Section 7.14 after giving effect to such transaction, (iii)
both before and after giving effect to such transaction, no Default or
Event of Default (other than with respect to the MDP Defaults and the
PMI Defaults) exists, and (v) the consideration paid in connection with
such merger shall consist solely of the Borrower's common or preferred
stock (other than Disqualified Stock)."
uu. Section 8.5 of the Credit Agreement is hereby deleted
in its entirety and replaced with the following new Section 8.5:
"8.5. ASSET DISPOSITIONS.
The Credit Parties will not permit any Consolidated Party to
make any Asset Disposition (including, without limitation, any Sale and
Leaseback Transaction) unless no later than the date of consummation of
such Asset Disposition, the Administrative Agent shall have received a
certificate of an officer of the Borrower briefly describing the assets
sold or otherwise disposed of, and setting forth the net book value of
such assets, and the aggregate consideration and Net Cash Proceeds
received for such assets in connection with such Asset Disposition, and
the Credit Parties shall on the date of the consummation of such Asset
Disposition, apply (or cause to be applied) an amount equal to the Net
Cash Proceeds of such Asset Disposition to prepay the Loans (and to
cash collateralize the LOC Obligations) in accordance with the terms of
Sections 3.3(b)(ii) and (iii) (except as expressly provided therein).
For the avoidance of doubt, the Credit Parties shall not permit to
occur the Agecroft Securitization or any similar transaction involving
the applicable property unless such transaction results in Net Cash
Proceeds to the Borrower of at least 45,000,000 Pounds Sterling (or the
equivalent in United States Dollars on such date) and the Net Cash
Proceeds of such transaction are applied in accordance with Sections
3.3(b)(iv).
Notwithstanding the foregoing, the Borrower agrees that it
shall not sell a Borrowing Base Property unless each of the following
conditions is satisfied: (i) no Default or Event of Default exists
(other than with respect to the MDP Defaults and the PMI Defaults),
(ii) such Borrowing Base Property is sold pursuant to the terms and
conditions of an arms length contract and on terms reasonably
satisfactory to the Administrative Agent, (iii) either (a) the Borrower
replaces such Borrowing Base Property with a substitute Borrowing Base
Property acceptable to the Lenders or (b) the Obligations outstanding
shall not exceed the lesser of the Aggregate Committed Amount and the
Borrowing Base after giving effect to such disposition and (iv) after
giving effect to such disposition, on a pro forma basis as if such
disposition had occurred on the first day of the twelve month period
ending on the last day of the Borrower's most recently completed fiscal
quarter, the Consolidated Parties would have been in compliance with
all the financial covenants set forth in Section 7.11."
<PAGE> 39
vv. Section 8.6 of the Credit Agreement is hereby deleted
in its entirety and replaced with the following new Section 8.6:
"8.6. INVESTMENTS.
The Credit Parties will not permit any Consolidated Party to
make Investments in or to any Person, except for (i) Permitted
Investments, (ii) so long as no Event of Default has occurred and is
continuing, Investments not otherwise prohibited under this Credit
Agreement (other than in Unrestricted Subsidiaries) in an amount not to
exceed $3,000,000 in any fiscal year of the Borrower and $15,000,000 in
the aggregate, (iii) the deemed investment in Agecroft by virtue of its
designation as an Unrestricted Subsidiary hereunder (provided that any
such designation shall not involve the transfer of cash or any other
assets from any Credit Party to Agecroft), and (iv) investments
consisting solely of the Borrower's common or preferred stock (other
than Disqualified Stock) in each of Management Sub and the Service
Company Subs, in connection with the Management Opco Merger and the
Service Company Mergers respectively, as otherwise permitted
hereunder."
ww. Section 8.7 of the Credit Agreement is hereby deleted
in its entirety and replaced with the following new Section 8.7:
"8.7. RESTRICTED PAYMENTS.
(a) The Credit Parties will not permit any Consolidated
Party to, directly or indirectly, declare, order, make or set apart any
sum for or pay any Restricted Payment, except (i) to make dividends
payable solely in the same class of Capital Stock of such Person, (ii)
to make dividends or other distributions payable to the Borrower
(directly or indirectly through Subsidiaries), (iii) the Borrower may
declare and pay non-cash dividends (other than in the form of
Disqualified Stock) in an aggregate amount not to exceed an amount
necessary to maintain the Borrower's status as a REIT for its 1999
taxable year, and (iv) the Borrower may repurchase Equity Interests of
the Borrower to the extent such repurchases are deemed to occur upon
the exercise of stock options if such Equity Interests represent a
portion of the exercise price thereof.
(b) Notwithstanding the foregoing, upon and after receipt
by the Borrower of at least $100,000,000 in Net Cash Proceeds resulting
from the issuance of any of the Borrower's common or preferred stock
(other than Disqualified Stock), the Borrower will be permitted to
declare and pay dividends as currently required by its series A
preferred stock, provided that, at the time of declaration and payment
thereof, no Default or Event of Default shall have occurred and be
continuing."
xx. Section 8.9 of the Credit Agreement is hereby deleted
in its entirety and replaced with the following new Section 8.9:
"8.9. TRANSACTIONS WITH AFFILIATES.
Except for transactions permitted under Section 8.15, the
Credit Parties will not permit any Consolidated Party to enter into or
permit to exist any transaction or series of
<PAGE> 40
transactions with or for the benefit of any officer, director,
shareholder, Unrestricted Subsidiary (other than, if applicable,
Agecroft in connection with the Agecroft Securitization) or Affiliate
of such Person (other than another Credit Party) other than (i) normal
compensation and reimbursement of expenses of officers and directors,
(ii) except as otherwise specifically limited in this Credit Agreement,
other transactions which are entered into in the ordinary course of
such Person's business on terms and conditions substantially as
favorable to such Person as would be obtainable by it in a comparable
arms-length transaction with a Person other than an officer, director,
shareholder, Unrestricted Subsidiary or Affiliate and (iii) in
connection with the Management Opco Merger and the Service Company
Mergers."
yy. Section 8.10 of the Credit Agreement is hereby
amended by adding, immediately following the words "affect the Lenders" in the
last line thereof, the words "except, in the case of (b) only, as necessary to
consummate the Management Opco Merger, the Service Company Mergers and the
Change in Tax Status, as applicable. Notwithstanding the foregoing, subject to
ensuring the continued and uninterrupted perfection and priority of the
Administrative Agent's Lien on the Collateral, after consummation of the
Management Opco Merger, the Borrower may change its name to "Corrections
Corporation of America""
zz. Section 8.13 of the Credit Agreement is hereby
amended by adding, immediately following the period at the end thereof, the
sentence "Notwithstanding the foregoing, the Borrower may consummate the
Headquarters Sale-Leaseback, provided that the Net Cash Proceeds thereof
received by the Borrower shall be at least $12,000,000 and shall be applied in
accordance with Sections 3.3(b)(ii) and (iii)."
aaa. Section 8.14 of the Credit Agreement is hereby
deleted in its entirety and replaced with the following new Section 8.14:
"8.14. NO FURTHER NEGATIVE PLEDGES.
The Credit Parties will not permit any Consolidated Party to
enter into, assume or become subject to any agreement prohibiting or
otherwise restricting the creation or assumption of any Lien upon its
properties or assets, whether now owned or hereafter acquired, or
requiring the grant of any security for such obligation if security is
given for some other obligation, except pursuant to (1) provided the
provisions thereof do not prohibit the Liens created under the Loan
Documents, (a) the Senior Notes Documents and the Permitted Unsecured
Debt Documents and any refinancing of any thereof otherwise permitted
under this Credit Agreement that, with respect to the matters referred
to in this Section 8.14, contain provisions no more restrictive on the
Borrower and its Subsidiaries than the Indebtedness being refinanced,
(b) the Agecroft Transaction Documents and (c) after consummation of
the Management Opco Merger, the Management Opco Credit Agreement and
the documentation governing any replacement credit facility, each as
permitted by Section 7.14(B), and (2) this Credit Agreement and the
other Credit Documents."
bbb. Section 8.15 of the Credit Agreement is hereby
deleted in its entirety and replaced with the following new Section 8.15:
<PAGE> 41
"8.15. TRANSACTIONS WITH CCA ENTITIES.
Notwithstanding the provisions of Section 8.9, other than as
necessary to consummate the Management Opco Merger (as required hereby)
and the Service Company Mergers, the Credit Parties will not permit any
Consolidated Party to make any payment to, or sell, lease, transfer or
otherwise dispose of any of its properties or assets to, or purchase
any property or assets from, or enter into or make, amend or modify any
transaction, contract, agreement, understanding, loan, advance or
guarantee with, any CCA Entity (each, a "CCA Entity Transaction"),
unless: (a) such CCA Entity Transaction is on terms that are no less
favorable to such Credit Party or the relevant Consolidated Party than
those that would have been obtained in a comparable transaction by the
Credit Party or such Consolidated Party with an unrelated Person and
(b) prior to the consummation of any CCA Entity Transaction or series
of related CCA Entity Transactions involving aggregate consideration in
excess of $5,000,000, the Aggregate Required Lenders shall have
consented in writing to such CCA Entity Transaction or CCA Entity
Transactions; provided, however, that the following transactions shall
be deemed not to be CCA Entity Transactions: (i) amendments to any
agreements with Management Opco that do not increase the total payments
to be due to Management Opco thereunder by more than $5,000,000 in the
aggregate for all such amended agreements, (ii) other amendments to
lease agreements or management contracts that do not alter the rent
provisions or economic terms of such agreements (including providing
for any rent deferrals), (iii) payments or transactions pursuant to
Existing CCA Entity Agreements and (iv) any new arrangement with
respect to properties not under lease with any of the CCA Entities as
of the Restatement Effective Date entered into by the Borrower or any
of its Restricted Subsidiaries in the ordinary course of business,
which is fair to the Borrower and its Restricted Subsidiaries in the
reasonable opinion of a majority of the disinterested members of the
Board of Directors of the Borrower. For the avoidance of doubt, the
term "CCA Entity Transaction" shall include, without limitation, any
amendment or modification of any of the Existing CCA Entity Agreements.
Upon and after consummation of the Management Opco Merger,
this Section 8.15 shall have no further force or effect with respect to
Management Opco. Upon and after consummation of the Service Company
Mergers, this Section 8.15 shall have no further force or effect with
respect to the Service Company Subs."
ccc. Section 8 of the Credit Agreement is hereby further
amended by adding, immediately following section 8.16, the following new
sections:
"8.17. MINIMUM AVAILABILITY.
The Credit Parties will at no time permit Availability to be
less than the Availability Reserve.
8.18. CAPITAL EXPENDITURES.
The Credit Parties will not permit any capital expenditures
for the construction of new facilities or the expansion of existing
facilities, except for (i) certain specified
<PAGE> 42
capital expenditures to be made from May 1, 2000 through December 31,
2000, as listed on Schedule 8.18, with respect to certain properties
under construction as of the Amendment Effective Date not exceeding in
the aggregate $33,000,000, (ii) after consummation of the Rights
Offering, Build-to-Suit Capital Expenditures not exceeding sixty
percent (60%) of the Net Cash Proceeds of any such Rights Offering
(with the remaining forty percent (40%) being applied in accordance
with Section 3.3(b)(ii) and (iii)), and (iii) at any time after
consummation of the Rights Offering that consolidated EBITDA for the
immediately preceding fiscal quarter is at least $60,000,000,
Build-to-Suit Capital Expenditures, provided that any such
Build-to-Suit Capital Expenditures made under this clause (iii) shall
not exceed $50,000,000 in the aggregate for any calendar year, provided
that, in the case of either of (ii) or (iii) above, the overall capital
expenditures budget for any particular project under which any such
capital expenditures are made shall be reasonably satisfactory to the
Required Lenders and the Required Tranche C Term Lenders."
ddd. Section 9.1 of the Credit Agreement is hereby deleted
in its entirety and replaced with the following new Section 9.1:
"9.1. EVENTS OF DEFAULT.
An Event of Default shall exist upon the occurrence of any of
the following specified events (each an "Event of Default"):
(a) Payment. Any Credit Party shall
(i) default in the payment when due of any
principal of any of the Loans or of any reimbursement
obligations arising from drawings under Letters of Credit, or
(ii) default, and such default shall continue for
three (3) or more Business Days, in the payment when due of
any interest on the Loans or on any reimbursement obligations
arising from drawings under Letters of Credit, or of any Fees
or other amounts owing hereunder, under any of the other
Credit Documents or in connection herewith or therewith; or
(b) Representations. Any representation, warranty or
statement made or deemed to be made by any Credit Party herein, in any
of the other Credit Documents, or in any statement or certificate
delivered or required to be delivered pursuant hereto or thereto shall
prove untrue in any material respect on the date as of which it was
deemed to have been made; or
(c) Covenants. Any Credit Party shall
(i) default in the due performance or observance
of any term, covenant or agreement contained in Sections 7.2,
7.4, 7.9, 7.11, 7.12, 7.14 through 7.19, inclusive, 7.21, 7.22
or 8.1 through 8.18, inclusive; or
<PAGE> 43
(ii) default in the due performance or observance
of any term, covenant or agreement contained in Sections
7.1(a), (b), (c), (e), (l) or (o) and such default shall
continue unremedied for a period of at least 5 days after the
earlier of a responsible officer of a Credit Party becoming
aware of such default or notice thereof by the Administrative
Agent; or
(iii) default in the due performance or observance
by it of any term, covenant or agreement (other than those
referred to in subsections (a), (b), (c)(i) or (c)(ii) of this
Section 9.1) contained in this Credit Agreement and such
default shall continue unremedied for a period of at least 30
days after the earlier of a responsible officer of a Credit
Party becoming aware of such default or notice thereof by the
Administrative Agent; or
(d) Other Credit Documents; Etc. (i) Any Credit Party
shall default in the due performance or observance of any term,
covenant or agreement in any of the other Credit Documents or the
Waiver and Amendment (subject to applicable grace or cure periods, if
any), or (ii) except as a result of or in connection with a merger of a
Subsidiary permitted under Section 8.4, any Credit Document shall fail
to be in full force and effect or to give the Administrative Agent
and/or the Lenders the Liens, rights, powers and privileges purported
to be created thereby, or any Credit Party shall so state in writing;
or
(e) Guaranties. Except as the result of or in connection
with a merger of a Subsidiary permitted under Section 8.4, the guaranty
given by any Guarantor hereunder (including any Additional Credit
Party) or any provision thereof shall cease to be in full force and
effect, or any Guarantor (including any Additional Credit Party)
hereunder or any Person acting by or on behalf of such Guarantor shall
deny or disaffirm such Guarantor's obligations under such guaranty, or
any Guarantor shall default in the due performance or observance of any
term, covenant or agreement on its part to be performed or observed
pursuant to any guaranty; or
(f) Bankruptcy, etc. Any Bankruptcy Event shall occur
with respect to any Consolidated Party; or
(g) Defaults under Other Agreements. With respect to any
Indebtedness (other than Indebtedness outstanding under this Credit
Agreement) in excess of $1,000,000 in the aggregate for the
Consolidated Parties taken as a whole, (A)(1) any Consolidated Party
shall default in any payment (beyond the applicable grace period with
respect thereto, if any) with respect to any such Indebtedness, or (2)
a default in the observance or performance relating to such
Indebtedness or contained in any instrument or agreement evidencing,
securing or relating thereto, or any other event or condition shall
occur and continue or condition exist, the effect of which default or
other event or condition is to cause, or permit the holder or holders
of such Indebtedness (or trustee or agent on behalf of such holders) to
cause (determined without regard to whether any notice or lapse of time
is required), any such Indebtedness to become due prior to its stated
maturity; or (B) any such Indebtedness shall be declared due and
payable, or required to be prepaid other than by a regularly scheduled
required prepayment, prior to the stated maturity thereof; or
<PAGE> 44
(h) Judgments. Except to the extent confirming a
settlement of a litigation not resulting in an Event of Default under
Section 9.1(r), one or more judgments or decrees shall be entered
against one or more of the Consolidated Parties involving a liability
of $1,000,000 or more in the aggregate (to the extent not paid or fully
covered by insurance provided by a carrier who has acknowledged
coverage and has the ability to perform) and any such judgments or
decrees shall not have been vacated, discharged or stayed or bonded
pending appeal within 30 days from the entry thereof; or
(i) ERISA. Any of the following events or conditions
shall occur, if such event or condition could reasonably be expected to
have a Material Adverse Effect: (i) any "accumulated funding
deficiency," as such term is defined in Section 302 of ERISA and
Section 412 of the Code, whether or not waived, shall exist with
respect to any Plan, or any lien shall arise on the assets of any
Consolidated Party or any ERISA Affiliate in favor of the PBGC or a
Plan; (ii) an ERISA Event shall occur with respect to a Single Employer
Plan, which is, in the reasonable opinion of the Administrative Agent,
likely to result in the termination of such Plan for purposes of Title
IV of ERISA; (iii) an ERISA Event shall occur with respect to a
Multiemployer Plan or Multiple Employer Plan, which is, in the
reasonable opinion of the Administrative Agent, likely to result in (A)
the termination of such Plan for purposes of Title IV of ERISA, or (B)
any Consolidated Party or any ERISA Affiliate incurring any liability
in connection with a withdrawal from, reorganization of (within the
meaning of Section 4241 of ERISA), or insolvency or (within the meaning
of Section 4245 of ERISA) such Plan; or (iv) any prohibited transaction
(within the meaning of Section 406 of ERISA or Section 4975 of the
Code) or breach of fiduciary responsibility shall occur which may
subject any Consolidated Party or any ERISA Affiliate to any liability
under Sections 406, 409, 502(i), or 502(l) of ERISA or Section 4975 of
the Code, or under any agreement or other instrument pursuant to which
any Consolidated Party or any ERISA Affiliate has agreed or is required
to indemnify any person against any such liability; or
(j) Management Opco Merger. The Management Opco Merger
has not been validly and legally consummated on or before the
Management Opco Merger Date; or
(k) Management Opco Credit Agreement. There shall occur
an Event of Default (as defined in the Management Opco Credit
Agreement) under the Management Opco Credit Agreement; or
(l) Lease Agreements. There shall occur (i) an event of
default under the Master Lease (subject to applicable grace or cure
periods, if any), (ii) any payment default (beyond any applicable grace
period) under any lease agreement (not including the Master Lease)
between the Borrower and Management Opco (each such lease agreement
(including the Master Lease), a "Lease Agreement") or (iii) any
shortening or limitation on the term of any Lease Agreement if, after
giving effect thereto, such Lease Agreement would not comply with
Section 7.15; or
(m) License Agreements. Any of the Opco License
Agreement, the Service Company A License Agreement or the Service
Company B License Agreement shall be
<PAGE> 45
terminated or canceled, except in connection with the Management Opco
Merger or the Service Company Mergers, as required hereby; or
(n) Ownership. There shall occur a Change of Control; or
(o) Amendments. Management Opco shall (a) enter into any
amendment of the Management Opco Credit Agreement (other than the
termination thereof in connection with the Management Opco Merger)
which would (i) reduce the committed amount of financing available
under the Management Opco Credit Agreement, (ii) decrease or shorten
the maturity date of the loans under the Management Opco Credit
Agreement, (iii) increase the rate at which interest is payable on the
loans under the Management Opco Credit Agreement, (iv) cause the
financial covenants in the Management Opco Credit Agreement to be more
restrictive with respect to Management Opco than those financial
covenants in effect as of the Closing Date, or (b) refinance the
indebtedness under the Management Opco Credit Agreement on terms and
conditions less favorable to Management Opco or the Borrower than such
existing indebtedness under the Management Opco Credit Agreement; or
(p) Management Consultant. At any time prior to the
appointment of and commencement of duties by the New CEO, the Borrower
shall fail, for a period of more than ten (10) consecutive Business
Days, to keep currently retained a management consultant (reporting to
the Board of Directors) reasonably satisfactory to the Administrative
Agent; or
(q) Management. At any time after November 15, 2000, a
person or persons reasonably satisfactory to the Required Lenders and
Required Tranche C Term Lenders fails to serve in the capacities of
Chief Executive Officer (the "New CEO") and Chief Financial Officer of
the Borrower; or
(r) Shareholder Litigation. In addition to the provisions
set forth in (h) above, the Borrower settles any shareholder litigation
or similar dispute for any cash amount not otherwise fully covered by
the Borrower's directors and officers or other insurance; or
(s) MDP Note Purchase Agreement. There occurs at any time
after the Amendment Effective Date, a "Repurchase Right Event" or a
"Termination Event" (each as defined in the MDP Note Purchase
Agreement); or
(t) Access by Financial Consultants. At any time prior to
the appointment of and commencement of duties by the New CEO, Ernst &
Young or another financial advisor retained by or on behalf of the
Administrative Agent fails to have, in the opinion of the
Administrative Agent, reasonable access during normal business hours to
the Borrower (including its affiliates), the other Credit Parties
(including their affiliates), and their respective officers,
facilities, books and records; or
(u) Filing of Proxy. The Borrower (i) fails to file the
Proxy with the SEC on or before July 1, 2000, or (ii) fails to
distribute the Proxy to all of the Borrower's shareholders on or before
August 1, 2000 (subject to completion of SEC review); or
<PAGE> 46
(v) Rights Offering. The Borrower fails to use
commercially reasonable efforts to consummate the Rights Offering on or
before December 31, 2000."
eee. Section 11.1 of the Credit Agreement is hereby
amended by replacing the name "Doctor R. Crants" with the name "Thomas W.
Beasley" in the address block for the Credit Parties therein and by replacing
the name "Michael O'Brien" with the name "Andrew Keith" in the address block for
the Administrative Agent therein.
2. Conditions to Effectiveness. The effectiveness of this Agreement is
conditioned upon satisfaction of the following conditions precedent:
a. the Administrative Agent shall have received signed written
authorization from the Required Lenders and Required Tranche C Term Lenders to
execute this Agreement, and shall have received counterparts of this Agreement
signed by the Borrower and the other Credit Parties;
b. each of the representations and warranties in Section 7 below
shall be true and correct in all material respects;
c. after giving effect to the waivers set forth in Section 2
hereof, no Default or Event of Default (other than by virtue of the MDP Defaults
and the PMI Defaults, as provided in Section 3 above) shall have occurred and be
continuing under the Credit Agreement or any other Credit Document;
d. in consideration of the consents, waivers and amendments
contained in this Agreement, the Borrower shall have paid to the Administrative
Agent on the Amendment Effective Date, for the pro rata account of the Lenders,
a fee equal to 0.75% of the sum of the Revolving Committed Amount, the
outstanding Term Loans and the Outstanding Tranche C Term Loans, which fee may
be paid out of the proceeds of a borrowing of Revolving Loans made on the
Amendment Effective Date;
e. the Administrative Agent shall have received payment in
immediately available funds of all expenses incurred by the Administrative Agent
(including, without limitation, legal fees) for which invoices have been
presented, on or before the Amendment Effective Date;
f. the Administrative Agent and the Lenders will have received
legal opinions from (i) Simpson Thacher & Bartlett, (ii) Miles & Stockbridge,
and (iii) Stokes & Bartholomew, each in form and substance reasonably
satisfactory to the Administrative Agent, dated as of the Amendment Effective
Date and addressed to each of the Administrative Agent, the Documentation Agent,
the Syndication Agent, the Co-Agent, the Lead Arranger and the Lenders;
g. all defaults of Management Opco under the Management Opco
Credit Agreement shall have been waived pursuant to a form of waiver attached
hereto as Exhibit C;
<PAGE> 47
h. the Borrower shall have hired a management consultant
(reporting to the Board of Directors) reasonably satisfactory to the
Administrative Agent and such consultant will be currently engaged on behalf of
the Borrower;
i. the Required Lenders and the Required Tranche C Term Lenders
shall be satisfied with the continued perfection and priority of the Liens of
the Administrative Agent on the Collateral and will have received such title
insurance endorsements and other documents and agreements as they may reasonably
require;
j. the Borrower shall have provided to the Administrative Agent
the Statement of Sources and Uses;
k. the Borrower shall have provided to the Administrative Agent
copies of the Borrower's currently effective directors and officers insurance
policies;
l. each of the Business Development Agreement, the Tenant
Incentive Agreement and the Services Agreement shall have been amended, subject
to the receipt within 30 days after the Amendment Effective Date of any required
fairness opinions, to provide for the deferral of the payment of all fees due
under such agreements from Prison Realty to Management Opco until such
agreements are terminated at the time of the Management Opco Merger;
m. the Administrative Agent shall have received executed Joinder
Agreements (with all schedules attached), financing statements, organizational
documents, board resolutions and other documentation with respect to Management
Sub and the Service Company Subs as deemed reasonably necessary by the
Administrative Agent; and
n. the Administrative Agent shall have received satisfactory
evidence that the execution, delivery and performance of this Agreement
(including, without limitation the amendments to the Credit Agreement contained
herein) have been duly approved by all necessary corporate action of each Credit
Party.
3. Representations and Warranties. The Borrower and each of the other
Credit Parties represents and warrants to the Administrative Agent and the
Lenders as follows:
a. Authority. Each of the Credit Parties has the requisite
corporate power and authority to execute and deliver this Agreement and to
perform its obligations hereunder and under the Credit Agreement (as modified
hereby). The execution, delivery and performance by the Borrower and each other
Credit Party of this Agreement, the Credit Agreement (as modified hereby) and
the transactions contemplated hereby and thereby have been duly approved by all
necessary corporate action of such Person and no other corporate proceedings on
the part of each such Person are necessary to consummate such transactions
(except as expressly contemplated hereby and thereby).
b. Enforceability. This Agreement has been duly executed and
delivered by the Borrower and the other Credit Parties. Each of this Agreement
and, after giving effect to this Agreement, the Credit Agreement and the other
Credit Documents is the legal, valid and binding
<PAGE> 48
obligation of each Credit Party hereto and thereto, enforceable against such
Credit Party in accordance with its terms, and is in full force and effect.
Neither the execution, delivery or performance of this Agreement or of the
Credit Agreement (as modified hereby), nor the performance of the transactions
contemplated hereby or thereby, will adversely affect the validity, perfection
or priority of the Administrative Agent's Lien on any of the Collateral. The
waivers, consents and amendments with respect to the Credit Agreement contained
herein have been validly approved as required under Section 11.6 and 11.6A of
the Credit Agreement and such waivers, consents and amendments are binding on
the Lenders.
c. Representations and Warranties. After giving effect
to this Agreement, the representations and warranties contained in the Credit
Agreement (other than any such representations and warranties that, by their
terms, are specifically made as of a date other than the date hereof) are true
and correct on and as of the date hereof as though made on and as of the date
hereof.
d. No Conflicts. Neither the execution and delivery of
this Agreement, nor the consummation of the transactions contemplated hereby,
nor performance of and compliance with the terms and provisions hereof by such
Credit Party will, at the time of such performance, (a) violate or conflict with
any provision of its articles or certificate of incorporation or bylaws or other
organizational or governing documents of such Person, (b) violate, contravene or
materially conflict with any Requirement of Law or any other law, regulation
(including, without limitation, Regulation U or Regulation X), order, writ,
judgment, injunction, decree or permit applicable to it, except for any
violation, contravention or conflict which could not reasonably be expected to
have a Material Adverse Effect, (c) violate, contravene or conflict with
contractual provisions of, or cause an event of default under, any indenture,
loan agreement, mortgage, deed of trust, contract or other agreement or
instrument to which it is a party or by which it may be bound (including,
without limitation, the Senior Notes Indenture, the MDP Note Purchase Agreement,
the PMI Note Purchase Agreement and the Management Opco Credit Agreement),
except for any violation, contravention or conflict which could not reasonably
be expected to have a Material Adverse Effect, or (d) result in or require the
creation of any Lien (other than those contemplated in or created in connection
with the Credit Documents) upon or with respect to its properties.
e. No Default. After giving effect to the waivers set
forth in Section 3 hereof, no Default or Event of Default (other than by virtue
of the MDP Defaults and the PMI Defaults, as provided in Section 2 above) shall
have occurred and be continuing under the Credit Agreement or any other Credit
Document.
8. Reference to and Effect on Credit Agreement.
a. Upon and after the effectiveness of this Agreement,
each reference in the Credit Agreement to "this Agreement", "hereunder",
"hereof" or words of like import referring to the Credit Agreement, and each
reference in the other Credit Documents to "the Credit Agreement", "thereunder",
"thereof" or words of like import referring to the Credit Agreement, shall mean
and be a reference to the Credit Agreement as modified hereby.
<PAGE> 49
b. Except as specifically modified above, the Credit
Agreement and the other Credit Documents are and shall continue to be in full
force and effect and are hereby in all respects ratified and confirmed. Without
limiting the generality of the foregoing, the Collateral Documents and all of
the Collateral described therein do and shall continue to secure the payment of
all Credit Party Obligations under and as defined therein, in each case as
modified hereby.
c. The execution, delivery and effectiveness of this
Agreement shall not, except as expressly provided herein, operate as a waiver of
any right, power or remedy of any Secured Party under any of the Credit
Documents, nor, except as expressly provided herein, constitute a waiver or
amendment of any provision of any of the Credit Documents.
9. Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed to be an original and all
of which taken together shall constitute one and the same agreement. Delivery of
an executed counterpart of a signature page to this Agreement by facsimile shall
be effective as delivery of a manually executed counterpart of this Agreement.
10. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
11. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.
12. Release of Claims. Each of the Credit Parties, hereby
acknowledges and agrees that it does not have any defenses, counterclaims,
offsets, cross-complaints, claims or demands of any kind or nature whatsoever
arising out of the Credit Agreement or the other Credit Documents that can be
asserted to reduce or eliminate all or any part of the liability of such Credit
Party to repay any Secured Party, as provided in the Credit Agreement and the
other Credit Documents or to seek affirmative relief or damages of any kind or
nature from any Secured Party arising out of the Credit Agreement or the other
Credit Documents. Each Credit Party hereby voluntarily and knowingly releases
and forever discharges each of the Secured Parties, and each Secured Party's
predecessors, agents, employees, successors and assigns, from all possible
claims, demands, actions, causes of action, damages, costs, or expenses, and
liabilities whatsoever, known or unknown, anticipated or unanticipated,
suspected or unsuspected, fixed, contingent, or conditional, at law or in
equity, originating in whole or in part on or before the effective date of this
Agreement, which such Credit Party may now or hereafter have against any such
Secured Party, and such Secured Party's predecessors, agents, employees,
successors and assigns, if any, in each case arising out of the Credit Agreement
or the other Credit Documents, irrespective of whether any such claims arise out
of contract, tort, violation of law or regulations, or otherwise, including,
without limitation, the exercise of any rights and remedies under the Credit
Agreement or the other Credit Documents, and the negotiation and execution of
this Agreement.
<PAGE> 50
To the extent that such laws may be applicable, the Credit Parties
waive and release any right or defense which they might otherwise have under any
law of any applicable jurisdiction which might limit or restrict the
effectiveness or scope of any of their waivers or releases hereunder.
[Signature Page Follows]
<PAGE> 51
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment and Waiver to be executed by their respective officers thereunto duly
authorized, as of the date first written above.
PRISON REALTY TRUST, INC.,
a Maryland corporation
BORROWER: By: /s/ Thomas W. Beasley
------------------------------------------
Name: Thomas W. Beasley
----------------------------------------
Title: Chairman of the Board of Directors
---------------------------------------
[Other Signature Pages Follow]
<PAGE> 52
SUBSIDIARY PRISON REALTY MANAGEMENT, INC.,
GUARANTORS: a Tennessee corporation
By: /s/ Vida H. Carroll
------------------------------------------
Name: Vida H. Carroll
----------------------------------------
Title: Secretary
---------------------------------------
[Other Signature Pages Follow]
<PAGE> 53
CCA ACQUISITION SUB, INC.,
a Tennessee corporation
By: /s/ Darrell K. Massengale
------------------------------------------
Name: Darrell K. Massengale
----------------------------------------
Title: President
---------------------------------------
[Other Signature Pages Follow]
<PAGE> 54
PMSI ACQUISITION SUB, INC.,
a Tennessee corporation
By: /s/ Darrell K. Massengale
------------------------------------------
Name: Darrell K. Massengale
----------------------------------------
Title: President
---------------------------------------
[Other Signature Pages Follow]
<PAGE> 55
JJFMSI ACQUISITION SUB, INC.,
a Tennessee corporation
By: /s/ Darrell K. Massengale
------------------------------------------
Name: Darrell K. Massengale
----------------------------------------
Title: President
---------------------------------------
[Other Signature Pages Follow]
<PAGE> 56
LEHMAN COMMERCIAL PAPER INC.,
as Administrative Agent, on behalf of the
Required Lenders and the Required Tranche C
Term Lenders
By: /s/ G. Andrew Keith
------------------------------------------
Name: G. Andrew Keith
-------------------------------------
Title: Authorized Signatory
------------------------------------
