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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
for the fiscal year ended December 31, 1995
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-13560
CORRECTIONS CORPORATION OF AMERICA
(Exact name of Company as specified in its charter)
DELAWARE 62-1156308
(State or other jurisdiction of
incorporation or organization (I.R.S. Employer Identification No.)
102 WOODMONT BOULEVARD 37205
NASHVILLE, TENNESSEE (Zip Code)
(Address of principal executive offices)
Company's telephone number, including area code: (615) 292-3100
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on
Common Stock, $1.00 par value Which Registered
Warrants to Purchase Common Stock New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the Company (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the Company
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes x No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of the Company's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.
Yes x No
--- ---
The aggregate market value of the voting stock held by non-affiliates
of the Company was $1,378,408,000 as of March 1, 1996, based upon the closing
price of such stock as reported on the New York Stock Exchange ("NYSE") on that
day. There were 33,747,237 shares of common stock, $1.00 par value, outstanding
at March 1, 1996.
DOCUMENTS INCORPORATED BY REFERENCE
Parts of the Registrant's Proxy Statement for its 1996 Annual Meeting
of Stockholders are incorporated by reference in Part III of this Annual Report.
Parts of the Registrant's Annual Report to Stockholders for the fiscal year
ended December 31, 1995 are incorporated by reference into Parts II and IV of
this Annual Report.
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PART I
ITEM 1. BUSINESS
GENERAL
The Company is the leading developer and manager of privatized
correctional and detention facilities in the United States, the United Kingdom
and Australia. At December 31, 1995, the Company had contracts to manage 47
correctional and detention facilities with an aggregate design capacity of
28,607 beds. Effective January 31, 1996, the Company terminated a contract for a
250 bed facility, resulting in 46 beds currently under contract. These
facilities are located in eleven states of the United States, Puerto Rico,
Australia and the United Kingdom. Of these 46 facilities, 38 are in operation
and nine were under development by the Company (with one scheduled to commence
operations in the first quarter of 1996, two scheduled to commence operations in
the third quarter of 1996, two scheduled to commence operations in the fourth
quarter of 1996 and four scheduled to commence operations in 1997). Since
December 31, 1994, the Company has substantially increased its revenues through
the acquisition of other companies as well as the opening of additional
facilities, while improving operating profitability. The Company began 1995 with
13,404 beds under contract, and through new contract awards and acquisitions,
ended 1995 with 28,607 beds under contract. Of those 28,607 beds, 3,400 came on
line in the fourth quarter, representing the largest number of openings in any
one quarter of the Company's history. The Company's revenues have grown from
approximately $95 million for the 1992 fiscal year to approximately $207 million
for the 1995 fiscal year, representing an annual compounded growth rate of
approximately 31%.
The management services provided by the Company to governmental
agencies include the integrated design, construction and management of new
correctional and detention facilities and the redesign, renovation and
management of older facilities. In addition to providing the fundamental
residential services relating to the inmates, the Company's facilities offer a
large variety of rehabilitation and education programs including basic
education, job and life skills training and chemical dependency counseling and
treatment. The Company also provides health care (including medical, dental and
psychiatric services), institutional food services, transportation requirements,
and work and recreational programs. In addition, through its wholly-owned
subsidiary, TransCor America, Inc., the Company provides inmate transportation
services for numerous governmental agencies. The Company is also expanding
its youth detention services. Management of the Company believes that its proven
ability to deliver a full range of high quality correctional and detention
facility management services on a cost-effective basis to governmental agencies
provides such agencies with sufficient incentives to choose the Company when
awarding new contracts or renewing existing contracts.
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In addition to the opening of new facilities, over the last two years,
the Company has expanded its service capabilities and broadened its geographic
presence in the United States market through a series of strategic acquisitions
of prison management companies and individual facilities as well as the
acquisition of an inmate transportation company. The Company intends to continue
to pursue strategic acquisitions of prison management companies and facilities
when the proposed acquisition enhances stockholder value. (See "Recent
Acquisitions".)
In addition to its domestic operations, the Company has obtained and is
pursuing construction and management contracts for correctional and detention
facilities outside the United States and presently operates facilities in the
United Kingdom and Australia. At December 31, 1995, the Company had contracts to
manage one facility in the United Kingdom and two facilities in Australia.
The Company is a Delaware corporation and is the successor to a
Tennessee corporation of the same name incorporated in January 1983. The
Company's principal executive offices are located at 102 Woodmont Boulevard,
Nashville, Tennessee 37205 and its telephone number is (615) 292-3100.
BUSINESS STRATEGY
The Company intends to increase revenues and enhance its position as
the leading developer and manager of privatized correctional and detention
facilities through the following business strategies.
Efficient and Effective Management of Facilities. The Company will
continue to provide low cost, high quality management of its facilities. The
Company believes that its quality of personnel, efficient application of
financial resources and adherence to proven policies and procedures enables it
to design, develop and manage correctional and detention facilities at costs
lower than governmental agencies that are responsible for performing such
services. The Company believes that its reputation as an innovative and
effective manager of facilities enhances its ability to market its services and
capitalize on a larger scope of opportunities with a variety of governmental
agencies.
The Company also recognizes the importance of the facility
administrator and the facility's management team in the successful financial
performance of its facilities. Management believes that the Company's reputation
as the leading developer and manager of privatized correctional and detention
enables it to attract highly-qualified facility administrators. Each facility
management team operates each facility in accordance with a company-wide policy
and procedure regimen, derived from American Correctional Association ("ACA")
standards, designed to ensure the delivery of consistent, high quality services
in each of its facilities. The Company seeks to minimize operating expenses by
designing its facilities to optimize correctional officer staffing consistent
with facility security requirements. The Company further controls operating
expenses through the use of electronic surveillance and other technology.
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Development of Domestic Business Opportunities. As a result of the
growth in the demand for privatized correctional and detention facilities, the
Company has been selective in the projects it pursues. The Company pursues
projects based on probability of success, geographic location, size, potential
profitability, political and community acceptability. This approach allows the
Company to enhance its market share and optimize resource allocation,
profitability and financial return.
The Company plans to pursue its domestic business opportunities in two
ways. First, the Company will follow the traditional competitive route where a
Request for Proposal ("RFP") is issued by a government agency and a number of
companies respond. Management believes that this approach will produce the
majority of new contract awards to the Company. The second course involves the
development of new facilities in locations where there is a clearly defined,
long-term need for beds, but where a competitive bidding procedure is not
required. This approach has proven successful for the Company and management
believes it evolves out of the Company's strong client relationships and solid
reputation for quality corrections. The Company's goal is to add at least 1,000
beds per year on a non-competitive basis. The Company believes its solid
reputation and relatively low financial leverage and substantial liquidity
provide competitive advantages in competing for such contracts.
Using both of these approaches, the Company intends to continue its
focus on high security jails and prisons that are 500 to 1,000 beds or larger.
Management believes that the Company's experience and reputation in managing
large facilities will enable it to capitalize on the trend of governments to
privatize larger facilities.
Strategic Acquisitions. The Company believes that its recent
acquisitions have significantly enhanced its position as the leading developer
and manager of privatized correctional and detention facilities while increasing
operating efficiencies. Accordingly, the Company intends to continue to pursue
strategic acquisitions of other managers of privatized correctional and
detention facilities when the proposed acquisition enhances stockholder value.
Expanded Scope of Services. The Company intends to continue to
implement a wide variety of specialized services that address the unique needs
of various segments of the inmate population. Because the facilities operated by
the Company differ with respect to security levels, ages, genders and cultures
of inmates, the Company focuses on the particular needs of an inmate population
and tailors its services based on local conditions and the Company's ability to
provide such services on a cost-effective basis. In addition to core residential
services, the Company offers rehabilitative and education services such as
counseling, basic education, chemical dependency treatment, job skill training
and life skills/transition planning services, all aimed at reducing recidivism.
The Company believes that its success in delivering these specialized services
will enable it to address the changing needs of its customers. By offering a
broad range of specialized services, the Company seeks to provide a solution to
the public's and government's desire to reduce recidivism and ultimately the
cost of crime.
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Expansion into International Markets. The Company believes the majority
of its new business will come from within the United States. However, research
conducted by the Company's international strategic partner, Sodexho S.A.
indicates that interest in private-sector corrections in other nations is
developing. While management will not detract from its domestic business to
pursue international activities more aggressively, the Company will participate
in selected international projects it finds attractive. The Company also
believes that in order to compete effectively in international markets it must
enter into alliances with strategic local partners with access to local
opportunities and familiarity with local business practices. In 1989, the
Company, along with two Australian partners, formed Corrections Corporation of
Australia, Pty. Ltd. ("CC AUS"), an Australian company, to pursue the prison
management business in Australia. In 1991, the Company and Chubb Security
Holdings Australia Limited ("Chubb Security") bought the other one-third
interest from the third initial investor. In 1995, the Company purchased Chubb
Security's interest. After consideration of several strategic alternatives
related to CC AUS, the Company sold the 50% interest to Sodexho S.A. in 1995.
The Company now has a 50% ownership interest in CC AUS. In February 1990, CC AUS
opened the Borallon Correctional Centre, a 389 inmate facility in Borallon,
Queensland, Australia. In 1995, CC AUS was selected by the Department of Justice
in Victoria, Australia to design, build and operate a 125 bed facility which is
scheduled to open in August 1996. In 1994, CC AUS entered into two contracts to
provide court escort services (inmate transport services) in Australia and
intends to bid on additional contracts to perform such services in Australia and
elsewhere.
In 1988, the Company, along with two British partners, formed UK
Detention Services ("UKDS"), a United Kingdom joint venture for the management
of detention facilities and prisons. In 1992, UKDS bid for and received the
contract to manage H.M. Prison Blakenhurst, a 649 inmate correctional facility,
which opened in May, 1993. The Company believes it is well positioned to
participate in the growth opportunities which exist in the United Kingdom
through UKDS.
In June 1994, the Company entered into an international strategic
alliance with Sodexho S.A. ("Sodexho"), a French conglomerate, which in addition
to other businesses, provides various contract management services. Among other
business ventures, Sodexho provides contract services to the French prisons and
has business operations in 60 countries. The purpose of the alliance is to
pursue prison management business outside of the United States, Australia and
the United Kingdom. Pursuant to the terms of the joint venture agreement between
the Company and Sodexho, the Company will continue to develop on its own, all
prison management business in the United States and its territories. In the rest
of the world, the Company and Sodexho will share the prison management business
opportunities through local joint venture entities to be established and pursue
opportunities in particular countries, generally on a 50/50 basis. Management
for the Company believes that the formation of the Sodexho relationship is one
of many indicators of the growing interest in and attractiveness of correctional
privatization in the international markets and that it is well positioned to
participate in these markets through the Sodexho alliance.
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Cost Reduction Programs. An important component of the Company's
strategy is to position itself as a low cost, high quality provider of prison
management services in all of its markets. As cost containment pressures
increase, the Company will continue to focus on improving operating performance
and efficiency through the following key operating initiatives: (i)
standardization of supply and service purchasing practices and usage; (ii)
improvement of inmate management, resource consumption and reporting procedures;
and (iii) improvement in salary and wage expenses by monitoring staff levels and
developing productivity standards. The Company intends to continue to apply
these operating cost initiatives throughout its existing facilities and in new
facilities.
Limiting Capital Risk. The Company currently owns 12 of the facilities
it manages and leases the remaining 34 facilities. The Company has been an
innovator in assisting in the development of tax exempt financing techniques
that governmental agencies may use to finance the construction of correctional
and detention facilities. As a result, under these structures, the Company is
generally neither a borrower nor a lender in the financing. The Company believes
that these financing techniques are being used increasingly by various
governmental agencies. Notwithstanding the foregoing, in response to the
requirements of current and prospective clients, the Company expects to make
capital investments in certain facilities.
RECENT ACQUISITIONS
The Company has expanded its service capabilities and broadened its
geographic presence in the United States market through a series of strategic
acquisitions over the last year (collectively, the "Acquisitions").
TransCor America, Inc. On December 29, 1994, the Company acquired
TransCor America, Inc., a Tennessee corporation ("TransCor"), in a voluntary
share exchange transaction (the "TransCor Exchange") accounted for as a pooling
of interests. In the TransCor Exchange, shareholders of TransCor received an
aggregate of 2,600,000 (post-split) newly issued restricted shares of the
Company's common stock for their outstanding shares of TransCor stock. Of the
shares issued, 260,000 are held in escrow for the resolution of certain
precombination contingencies. TransCor operates as a wholly-owned subsidiary of
the Company and provides inmate transportation services for numerous
governmental agencies nationwide.
Concept Incorporated. On April 25, 1995, the Company acquired Concept
Incorporated, a Delaware corporation ("Concept"), in a share exchange
transaction (the "Concept Exchange") accounted for as a pooling of interests. In
the Concept Exchange, stockholders of Concept received an aggregate of 2,724,992
(post-split) newly issued restricted shares of the Company's common stock for
their outstanding shares of Concept common stock. Of the shares issued, 272,500
are held in escrow for the resolution of certain precombination contingencies.
Prior to the Concept Exchange, Concept was a privately held prison management
company which had eight facilities with approximately 4,400 beds under contract
throughout the United States.
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Corrections Partners, Inc. On August 18, 1995, the Company purchased
Correction Management Affiliates, Inc., a Delaware corporation ("CMA"), and
Correctional Services Group, Inc., a Missouri corporation ("CSG"), in a merger
of both companies into wholly-owned subsidiaries of the Company (the "CPI
Mergers"). In the CPI Mergers, shareholders of CMA and CSG received an aggregate
of 1,400,000 (post-split) newly issued restricted shares of the Company's common
stock for their outstanding shares of CMA and CSG common stock. Of the shares
issued, 140,000 are held in escrow for the resolution of certain precombination
contingencies. Prior to the CPI Mergers, CMA and CSG owned 100% of the issued
and outstanding common stock of Corrections Partners, Inc., a Delaware
corporation ("CPI"). Prior to the CPI Mergers, CPI was a privately held prison
management company which had seven facilities with approximately 2,900 beds
under contract throughout the United States.
MARKET
In the United States, there is a growing trend toward privatization of
government services and functions, including corrections and detention, as
governments of all types have faced continuing pressure to control costs and
improve the quality of services. Further, as a result of the number of crimes
committed each year and the corresponding number of arrests, incarceration costs
generally grow faster than any other part of government's budgets. In an attempt
to address these pressures, governmental agencies responsible for correctional
and detention facilities are increasingly privatizing facilities. From 1984 to
1994, the number of beds under management at privatized adult correctional and
detention facilities throughout the world increased from 885 to approximately
49,000, with the majority of this growth occurring since 1989. During 1995, the
number of beds under management at privatized adult correctional and detention
facilities increased to 63,000. The number of beds in juvenile offender
facilities has also increased dramatically. While the number of beds under
private management continues to grow, the total number of beds under private
management constitutes approximately four percent of the total jail and prison
beds in the United States. To date, numerous counties, 20 states and the Federal
government have incorporated the private sector into their criminal justice
systems. Fifteen more states are currently considering privatization. Management
believes that because the private sector accounts for only four percent of the
corrections industry, there is substantial room for growth for the Company.
Management also believes that the increase in the demand for privatized
correctional and detention facilities is a result, in large part from the
general shortage of beds available in correctional and detention facilities.
According to reports issued by the United States Department of Justice, Bureau
of Justice Statistics ("DOJ"), the number of inmates housed in United States
federal, state and local prison facilities increased from 696,000 at December
31, 1980 to 1,544,000 at December 31, 1994, an increase of more than 122%. At
December 31, 1992, the date at which the most recent statistics were available,
the DOJ reports that the federal prison system in the United States was
operating at approximately 137% of its rated capacity. Reports also indicate
that inmates convicted of violent crimes generally serve only one-third of their
sentence, with 65% of them being repeat offenders. Accordingly, there is a
perceived public demand for, among other things, longer prison sentences, as
well as prison terms for juvenile
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offenders, resulting in even more overcrowding in United States correctional and
detention facilities. In addition, as a result of increased costs, some
governments have been forced to limit public services and to seek more
cost-effective means of providing the remaining services. Since correctional and
detention facilities are viewed as an essential service, fiscal pressures have
pushed governments to seek to deliver these services more cost effectively.
Finally, numerous courts and other governmental entities in the United States
have mandated that additional services offered to inmates be expanded and living
conditions be improved. Many governments do not have the readily-available
resources to make the changes necessary to meet such mandates.
According to the Private Corrections Project, Center for Studies in
Criminology and Law, University of Florida ("Privatization Reports"), 19 states
and Puerto Rico had awarded management contracts to private companies at
December 31, 1994. At December 31, 1995, there were a total of 92 adult
facilities with a design capacity more than 63,595 beds privatized in the United
States, of which the Company was awarded 39 facilities with a design capacity of
26,941 beds. These facilities include (i) INS detention facilities and United
States Marshal detention facilities privatized by federal agencies, (ii) state
prisons, community corrections facilities, intermediate sanction facilities,
pre-release centers, work program facilities and state jail facilities
privatized by state agencies, and (iii) city jail facilities and transfer
facilities privatized by local agencies. There are also numerous privatized
juvenile offender facilities of which the Company has contracts to operate four
facilities with a design capacity of 503 beds.
The demand for privately-managed correctional and detention centers is
also increasing internationally. Management believes that many countries are
faced with the same fiscal pressures as the United States and as a result, are
seeking more cost-effective means of providing prison management services. This
is evidenced by the increase in number of privatized beds in the United Kingdom
and Australia. At December 31, 1995, there were a total of eleven privatized
facilities in the United Kingdom and Australia, with a design capacity of 5,738
beds, and the Company, through its joint ventures, UKDS and CC AUS, has
contracts to manage three of these facilities with a design capacity of 1,163
beds.
For similar economic reasons, the demand for privatized prisoner
transport services is also increasing domestically and internationally. The
Company believes that more and more government agencies will look for more
cost-effective means of providing these ancillary services.
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FACILITIES
The following table summarizes certain information with respect to
facilities under management by the Company or a subsidiary or joint venture of
the Company at March 1, 1996.
<TABLE>
<CAPTION>
DESIGN SECURITY COMMENCEMENT RENEWAL
FACILITY NAME/LOCATION CAPACITY LEVEL OF CONTRACT TERM OPTION
<S> <C> <C> <C> <C> <C>
Bartlett State Jail 1,000 Multi 10/95 8/98 (1) 2 year
Bartlett, Texas
Bay Correctional Facility 750 Medium 8/95 8/98 (1) 2 year
Panama City, Florida
Bay County Jail 276 Multi 10/85 10/2005 ___
Panama City, Florida
Bay County Jail Annex 401 Multi 4/86 10/2005 ___
Panama City, Florida
Blakenhurst, HM Prison 649 Medium 5/93 5/98 (3) 3 year
Redditch, England
BM Moore Pre-Release Center 500 Multi 6/95 8/97 (1) 2 year
Overton, Texas
Borallon Correctional Centre 389 Multi 1/90 4/2000
Queensland, Australia
Bridgeport PreParole Transfer 200 Minimum 11/87 8/97 (1) 2 year
Facility
Bridgeport, Texas
Brownfield Intermediate Sanction 200 Multi 7/92 8/97 (1) 2 year
Facility
Brownfield, Texas
Central Arizona Detention Center 1,024 Multi 10/94 10/2014 --
Florence, Arizona
Citrus County, Florida 300 Multi 10/96 9/98 (1) 3 year
Lecanto, Florida
Cleveland Pre Release Center 520 Multi 9/89 8/98 (1) 2 year
Cleveland, Texas
</TABLE>
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<TABLE>
<CAPTION>
DESIGN SECURITY COMMENCEMENT RENEWAL
FACILITY NAME/LOCATION CAPACITY LEVEL OF CONTRACT TERM OPTION
<S> <C> <C> <C> <C> <C>
Davidson County Juvenile 48 Secure 5/94 4/99 ----
Detention Facility
Nashville, Tennessee
Eden Detention Center 1,006 Multi 10/95 10/2015 ----
Eden, Texas
Eloy Detention Center 1,000 Medium 7/94 7/97 (2) 1 year
Eloy, Arizona
Great Plains Correctional Facility 768 Medium 10/91 5/99 ----
Hinton, Oklahoma
Guayama Correctional Center 1,000 Medium 12/96 12/2000 (1) 5 year
Guayama, Puerto Rico
Hernando County Jail 302 Multi 10/88 10/2000 ----
Brooksville, Florida
Houston Processing Center 411 Medium 4/84 9/96 ----
Houston, Texas
Labette County Conservation 104 Minimum 2/91 6/97 (1) 2 year
Camp
Oswego, Kansas
Laredo Processing Center 258 Medium 3/85 12/96 ----
Laredo, Texas
Leavenworth Dentention Center 327 Maximum 6/92 6/96 (1) 1 year
Leavenworth, Kansas
Liberty County, Texas Facility 382 Multi 11/96 11/99 (1) 2 year
Liberty, Texas
Metro Detention Facility 1,092 Multi 2/92 2/97 ----
Nashville, Tennessee
Mineral Wells Pre-Parole 1,049 Minimum 7/89 8/97 (1) 2 year
Transfer Facility
Mineral Wells, Texas
New Mexico Women's 322 Multi 6/89 6/97 (6) 2 year
Correctional Facility
Grants, New Mexico
</TABLE>
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<TABLE>
<CAPTION>
DESIGN SECURITY COMMENCEMENT RENEWAL
FACILITY NAME/LOCATION CAPACITY LEVEL OF CONTRACT TERM OPTION
<S> <C> <C> <C> <C> <C>
Santa Fe Dentention Center 201 Multi 8/86 6/97 ----
Santa Fe, New Mexico
Shelby Training Center 200 Secure 5/86 4/2015 ----
Memphis, Tennessee
Silverdale Facilities 414 Multi 10/84 9/96 (5) 4 year
Chattanooga, Tennessee
Youth Central Correctional 1,506 Medium 3/92 3/97 ----
Center
Clifton, Tennessee
Southwest Indiana Youth Village 140 Secure 4/95 4/2000 ----
Vinconnes, Indiana
Tall Trees 63 Non-secure 1/84 1/2004 ----
Memphis, Tennessee
Torrance County Detention 286 Multi 12/90 12/2000 ----
Facility
Estancia, New Mexico
Venus Pre-Release Center 1,000 Multi 8/89 8/98 (1) 2 year
Venus, Texas
West Tennessee Detention 440 Multi 9/90 9/2000 ----
Facility
Mason, Tennessee
Winn Correctional Center 1,474 Medium 3/90 3/98 (1) 2 year
Winnfield, Louisiana
</TABLE>
FACILITY MANAGEMENT CONTRACTS
The Company is compensated on the basis of the number of inmates held
in each of its facilities. Contracts may vary to provide fixed per diem rates or
monthly fixed rates. Of the Company's 36 facilities in operation, 32 of the
Company's facility management contracts provide that the Company will be
compensated at an inmate per diem rate based upon actual or minimum guaranteed
occupancy levels and four of the management contracts are based on monthly fixed
rates. In either case, the compensation is invoiced in accordance with
applicable law and is paid on a monthly basis. Occupancy rates for a particular
facility will be low when first opened or when expansions are first available.
However, after a facility gets beyond the opening period,
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the occupancy rate tends to stabilize. For 1995, the average occupancy, based on
rated capacity, was 93.9% for all facilities operated by the Company.
In addition, the Company's contracts generally require the Company to
operate each facility in accordance with all applicable local, state, and
federal laws, and the rules and regulations promulgated thereunder. The Company
is required by its contracts to maintain certain levels of insurance coverage
for general liability, workers' compensation, vehicle liability and property
loss or damage. In the event that the Company does not maintain such insurance,
the contracting agency may terminate the contract. See "Item 1. Business -
Insurance." The Company is required also to indemnify the contracting agencies
for claims and costs arising out of the Company's operations and in certain
cases, to maintain performance bonds.
The Company's facility contracts are short term in nature, with terms
of federal contracts generally ranging from one to two years and not exceeding
five years, and containing multiple renewal options. The terms of local and
state contracts may be for longer periods with additional renewal options. Most
facility contracts also generally contain clauses which allow the governmental
agency to terminate a contract without cause. The Company's facility contracts
are generally subject to annual or bi-annual legislative appropriation of funds.
A failure by a governmental agency to receive appropriations could result in
termination of the contract by such agency or a reduction in the management fee
payable to the Company. To date, none of the Company's contracts have been
terminated by a governmental agency with or without cause, although there can be
no assurance that this will continue in the future. To date, all renewal options
under the Company's management contracts have been exercised.
OPERATING PROCEDURES
Pursuant to the terms of its management contracts, the Company is
responsible for the overall operation of its facilities, including staff
recruitment, general administration of the facilities, security and supervision
of the offenders and facility maintenance. The Company also provides a variety
of rehabilitative and educational programs at its facilities. Inmates at most
facilities managed by the Company may receive basic education through academic
programs designed to improve inmate's literary levels and the opportunity to
acquire General Education Development ("GED") certificates. The Company also
offers vocational training to inmates who lack marketable job skills. In
addition, the Company offers life skills transition planning programs that
provide inmates job search training and employment skills, health education,
financial responsibility training, parenting and other skills associated with
becoming productive citizens. At several of its facilities, the Company also
offers counseling, education and/or treatment to inmates with alcohol and drug
abuse problems.
The Company operates each facility in accordance with the Company-wide
policies and procedures and the standards and guidelines established by the ACA
Commission on Accreditation. The ACA is an independent organization comprised of
professionals in the corrections industry which establishes guidelines of
standards by which a correctional institution may gain accreditation. The ACA
standards, which the ACA believes safeguard the life, health
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and safety of offenders and personnel, are the basis of the accreditation
process and define policies and procedures for operating programs. The standards
describe specific objectives to be accomplished and cover such areas as
administration, personnel and staff training, security, medical and health care,
food service, inmate supervision and physical plant requirements. The ACA
standards are the most widely accepted correctional standards. The Company has
sought and received ACA accreditation for 16 of the facilities it currently
manages. The Company intends to apply for ACA accreditation for all of its
future facilities. The accreditation process is usually completed in 18 to 24
months after a facility is opened.
FACILITY DESIGN, CONSTRUCTION AND FINANCE
In addition to its facility management services, the Company also
provides consultation to various governmental agencies with respect to the
design and construction of new correctional and detention facilities and the
redesign and renovation of older facilities. Since its inception in January
1983, the Company has designed and constructed 21 of its 36 operating
corrections facilities for various federal, state, city and county governmental
agencies. The Company manages all of the facilities it has designed and
constructed or redesigned and renovated.
Pursuant to the Company's design, build and manage contracts, it is
responsible for overall project development and completion. Typically, the
Company develops the conceptual design for a project, then hires architects,
engineers and construction companies to complete the development. When designing
a particular facility, the Company utilizes, with appropriate modifications,
prototype designs the Company has used in developing other projects. Management
of the Company believes that the use of such prototype designs allows it to
reduce cost overruns and construction delays. Because the Company's facility
designs increase the area of vision under surveillance by guards and make use of
additional electronic surveillance, the staffing efficiencies are greatly
enhanced.
Various methods of construction financing may be used by a contracting
governmental agency, including, but not limited to the following: (i) one-time
general revenue appropriation by the government agency for the cost of the new
facility; (ii) general obligation bonds that are secured by either a limited or
unlimited tax levied by the issuing governmental entity; or (iii) lease revenue
bonds or certificates of participation secured by an annual lease payment that
is subject to annual or bi-annual legislative appropriation of funds. If the
project is financed using direct governmental appropriations, using proceeds of
the sale of bonds or other obligations issued prior to the award of the project
or by the Company directly, then financing is in place when the contract
relating to the construction or renovation project is executed. If the project
is financed using project-specific tax-exempt bonds or other obligations, the
construction contract is generally subject to the sale of such bonds or
obligations. Substantial expenditures for construction will not be made on such
a project until the tax-exempt bonds or other obligations are sold and if such
bonds or obligations are not sold, construction and, therefore, management of
the facility may either be delayed until alternate financing is procured or
development of the project will be entirely suspended. When the Company is
awarded a facility management contract, appropriations for the first annual or
bi-annual period of the contract's term have generally
13
<PAGE> 14
already been approved, and the contract is subject to governmental
appropriations for subsequent annual or bi-annual periods. Of the domestic
facilities currently managed by the Company, 10 are funded by the government
using one of the above-described financing vehicles, 15 are directly leased by
the Company from a governmental agency and 12 are owned by the Company.
FACILITIES UNDER CONSTRUCTION
The following table presents information concerning facilities that are
currently under construction or are being expanded with respect to which the
Company has agreements to provide certain management and operation services:
<TABLE>
<CAPTION>
Location Use Bed Capacity
-------- --- ------------
<S> <C> <C>
Ponce, Puerto Rico Adult Prison/Youthful 1,500
Offender Prison
Construction has begun on a 1,500-bed medium-security prison in Ponce,
Puerto Rico. The Commonwealth of Puerto Rico is financing and will own
the facility and construction is scheduled for completion in the fourth
quarter of 1996. The prison will house Puerto Rican inmates under the
custody of the Administration of Corrections.
Holdenville, Oklahoma State Prison 960
(Hughes County)
Construction has begun on a 960-bed medium-security prison in Hughes
County, Oklahoma. The Industrial Development Authority of Holdenville,
Oklahoma is financing and will own the facility and construction is
scheduled for completion in the first quarter of 1996. The prison will
house State of Oklahoma inmates.
Greenwood, Mississippi State Prison 1,034
(Leflore County)
Construction has begun on a 1,034-bed medium security prison in Leflore
County, Mississippi. The State of Mississippi is financing and will own
the facility and construction is scheduled for completion in the third
quarter of 1996. The prison will house State of Mississippi inmates.
Lake City, Florida Youthful Offender 350
(Columbia County)
Construction has begun on a 350-bed youthful offender facility in Lake
City, Florida. The State of Florida is financing and will own the
facility and construction is scheduled for completion in the first
quarter of 1997. The facility will house 19-24 year old State of
Florida inmates.
</TABLE>
14
<PAGE> 15
<TABLE>
<S> <C> <C>
Whiteville, Tennessee State Prison 1,504
(Hardeman County)
Construction has begun on a 1,504-bed medium security prison in
Whiteville, Tennessee. Hardeman County is financing and will own the
facility and construction is scheduled for completion in the third
quarter of 1997. It is anticipated that the facility will house State
of Tennessee inmates.
Okeechobee, Florida Juvenile Center 100
(Okeechobee County)
Construction has begun on a 100-bed maximum security juvenile center in
Okeechobee, Florida. The State of Florida is financing and will own the
facility and construction is scheduled for completion in the first
quarter of 1997. The facility will house State of Florida juveniles.
</TABLE>
ORGANIZATIONAL SYSTEM
The Company has developed a monitoring and evaluation system which,
combined with a centralized organizational structure, positions the Company for
expansion without requiring substantial additions of management personnel or
reducing quality. The Company devotes considerable resources to assuring
compliance with contractual and other requirements and maintaining the highest
level of quality assurance at each facility through a system of formal
reporting, corporate oversight, site reviews and inspection by on-site facility
administrators.
Under its facilities management contracts, the Company usually provides
the contracting governmental agency the services, personnel and materials
necessary for the operation, maintenance and security of the facility and the
custody of inmates. The Company offers full logistical support to the facilities
it manages, including security, health care services, transportation, building
and ground maintenance, education, treatment and counseling services, and
institutional food services. Except for certain aspects of health care services,
which are generally subcontracted, all of the facilities support services are
provided by the Company's personnel.
The Company's business development department is responsible for
marketing the Company's service to governmental clients. Marketing
responsibilities include identifying new clients, preparing and delivering
formal presentations, identifying project construction partners and potential
financing sources, developing proposals and interfacing with the Company's
customers from contract award through the receipt of inmates.
The operations department, in conjunction with the legal department,
supervises compliance of each facility to operational standards of applicable
management contracts and of professional and governmental agencies. The
operations department also establishes and monitors the policies and procedures
of the Company. The department's responsibilities include
15
<PAGE> 16
developing specific policies and procedures manuals, monitoring all management
contracts, ensuring compliance with applicable labor and affirmative action
standards, training and administering all personnel, purchasing supplies and
developing educational, vocational, counseling and life skills inmate programs.
The Company provides meals for inmates at the facilities it operates in
accordance with regulatory, client and nutritional requirements. These catering
responsibilities include hiring and training staff, monitoring food operations,
purchasing food and supplies, and maintaining equipment, as well as adhering to
all applicable safety and nutritional standards and codes.
The Company's finance department oversees the implementation and
development of the billing system for each client and for insuring the prompt,
systematic payment of all Company obligations under the individual management
contracts. This department also monitors and analyzes budgetary and purchasing
procedures, tax reporting requirements and fiscal management policies.
MARKETING
The Company engages in extensive marketing efforts. The Company
believes that it is the industry leader in promulgating the benefits of
privatization of prisons and other correctional and detention facilities.
Marketing efforts are conducted and coordinated by the Company's business
development department and CEO with the aid, where appropriate, of certain
independent consultants.
The Company views governmental agencies responsible for federal, state
and local correctional facilities in the United States and governmental agencies
responsible for correctional facilities in Puerto Rico, the United Kingdom and
Australia as its primary potential customers. The Company's secondary customers
include other foreign governmental agencies.
The Company generally receives inquiries from or on behalf of
governmental agencies that are considering privatization of certain facilities
or that have already decided to contract with private enterprise. When it
receives such an inquiry, the Company determines whether there is an existing
need for the Company's services and whether the legal and political climate in
which the inquiring party operates is conducive to serious consideration of
privatization and then conducts an initial cost analysis to further determine
project feasibility.
Generally, governmental agencies responsible for correctional and
detention services procure goods and services through Requests for Proposals
("RFPs") or Requests for Qualification ("RFQs"). Most of the Company's
activities in the area of securing new business are in the form of responding to
RFPs. As part of the Company's process of responding to RFPs, management meets
with appropriate personnel from the agency making the request to best determine
the agency's distinct needs. If the project fits within the Company's strategy,
the Company will then submit a written response to the RFP. The Company competes
primarily on the basis of the quality of service provided, its experience in
managing facilities, the reputation of its personnel, and its ability to design,
finance and construct new facilities, if appropriate. A typical RFP
16
<PAGE> 17
requires bidders to provide detailed information, including, but not limited to,
the following: the service to be provided by the bidder, its experience and
qualification, and the price at which the bidder is willing to provide the
services (which services may include the renovation, improvement or expansion of
an existing facility or the planning, design and construction of a new
facility). The Company has and intends to in the future, engage independent
consultants to assist it in responding to RFPs. Based on the proposals received
in response to an RFP, the agency will award a contract to the successful
bidder. In addition to issuing formal RFPs, local jurisdictions may make use of
a procedure known as Purchase of Services or RFQ. If the agency selects the RFQ
process, the requesting agency selects a firm believed to be most qualified to
provide the requested services and then negotiates the terms of the contract
with that firm, including the price at which its services are to be provided.
However, there is no assurance that negotiations will result in a contract for
the selected firm.
The marketing process for facility management consists of several
critical events. These include issuance of an RFP by a governmental agency,
submission of a response to the RFP by the Company, the award of the contract by
a governmental agency and the commencement of construction or management of the
facility. The Company's experience has been that a substantial period of time
may elapse from the initial inquiry to receipt of a new contract. As the concept
of privatization has gained wider acceptance, however, the length of time from
inquiry to the award of a contract has shortened. The length of time required to
award a contract is also affected, in some cases, by the need to introduce
enabling legislation. Generally, if the facility for which an award has been
made must be constructed, the Company's experience has been that management of a
newly-constructed facility typically commences between 12 and 28 months after
the governmental agency's award.
While the Company focuses primarily on the traditional competitive
marketing approach described above, it also pursues the development of new
facilities in those areas where a competitive bid process is not required.
In addition to marketing its services to local, state and federal
authorities, the Company markets its services internationally. Through the
international alliance formed with Sodexho, the Company is currently marketing
its management services in Australia, Germany, Hungary, Canada, Panama, and
Mexico.
The marketing efforts of TransCor for transportation services vary from
those of the Company as TransCor's marketing approach generally consists of mass
mailings, phone calls, and personal visits to approximately 1,000 state and
local governmental agencies as well as attendance at local, state and national
trade shows.
BUSINESS PROPOSALS
As of March 15, 1996, the Company was pursuing 10 facility prospects
with a total of 11,000 beds, for which it has not submitted proposals and 10
prospects for a total of 7,500 beds for which written responses to RFPs were
submitted. The Company also is pursuing other
17
<PAGE> 18
projects for which it has not yet submitted, and may not submit, a response to
an RFP. The domestic projects that the Company is pursuing are in fifteen
states. Additionally, the Company is actively pursuing business in Australia and
Great Britain through joint ventures in those countries. The Company is also
pursuing other foreign facility prospects through its alliance with Sodexho. No
assurance can be given that the Company will receive additional awards with
respect to proposals submitted.
When a contract requires construction of a new facility, the Company's
success depends, in part, upon its ability to acquire real property for its
facilities on desirable terms and at satisfactory locations. Management expects
that many such locations will be in or near populous areas and therefore
anticipates legal action and other forms of opposition from residents in areas
surrounding each proposal site. The Company may incur significant expenses in
responding to such opposition and there can be no assurance of success.
Through TransCor, the Company is also pursuing a large number of
transportation contracts with various state and local governmental agencies. No
assurance can be given that TransCor will receive additional awards with respect
to the proposals submitted.
MAJOR CUSTOMERS
The Company's customers consist of local, state and federal
correctional and detention authorities. The following table sets forth, for the
periods indicated, the percentage of the Company's revenues from certain
facilities of the Company:
<TABLE>
<CAPTION>
Percentage of Revenues
--------------------------
Year ended Year ended
Customer Location 12/31/95 12/31/94
------------- ---------------------- ---------- ---------
<S> <C> <C> <C>
U.S. Marshals Mason, Tennessee, 11% 13%
Service Santa Fe, New Mexico,
Estancia, New Mexico,
Brooksville, Florida,
Nashville, Tennessee,
Panama City, Florida,
Leavenworth, Kansas and
Florence, Arizona
</TABLE>
18
<PAGE> 19
<TABLE>
<CAPTION>
<S> <C> <C> <C>
State of Texas Houston, Texas, 18% 24%
Venus, Texas,
Cleveland, Texas,
Laredo, Texas
Bridgeport, Texas
Mineral Wells, Texas
Sweetwater, Texas
Brownfield, Texas
Overton, Texas, and
Bartlett, Texas
State of Tennessee Memphis, Tennessee and 9% 11%
Clifton, Tennessee
</TABLE>
No other single customer accounted for 10% or more of the Company's total
revenues in the above-referenced fiscal years.
BACKLOG
Most of the Company's contracts provide for the Company to be
compensated on a per diem/per capita basis, which fluctuates daily. However,
certain contracts guarantee a minimum utilization over the term of such
contracts. The Company's backlog, as shown below, reflects only guaranteed
revenues pursuant to the Company's guaranteed contracts over the term of such
contracts, using current per diem/per capita rates, and disregarding any
renewals of such contracts and adjustments to such rates as a result of
inflation. As of December 31, 1995, the Company's backlog, determined as
described above, was $297,431,000, of which $81,754,000 is expected to be filled
during the year ending December 31, 1996. As of December 31, 1994, the Company's
backlog, computed as described above, was $351,033,000.
EMPLOYEES
At December 31, 1995, the Company employed 5,337 full-time employees
and 206 part-time employees. Of such full-time employees, 77 were employed at
the Company's headquarters and 5,260 were employed at the Company's facilities
and its transportation subsidiary. The Company employs personnel in the
following areas: clerical and administrative, including facility
administrators/wardens, security, food service, medical, transportation and
scheduling, maintenance, teachers, counselors and other support services.
Each of the Company's facilities is managed as a separate operational
facility by the facility administrator or warden. All facilities follow a
standardized code of policies and procedures. The Company has never experienced
a strike or work stoppage. Beginning in 1992, six facilities were approached by
one particular union to organize the work force. The union was defeated or
withdrew in five facilities. In March 1993, the Company reached an agreement
with the union to represent 73 correctional officers at the Silverdale facility
and this contract was
19
<PAGE> 20
decertified in March 1994. In January 1996, the Company reached an agreement
with a union to represent 38 non-security personnel at Shelby Training Center.
Overall, in the opinion of management, employee relations are considered good.
EMPLOYEE TRAINING
Under the laws applicable to the Company's operations, and the
Company's internal policy, the Company's corrections officers are required to
complete a minimum amount of training prior to independent assignment. In most
cases, officers must undergo at least 160 hours of training by the Company
before being allowed to work alone in a position that will bring them in contact
with inmates or detainees. Florida law requires that corrections officers
receive a minimum of 411 hours of training. At least 280 hours of training is
required for United Kingdom officers and 240 hours of training is required for
Australian officers in order to enable such officers to work in positions that
will bring them into contact with inmates. All non-security staff receive 80
hours of initial training. The Company's training programs meet or exceed all
applicable requirements.
The Company's training is comprised of approximately 40 hours of
instruction concerning the Company's policies, operational procedures and
management philosophy. An additional 120 hours concerning legal issues, rights
of inmates and detainees, techniques of communication and supervision,
improvement of interpersonal skills and job training relating to the particular
position to be filled are provided. Employees of facilities taken over by the
Company who are offered continued employment undergo at least 40 hours of
training by the Company before reporting to work for the Company. Each of the
Company's employees who has contact with inmates receives a minimum of 40 hours
of additional training each year, and each facility management employee of the
Company receives at least 40 hours of training each year.
TransCor, the Company's transportation subsidiary, also has training
requirements for its employees. Each new employee must undergo 40 hours of
training, prior to job performance, including drivers training and safety,
correctional training and policy and procedures guidelines. Each employee then
performs four weeks of on-the-job training with an experienced transportation
agent. TransCor maintains continuing training for all employees of 16 to 32
hours per year.
REGULATIONS
The industry in which the Company operates is subject to national,
federal, state and local regulations in the United States, United Kingdom and
Australia which are administered by various regulatory authorities. Prospective
providers of correctional and detention services must comply with a variety of
applicable state and local regulations including education, health care and
safety regulations. The Company's contracts typically include extensive
reporting requirements and require supervision and on-site monitoring by
representatives of contracting governmental agencies. Certain states such as
Florida and Texas deem prison guards to be peace officers and require company
personnel to be licensed and may make them subject to background
20
<PAGE> 21
investigation. State law also typically requires corrections officers to meet
certain training standards.
In addition, many state and local governments are required to enter
into a competitive bidding procedure before awarding contracts for products or
services. The laws of certain jurisdictions may also require the Company to
award subcontracts on a competitive basis or to subcontract with businesses
owned by members of minority groups.
The failure to comply with any applicable laws, rules or regulations
and the loss of any required license could have a material adverse effect on the
Company's business, financial condition and results of operations. Furthermore,
the current and future operations of the Company may be subject to additional
regulations as a result of, among other factors, new statutes and regulations
and changes in the manner in which existing statutes and regulations are or may
be interpreted or applied. Any such additional regulations could have a material
adverse effect on the Company's business, financial condition and results of
operations.
COMPETITION
Private sector participants in the correction and detention industry
range from firms that provide limited service, such as design and construction
firms, consulting firms and management firms, and firms such as the Company that
provide a full range of services including financing, designing, constructing,
renovating and managing new and existing facilities. Some private sector
participants are limited to half-way house facilities such as pre-parole
transfer centers. The Company's facilities range from pre-parole transfer
facilities to jails and prisons with maximum security prisoners.
The Company competes primarily on the basis of the quality and range of
services offered, its experience in managing facilities, the reputation of its
personnel, and its ability to design, finance and construct new facilities. The
business in which the Company engages is one that other entities may enter
easily without substantial capital investment or experience in management of
correctional or detention facilities. Private sector competitors of the Company
include, among others, Wackenhut Corrections Corporation, Esmor Correctional
Services, Inc., United States Corrections Corp., Group 4 International
Corrections Service and Securicor Group. Some of the Company's international
competitors are larger and have greater resources than the Company. The Company
also competes in some local markets with small local companies that may have a
better understanding of the local conditions and may be better able to gain
political and public acceptance. In addition, the Company competes with
governmental agencies that are responsible for correctional facilities.
The primary competitors in the prison transportation business are local
and state governmental agencies and retired law enforcement personnel who
provide limited transportation services.
21
<PAGE> 22
INSURANCE
The Company maintains a $15,000,000 general liability insurance policy
for all of its operations. To date, no payments have been made under the
Company's general liability insurance policies because of any action brought as
a result of the operation of any of its facilities. The Company also maintains
insurance in amounts it deems adequate to cover property and casualty risks,
workers' compensation and directors and officers liability. There can be no
assurance that the aggregate amount and kinds of the Company's insurance are
adequate to cover all risks it may incur or that insurance will be available in
the future.
Each of the Company's facility management contracts and the statutes of
certain states require the maintenance of insurance. The Company's contracts
provide that in the event that the Company does not maintain such insurance, the
contracting agency may terminate its agreement with the Company. The Company
believes it is in compliance in all material respects with respect to these
requirements.
LITIGATION
The Company is currently, and from time to time, subject to claims and
suits arising in the ordinary course of business, including claims for damages
for personal injuries or for wrongful restriction of, or interference with,
inmate privileges. In the opinion of management, the outcome of the proceedings
to which it is currently a party will not have a material adverse effect upon
its operations or financial condition.
22
<PAGE> 23
RISK FACTORS
In connection with the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995, the Company is including the following
cautionary statements identifying important facts that could cause the Company's
actual results to differ materially from those projected in forward looking
statements of the Company made by, or on behalf of, the Company.
Regulations. The Company's contracts require the Company to operate
each facility in accordance with the current standards and guidelines of the
American Correctional Association and all applicable local, state and federal
laws and the rules and regulations promulgated thereunder. The Company's
business is subject to various state, federal and international laws and the
rules and regulations promulgated thereunder. These regulations address the
manner in which the Company can conduct its operations thereby affecting its
operating costs and revenues. The Company may be subjected to substantial
penalties if it fails to comply with such regulations. Governmental authorities
may conduct investigations in order to insure that the Company is in compliance
with regulations or to evaluate an inmate's complaint. There can be no assurance
that future allegations will not lead to investigations or that any such
investigation will not lead to claims against the Company. An adverse change in
governmental regulations could have a material adverse effect on the Company's
business by limiting the income that the Company may generate on existing and
new facilities management contracts.
Competition. The Company competes directly with outside entities that
may have available greater financial resources. Moreover, the business in which
the Company operates is one that other entities may enter easily, thereby
creating additional competition. In some areas, competition may include
governmental agencies that manage detention or correctional facilities.
Risk of Expansion. The Company's substantial growth has been partially
due to the opening of new facilities. A slow-down in this expansion could have
an adverse impact upon the future earnings of the Company. The Company's
continued ability to expand will depend on a number of factors, including
selection and availability of suitable locations for facilities, the hiring and
training of sufficiently skilled management personnel, the availability of
adequate financing and other factors. Some factors beyond the control of the
Company include governmental and public reaction to the privatization of prisons
and crime rates and sentencing policies in locations in which the Company may
operate. There is no assurance that the Company will be able to open all of its
planned new facilities or that, if open, the facilities can be operated
profitably.
Integration of Acquisitions. The Company's substantial growth is also
due in part to the Acquisitions. During 1995, the Company added a total of 7,300
beds under construction as a result of the Concept Share Exchange and the CPI
Merger. Given the magnitude of these Acquisitions, there can be no assurance
that the challenge of assimilating the Acquisitions and managing the larger
overall business operations will not have an adverse effect on the Company's
results of operations.
23
<PAGE> 24
Dependence on Senior Management. The success of the Company's
operations will depend largely upon the continued services of its senior
management, including Doctor R. Crants, Chairman and Chief Executive Officer.
The loss of service of one or more of the Company's senior management could have
an adverse effect on the Company's business. The Company's loan agreement
provides that Mr. Crants or a successor reasonably acceptable to the Company's
lenders must be employed as Chief Executive Officer. The Company has an
employment agreement with Mr. Crants.
Volatility of Market Price. From time to time, there may be significant
volatility in the market price for the Company's Common Stock. Quarterly
operating results of the Company or of other private prison operators, changes
in general conditions in the economy, the financial market for the private
prison industry, natural disasters or other developments affecting the Company
or its competitors could cause the market price of the Company's Common Stock to
fluctuate substantially. In addition, in recent years the stock market has
experienced extreme price and volume fluctuations. This volatility has had a
significant effect on the market prices of the securities issued by many
companies for reasons unrelated to their operating performance.
Cash Flow Subject to Funding by Government. The Company's cash flow is
subject to the receipt of sufficient funding and timely payment by applicable
governmental entities. If the appropriate governmental agency does not receive
sufficient appropriations to cover its contractual obligations, a contract may
be terminated or the management fee may be deferred or reduced. Any delays in
payment could have an adverse effect on the Company's cash flow.
Impediments to Privatization of Prisons. Some state governments and
departments of the federal government are legally barred from transferring
responsibility for management of correctional and detention facilities to the
private sector. In addition, certain groups, such as organized labor and local
sheriffs, have occasionally opposed the privatization of prisons. Another risk
is that political changes in a market in which the Company is operating could
lead to a change in a particular government's position on privatization.
Fluctuating Occupancy Rates. A significant amount of the Company's
revenues are based upon occupancy rates, while the Company incurs substantial
fixed costs. Because a large portion of the Company's revenues derive from per
diem payments based upon occupancy rates, a decline in occupancy rates could
lead to a decline in revenues and profitability. The average occupancy rate at
CCA facilities under per diem contracts in fiscal year 1995 was 93.9%.
Nonetheless, no assurance can be given that occupancy rates will not decline in
the future.
EXECUTIVE OFFICERS
The following table sets forth certain information concerning the
executive officers of the Company.
24
<PAGE> 25
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---------------- --- --------
<S> <C> <C>
Doctor R. Crants 51 Chairman of the Board;
Chief Executive Officer; Director
Thomas W. Beasley 53 Chairman Emeritus of the Board;
Director
T. Don Hutto 60 Senior Managing Director
of International Operations
David L. Myers 52 President
Darrell K. Massengale 35 Chief Financial Officer;
Secretary and Treasurer;
Vice President, Finance
Dennis E. Bradby 46 Vice President, Education Services
Robert G. Britton 55 Vice President, Operations
Linda G. Cooper 45 Vice President, Legal Affairs
Peggy W. Lawrence 40 Vice President, Investor Relations
John D. Rees 49 Vice President, Business
Development
Linda A. Staley 51 Vice President, Project
Development
Gay E. Vick, III 48 Vice President and Managing
Director of International
Operations
</TABLE>
Doctor R. Crants, a founder of the Company, was elected Chief Executive
Officer and Chairman of the Board of the Company in June 1994. From June 1987 to
June 1994, he served as President, Chief Executive Officer and Vice Chairman of
the Board of Directors of the Company. From January 1983 through June 1987, Mr.
Crants served as Secretary and Treasurer of the Company. He has served as a
director of the Company since 1983. Mr. Crants served as a director of Sahara
Resorts, a destination resort company from January 1985 through 1990. Mr. Crants
has served as President of Tri Insurance, Inc. since June 1985 and as a director
of that company since January 1985. He served as President and director of
Tennessee Media South,
25
<PAGE> 26
Inc., a consulting firm in the broadcasting industry, from 1980 through January
1984. Mr. Crants graduated from the United States Military Academy at West Point
in 1966, and received joint Masters in Business Administration and Juris Doctor
degrees from the Harvard Business School and Harvard Law School, respectively,
in 1974.
Thomas W. Beasley, a founder of the Company, was elected Chairman
Emeritus of the Board of Directors of the Company in June 1994. From June 1987
to June 1994, he served as Chairman of the Board. Mr. Beasley served as
President of the Company from January 1983 to June 1987. He has served as a
director since 1983. From 1978 through June 1985, Mr. Beasley was President of
Tri Insurance, Inc., a property and casualty insurance agency, and since June
1985, has served as its Vice President. Mr. Beasley has served as a director of
Tri Insurance, Inc. since 1978. Mr. Beasley also serves as a director of Dixon
Springs Investment Company, a real estate investment company. From 1974 through
1978, Mr. Beasley served as Chairman of the Tennessee Republican Party, and he
continues to be active in Tennessee politics. Mr. Beasley graduated from the
United States Military Academy at West Point in 1966 and received a Doctor of
Jurisprudence degree from Vanderbilt University School of Law in 1973.
T. Don Hutto, a founder of the Company, was elected Vice Chairman of
the Board of Directors and Senior Managing Director of International Operations
of the Company in June 1994. From July 1988 to June 1994, he was engaged by the
Company as International Projects Manager to oversee and supervise the Company's
business activities in the United Kingdom, France, Australia, New Zealand, and
Canada, as well as other projects as directed by the Company's President. From
April 1984 to July 1988, Mr. Hutto served as Executive Vice President of the
Company, and from January 1983 to April 1984 he served as Vice President. He has
served as a director of the Company since 1983. From January 1982 through
January 1983, Mr. Hutto served as President of H & H Associates, a consulting
firm specializing in corrections and criminal justice. Mr. Hutto served as
Commissioner, Department of Corrections of Virginia, from 1976 through December
1981 and Commissioner of Corrections of Arkansas from 1971 to 1976. He has also
held a management position in the corrections department of the State of Texas.
He is the past president of the American Correctional Association ("ACA"), and a
past president of both the Association of State Correctional Administrators and
the Southern States Correctional Association. Mr. Hutto is the 1987 recipient of
the E.R. Cass Award, the highest award given by the ACA for lifetime achievement
in corrections. Mr. Hutto graduated from East Texas State University in 1958.
David L. Myers became President of the Company in June 1994. From
December 1986 to June 1994, he served as Vice President, Facility Operations of
the Company. From September 1985 to December 1986, he served as Administrator of
the Company's Bay County, Florida facility. From 1968 to 1985, Mr. Myers was
employed with the Texas Department of Corrections, starting as a corrections
officer in 1968 and progressing in 1973 to warden of a maximum security prison.
He graduated from Sam Houston State University in 1969.
Darrell K. Massengale joined the Company in February 1986 and in March
1991 became its Vice President, Finance, Secretary, and Treasurer. In June 1994,
he was also elected Chief
26
<PAGE> 27
Financial Officer of the Company. From February 1986 to March 1991, Mr.
Massengale served as Controller of the Company. He is a certified public
accountant who was employed by the accounting firm of KPMG Peat Marwick from
1982 through 1986. Mr. Massengale graduated from Middle Tennessee State
University in 1982 and became a certified public accountant in 1985.
Dennis E. Bradby has served as Vice President, Education Services for
the Company since June 1991. From April 1986 through June 1991, Mr. Bradby
served as the Company's Vice President, Operational Support Systems. From
January through April 1986, Mr. Bradby served as the Facility Administrator of
the Company's Hamilton County Work House and, from March 1984 through January
1986, as the Facility Administrator of the Company's Houston Immigration
Detention Facility. He served as Regional Manager of the Virginia State
Department of Corrections from 1977 through March 1984 and as the Assistant
Superintendent of that department from 1974 through 1978. Mr. Bradby also served
as Assistant Superintendent of the Juvenile Detention Facility in Norfolk,
Virginia from 1973 through 1974. Mr. Bradby graduated from Norfolk State
University in 1972.
Robert G. Britton was elected Vice President, Operations for the
Company in June 1994. From January 1986 to June 1994, he served as Vice
President, Business Development for the Company. From April 1985 to January
1986, Mr. Britton served as Vice President, Operations for the Company. From
March 1983 to March 1985, Mr. Britton served as Director of Corrections of
Dallas County, Texas and from August 1981 to March 1983 as the President of
Prison Management Systems, Inc., a subsidiary of American Medical International
Corporation (a hospital management company). From 1979 to 1981, Mr. Britton
served as the Director of the Alabama Department of Corrections. Mr. Britton
graduated from Sam Houston State University in 1965.
Linda G. Cooper joined the Company in April 1987 as Senior Legal
Counsel. In May 1988, she was elected Assistant Secretary for the Company and in
January 1989 became its Vice President, Legal Affairs. From December 1981 to
March 1987 she served as staff attorney and then deputy general counsel for the
Kentucky Corrections Cabinet. Ms. Cooper received a Juris Doctor degree from the
University of Kentucky in 1979.
Peggy W. Lawrence became Vice President, Investor Relations in January
1995. From June 1985 to January 1995, she served as Vice President,
Communications for the Company. From March 1987 to June 1989, she served as
Director of Communications for the Company. From January 1985 to March 1987, she
served as an account executive for Dye, Van Mol and Lawrence Public Relations.
From January 1980 to January 1985, Ms. Lawrence served as Vice President,
Research at Morgan Keegan & Co., an investment banking firm. Ms. Lawrence
graduated from the University of Tennessee at Knoxville in 1977 and became a
Chartered Financial Analyst in 1984.
John D. Rees was elected Vice President, Business Development for the
Company in June 1994. From 1967 until 1986 when he joined the Company, Mr. Rees
served as warden of the
27
<PAGE> 28
Kentucky State Reformatory. Mr. Rees holds a Master of Science degree from
Florida State University and a Bachelor of Arts degree from the University of
Kentucky with majors in criminology, correctional administration and sociology.
Linda A. Staley was elected Vice President, Project Development for the
Company in June 1994. She joined the Company in 1985 as Director, Project
Development. Prior to joining the Company, Ms. Staley spent 18 years working for
federal governmental agencies, including the Department of Justice and the
Immigration and Naturalization Service (INS) in the contracting and procurement
field. Ms. Staley attended Wayne State College where she studied business
administration.
Gay E. Vick, III was elected Vice President and Managing Director for
the Company's International Operations in June 1994. From January 1987 to June
1994, he served as Vice President, Project Development for the Company. From
April 1984 to December 1986, Mr. Vick served as Vice President, Design and
Construction. From April 1983 to April 1984 he served as President of Vick and
Harris, Ltd., where he master planned correctional and detention facilities. He
serves as a director of Corrections Corporation of Australia and Viccor Pty.
Ltd. and as Chairman of Corrections Corporation of New Zealand. Mr. Vick
graduated from Virginia Tech Institute in 1970.
ITEM 2. PROPERTIES
The Company believes that all of its properties are well-maintained and
in good repair. The condition of the properties is adequate for the purpose for
which they are maintained. Of the Company's 34 domestic facilities, 12 are owned
and 22 are leased as of March, 1996.
The location and name of and the rated capacity of, each of the
Company's facilities at March 1, 1996, grouped by State, are set forth in the
following table:
<TABLE>
<CAPTION>
No. of Owned or
State City Name Beds Managed
- ----- ---- ---- ---- -------
<S> <C> <C> <C> <C>
Arizona Eloy Eloy Dentention Center 1,000 Owned
Florence Central Arizona 1,024 Owned
Detention Center
Florida Panama City Bay Correctional Facility 750 Managed
Panama City Bay County Jail 276 Managed
Panama City Bay County Jail Annex 401 Owned
Brooksville Hernando County Jail 302 Managed
Lecanto Citrus County, Florida 300 Managed
Indiana Vincennes Southwest Indiana Youth 140 Managed
Village
</TABLE>
28
<PAGE> 29
<TABLE>
<CAPTION>
No. of Owned or
State City Name Beds Managed
- ----- ---- ---- ---- -------
<S> <C> <C> <C> <C>
Kansas Leavenworth Leavenworth Detention Center 327 Owned
Oswego Labette County Conservation 104 Managed
Camp
Louisiana Winnfield Winn Correctional Center 1,474 Managed
New Mexico Estancia Torrance County Detention 286 Owned
Grants New Mexico Women's 322 Owned
Correctional Facility
Santa Fee Santa Fee Detention Center 201 Managed
Oklahoma Hinton Great Plans Correctional 768 Managed
Facility
Puerto Rico Guayama Guayama Correctional Center 1,000 Managed
Tennessee Chattanooga Silverdale Facilities 414 Managed
Clifton South Central Correctional 1,506 Managed
Mason West Tennessee Detention 440 Owned
Facility
Memphis Shelby Training Center 200 Owned
Memphis Tall Trees 63 Managed
Nashville Davidson County Juvenile 48 Managed
Detention Facility
Nashville Metro Detention Facility 1,092 Managed
Texas Bartlett Bartlett State Jail 1,000 Managed
Bridgeport Bridgeport PreParole Transfer 200 Owned
Facility
Brownfield Brownfield Intermediate 200 Managed
Sanction Facility
Cleveland Cleveland Pre Release Center 520 Managed
Eden Eden Detention Center 1,006 Managed
Houston Houston Processing Center 411 Owned
Laredo Laredo Processing Center 258 Owned
Liberty Liberty County, Texas Facility 382 Managed
Mineral Wells Mineral Wells Pre-Parole 1,119 Owned
Transfer Facility
Overton BM Moore Pre-Release 500 Managed
Center
Venus Venus Pre-Release Center 1,000 Managed
</TABLE>
The Company maintains its corporate headquarters in approximately 21,600
square feet of office space at 102 Woodmont Boulevard, Nashville, Tennessee
37205, at a rate comparable for similar space in the area. In addition, the
Company also leases approximately 13,000 square feet of office space in
Brentwood, Tennessee. The Company's wholly-owned subsidiary, TransCor,
29
<PAGE> 30
leases approximately 15,000 square feet of office space and a maintenance
facility comprising approximately 8,000 square feet at 1510 Fort Negley
Boulevard, Nashville, Tennessee, at a rate comparable for similar space in the
area. TransCor also leases approximately 2,000 square feet of office space in
Cocoa, Florida. The Company's wholly-owned subsidiary, Concept, leases
approximately 10,700 square feet of office space at 14206 North Brook Street,
San Antonio, Texas, at a rate comparable for similar space in the area. The
Company's wholly-owned subsidiary, CPI, leases approximately 4,500 square feet
of office space at 1900 Church Street, Nashville, Tennessee at a rate comparable
for similar space in the area.
ITEM 3. LEGAL PROCEEDINGS
Information with respect to this Item is incorporated herein by reference
to Item 1 "Business - Litigation".
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF STOCKHOLDERS
No matters were submitted to a vote of stockholders during the fourth
quarter of 1995.
PART II
ITEM 5. MARKET FOR COMPANY'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.
(a) The Common Stock has been traded on the New York Stock Exchange under
the symbol "CXC" since December 30, 1994. From July 7, 1987 to December 29,
1994, the Common Stock traded on the NASDAQ National Market System under the
symbol "CCAX". The following table sets forth the quarterly high and low closing
sales prices as reported on (i) the NASDAQ National Market System from January
1, 1992 through December 29, 1994 and (ii) the New York Stock Exchange from
December 30, 1994 through December 31, 1995. In October 1995, the Company
authorized a 2-for-1 stock split on its common stock effective October 31, 1995.
The stock split was paid in the form of a one-share dividend for every share of
common stock held by stockholders of record on October 16, 1995. All references
herein to the Common Stock are on a post-split basis. The closing stock price
for the Company's Common Stock on the New York Stock Exchange was $37.13 on
December 29, 1995.
<TABLE>
<CAPTION>
1993 High Low
---- ---- ---
<S> <C> <C>
First Quarter 5.13 3.25
Second Quarter 5.13 3.56
Third Quarter 4.13 3.13
</TABLE>
30
<PAGE> 31
<TABLE>
<S> <C> <C>
Fourth Quarter 4.50 3.50
<CAPTION>
1994
----
First Quarter 8.19 4.63
Second Quarter 8.38 6.25
Third Quarter 8.75 7.69
Fourth Quarter 8.75 6.44
<CAPTION>
1995
----
First Quarter 15.31 8.25
Second Quarter 18.81 14.69
Third Quarter 24.31 17.69
Fourth Quarter 38.38 23.44
</TABLE>
(b) As of March 25, 1996, there were 898 holders of record of the Common
Stock and 368 holders of record of the Company's warrants to purchase Common
Stock.
(c) The Company has not paid any cash dividends to its common
stockholders since its inception and does not anticipate paying any cash
dividends to its common stockholders in theforeseeable future. The Company
intends to retain earnings to provide funds for its operations and growth.
Future cash dividend policy will be determined by the Board of Directors based
on conditions then existing, including the Company's earnings and financial
condition, capital requirements and other relevant factors. In addition, cash
dividends may not be paid without the consent of the Company's lenders.
In September 1992, the Company issued a warrant dividend to its common
stockholders. Stockholders received one warrant for every five shares of common
stock held on the record date (the "Warrants"). The Warrants initially carried a
four-year term and became exercisable after April 30, 1993. The Warrants are
exercisable at $8.50 per share and prior to the stock split were exercisable for
one share of common stock. In September 1993, the expiration date of the
Warrants was extended to September 14, 1997. As of March 1, 1996, there were
1,627,355 Warrants outstanding.
In connection with the October 1995 stock split, the terms of the
Company's Warrants to purchase Common Stock were adjusted proportionately. As
revised, each Warrant is convertible into two shares of Common Stock of the
Company for a total conversion price of $8.50. The market trading price of the
Warrants was unaffected by the split.
31
<PAGE> 32
ITEM 6. SELECTED FINANCIAL DATA
The selected historical financial data for the five fiscal years ended
December 31, 1995 are
32
<PAGE> 33
derived from the consolidated financial statements of the Company. Because the
Company accounted for the Acquisitions as pooling of interests transactions,
certain of the historical financial data of the Company includes historical
results of operations of TransCor, Concept, CMA and CSG. The years ended
December 31, 1993, 1994 and 1995 have been restated to reflect the effect of the
TransCor, Concept, CMA and CSG business combinations. For the years ended
December 31, 1992 and 1991, the financial statements were not restated for any
of the business combinations due to the immaterial impact. All information
contained in the following table should be read in conjunction with the
consolidated financial statements and related notes of the Company included
herein.
33
<PAGE> 34
CORRECTIONS CORPORATION OF AMERICA
(In thousands, except per share data)
<TABLE>
<CAPTION>
Years Ended December 31,
-------------------------------------------------------------------------
INCOME STATEMENT 1991 1992 1993 1994 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Revenues: $ 67,883 $112,099 $132,534 $152,375 $207,241
Expenses:
Operating 55,449 89,392 108,026 123,540 158,814
General and administrative 7,505 9,653 7,885 9,413 14,288
Depreciation and amortization 3,126 5,886 5,759 5,753 6,524
--------- -------- -------- -------- --------
58,575 104,931 121,670 138,706 179,626
--------- -------- -------- -------- --------
Contribution from operations 9,308 7,168 10,864 13,669 27,615
Interest expense, net 3,666 4,264 4,424 3,439 3,952
--------- -------- -------- -------- --------
Income (loss) before
income taxes (1,863) 2,582 6,440 10,230 23,663
Income tax provision - 50 832 2,312 933
--------- -------- -------- -------- --------
Net income (loss) (1,863) 2,532 5,618 7,918 14,333
Preferred stock dividends - 71 425 204 -
--------- -------- -------- -------- --------
Net income (loss) allocable to
common stockholders $ (1,863) $ 2,461 $ 5,183 $ 7,714 $ 14,333
========= ======== ======== ======== ========
Net income (loss) per share:
Primary $ (0.10) $ .11 $ .20 $ .25 $ .38
Fully diluted $ (0.10) $ .10 $ .20 $ .25 $ .36
Weighted average shares
outstanding: 18,432 22,908 25,881 30,954 37,555
Working capital $ 8,098 $ 11,074 $ 12,540 $ 12,587 $ 11,093
Total assets $ 96,735 $103,295 $109,285 $141,792 $213,478
Long-term obligations,
less current portion $ 57,811 $ 56,277 $ 50,558 $ 47,984 $ 74,865
Redeemable convertible
preferred stock $ 5,000 $ 5,000 $ 5,000 $ --- $ ---
Total stockholders' equity $ 25,174 $ 27,928 $ 34,182 $ 61,757 $ 96,704
</TABLE>
34
<PAGE> 35
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
GENERAL
The Company's recent operating results were significantly affected by its
strategic acquisitions. As discussed in Note 2 to the accompanying consolidated
financial statements, the Company completed the acquisition of TransCor on
December 30, 1994, the acquisition of Concept on April 25, 1995 and the mergers
of CMA and CSG (and their subsidiary, CPI) on August 18, 1995. Each of these
business combinations was accounted for as a pooling of interests and,
accordingly, the operations of TransCor, Concept and CMA and CSG have been
combined in the accompanying consolidated financial statements. The discussion
herein is based upon the combined operations of the Company, TransCor, Concept,
CMA and CSG for all periods presented in the accompanying consolidated financial
statements. To enhance understandability, discussion and analysis of financial
conditions and results of operations of the separate companies is included,
where necessary.
The Company presently has contracts to manage 46 correctional and
detention facilities with an aggregate design capacity of 28,607 beds. Of these
46 facilities, 37 are currently in operation and nine are under development by
the Company. The Company, through its UK joint venture, UKDS, manages one
facility in the United Kingdom and, through its Australian joint venture, CC
AUS, manages one facility in Australia. Commencing in the second quarter of
1996, CC AUS will manage a 125-bed facility in Victoria, Australia. The
Company's ownership interests in UKDS and CC AUS are accounted for under the
equity method. Of the nine facilities under development by the Company, five are
scheduled to commence operations during 1996 (one in the first quarter, two in
the third quarter and two in the fourth quarter) and four are scheduled to
commence operations during 1997. In addition, at March 8, 1996, the Company had
outstanding written responses to Request for Proposals for 10 projects with an
aggregate design capacity of 7,500 beds.
The following table sets forth the number of facilities under contract or
award at the end of the periods shown.
<TABLE>
<CAPTION>
End of Fiscal
----------------------------------------
1995 1994 1993
--------- --------- --------
<S> <C> <C> <C>
Contracts(1)........................................... 47 39 28
Facilities in operation................................ 38 31 26
Design capacity of contracts........................... 28,607 19,735 12,254
Design capacity of facilities in operation............. 20,252 13,404 10,368
Compensated resident days(2)........................... 4,799,562 3,768,095 3,338,411
</TABLE>
- ---------------
(1) Comprised of facilities in operation and facilities under development for
which contracts have been finalized.
(2) Compensated resident days for a period ended are calculated, for per diem
rate facilities, as the number of beds occupied by residents on a daily
basis during the period ended and, for fixed rate facilities, as the design
capacity of the facility multiplied by the number of days the facility was
in operation during the period.
35
<PAGE> 36
The Company derives substantially all of its revenues from the management
of correctional and detention facilities for national, federal, state and local
governmental agencies in the United States and abroad.
Geographic Market Concentration. The Company currently manages facilities
in nine states and Puerto Rico. Management revenues by state, as a percentage of
the Company's total revenues for years ended December 31, 1995 and 1994,
respectively, are as follows:
<TABLE>
<CAPTION>
Percentage of Percentage of
No. of Fiscal 1995 No. of Fiscal 1994
State Facilities Total Revenues Facilities Total Revenues
- ----- ---------- --------------- ---------- --------------
<S> <C> <C> <C> <C>
Alabama 0 .4% 1 .9%
Arizona 2 16.5% 2 4.0%
Florida 5 7.8% 3 6.9%
Indiana 1 1.4% 0 --
Kansas 2 4.6% 2 5.7%
Louisiana 1 6.1% 1 7.6%
New Mexico 3 8.4% 3 9.5%
Oklahoma 1 1.9% 1 1.9%
Puerto Rico 1 .1% 0 --
Tennessee 8 25.2% 8 30.9%
Texas 12 22.7% 8 27.9%
</TABLE>
To the extent favorable or unfavorable changes in regulations or market
conditions occur in these markets, such changes would likely have a
corresponding impact on the Company's results of operations.
Revenues for operation of correctional and detention facilities are
recognized as the services are provided, based on a net rate per day per inmate
("per diem" rate) or on a fixed monthly rate. Of the Company's 37 facilities in
operation, 33 are compensated on a per diem basis and four are compensated at
fixed monthly rates. The per diem rates or fixed monthly rates vary according to
the type of facility and the extent of services provided at the facility.
Transportation revenues are based on a per mile charge or a fixed fee per trip.
The Company incurs all facility operating expenses, except for certain
debt service and lease payments with respect to certain facilities that the
Company does not own or lease. The Company owns 12 of the facilities it manages.
The Company manages 25 facilities that are owned or leased by a governmental
agency, construction of which as been financed by the agency through one or more
of a variety of methods.
Facility payroll and related taxes constitute the majority of facility
operating expenses. Substantially all other operating expenses consist of food,
clothing, medical services, utilities, supplies, maintenance, insurance and
other general operating expenses. As inmate populations
36
<PAGE> 37
increase following the start-up of a facility, operating expenses generally
decrease as a percentage of related revenues. Each facility is fully staffed at
the time it is open or taken over by the Company, although it may be operating
at a relatively low occupancy rate.
General and administrative costs consist of salaries of officers and
other corporate headquarters personnel, legal, accounting and other professional
fees (including pooling expenses), travel expenses, executive office rental, and
promotional and marketing expenses. The most significant component of these
costs relates to the hiring of experienced corrections and administrative
personnel necessary for the implementation and maintenance of the facility
management and transportation contracts.
Contribution from operations for each facility depends upon the
relationship between operating costs, the rate at which the Company is
compensated per manday, and the occupancy rate. The per diem or fixed rate is
fixed by contract and approximately two-thirds of all operating costs are fixed
costs. Therefore, contribution from operations will vary from period to period
as occupancy rates fluctuate. Contribution from operations will be affected
adversely as the Company increases the number of newly-constructed or expanded
facilities under management and experiences initial low occupancy rates.
After a management contract has been awarded, the Company incurs facility
start-up costs that consist principally of initial employee training, travel and
other direct expenses incurred in connection with the contract. These costs are
capitalized and amortized on a straight-line basis over the shorter of the term
of the contract plus renewals, or five years. Depending on the contract,
start-up costs are either fully recoverable as pass-through costs or are
billable to the contracting agency over the original term of the contract plus
renewals. The Company has historically financed start-up costs through available
cash, cash from operations and borrowings under the Company's revolving credit
facility.
Newly opened facilities are staffed according to contract requirements
when the Company begins receiving inmates. Inmates are typically assigned to a
newly opened facility on a regulated, structured basis over a one-to-three month
period. Until expected occupancy levels are reached, operating losses may be
incurred.
37
<PAGE> 38
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, the percentage
of revenues of certain items in the Company's statement of operations and the
percentage change from period to period in such items:
<TABLE>
<CAPTION>
Period-to-Period
Percentage Changes
---------------------------
December 31, 1995 1994
--------------------------- Compared Compared
1995 1994 1993 to 1994 to 1993
------- ------ ----- -------------- ----------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT
Revenues 100.0% 100.0% 100.0% 36.0% 15.0%
Expenses:
Operating 76.6 81.1 81.5 28.6 14.4
General and administrative 6.9 6.1 6.0 51.8 19.4
Depreciation and amortization 3.2 3.8 4.3 13.4 (.1)
------ ------ ------
Contribution from operations 13.3 9.0 8.2 102.0 25.8
------ ------ ------
Interest expense, net 1.9 2.3 3.3 14.9 (22.3)
----- ----- ------
Income before income taxes 11.4 11.4 4.9 131.3 58.9
Provision for income taxes 4.5 1.5 .7 303.5 177.9
------ ------ ------
Net Income 6.9 5.2 4.2 81.0 41.2
Preferred stock dividends .0 .1 .3 (100.0) (52.0)
----- ------ -------
Net Income allocable to
common stockholders 6.9% 5.1% 3.9% 85.8% 48.8%
====== ====== ======
</TABLE>
YEAR ENDED DECEMBER 31, 1995 COMPARED WITH YEAR ENDED DECEMBER 31, 1994
Revenues. Total revenues increased 36% from 1994 to 1995 with increases
in both management and transportation services. Management revenues increased
37% in 1995, or $53,213,000. The 37% increase is due to new facilities opened
and expansions of existing facilities that occurred in 1994 and 1995 by the
Company and the related acquisitions. In 1995, the Company opened five new
facilities representing 3,390 beds and assumed management of three facilities
representing 1,688 beds. The Company also realized the full-year effect of three
facilities added in 1994 representing 1,560 beds. The third contributing factor
to growth was the expansion of 13 existing facilities providing 1,887 new beds.
Due to the growth in beds, compensated mandays increased 27% in 1995 from
3,768,095 to 4,799,562. Average occupancy remained stable at 93.9% for 1995 as
compared to 93.5% for 1994.
Transportation revenues increased $1,653,000 or 21% in 1995 as compared
to 1994. The 1995 growth was due to a continued marketing effort that expanded
the customer base and resulted in increased compensated mileage.
38
<PAGE> 39
During the first quarter of 1995, the Company purchased the remaining 50%
of CC AUS from its original joint venture partner. After consideration of
several strategic alternatives related to CC AUS, the Company sold 50% of the
entity to Sodexho during the second quarter of 1995. The Company accounted for
the 100% ownership period on the equity basis of accounting and recognized an
after-tax gain of $783,000 on the sale.
Facility Operating Expenses. Salary and related employee benefits
constituted approximately 50% and 55% of facility operating expenses for 1995
and 1994, respectively. Facility operating expenses increased by 29% to
$158,814,000 in 1995 compared to $123,540,000 in 1994. This increase was due to
the additional beds on line that increased compensated mandays and the growth in
the transportation services. The average management operating cost per manday
was $31.59 for 1995 as compared to $31.40 for 1994. The increase in average cost
per manday was due to the significant number of new beds brought on line in
1995. As the five new facilities were opened, the full complement of fixed costs
was being incurred prior to full occupancy. As a percentage of revenues,
however, facility operating expenses decreased to 77% from 81%. This decrease is
primarily attributable to the expansion of various facilities that added lower
incremental operating expenses and improved economies of scale.
General and Administrative. General and administrative costs increased
52% in 1995 to $14,288,000 as compared to $9,413,000 in 1994. Included in 1995
were approximately $950,000 of non-recurring pooling expenses related to the
acquisitions. The Company has also expanded its management staff to manage its
significant growth. Staff have been added to bring new business on line,
resulting in cost being incurred prior to revenue being realized. Also, as all
transition issues are finalized from the acquired operations and the duplicate
services are consolidated, general and administrative costs should decrease as a
percentage of revenues.
Depreciation and Amortization. Depreciation and amortization increased by
$771,000, to $6,524,000 in 1995 as compared to $5,753,000 in 1994. The 1995
increase is due to the growth in total beds in facilities owned by the Company.
Interest Expenses, Net. Interest expense , net, increased 15% in 1995 due
to the assumption of debt related to the Eloy Detention Center in Eloy, Arizona.
In July, 1995 the Company acquired the remaining 50% of the investment in a
partnership and assumed the assets and debts.
Income Taxes. In 1995, the Company's effective income tax rate increased
to 39% as compared to 23% in 1994. This increase in taxes was due to the
Company's complete utilization of net operating loss carryforwards, therefore
becoming subject to full statutory tax rates.
YEAR ENDED DECEMBER 31, 1994 COMPARED WITH YEAR ENDED DECEMBER 31, 1993
Total revenues increased 15% in 1994 over 1993. Management revenues
increased from $126,749,000 in 1993 to $144,466,000 in 1994 representing a 14%
improvement. Transportation revenues increased 37% going from $5,785,000 in 1993
to $7,909,000 in 1994. The increase in management revenues was due to three
facilities with 1,560 beds being opened in 1994 and the
39
<PAGE> 40
expansion of three existing facilities representing 838 beds. Compensated
mandays increased from 3,338,411 in 1993 to 3,768,095 in 1994 for a 13%
increase, while average occupancy rose from 92.0% to 93.5% for the same period.
The increase of 37% in transportation revenues was due to a marketing
effort that expanded customer base and resulted in increased compensated
mileage.
Facility Expenses. Facility operating expenses increased 14% to
$123,540,000 in 1994 as compared to $108,026,000 in 1993. This increase was due
to increased compensated mandays and the growth in the transportation services.
As a percentage of revenues, operating expenses decreased to 81% from 82% in
1993. This decrease was primarily attributable to the expansion of various
facilities that added lower incremental operating expense and improved economies
of scale.
General and Administrative. General and administrative costs increased
$1,528,000 or 19% in 1994 as compared to 1993. The increase resulted from the
expanded activity necessary to administer the increased beds and transportation
contracts under management.
Depreciation and Amortization. Depreciation and amortization remained
stable from 1993 to 1994 due to the full depreciation of equipment in some of
the Company's older facilities.
Interest Expense, Net. Interest expense, net, decreased 22% in 1994. The
1994 decrease was due to the Company reducing debt by $9,800,000 with the
proceeds from common stock and through normal periodic principal payments.
Income Taxes. In 1994, the Company's effective income tax rate increased
to 23% as compared to 13% in 1993. This increase in taxes was due to the
Company's increased utilization of net operating loss carryforwards, therefore
resulting in the Company being subject to full statutory rates for part of 1994.
LIQUIDITY AND CAPITAL RESOURCES
The Company's business is capital intensive in relation to the
development of a correctional facility. The Company's efforts to obtain
contracts, construct additional facilities and maintain its day-to-day
operations have required the continued acquisition of funds through borrowings
and equity offerings. The Company has financed these activities through the sale
of capital stock, subordinated convertible notes and senior secured debt,
through the issuance of taxable and tax-exempt bonds, by bank borrowings, and by
assisting governmental agencies in the issuance of municipal bonds.
Cash flow from operations for 1995 was approximately $17,766,000 as
compared to $11,637,000 in 1994 and $12,916,000 in 1993. The Company has
strengthened its cash flow through its expanded business, additional focus on
larger, more profitable facilities, the expansion of existing facilities where
economies of scale can be realized, and the continuing effort of cost
40
<PAGE> 41
containment. Cash flow from operations has allowed the Company to fund growth
and to continue to retire debt on an accelerated basis.
The Company's current ratio decreased to 1.31 in 1995 as compared to 1.51
in 1994. The reason for the decrease was due to the Company investing excess
cash flow into the expansion of certain facilities and the current portion of
long-term debt increasing approximately $4,700,000 relative to the assumption of
debt for the UCLP acquisition. The ratio of long-term debt to total
capitalization was 77% at December 31, 1995 and 78% at December 31, 1994. In
October 1995, the Company declared a two-for-one stock split. All references to
number of shares have been adjusted for this stock split.
In June 1994, the Company entered into an international alliance with
Sodexho, S.A., a French conglomerate, the purpose of which is to pursue prison
management business outside the United States, Australia and the United Kingdom.
In conjunction with the alliance, Sodexho purchased 1,400,000 shares of common
stock at $7.50 per share and a $7,000,000 Convertible Subordinated Note bearing
interest at 8.5%. Sodexho also received 1,100,000 Warrants at $15.80 per warrant
that expire December 1998. Each warrant entitles Sodexho to two common shares
upon exercise. The Company plans to use the proceeds from these future
financings to fund new capital projects. In consideration of the placement of
the aforementioned securities and these future financings, the Company agreed to
pay Sodexho $3,960,000 over a four-year period ending 1998.
In addition, in June 1995, as a result of its preemptive right triggered
in connection with the issuance of shares of common stock to the stockholders of
Concept, Sodexho purchased 545,000 shares of common stock from the Company at a
purchase price of $15.25 per share. Also during 1995, the Company and Sodexho
entered into a forward contract whereby Sodexho would purchase up to $20,000,000
of convertible subordinated notes at any time prior to December, 1997. The notes
will bear interest at LIBOR plus 1.35% and will be convertible into common
shares at a conversion price of $13.65 per share.
The Company's working capital revolving credit facility with a U.S. bank
matures May 31, 1997. The credit facility provides for borrowings of up to
$25,000,000 for working capital and certain letters of credit. The credit
facility bears interest, at the election of the Company, at either the bank's
prime rate or a rate which is 2% above the applicable 30, 60 or 90 day LIBOR
rate. Interest is payable monthly with respect to prime rate loans and at the
expiration of the applicable LIBOR period with respect to LIBOR-rate based
loans. The credit facility is secured by certain accounts receivable and real
and personal property at certain of the Company's facilities. There are no
prepayment penalties associated with the credit facility. The credit facility
requires the Company, among other things, to maintain maximum leverage ratios
and a minimum debt service coverage ratio. The facility also limits certain
payments and distributions. In February 1994, the Company received a
construction loan from the bank totaling $13,600,000, with the proceeds used to
construct the Central Arizona Detention Center in Florence, Arizona. The loan
requires equal monthly principal payments based on a ten-year amortization. As
of December 31, 1995, there was $12,580,000 outstanding on the construction
loan. As of December 31, 1995, there was
41
<PAGE> 42
$14,500,000 borrowed against the facility. Letters of credit totaling $2,775,000
have been issued leaving the unused commitment at $7,725,000.
In February 1996, the Company issued $30,000,000 of its convertible
subordinated notes to an investor. The proceeds were used to repay the
outstanding principal under the Company's working capital credit facility and
construction loan. The notes bear interest at 7.5%, payable quarterly and
require the Company to maintain specific ratio requirements relating to net
worth, cash flow and debt coverage. In March, 1996, as a result of its
preemptive right triggered in connection with the issuance of convertible
subordinated notes, Sodexho notified the Company of its intent to purchase
$20,000,000 of convertible subordinated notes under the same terms and
conditions.
In connection with the construction and development of certain
facilities, the Company caused a U.S. Bank to issue two letters of credit
totaling $59,500,000. The letters of credit support certain industrial
development bonds, the proceeds of which were used to construct such facilities.
The Company guaranteed to the Bank the repayment in full of any amounts drawn on
such letters of credit as a result of a default under the related bonds. In the
event the Company is required to fund amounts pursuant to these guarantees then
the Company will obtain ownership rights to these facilities. The Company's
reimbursement obligations are secured by all of the collateral that secures the
Company's credit facility with the U.S. Bank described above and are
cross-defaulted with such credit facility.
The Company anticipates making cash investments in connection with future
acquisitions and expansions. In addition, in accordance with the developing
trend of private prison managers toward making strategic financial investments
in facilities, the Company plans to use a portion of its cash to finance
start-up costs, leasehold improvements and equity investments in facilities, if
appropriate in connection with undertaking new contracts. The Company believes
that the cash flow from operations and amounts available under its credit
facility will be sufficient to meet its capital requirements for the foreseeable
future. Furthermore, management believes that additional resources may be
available to the Company through a variety of other financing methods.
INFLATION
Many of the Company's facility contracts provide periodic adjustments in
the compensation paid to the Company in accordance with changes in the consumer
price index during such period. Management does not believe that inflation has
had a material adverse effect on the revenues or expenses of the Company.
IMPACT OF ACCOUNTING PRONOUNCEMENTS
In March 1995, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standard (SFAS) No. 121, "Accounting for the
Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed Of." This
statement imposes stricter criteria for long-term assets by requiring that such
assets be probable of future recovery at each balance sheet
42
<PAGE> 43
date. The Company anticipates adopting SFAS 121 effective January 1, 1996, and
does not expect that adoption will have a material impact on the results of
operations, financial condition or cash flows of the Company.
In October 1995, the FASB issued SFAS 123, "Accounting for Stock-Based
Compensation." This statement requires new disclosures in the notes to the
financial statements about stock-based compensation plans based on the fair
value of equity instruments granted. Companies also may base the recognition of
compensation cost for instruments issued under stock-based compensation plans on
these fair values. The Company anticipates adopting SFAS 123 effective January
1, 1996, but currently does not plan to change the method of accounting for
these plans.
43
<PAGE> 44
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Independent Public Accountants....................................... F-1
Consolidated Balance Sheets at December 31, 1995
and 1994....................................................................... F-2
Consolidated Statements of Operations for the years
ended December 31, 1995, 1994, and 1993........................................ F-3
Consolidated Statements of Stockholders' Equity
for the years ended December 31, 1995, 1994,
and 1993....................................................................... F-4
Consolidated Statements of Cash Flows for the years
ended December 31, 1995, 1994, and 1993........................................ F-5
Notes to Consolidated Financial Statements..................................... F-9
</TABLE>
44
<PAGE> 45
CORRECTIONS CORPORATION OF AMERICA
AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1995 AND 1994
TOGETHER WITH
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
<PAGE> 46
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders of
Corrections Corporation of America and Subsidiaries:
We have audited the accompanying consolidated balance sheets of CORRECTIONS
CORPORATION OF AMERICA AND SUBSIDIARIES as of December 31, 1995 and 1994, and
the related statements of operations, stockholders' equity and cash flows for
each of the three years in the period ended December 31, 1995. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Corrections Corporation of
America and Subsidiaries as of December 31, 1995 and 1994, and the results of
their operations and their cash flows for each of the three years in the period
ended December 31, 1995, in conformity with generally accepted accounting
principles.
As discussed in Note 8 to the consolidated financial statements, effective
January 1, 1993, the Company changed its method of accounting for income taxes.
/s/ Arthur Andersen LLP
Nashville, Tennessee
February 20, 1996
F-1
<PAGE> 47
CORRECTIONS CORPORATION OF AMERICA AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1995 AND 1994
(IN THOUSANDS)
<TABLE>
<CAPTION>
ASSETS 1995 1994
------ ---- ----
CURRENT ASSETS:
<S> <C> <C>
Cash, cash equivalents and restricted cash $ 2,714 $ 4,609
Accounts receivable, net of allowances 39,661 26,875
Prepaid expenses 1,569 1,551
Deferred tax assets 1,646 3,285
Other 1,020 933
--------- ---------
Total current assets 46,610 37,253
RESTRICTED INVESTMENTS 443 69
OTHER ASSETS 19,642 11,418
PROPERTY AND EQUIPMENT, NET 137,019 82,934
INVESTMENT IN DIRECT FINANCING LEASE 9,764 10,118
--------- ---------
$ 213,478 $ 141,792
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 10,757 $ 8,768
Accrued salaries and wages 3,480 3,273
Accrued property taxes 1,623 1,462
Other accrued expenses 8,637 5,404
Current portion of long-term debt 11,020 5,759
--------- ---------
Total current liabilities 35,517 24,666
LONG-TERM DEBT, NET OF CURRENT PORTION 74,865 47,984
DEFERRED TAX LIABILITIES 4,164 3,628
OTHER NONCURRENT LIABILITIES 2,228 3,757
-------- ---------
Total liabilities 116,774 80,035
--------- ---------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock - $1 par value; 50,000 shares authorized 32,270 29,690
Additional paid-in capital 48,830 28,508
Retained earnings 15,641 3,866
Treasury stock, at cost (37) (307)
--------- ---------
Total stockholders' equity 96,704 61,757
--------- ---------
$ 213,478 $ 141,792
========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
F-2
<PAGE> 48
CORRECTIONS CORPORATION OF AMERICA AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
REVENUES $207,241 $152,375 $132,534
EXPENSES:
Operating 158,814 123,540 108,026
General and administrative 14,288 9,413 7,885
Depreciation and amortization 6,524 5,753 5,759
-------- -------- --------
CONTRIBUTION FROM OPERATIONS 27,615 13,669 10,864
INTEREST EXPENSE, NET 3,952 3,439 4,424
-------- ------- -------
INCOME BEFORE INCOME TAXES 23,663 10,230 6,440
PROVISION FOR INCOME TAXES 9,330 2,312 832
-------- ------- ------
NET INCOME 14,333 7,918 5,608
PREFERRED STOCK DIVIDENDS -- 204 425
-------- ------- ------
NET INCOME ALLOCABLE TO COMMON STOCKHOLDERS
$ 14,333 $ 7,714 $ 5,183
======== ======== ========
NET INCOME PER COMMON SHARE:
Primary $ .38 $ .25 $ .20
======== ======== ========
Fully diluted $ .36 $ .25 $ .20
======== ======== ========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
37,555 30,954 25,881
======== ======== =======
</TABLE>
The accompanying notes are an integral part of these statements.
F-3
<PAGE> 49
CORRECTIONS CORPORATION OF AMERICA AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON STOCK
-------------------------------------------
ISSUED TREASURY STOCK ADDITIONAL RETAINED TOTAL
------------------ ------------------ PAID-IN EARNINGS STOCKHOLDERS'
SHARES AMOUNT SHARES AMOUNT CAPITAL (DEFICIT) EQUITY
====== ======== ====== ======== ======== ========== ============
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1992 23,774 $ 23,774 - $ - $ 13,604 $ (8,314) $ 29,064
Purchase of treasury stock, at cost - - (79) (392) - - (392)
Stock options and warrants exercised 526 526 5 52 (84) (167) 327
Preferred stock dividends - - - - - (425) (425)
Net income - - - - - 5,608 5,608
------ -------- --- -------- -------- -------- --------
BALANCE, DECEMBER 31, 1993 24,300 24,300 (74) (340) 13,520 (3,298) 34,182
Issuance of common stock 1,856 1,856 - - 8,243 - 10,099
Stock options exercised and
warrants converted to stock 1,716 1,716 35 33 286 (550) 1,485
Income tax benefits of incentive
stock option exercises - - - - 593 - 593
Conversion of long-term debt
and preferred stock 1,818 1,818 - - 5,866 - 7,684
Preferred stock dividends - - - - - (204) (204)
Net income - - - - - 7,918 7,918
------ -------- --- -------- -------- -------- --------
BALANCE, DECEMBER 31, 1994 29,690 29,690 (39) (307) 28,508 3,866 61,757
Issuance of common stock 579 579 - - 7,763 - 8,342
Stock options exercised and warrants
repurchased or converted to stock 1,114 1,114 37 270 2,813 (2,558) 1,639
Income tax benefits of incentive
stock option exercises - - - - 3,987 - 3,987
Conversion of long-term debt 887 887 - - 5,759 - 6,646
Net income - - - - - 14,333 14,333
------ -------- --- -------- -------- -------- --------
BALANCE, DECEMBER 31, 1995 32,270 $ 32,270 (2) $ (37) $ 48,830 $ 15,641 $ 96,704
====== ======== === ======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
F-4
<PAGE> 50
CORRECTIONS CORPORATION OF AMERICA AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(IN THOUSANDS)
<TABLE>
<CAPTION>
1995 1994 1993
------- ------- -------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C> <C>
Net income $ 14,333 $ 7,918 $ 5,608
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 6,524 5,753 5,759
Deferred and other noncash income taxes 6,162 878 (122)
Loss (gain) on disposal of assets (1,284) 11 179
Equity in earnings of unconsolidated entities (619) (422) (334)
Changes in assets and liabilities, net of acquisitions:
Accounts receivable (12,750) (7,901) 40
Prepaid expenses (18) (70) 1,778
Other current assets (87) (259) (30)
Accounts payable 1,991 4,537 655
Accrued expenses 3,514 1,192 (617)
-------- ------- -------
Net cash provided by operating activities 17,766 11,637 12,916
-------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions of property and equipment (25,926) (24,891) (2,381)
Acquisition of UCLP (5,250) - -
Decrease (increase) in restricted cash and
investments (619) (7) 958
Increase in other assets (8,500) (1,836) (667)
Investment in affiliates, net (3,717) (426) 144
Proceeds from disposals of assets 3,763 25 15
Issuance of notes receivable - (900) -
Payments received on direct financing lease and
notes receivable 328 286 257
-------- -------- -------
Net cash used in investing activities (39,921) (27,749) (1,674)
======== ======== =======
</TABLE>
(Continued)
F-5
<PAGE> 51
CORRECTIONS CORPORATION OF AMERICA AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(Continued)
<TABLE>
<CAPTION>
1995 1994 1993
-------- ------- -------
<S> <C> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt $ 7,111 $ 15,974 $ 9,953
Payments on long-term debt (8,648) (14,159) (17,409)
Payments on notes payable to stockholders - (403) (476)
Proceeds from line of credit, net 13,715 270 211
Payment of debt issuance costs (260) - -
Payments of dividends - (291) (494)
Proceeds from issuance of common stock 7,859 10,571 -
Proceeds from exercise of stock options and warrants
868 1,137 327
Purchase of treasury stock and warrants (630) - (392)
-------- ------- -------
Net cash provided by (used in) financing activities 20,015 13,099 (8,280)
-------- ------- -------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (2,140) (3,013) 2,962
CASH AND CASH EQUIVALENTS, BEGINNING OF YEARS 4,285 7,298 4,336
-------- -------- --------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 2,145 $ 4,285 $ 7,298
======== ======== ========
SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION:
Cash paid during the year for:
Interest (net of amounts capitalized) $ 5,145 $ 4,854 $ 5,706
======== ======== ========
Income taxes $ 3,060 $ 1,572 $ 327
======== ======== ========
</TABLE>
(Continued)
F-6
<PAGE> 52
CORRECTIONS CORPORATION OF AMERICA AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(Continued)
<TABLE>
<CAPTION>
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
SUPPLEMENTAL SCHEDULE OF NONCASH
INVESTING AND FINANCING ACTIVITIES:
The Company entered into an international alliance
and equity participation which included the deferral
of the payment of certain issuance costs:
Other assets $ - $(3,488) $ -
Other accrued expenses - 990 -
Other noncurrent liabilities - 2,970 -
Additional paid-in capital - (472) -
---------- ------- -----------
$ - $ - $ -
========== ======= ===========
Long-term debt was converted into common stock through
the exercise of stock warrants:
Other assets $ 27 $ 9 $ -
Long-term debt (1,428) (357) -
Common stock 400 100 -
Additional paid-in capital 1,001 248 -
------- ------- -----------
$ - $ - $ -
======= ======= ===========
Redeemable convertible preferred stock was converted
into common stock:
Other assets $ - $ 290 $ -
Preferred stock - (5,000) -
Common stock - 1,400 -
Additional paid-in capital - 3,310 -
------- ------- -----------
$ - $ - $ -
======= ======= ===========
</TABLE>
(Continued)
F-7
<PAGE> 53
CORRECTIONS CORPORATION OF AMERICA AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(Continued)
<TABLE>
<CAPTION>
1995 1994 1993
--------- -------- --------
<S> <C> <C> <C>
Long-term debt was converted into common stock:
Other assets $ 53 $ 26 $ -
Long-term debt (6,700) (3,000) -
Common stock 887 419 -
Additional paid-in capital 5,760 2,555 -
------- ------- -------
$ - $ - $ -
======= ======= =======
The Company acquired property and equipment by
assuming long-term debt:
Property and equipment $(27,392) $ - $ -
Long-term debt 27,392 - -
-------- ------- -------
$ - $ - $ -
======== ======= =======
</TABLE>
The accompanying notes are an integral part of these statements.
F-8
<PAGE> 54
CORRECTIONS CORPORATION OF AMERICA AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Corrections Corporation of America (together with its subsidiaries,
referred to as the "Company"), a Delaware corporation, operates and
manages prisons and other correctional facilities and provides prisoner
transportation services for governmental agencies. The Company provides a
full range of related services to governmental agencies, including
managing, financing, designing and constructing new facilities and
redesigning and renovating older facilities. The consolidated financial
statements include the accounts of the Company and its wholly-owned
subsidiaries, TransCor America, Inc. ("TransCor"), Concept Incorporated
("Concept"), Corrections Management Affiliates, Inc. ("CMA"), Correctional
Services Group, Inc. ("CSG"), CCA International, Inc. and Technical and
Business Institute of America, Inc. CCA International, Inc. has two
wholly-owned subsidiaries, CCA France, Inc. and CCA (UK) Limited. Concept
has two wholly-owned subsidiaries, Mineral Wells R.E. Holding Corp.
("Mineral Wells") and United-Concept Inc. ("United-Concept"). Concept
together with Mineral Wells wholly owns United-Concept Limited
Partnership ("UCLP"). CMA together with CSG wholly owns Corrections
Partners, Inc. ("CPI"). The accompanying consolidated financial statements
and note information reflect the accounting for the acquisitions in 1994
and 1995 of TransCor, Concept, CMA and CSG in transactions accounted for
as pooling-of-interests and the acquisition in 1995 of United-Concept and
UCLP accounted for as a purchase. All intercompany transactions and
balances have been eliminated.
At December 31, 1995, the Company also has a 50% interest in Corrections
Corporation of Australia PTY LTD ("CC Australia"). CC Australia provides
services similar to the Company in Australia and surrounding countries. At
December 31, 1995, CCA (UK) Limited has a one-third interest in UK
Detention Services Limited ("UKDS"), a United Kingdom joint venture. UKDS
provides services similar to the Company in the United Kingdom. The
Company accounts for these investments under the equity method. Assets and
liabilities are converted from their functional currency into the U.S.
dollar utilizing the conversion rate in effect at the balance sheet date.
Revenue and expense items are converted using the weighted average rate
during the period. The excess of the Company's investment in
unconsolidated subsidiaries over the underlying equity is being amortized
over twenty-five years.
F-9
<PAGE> 55
Deferred project development costs consist of costs that can be directly
associated with a specific anticipated contract and, if recovery from that
contract is probable, are deferred until the anticipated contract has been
awarded. Internal costs incurred in securing new clients including costs
of responding to requests for proposals are expensed as incurred. At the
time the contract is awarded to the Company, the deferred project
development costs are either capitalized as part of property and equipment
or are amortized over five years as project development costs. Costs of
unsuccessful or abandoned contracts are charged to depreciation and
amortization expense when their recovery is not considered probable.
Facility start-up costs, principally costs of initial employee training,
travel and other direct expenses incurred in connection with opening of
new facilities, to the extent recoverable under the applicable contract,
are deferred and recorded as other assets. Start-up costs are amortized on
a straight-line basis over the lesser of the initial term of the contract
plus renewals or five years.
Debt issuance costs are amortized on a straight-line basis over the life
of the related debt. This amortization is charged to depreciation and
amortization expense.
Property and equipment is carried at cost. Betterments, renewals and
extraordinary repairs that extend the life of the asset are capitalized;
other repairs and maintenance are expensed. Interest is capitalized to the
asset to which it relates in connection with the construction of major
facilities. The cost and accumulated depreciation applicable to assets
retired are removed from the accounts and the gain or loss on disposition
is recognized in income. Depreciation is computed by the straight-line
method for financial reporting purposes and accelerated methods for tax
reporting purposes based upon the estimated useful lives of the related
assets.
Investment in direct financing lease represents the portion of the
Company's management contract with a governmental agency that represents
payments on building and equipment leases. The lease is accounted for
using the financing method and, accordingly, the minimum lease payments to
be received over the term of the lease less unearned income are
capitalized as the Company's investment in the lease. Unearned income is
recognized as income over the term of the lease using the interest method.
Income taxes are accounted for under the provisions of Statement of
Financial Accounting Standards ("SFAS") No. 109, "Accounting for Income
Taxes," which was adopted by the Company effective January 1, 1993. This
statement generally requires the Company to record deferred income taxes
for the differences between book and tax bases of its assets and
liabilities.
F-10
<PAGE> 56
The Company maintains contracts with various governmental entities to
manage their facilities for fixed per diem rates or monthly fixed rates.
The Company also maintains contracts with various federal, state and local
governmental entities for the housing of inmates in Company owned
facilities at fixed per diem rates. These contracts usually contain
expiration dates with renewal options ranging from annual to multi-year
renewals. Most of these contracts have current terms that require renewal
every two to five years. The Company expects to renew these contracts for
periods consistent with the remaining renewal options allowed by the
contracts or other reasonable extensions. The Company records revenues
based on these per diem rates and the number of inmates housed during the
revenue period.
To meet the reporting requirements of SFAS 107, "Disclosures About Fair
Value of Financial Instruments," the Company calculates the fair value of
financial instruments using quoted market prices. At December 31, 1995,
there were no material differences in the book values of the Company's
financial instruments and their related fair values, except for the
Company's convertible subordinated notes (see Note 7) and the forward
contract for convertible subordinated notes (see Note 12), which based on
the underlying equity securities, have an estimated fair market value of
approximately $150,000,000.
For purposes of the statements of cash flows, the Company excludes
restricted cash from cash and cash equivalents. The Company considers all
highly liquid debt instruments with a maturity of three months or less to
be cash equivalents.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
In March, 1995, the Financial Accounting Standards Board ("FASB") issued
SFAS 121, "Accounting for the Impairment of Long-Lived Assets and
Long-Lived Assets to be Disposed Of." This statement imposes stricter
criteria for long-term assets by requiring that such assets be probable of
future recovery at each balance sheet date. The company anticipates
adopting SFAS 121 effective January 1, 1996, and does not expect that
adoption will have a material impact on the results of operations,
financial condition or cash flows of the Company.
Certain reclassifications of 1994 and 1993 amounts have been made to
conform with the 1995 presentation.
F-11
<PAGE> 57
2. MERGERS AND ACQUISITIONS
On August 18, 1995, the Company issued 1,400,000 shares of its common
stock for all the outstanding shares of CMA and CSG. CMA and CSG operate
and manage prisons and other correctional facilities for governmental
agencies. Of the shares issued, 140,000 are held in escrow for the
resolution of precombination contingencies.
On April 25, 1995, the Company issued 2,724,992 shares of its common stock
for all the outstanding shares of Concept. Concept operates and manages
prisons and other correctional facilities for governmental agencies. Of
the shares issued, 272,500 are held in escrow for the resolution of
precombination contingencies.
On December 30, 1994, the Company issued 2,600,000 shares of its common
stock for all the outstanding shares of TransCor, a prisoner
transportation company. Of the shares issued, 260,000 are held in escrow
for the resolution of certain precombination contingencies.
These transactions were accounted for as pooling-of-interests, and
accordingly, the accompanying consolidated financial statements for 1995,
1994 and 1993 have been restated to include the accounts of CMA and CSG.
The Company has previously filed restated financial statements for
TransCor and Concept. Pooling expenses of approximately $950,000 are
included in general and administrative expense in the 1995 statement of
operations. A reconciliation of separately reported revenues and net
income is as follows (in thousands):
<TABLE>
<CAPTION>
(UNAUDITED)
SIX MONTHS ENDED YEARS ENDED DECEMBER 31,
JUNE 30, -----------------------
1995 1994 1993
---------------- -------- ---------
<S> <C> <C> <C>
Revenues:
Corrections Corporation of
America $ 89,520 $ 144,060 $ 126,634
CMA and CSG combined 5,876 8,315 5,900
--------- --------- ---------
$ 95,396 $ 152,375 $ 132,534
========= ========= =========
Net Income:
Corrections Corporation of
America $ 5,450 $ 8,158 $ 5,383
CMA and CSG combined (304) (240) 225
--------- --------- ---------
$ 5,146 $ 7,918 $ 5,608
========= ========= =========
</TABLE>
In the preparation of the consolidated financial statements, the Company
made certain immaterial adjustments and reclassifications to the
historical financial statements of TransCor, Concept, CMA and CSG to be
consistent with the accounting policies of the Company.
As discussed in Note 6, the Company exercised its option to acquire the
remaining 50% of its investment in UCLP during 1995. The acquisition was
accounted for using the purchase method. The purchase price has been
allocated to assets acquired and liabilities assumed based on the
estimated fair market value at the date of the acquisition. The operations
of UCLP on a
F-12
<PAGE> 58
consolidated basis prior to the acquisition are not material to the
Company's results of operations.
3. OTHER ASSETS
Other assets consist of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
---------------
1995 1994
------- ------
<S> <C> <C>
Deferred project development costs $ 1,230 $ 613
Project development costs, less accumulated amortization
of $487 and $683, respectively 2,275 692
Facility start-up costs, less accumulated amortization
of $2,728 and $2,141, respectively 6,705 2,189
Debt issuance costs, less accumulated amortization of
$1,289 and $1,380, respectively 1,669 1,461
Deferred placement fees 2,404 2,404
Investments in affiliates 3,756 2,590
Notes receivable 890 900
Other assets 713 569
------- -------
$19,642 $11,418
======= =======
</TABLE>
The notes receivable bear interest at the weighted average rate of 11.14%.
$700,000 is secured by a third mortgage on a facility and is due in
January 1999. The remaining balance is due in monthly principal and
interest payments through April 1999.
During the first quarter of 1995, the Company purchased the remaining 50%
of CC Australia from its original joint venture partner. After
consideration of several strategic alternatives related to CC Australia,
the Company sold 50% of the entity to Sodexho, S.A. ("Sodexho"), a French
conglomerate, during the second quarter of 1995. The Company accounted for
the 100% ownership period on the equity basis of accounting and recognized
an after-tax gain of $783,000 on the sale.
F-13
<PAGE> 59
4. PROPERTY AND EQUIPMENT
Property and equipment, at cost, consist of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1995 1994
--------- ---------
<S> <C> <C>
Land $ 3,953 $ 2,916
Buildings and improvements 114,863 83,103
Equipment 13,486 9,492
Office furniture and fixtures 2,262 1,850
Construction in progress 23,083 1,583
--------- ---------
157,647 98,944
Less accumulated depreciation (20,628) (16,010)
--------- ---------
$ 137,019 $ 82,934
========= =========
</TABLE>
Depreciation expense was $4,428,000, $3,469,000 and $3,011,000 for 1995,
1994 and 1993, respectively.
5. INVESTMENT IN DIRECT FINANCING LEASE
At December 31, 1995, the investment in direct financing lease represents
a building and equipment lease between the Company and the state of New
Mexico for the New Mexico Women's Correctional Facility.
A schedule of minimum future rentals to be received under the direct
financing lease at December 31, 1995 is as follows (in thousands):
<TABLE>
<CAPTION>
DIRECT
FINANCING
LEASE RENTAL
RECEIVABLE
------------
<S> <C>
1996 $ 1,420
1997 1,420
1998 1,420
1999 1,420
2000 1,420
Thereafter 12,066
------
Total minimum obligation 19,166
Less unearned income (9,048)
------
Present value of direct financing lease 10,118
Less current portion (354)
------
Long-term portion at December 31, 1995 $ 9,764
=======
</TABLE>
F-14
<PAGE> 60
The agreement contains a provision that allows the state to purchase the
building and equipment for predetermined prices at specific intervals
during the contract period.
Beginning in 1996, CCA began leasing to the State of New Mexico an
addition to the New Mexico Women's Correctional Facility. This new lease
will be added to the direct financing lease above. The minimum future
rentals to be received under the additional lease, which are not included
in the schedule above, total approximately $3,590,000, excluding unearned
income.
6. INVESTMENT IN UCLP
At December 31, 1994, Concept and its affiliates owned 49.9% of UCLP and
Concept owned 50% of the common stock of United- Concept, which owned .2%
of UCLP and was the managing general partner of UCLP. In addition, Concept
had an option to purchase from its partner in UCLP the other 50%
partnership interests in UCLP and the other 50% of the common stock of
United-Concept. On July 17, 1995, Concept exercised its option and
acquired the remaining interests of UCLP for $5,250,000.
United-Concept has issued and outstanding 1,000 shares of common stock (of
which Concept owns 1,000 shares) and one share of voting preferred stock,
which is owned by The First National Bank of Chicago under an indenture
agreement related to the financing of the Eloy Facility. Each share of
stock, common and preferred, has one vote. The preferred stock does not
participate in income distribution by United-Concept and has a $10
liquidation value. The by-laws of United-Concept require 100% shareholder
approval of significant corporate actions, and also require an independent
director. Concept is entitled to 100% of the income of UCLP, but the
independent director effectively has veto power over certain actions of
United-Concept.
The Company's investment in UCLP was accounted for under the equity method
from inception through July 17, 1995. Since July 17, 1995, the Company is
entitled to 100% of the income and has responsibility for all the debt and
for satisfying the contractual obligation of UCLP. As a result, the
Company has included UCLP in the consolidated financial statements.
F-15
<PAGE> 61
Condensed financial information of UCLP as of December 31, 1994, and for
the year then ended is as follows (in thousands):
<TABLE>
<CAPTION>
<S> <C>
Net revenue $ 1,886
=======
Net income $335
=======
Current assets $2,560
Noncurrent assets 30,131
-------
$32,691
=======
Current liabilities $4,501
Payable to Concept 1,288
Noncurrent liabilities 25,965
Partners' capital 937
-------
$32,691
=======
</TABLE>
7. LONG-TERM DEBT
Long-term debt consists of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------------
1995 1994
------------ ------------
<S> <C> <C>
Industrial Development Revenue Bonds, principal payments of
$235 annually through November 1, 2005, interest at
8.875%, payable semi-annually, collateralized by
property and equipment with a carrying value of
$6,766 at December 31, 1995 and by revenues from
a contract. $2,385 $2,620
Senior Secured Notes, principal payments of $2,000 annually through
1997, increasing to $3,000 in 1998 with the unpaid balance
due in 2000, interest payable semi-annually at 11.08%,
collateralized by property and equipment with a carrying
value of $8,486 at December 31, 1995 and by revenues
from certain contracts. 12,215 15,643
</TABLE>
F-16
<PAGE> 62
<TABLE>
<CAPTION>
DECEMBER 31,
1995 1994
-------- --------
<S> <C> <C>
Secured Notes Payable, principal payments due annually in various amounts
through 1997, interest payable monthly at 9.6%, collateralized by
property and equipment with a carrying value of $11,171 at December 31,
1995 and by revenues from a contract.
$2,981 $4,223
Bank Loan, principal and interest payable in monthly installments of $113
through February 1, 2000, at which time the entire principal and any
unpaid accrued interest is due, interest at the bank's prime rate (8.5%
at December 31, 1995), or LIBOR plus 2% (7.9% at December 31, 1995),
collateralized by property and equipment with a carrying value of
$31,967 at December 31, 1995 and by revenues from a contract.
12,580 6,081
Notes payable to a bank, principal and interest at 10%, payable monthly
until maturity in March 2000, collateralized by property and equipment
with a carrying value of $31,650 at December 31, 1995 and by revenues from
a contract.
25,608 -
Line of credit payable to a bank, principal due May 1997, interest payable
monthly at the bank's prime rate (8.5% at December 31, 1995), or LIBOR
plus 2% (7.9% at December 31, 1995), collateralized by property and
equipment with a carrying value of $43,399 at December 31, 1995.
14,500 -
Line of credit payable to a bank, principal paid in full in May 1995,
interest paid at the bank's prime rate (9.0% in May 1995). - 785
Note payable to UCLP, principal paid in full in July
1995, interest paid at 10%. - 892
</TABLE>
F-17
<PAGE> 63
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------
1995 1994
------- -------
<S> <C> <C>
Convertible Subordinated Notes, principal due at maturity in 1999 with
call provisions beginning in 1997, interest payable semi-annually at
8.5% $7,000 $13,700
Convertible Subordinated Notes, principal due at
maturity in 1998, interest payable quarterly at
8.5%. 7,500 7,500
Other 1,116 2,299
------- ------
85,885 53,743
Less current portion (11,020) (5,759)
------- ------
$74,865 $47,984
======= ======
</TABLE>
At December 31, 1995, the Company's line of credit facility provides for
borrowings up to $25,000,000. The facility consists of a working capital
line, which includes letters of credit. Letters of credit totaling
$2,775,000 have been issued to secure the Company's workers' compensation
insurance policy, performance bonds and utility deposits. The unused
commitment at December 31, 1995 was $7,725,000. The facility is subject to
renewal on May 31, 1997.
Restricted cash of $569,000 and $324,000 at December 31, 1995 and 1994,
respectively, represents cash held in an investment trust related to the
Company's liability insurance policy and deposits to sinking funds
established for the funding of current year principal and interest on
certain bonds.
The Company does not maintain any significant formal or informal
compensating balance arrangements with financial institutions.
The Convertible Subordinated Notes are convertible into the Company's
common stock at prices ranging from $3.39 to $7.17 per share. The Company
may require conversion under certain conditions after the stock has a
market value of 150% of the conversion price for a specified period. In
1995 and 1994, Convertible Subordinated Notes with a face value of
$6,700,000 and $3,000,000, respectively were converted into 887,000 and
419,000, respectively, shares of common stock.
The provisions of the credit facility, bonds, and notes contain
restrictive covenants, the most restrictive of which are limits on the
payment of dividends, incurrence of additional indebtedness, investments
and mergers. The agreements also require that the Company maintain
specific ratio requirements relating to cash flow, tangible net worth,
interest coverage and earnings.
The Company was in compliance with the covenants at December 31, 1995.
F-18
<PAGE> 64
The Company capitalized interest of $717,000, $377,000 and $226,000 in
1995, 1994 and 1993, respectively. Interest expense, net is comprised of
the following for each year (in thousands):
<TABLE>
<CAPTION>
1995 1994 1993
------ -------- ---------
<S> <C> <C> <C>
Interest expense $ 5,534 $ 4,954 $ 5,842
Interest income (1,582) (1,515) (1,418)
------- ------- --------
$ 3,952 $ 3,439 $ 4,424
</TABLE>
Maturities of long-term debt for the next five years and thereafter are:
1996 - $11,020,000; 1997 - $27,037,000; 1998 - $20,582,000; 1999 -
$14,229,000; 2000 - $11,794,000 and thereafter - $1,197,000.
8. INCOME TAXES
The Company adopted SFAS 109 effective January 1, 1993. No adjustment for
the cumulative effect of the accounting change was required and the
Company elected not to restate prior years.
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes. The
provision for income taxes is comprised of the following components (in
thousands):
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
------------------------------------------
1995 1994 1993
------ ------ ------
<S> <C> <C> <C>
CURRENT PROVISION
Federal $2,853 $1,319 $864
State 315 115 90
------ ------ ----
3,168 1,434 954
------ ----- ----
INCOME TAXES CHARGED TO EQUITY
Federal 3,567 531 -
State 420 62 -
----- ----- ----
3,987 593 -
----- ----- ----
DEFERRED PROVISION
Federal 1,946 99 (108)
State 229 186 (14)
------ ------ ----
2,175 285 (122)
------ ------ ----
Provision for income taxes $9,330 $2,312 $832
====== ====== ====
</TABLE>
F-19
<PAGE> 65
Significant components of the Company's deferred tax assets and
liabilities are as follows (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------
1995 1994
------- -------
<S> <C> <C>
CURRENT DEFERRED TAX ASSETS
Asset reserves and liabilities not yet deductible
for tax $1,473 $ 855
Alternative minimum tax carryforward 173 972
Net operating loss carryforwards - 1,458
-------- -------
Net current deferred tax assets $1,646 $3,285
======== =======
NONCURRENT DEFERRED TAX ASSETS
Other $ 35 $ 27
------ ------
Total noncurrent deferred tax assets 35 27
------ ------
NONCURRENT DEFERRED TAX LIABILITIES
Tax in excess of book depreciation and amortization 3,565 3,467
Income items not yet taxable and other 634 188
------ ------
Total noncurrent deferred tax liabilities 4,199 3,655
------ ------
Net noncurrent deferred tax liabilities $4,164 $3,628
====== ======
</TABLE>
At December 31, 1993, a valuation allowance had been recorded equal to the
remaining deferred tax assets after considering deferred tax assets that
can be realized through offsets to existing taxable temporary differences.
In 1994, the valuation allowance was eliminated due to the Company's
realization of the tax operating loss carryforwards. At December 31, 1995
and 1994, there is no valuation allowance.
F-20
<PAGE> 66
A reconciliation of the statutory federal income tax rate and the
effective tax rate as a percentage of pretax income for the years ended
December 31 is as follows:
<TABLE>
<CAPTION>
1995 1994 1993
------ ------ ------
<S> <C> <C> <C>
Statutory federal rate 34.0% 34.0% 34.0%
State taxes, net of federal tax benefit 4.0 4.0 4.0
Utilization of net operating loss carryforward - (15.4) (25.1)
Non-deductible items, primarily related to pooling
expenses 1.4 - -
----- ----- ----
39.4% 22.6% 12.9%
==== ===== ====
</TABLE>
9. EARNINGS PER SHARE
Primary net income per common share is computed using the weighted average
number of shares of common stock and common stock equivalents outstanding.
Stock warrants and stock options are considered common stock equivalents.
The convertible subordinated notes are not common stock equivalents. In
computing fully diluted net income per common share, the convertible
subordinated notes are considered dilutive using the if-converted method.
In 1994 and 1993, the convertible subordinated notes were antidilutive.
The following table presents information necessary to calculate fully
diluted earnings per share for the years ended December 31, 1995, 1994 and
1993 (in thousands, except per share amounts):
<TABLE>
<CAPTION>
1995 1994 1993
------ ------ -------
<S> <C> <C> <C>
Net income allocable to common
stockholders $14,333 $ 7,714 $ 5,183
Interest expense applicable to
convertible subordinated notes, net of
tax 740 - -
------- ------- -------
Adjusted net income $15,073 $ 7,714 $ 5,183
======= ======= =======
Fully diluted weighted average common
shares outstanding 38,679 31,220 26,422
Conversion of convertible subordinated
notes 3,123 - -
------ ------ ------
Adjusted fully diluted common shares
outstanding 41,802 31,220 26,422
======= ====== ======
Fully diluted earnings per share $ .36 $ .25 $ .20
======= ======= =======
</TABLE>
F-21
<PAGE> 67
10. STOCKHOLDERS' EQUITY
Preferred Stock -
The Company has authorized 1,000,000 shares of $1 par value preferred
stock.
In December 1991, the Company sold 50,000 shares of Series A preferred
stock for $5,000,000. The preferred stock earned dividends at 8.5% and
were paid quarterly from January 31, 1993 through June 23, 1994. Each
share of the Series A preferred stock was convertible into 28 shares of
common stock. In June 1994, the Series A preferred stock was converted at
par value into 1,400,000 shares of common stock. At December 31, 1995, no
preferred stock was issued or outstanding.
Stock Split -
On October 4, 1995, the Board of Directors declared a two-for-one stock
split of the Company's common stock to be effective on October 31, 1995.
An amount equal to the par value of the common shares outstanding as of
October 31, 1995, was transferred from additional paid-in capital to the
common stock account. All references to number of shares and to per share
data in the consolidated financial statements have been adjusted for this
stock split.
Stock Warrants -
The Company has issued stock warrants to certain affiliated and
unaffiliated parties for providing certain financing, consulting and
brokerage services to the Company and to stockholders as a dividend. Stock
warrants outstanding at December 31, 1995 are as follows:
<TABLE>
<CAPTION>
DATE OF NUMBER OF EXERCISE EXPIRATION
ISSUANCE WARRANTS PRICE DATE
---------- --------- -------- ----------
<S> <C> <C> <C>
6/22/92 73,314 $8.50/share 9/14/97
9/4/92 1,935,777 $8.50/share 9/14/97
12/2/92 43,988 $8.50/share 9/14/97
4/30/93 98,038 $8.50/share 9/14/97
6/23/94 1,100,000 $15.80/share 12/31/98
</TABLE>
Each warrant entitles the warrant holder to two common shares upon
exercise. The warrants are exercisable from date of issuance except for
the warrants issued June 22, 1992, September 4, 1992 and December 2, 1992,
which were exercisable beginning April 30, 1993.
In 1995, 268,138 warrants were exercised at prices ranging from $7.14 to
$8.50 per share. In 1995, the Company purchased 60,000 warrants at the
market price of $18 per share from a warrant holder. In 1994, 185,242
warrants were exercised at prices ranging from $2.83 to $8.50 per share.
F-22
<PAGE> 68
Stock Option Plans -
The Company has incentive and nonqualified stock option plans under which
options may be granted to "key employees" as designated by the Board of
Directors. The options are granted with exercise prices that equal market
value on the date of grant. The options are exercisable after the later of
two years from date of employment or one year after the date of grant
until ten years after the date of the grant.
The Company's Board of Directors approved a stock repurchase program for
up to an aggregate of 200,000 shares of the Company's stock for the
purpose of funding the employee stock options, stock ownership and stock
award plans.
Stock option transactions relating to the Company's incentive and
nonqualified stock option plans are summarized below (in thousands, except
per share amounts):
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------------------------------
1995 1994 1993
------- -------- --------
<S> <C> <C> <C>
Outstanding at beginning of period 1,735 3,191 2,655
Granted 624 89 673
Exercised (377) (1,530) (130)
Canceled (24) (15) (7)
------ ------ ------
Outstanding at end of period 1,958 1,735 3,191
====== ====== ======
Available for future grant 1,909 510 558
====== ====== ======
Exercisable 1,340 1,693 2,523
====== ====== =======
Option price range $ 2.08 $ 1.93 $ .10
TO to to
$29.25 $ 8.32 $ 5.99
</TABLE>
In addition to the plans mentioned above, the Company has a nonqualified
stock option plan to encourage stock ownership by selected employees of
the Company. Pursuant to the plan, stock options may be granted to key
employees upon authorization by the Board of Directors. The aggregate
number of options that may be granted under the plan is 720,000. As of
December 31, 1995, 360,000 options were outstanding at option prices
ranging from $2.71 to $3.33 per share. Subsequent to December 31, 1995,
240,000 of these options were exercised.
During 1995, the Company agreed to issue 168,512 shares of common stock to
certain key employees as a deferred stock award. The award becomes fully
vested ten years from the date of grant based on continuous employment
with the Company. The Company is expensing the $3,670,000 of awards over
the vesting period.
F-23
<PAGE> 69
In October 1995, the FASB issued SFAS 123, "Accounting for Stock-Based
Compensation." This statement requires new disclosures in the notes to the
financial statements about stock-based compensation plans based on the
fair value of equity instruments granted. Companies also may base the
recognition of compensation cost for instruments issued under stock-based
compensation plans on these fair values. The Company anticipates adopting
SFAS 123 effective January 1, 1996, but currently does not plan to change
the method of accounting for these plans.
Employee Stock Ownership Plan -
The Company has an Employee Stock Ownership Plan whereby each employee of
the Company who is at least 18 years of age is eligible for membership in
the plan as of January 1 of their first anniversary year in which they
have completed at least 1,000 hours of service.
Benefits, which become 40% vested after four years of service and 100%
vested after five years of service, are paid on death, retirement or
termination. The Board of Directors has discretion in establishing the
amount of the Company contributions. The Company's contributions to the
plan may be in the form of common stock, cash or other property.
Contributions to the plan amounted to $1,366,000, $1,059,000 and $915,000
for the years ended December 31, 1995, 1994 and 1993, respectively.
11. REVENUES AND EXPENSES
Approximately 99% of the Company's revenues for the years ended December
31, 1995, 1994 and 1993, relate to amounts earned from federal, state and
local governmental management and transportation contracts.
The Company had revenues of 23%, 17% and 22% from the federal government
and 49%, 54% and 51% from state governments for the years ended December
31, 1995, 1994 and 1993, respectively. One state government had revenues
of 18%, 24% and 24% for the years ended December 31, 1995, 1994 and 1993,
respectively. In addition, another state government had revenues of 11%
and 10% for the years ended December 31, 1994 and 1993, respectively.
Accounts receivable include $37,057,000 and $23,570,000 due from federal,
state and local governments at December 31, 1995 and 1994, respectively.
Accounts receivable and accounts payable at December 31, 1995 consisted of
the following (in thousands):
<TABLE>
<CAPTION>
ACCOUNTS
RECEIVABLE PAYABLE
---------- --------
<S> <C> <C>
Trade $32,544 $ 7,267
Construction 4,513 3,490
Other 2,604 -
------- -------
$39,661 $10,757
======= =======
</TABLE>
Salaries and related benefits represented 58%, 55% and 54% of operating
expenses for the years ended December 31, 1995, 1994 and 1993,
respectively.
F-24
<PAGE> 70
12. INTERNATIONAL ALLIANCE
The Company has entered into an International Alliance (the "Alliance")
with Sodexho to pursue prison management business outside the United
States, Australia and the United Kingdom. In conjunction with the
Alliance, Sodexho purchased an equity position in the Company by acquiring
several instruments. In 1994, the Company sold Sodexho 1,400,000 shares of
common stock at $7.50 per share and a $7,000,000 convertible subordinated
note bearing interest at 8.5%. Sodexho also received 1,100,000 warrants at
$15.80 per warrant that expire December 1998. Each warrant entitles
Sodexho to two common shares upon exercise. In consideration of the
placement of the aforementioned securities, the Company agreed to pay
Sodexho $3,960,000 over a four-year period ending in 1998. These fees
include debt issuance costs and private placement equity fees. These fees
have been allocated to the various instruments and are charged to debt
issuance costs or equity as the respective financings are completed.
Sodexho is subject to a standstill agreement that limits their ownership
to 25% in the Company and has certain preemptive rights to retain its
percentage ownership.
In 1995, Sodexho purchased 545,000 shares of common stock for $15.25 per
share pursuant to their contractual preemptive right. Also during 1995,
the Company and Sodexho entered into a forward contract whereby Sodexho
would purchase up to $20,000,000 of convertible subordinated notes at any
time prior to December 1997. The notes will bear interest at LIBOR plus
1.35% and will be convertible into common shares at a conversion price of
$13.65 per share.
13. RELATED PARTY TRANSACTIONS
The Company had a note receivable from its chief executive officer of
$100,000 at December 31, 1994. Interest at the prime rate plus 1% is
charged annually. The note was repaid in 1995.
TransCor and Concept had notes payable to stockholders of $100,000 at
December 31, 1994. The Companies repaid notes payable to stockholders of
$100,000 and $403,000 in 1995 and 1994, respectively. Interest expense
totaled approximately $3,000 and $34,000 on notes payable to stockholders
in 1995 and 1994, respectively.
The Company pays legal fees to a law firm of which one of the partners is
a stockholder and a member of the Board of Directors of the Company. Legal
fees, including fees related to the Company's mergers and acquisitions,
paid to the law firm amounted to $675,069 and $140,025 in 1995 and 1994,
respectively.
F-25
<PAGE> 71
14. COMMITMENTS AND CONTINGENCIES
The Company leases certain office space and equipment under long-term
operating leases expiring through 2001. Rental expense was approximately
$5,904,000, $3,490,000 and $2,237,000 for the years ended December 31,
1995, 1994 and 1993, respectively.
Minimum rental commitments for noncancelable leases are as follows (in
thousands):
<TABLE>
<CAPTION>
YEAR AMOUNT
------ --------
<S> <C>
1996 $2,075
1997 2,089
1998 1,833
1999 715
2000 347
</TABLE>
The nature of the Company's business results in claims and litigation
alleging that the Company is liable for damages arising from the conduct
of its employees or others. In the opinion of management, there are no
pending legal proceedings that would have a material effect on the
consolidated financial position or results of operations of the Company.
The Company has an employment agreement with its chief executive officer
through September 30, 1997. The agreement includes a non-compete agreement
covering the same period and requires payments during the period if
employment is terminated. The Company also has other employment
agreements, with similar non-compete agreements and payments, with
officers of the Company that terminate from December 31, 1996 to December
31, 1999.
Each of the Company's management contracts and the statutes of certain
states require the maintenance of insurance. The Company maintains various
insurance policies including employee health, workers' compensation and
general liability insurance. These policies are fixed premium policies
with various deductible amounts that are self-funded by the Company.
Reserves are provided for estimated incurred claims within the deductible
amounts.
F-26
<PAGE> 72
The Company guarantees $263,000 of a performance bond for CC Australia.
The Company has provided a $1,000,000 performance bond in connection with
UKDS's management contract with the United Kingdom. The amount provided is
proportional to the Company's ownership interest in UKDS.
The Company also has letters of credit outstanding on its credit facility
as mentioned in Note 7. In connection with the construction and
development of certain facilities, the Company caused a U.S. Bank (the
"Bank") to issue two letters of credit totaling $59,500,000. The letters
of credit support certain industrial development bonds, the proceeds of
which were used to construct such facilities. The Company guaranteed to
the Bank the repayment in full of any amounts drawn on such letters of
credit as a result of a default under the related bonds. In the event the
Company is required to fund amounts pursuant to these guarantees then the
Company will obtain ownership rights to these facilities. The Company's
reimbursement obligations are secured by all of the collateral that
secures the Company's line of credit facility with the Bank described in
Note 7 and are cross-defaulted with such credit facility.
15. EVENT SUBSEQUENT TO DECEMBER 31, 1995 (UNAUDITED)
On February 29, 1996, the Company sold $30,000,000 of convertible notes
bearing interest at 7.5%. The Company used the proceeds to repay the
principal outstanding under the Company's bank loan and line of credit
(balances of $12,580,000 and $14,500,000, respectively, at December 31,
1995).
F-27
<PAGE> 73
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
There have been no disagreements with the Company's
accountants on any matter of accounting principles and practices or financial
statement disclosures. Arthur Andersen LLP was selected to serve in such
capacity during the fiscal year 1995 and has been selected to serve in such
capacity during the fiscal year 1996.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The information required by this item will appear in, and is
incorporated by reference from, the sections entitled "Proposals for Stockholder
Action - Proposal 1. Election of Directors" and "Management - Directors and
Executive Officers" included in the Company's definitive Proxy Statement
relating to the 1996 Annual Meeting of Stockholders, which will be filed with
the Securities and Exchange Commission pursuant to Regulation 14A.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item will appear in the
sections entitled "Executive Compensation", included in the Company's definitive
Proxy Statement relating to the 1996 Annual Meeting of Stockholders, which
information, other than the Compensation Committee Report and Performance Graph
required by Items 402(k) and (l) of Regulation S-K, is incorporated herein by
reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The information required by this item will appear in, and is
incorporated by reference from, the section entitled "Security Ownership of
Directors, Officers and Principal Stockholders" included in the Company's
definitive Proxy Statement relating to the 1996 Annual Meeting of Stockholders,
which will be filed with the Securities and Exchange Commission pursuant to
Regulation 14A.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item will appear in, and is
incorporated by reference from, the sections entitled "Certain Relationships and
Related Transactions" included in the Company's definitive Proxy Statement
relating to the 1996 Annual Meeting of Stockholders, which will be filed with
the Securities and Exchange Commission pursuant to Regulation 14A.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K
(a) The following documents are filed as part of this Report:
(1) Financial Statements.
No financial statements have been filed with this
Form 10-K other than those incorporated by reference
in Item 8.
(2) Financial Statement Schedules.
All schedules specified in the accounting regulations of
the Securities and Exchange Commission have been omitted
because they are either inapplicable or are not
required.
(3) The Exhibits are listed in the Index of Exhibits
Required by Item 601 of Regulation S-K included
herewith, which is incorporated herein by reference.
(b) No reports on Form 8-K were filed during the last quarter of
the period covered by this Report.
(c) Certain Exhibits. See Item 14(a)(3) above.
(d) Certain Financial Statements. See Item 14(a) (1 and 2) above.
45
<PAGE> 74
INDEX OF EXHIBITS
Exhibits marked with an * are filed herewith. Exhibits following
exhibit number 10(kkkkk) are numbered beginning with 10.100. Other exhibits
have previously been filed with the Commission and are incorporated herein by
reference. Exhibits marked with + are management contracts filed pursuant to
Item 601(b)(10) of Regulation S-K. Effective December 31, 1995, contracts or
amendments to contracts relating to a particular individual facility operated
by the Company will not be included herewith as such contracts are made in the
ordinary course of the Company's business and are not required by Item
601(b)(10) of Regulation S-K. Exhibits marked with a ## are compensation plans
required to be filed pursuant to Item 601(b)(10) of Regulation S-K.
Exhibit
Number Description
3(a) Certificate of Incorporation of the Company. (1)
3(b) Amended and Restated By-Laws of the Company. (4)
3(c) Certificate of Designation relating to the Series A Preferred
Stock. (14)
3(d)* Certificate of Amendment to the Certificate of Incorporation
of the Company dated May 26, 1995.
4(a) Form of 8.5% Convertible Subordinated Note due November 7,
1999 made payable to Toronto Dominion Investments, Inc. in the
aggregate principal amount of $7,000,000. (12)
4(b) Form of 8.5% Convertible Subordinated Notes in the aggregate
principal amount of $4,000,000, together with a schedule
identifying the respective holders, execution dates, maturity
dates, principal amounts, and conversion prices thereof. (12)
4(c) Form of 11.08% Senior Secured Notes, in the aggregate
principal amount of $20,000,000, due November 30, 2000 made
payable to Teachers Insurance and Annuity Association of
America, Massachusetts Mutual Life Insurance Company,
Massmutual Corporate Investors and Massmutual Participation
Investors. (13)
4(d) Form of Warrant for the purchase of common stock of the
Company, expiring November 30,2000 issued to Teachers
Insurance and Annuity Association of America, Massachusetts
Mutual Life Insurance Company, Massmutual Corporate Investors
and Massmutual Participation Investors. (13)
<PAGE> 75
Exhibit
Number Description
4(e) Stock Purchase Agreement, dated as of December 23, 1991,
relating to the shares of Series A Preferred Stock issued to
General Electric Capital Corporation and related Registration
Rights Agreement and Certificate of Designation. (14)
4(f) 8.5% Convertible Extendable Subordinated Notes originally due
September 30, 1998, dated as of June 22, 1992 in the aggregate
principal amount of $2,500,000, made payable to Pacific Mutual
Life Insurance Company and PM Group Life Insurance Company.
(16)
4(g) 8.5% Convertible Extendable Subordinated Notes originally due
September 30, 1998, dated as of December 2, 1992 in the
aggregate principal amount of $1,500,000, made payable to
Pacific Mutual Life Insurance Company and PM Group Life
Insurance Company. (16)
4(h) Warrant Agreement, dated August 21, 1992, by and between the
Company and First Union National Bank of North Carolina
relating to the warrants described in Exhibit 4(i) (15).
4(i) Form of Warrant Certificate issued to the Company's
shareholders of record on September 4, 1992. (15)
4(j) Form of Stock Purchase Warrant for the purchase of Common
Stock issued to the respective holders set forth in the
schedule attached thereto, together with the execution dates,
exercise prices and number of underlying shares. (16)
4(k) Stock Purchase Warrants for the purchase of Common Stock of
the Company issued to the respective holders set forth in the
schedule attached thereto, together with the execution dates,
exercise prices and number of underlying shares. (16)
4(l) 8.5% Convertible Extendable Subordinated Notes originally due
September 30, 1998, dated as of April 29, 1993 in the
aggregate principal amount of $2,500,000, made payable to
Pacific Mutual Life Insurance Company and PM Group Life
Insurance Company.(17)
4(m) Stock Purchase Warrants for the purchase of Common Stock of
the Company issued to Pacific Mutual Life Insurance Company
and PM Group Life Insurance Company on April 29, 1993.(17)
<PAGE> 76
Exhibit
Number Description
4(n) Amendment No. 1 to Warrant Agreement dated August 31, 1993 by
and between the Company and First Union National Bank of North
Carolina relating to the Warrants described on Exhibit
(i).(17)
4(o) 8.5% Convertible Subordinated Note due November 7, 1999 made
payable to Sodexho S.A. in the aggregate principal amount of
$7,000,000.(18)
4(p) Stock Purchase Warrant for the purchase of Common Stock of the
Company issued to Sodexho, S.A. on June 23, 1994.(19)
4(q)* Warrant Repurchase Agreement, dated February 1, 1995, between
First Union National Bank of Tennessee and the Company.
4(r)* Form of Amended 8.5% Convertible Extendable Subordinated Notes
originally due September 30, 1998, dated as of June 22, 1992
in the aggregate principal amount of $2,500,000, made payable
to Cudd & Co. and Atwell & Co. (Original Exhibit No. 4(f)).
4(s)* Form of Amended 8.5% Convertible Extendable Subordinated Notes
originally due September 30, 1998, dated as of December 2,
1992 in the aggregate principal amount of $1,500,000, made
payable to Cudd & Co. and Atwell & Co. (Original Exhibit No.
4(g)).
4(t)* Form of Amended 8.5% Convertible Extendable Subordinated Notes
originally due September 30, 1998, dated as of April 29, 1993
in the aggregate principal amount of $3,500,000, made payable
to Cudd & Co. and Atwell & Co. (Original Exhibit No. 4(l).
4(u)* Form of 7.5% Convertible, Subordinated Note due February 28,
2002 made payable to PMI Mezzanine Fund, L.P. in the aggregate
principal amount of $30,000,000.
<PAGE> 77
Exhibit
Number Description
10(c) ## Corrections Corporation of America Stock Option Plan dated
January 23, 1985, as amended by First Amendment to Corrections
Corporation of America Stock Option Plan, together with forms
of Incentive Stock Option Agreement and Non-Qualified Stock
Option Agreement. (1)
10(d) ## Non-Qualified Stock Option Plan of the Company, dated January
16, 1986, and related form of Non-Qualified Stock Option
Agreement. (1)
10(e) ## Corrections Corporation of America 1988 Flexible Stock Option
Plan. (7)
10(f) Loan Agreement, dated July 1, 1985, between the Company and
the Industrial Development Board of the City of Memphis and
County of Shelby, Tennessee, relating to $6,000,000 Industrial
Revenue Bonds, Series A (Corrections Corporation of America
Project) 1985, related Trust Indenture and related Guaranty,
dated July 1, 1985, between the Company and Commerce Union
Bank. (1)
10(k) Consulting Agreement, dated January 5, 1984, between the
Company and Massey Burch Investment Group, Inc., as amended.
(1)
10(l)+ Bay County Detention Facilities Contract between the Company
and Bay County, Florida, dated September 3, 1985, together
with letter of compliance, dated July 23, 1986. (1)
10(m)+ Contract between the Company and The County of Shelby,
Tennessee (Tall Trees), dated January 25, 1984 as amended
April 15, 1985, and related Lease Agreement dated January 25,
1984. (1)
10(n)+ Contract between the Company and The County of Shelby,
Tennessee and related Lease Agreement, each dated April 15,
1985. (1)
10(o)+ Hamilton County, Tennessee Corrections Facilities Agreement by
and among the Company, Hamilton County, Tennessee, and Dalton
Roberts, County Executive, dated September 20, 1984. (1)
10(q)+ Contract between the Company and the United States of America
dated October 5, 1984, as amended, relating to Laredo, Texas
facility. (1)
<PAGE> 78
Exhibit
Number Description
10(r)+ Contract between the Company and the United States of America,
dated October 6, 1983, relating to the Houston, Texas
facility. (1)
10(s)+ Management and Services Contract and Lease, dated August 6,
1986, between the Company and Santa Fe County, New Mexico. (1)
10(t) First Amendment to Loan Agreement, dated July 1, 1985 between
the Company and the Industrial Development Board of the City
of Memphis and County of Shelby, Tennessee. (2)
10(u) Contract between the Company and Education Corporation of
America, dated May 26, 1986. (2)
10(v) Memorandum of Understanding regarding privatization of
France's penitentiary system. (2)
10(y) First Amendment to Consulting Agreement between the Company
and Massey Burch Investment Group, Inc. (3)
10(z) Loan Agreement, dated November 1, 1986, between the Company
and Bay County, Florida relating to $4,500,000 Bay County,
Florida Industrial Development Correctional Facilities
Revenue Bonds, Series A (Corrections Corporation of America
Project) and related Indenture of Trust. (5)
10(aa) ## Second Amendment to Corrections Corporation of America Stock
Option Plan of Company, dated March 27, 1987, together with
form of Incentive Stock Option Agreement. (6)
10(bb)+ Contract for Pre-Parole Transfer Program Services, dated July
3, 1987, by and between the Company and the Texas Board of
Pardons and Paroles, as extended for an additional period of
one year, on October 20, 1987. (9)
10(ee) Joint Venture Agreement, dated August 27, 1986, by and among
the Company, Jean-Louis Vullierme and Pierre
Dejardin-Verkinder. (9)
<PAGE> 79
Exhibit
Number Description
10(ff) Shareholders' Agreement (the "COGESIP Agreement"), dated
November 7, 1986, by and between the Company, Spie
Batignolles, S.A. ("Spie") and Banque Worms, relating to the
formation of Compagnie de Gestion de Systemes d'Interet
Public, S.A. ("COGESIP"). (9)
10(gg) Agreement, dated December 18, 1986 by and among the Company,
Spie, Banque Worms and Lyonnaise des Eaux, S.A. ("Lyonnaise"),
relating to the admission of Lyonnaise as a participant in
COGESIP. (9)
10(hh) Letter Agreement, dated December 18, 1986, by and among the
Company, Spie, Banque Worms and Lyonnaise, evidencing the
agreement of Lyonnaise to be joined as a party to the COGESIP
Agreement. (9)
10(ii) Memorandum of Understanding, dated August 27, 1987, by and
among the Company, Jean-Louis vullierme and Pierre
Dejardin-Verkinder. (9)
10(jj) Agreement, dated August 31, 1987, by and among the Company,
Spie, Lyonnaise and Banque Worms. (9)
10(kk) Memorandum, dated January 19, 1988, by and among the Company,
CCA International, Inc., Sir Robert McAlpine & Sons Limited
and John Mowlem & Company PLC. (9)
10(ll) Agreement, dated February 22, 1988, by and among the Company,
Jean-Louis Vullierme and Pierre Dejardin-verkinder. (9)
10(mm) Agreement, dated February 22, 1988, by and between CCA
International, Inc. and Initiative Industriali S.P.A. (9)
10(nn)+ Management and Services Contract for Detention Facilities,
dated effective as of March 1, 1988, by and between the
Company and Hernando County, Florida. (9)
10(qq) ## Third Amendment to Corrections Corporation of America Stock
Option Plan dated March 18, 1988. (8)
<PAGE> 80
Exhibit
Number Description
10(rr) Employment Agreement, dated July 8, 1988, by and between the
Company and Mr. Hutto. (11)
10(ss)+ Continuation of Contract by and between the Company and the
United States of America, dated October 1, 1988, relating to
the Houston, Texas facility. (11)
10(uu)+ Operation and Management Services Agreement for Liberty County
and Johnson County Pre-Release Centers by and between the
Texas Department of Corrections and the Company, dated April
28, 1988. (11)
10(vv)+ Management Services Agreement by and between the New Mexico
Corrections Department and the Company, dated July 1, 1988,
relating to the Grants, New Mexico facility. (11)
10(ww)+ Professional Management Agreement by and between Reeves
County, Texas and the Company, dated August 29, 1988, relating
to the Reeves County, Texas facility. (11)
10(xx) U.S. Government Lease for Real Property by and between the
United States of America and the Company, dated April 10,
1984, relating to the Houston facility. (11)
10(yy)+ Contract for Inmate Confinement between the City of Santa Fe
and the Company, dated July 1, 1988, relating to the Santa Fe
facility. (11)
10(zz) ## Corrections Corporation of America 1989 Stock Bonus Plan. (12)
10(bbb) Shareholders, Agreement, dated September 27, 1989, by and
among the Company, John Holland Holdings Limited, and Wormald
Security Australia Pty. Ltd., relating to the formation of
Corrections Corporation of Australia, Pty. Ltd. (12)
10(ccc) Memorandum Varying Agreement, dated September 27, 1989,
relating to the amendment of the Shareholders' Agreement,
dated September 27, 1989, by and among the Company, John
Holland Holdings Limited, and Wormald Security Australia Pty.
Ltd. (12)
<PAGE> 81
Exhibit
Number Description
10(ddd)+ Contract, dated October 10, 1989, by and between Corrections
Corporation of Australia Pty. Ltd. and the Queensland
Corrective Services Commission, relating to the operation and
management of the Borallon Correctional Centre. (12)
10(eee) Letter of Guaranty, dated October 27, 1989, between the
Company and National Australia Bank Limited, relating to the
guaranty by the Company of certain advances made by National
Australia Bank Limited to Corrections Corporation to
Australia, Pty. Ltd. (12)
10(fff) Assignment and Assumption Agreement, dated March 2, 1990, by
and between the Company and Esmor, Inc.'s relating to the
assignment of Esmor, Inc.'s leasehold interest in real
property located in San Diego County, California and the
assignment of Esmor Inc.'s contract with the Immigration and
Naturalization Service for the construction and operation of
an INS Detention Facility. (12)
10(ggg)+ Management Services Contract, dated February 1, 1990, by and
between the Company and the State of Louisiana, Department of
Public Safety and Corrections, relating to the Winn Parish,
Louisiana facility. (12)
10(hhh)+ Letter Agreement, dated December 27, 1989, From the Company to
the Immigration and Naturalization Service, relating to the
continuation of services at the Laredo, Texas facility. (12)
10(iii)+ Letter Agreement, dated December 27, 1989, between the Company
and the Immigration and Naturalization Service, relating to
the continuation of services at the Houston, Texas facility.
(12)
10(jjj)+ Management and Services Contract and Lease, dated August 6,
1989, by and between the Company and the Board of
Commissioners of Santa Fe County, relating to the management
of the Santa Fe, New Mexico facility. (12)
10(mmm) ## First Amendment to Corrections Corporation of America 1988
Flexible Stock Option Plan, dated June 8, 1989. (12)
10(nnn) ## First Amendment to the Corrections Corporation of America
Non-Qualified Stock Option Plan, dated June 8, 1989. (12)
<PAGE> 82
Exhibit
Number Description
10(ooo) Amendment, dated September 16, 1989, to Employment Agreement,
dated July 8, 1988, between the Company and Mr. Hutto. (12)
10(ppp)+ Agreement, dated October 26, 1990, between the Texas
Department of Criminal Justice Pardons and Paroles Division,
relating to the Houston Texas facility. (13)
10(qqq)+ Management Services Contract, dated July 30, 1990, between The
City of Mason and the Company, relating to the management of
the facility in The City of Mason, Tipton County, Tennessee,
and all amendments and documents related thereto, including
that certain Assignment dated December 12, 1990 by the City of
Mason of its rights under the Contract between the City of
Mason and the U.S. Marshals Service. (13)
10(rrr)+ Design, Construction and Management Services Contract, dated
October 10, 1990, between The Metropolitan Government of
Nashville and Davidson County and the Company, relating to the
Deberry, Davidson County, facility. (13)
10(sss) Management Services Contract, dated November 9, 1990, between
The County of Torrance and the Company, relating to the
management of the Torrance County, New Mexico facility. (13)
10(ttt) Loan Agreement, dated June 21, 1990, by and between the
Company and Dominion Bank of Middle Tennessee, relating to a
loan in the aggregate principal amount of up to $7,000,000;
Promissory Note; Security Agreement; and Deed of Trust and
Security Agreement, as amended by First Amendment to Loan
Agreement dated March 7, 1991. (13)
<PAGE> 83
Exhibit
Number Description
10(uuu) Note Purchase Agreement, dated as of December 6, 1990, by and
among the Teachers Insurance and Annuity Association of
America, Massachusetts Mutual Life Insurance Company,
Massmutual Corporate Investors, Massmutual Participation
Investors, and the Company, relating to the issuance of notes
in the aggregate principal amount of $20,000,000; Security
Agreement; Trust Agreement; Collection Account Agreement; and
Deed of Trust, as amended by First Amendment to Note Purchase
Agreement dated March 21, 1991. (13)
10(vvv)+ Award/Contract, dated July 1, 1990 by and between the U.S.
Marshals Service and CDC/CCA, a joint venture, relating to
services at a proposed facility at Leavenworth, Kansas, and
related assignment and novation agreements. (13)
10(www) Agreement of Purchase and Sale of Assets, dated May 28, 1991,
by and among P.B.I. Schools, Inc., Pontiac Business
Institute-Oxford, Inc., Howard Weaver and Technical and
Business Institute of America, Inc., a wholly-owned subsidiary
of the Company, and related Bill of Sale, Assignment of
Accounts Receivable and Promissory Note. (14)
10(yyy)+ Pardons and Paroles Division Pre-Parole Transfer Facility
Management and Operations Agreement, dated August 20, 1991, by
and between the Company and the Texas Department of Criminal
Justice, Pardons and Parole Division, relating to the Houston,
Texas facility. (14)
10(zzz) Agreement dated January 10, 1991 by and between the Company
and Correctional Development Corporation ("CDC"), Assignment
and Assumption, Termination of Joint Venture, Indemnification
and Hold Harmless, and Waiver Agreement, dated as of February
20, 1991 between the Company and CDC, and related Novation
Agreement, dated as of February 20, 1991, by and among the
Company, CCA/CDC Joint Venture and the United States.(17)
10(aaaa)+ Operation and Management Services Agreement, Liberty County
and Johnson County Pre-Release Centers, by and between Texas
Department of Criminal Justice Institutional Division and the
Company, dated September 1, 1991. (14)
<PAGE> 84
Exhibit
Number Description
10(bbbb) Standard Transfer Form, dated September 8, 1991,
between the Company and Houghton Holdings Limited
(formerly John Holland Holdings Limited) relating to
the purchase by the Company of 7,500 shares in
Corrections Corporation of Australia Pty. Ltd. and
related Amended and Restated Letter of Guaranty. (14)
10(cccc)+ Contract, dated September 18, 1991, by and between
The Immigration and Naturalization Service and the
Company relating to the Houston, Texas facility. (14)
10(dddd)+ Contract, dated December 20, 1991, by and between The
Immigration and Naturalization Service and the
Company relating to the Laredo, Texas facility. (14)
10(eeee)+ Contract, dated January 24, 1992, by and between the
State of Tennessee Department of Correction and the
Company relating to the Wayne County facility, and
related addendums. (14)
10(ffff)+ Addendum to Management Services Contract for
Detention Facilities between Hernando County, Florida
and the Company, dated January 28, 1992. (14)
10(gggg)+ Modification, dated February 21, 1992, to the Design,
Construction and Management Services Contract between
the Company and The Metropolitan Government of
Nashville and Davidson County. (14)
10(hhhh) Amendment dated March 26, 1992 to the Note Purchase
Agreement described in Exhibit 10(uuu). (14)
10(iiii) ## Corrections Corporation of America Amended and
Restated Employee Stock Ownership Plan.(14)
10(jjjj) Loan Agreement, dated March 17, 1992, by and between
the Company and Canada Life Assurance Company,
relating to a loan in the aggregate principal amount
of $6,500,000; Promissory Note; First Mortgage and
Security Agreement, and Assignment of Lease, Rents,
Management and Securities Agreement. (16)
10(kkkk) Amended and Restated Loan Agreement, dated as of
December 22, 1992 by and between the Company and
First Union National Bank of
<PAGE> 85
Exhibit
Number Description
Tennessee, relating to a loan in the aggregate
principal amount of $5,000,000; Third Amended and
Restated Working Capital Note; First Amendment to
Line of Credit Property Deed of Trust, Security
Agreement and Financing Statement. (16)
10(llll) Third Amendment to Loan Agreement, dated February 26,
1992, by and between the Company and Dominion Bank of
Middle Tennessee. (16)
10(mmmm) Fourth Amendment to Loan Agreement, dated June 5,
1992, by and between the Company and Dominion Bank of
Middle Tennessee. (16)
10(nnnn) Employment Agreement, dated as of September 28, 1992,
between the Company and Doctor R. Crants. (16)
10(oooo) Amended and Restated Promissory Note, dated November
6, 1992, executed by Doctor R. Crants, to the order
of the Corporation in the aggregate principal amount
of $300,000. (16)
10(pppp) Amendment dated June 26, 1992 to Note Purchase
Agreement described in Exhibit 10(uuu). (16)
10(qqqq)+ Addendum to the Management and Services Contract for
Detention Facilities between the Company and Hernando
County, Florida, dated January 28, 1992. (16)
10(rrrr) Notice of Termination, dated June 18, 1992, from the
Company relating to the termination of the contract
between the State of Tennessee Department of Youth
Development and the Company for the management of the
Mountain View Youth Development Center, effective
December 31, 1992. (16)
10(ssss)+ Amendment No. 4 to the Management and Services
Contract and Lease between the Company and Santa Fe
Board of County Commissioners, dated August 6, 1992.
(16)
10(tttt)+ Heads of Agreement, dated November 27, 1992, between
the Secretary of State for the Home Department of 50
Queen Anne's Gate London SW1H 9AT and UK Detention
Services Limited relating to the Blakenhurst
facility. (16)
<PAGE> 86
Exhibit
Number Description
10(uuuu)+ Contract Amendment No. 2 to the Management Service
Contract, dated December 14, 1992 between the Company
and the State of Louisiana, Department of Public
Safety and Corrections relating to the Winn Parish
facility. (16)
10(vvvv)+ Management and Operations Agreement, dated December
22, 1992 between the Company and Texas Department of
Criminal Justice, Pardons and Paroles Division
relating to the Houston, Texas facility. (16)
10(wwww)+ Renewal Option Exercise, dated February 11, 1993 of
the Immigration and Naturalization Service, relating
to the continuation of services at the Laredo, Texas
facility. (16)
10(xxxx)+ Renewal Option Exercise, dated February 11, 1993 of
the Immigration and Naturalization Service, relating
to the continuation of services at the Houston, Texas
facility. (16)
10(yyyy) ## Corrections Corporation of America Non-Employee
Director Stock Option Plan.(17)
10(zzzz) ## Employment Agreement, dated as of April 1, 1994, by
and between the Company and T. Don Hutto.(17)
10(aaaaa) Stock Repurchase Agreement, dated April 1, 1993 by
and between the Company and Doctor R. Crants.(17)
10(bbbbb) First Amendment to Amended and Restated Loan
Agreement, dated April 30, 1993, by and between the
Company and First Union National Bank of Tennessee;
Overadvance Credit and Term Note; Real Property Deed
of Trust, Security Agreement and Financing
Statement.(17)
<PAGE> 87
Exhibit
Number Description
10(ccccc) Notice of Redemption, Special Warranty Deed, Bill of
Sale and Assignment, Lease Termination Agreement and
related releases, in connection with the defeasance
of the $12,000,000 Correctional Facilities Industrial
Revenue Bonds, Series 1989 (Corrections Corporation
of America Project).(17)
10(ddddd) Amendment No. 1 to the Management Services Contract
between the Company and the State of Louisiana,
Department of Public Safety and Corrections, dated
December 14, 1992.(17)
10(eeeee)+ Letter dated December 16, 1992 relating to the
renewal of the Management Services Contract between
the Company and the State of Louisiana, Department of
Public Safety and Corrections.(17)
10(fffff)+ Operation and Management Services Agreement dated
September 1, 1993 by and between the Company and the
Texas Department of Criminal Justice relating to the
Liberty County and Johnson County Pre-Release
Centers.(17)
10(ggggg)+ Extension of Management and Operations Agreement,
dated September 1, 1993, by and between the Company
and the Texas Department of Criminal Justice relating
to the Houston, Texas facility.(17)
10(hhhhh)+ Inmate Housing Agreement, dated September 9, 1993 by
and between the Company and the Texas Department of
Criminal Justice, Institutional Division, relating to
the Laredo, Texas facility.(17)
10(iiiii)+ Management and Operations Agreement dated September
1, 1993 by and between the Company and the Texas
Department of Criminal Justice, Institutional
Division, relating to the Houston, Texas
facility.(17)
10(jjjjj)+ Exercise of Contract Option, dated December 21, 1993
by the Immigration and Naturalization Service
relating to the Laredo, Texas facility.(17)
<PAGE> 88
Exhibit
Number Description
10(kkkkk) Construction Loan and Security Agreement, dated February 28,
1994 by and between the Company and First Union National Bank
of Tennessee; Construction Loan Note; and Deed of Trust,
Security Agreement and Fixture Filing.(17)
10.100+ Amendment of Solicitation/Modification of Contract dated March
23, 1994 between the Company and the U.S. Department of
Justice, relating to the Laredo, Texas facility.(24)
10.101+ Management Services Agreement, dated as of March 30, 1994
between the Company and the Administration of Corrections of
the Commonwealth of Puerto Rico, Puerto Rico Public Buildings
Authority, relating to the Guayama, Puerto Rico facility. (24)
10.102 ## First Amendment to Corrections Corporation of America 1991
Flexible Stock Option Plan dated March 11, 1994.(24)
10.103+ Intergovernmental Service Agreement effective as of April 1,
1994 between the Company and the United States Marshals
Service, relating to the Pinal County facility.(24)
10.104+ Agreement for Inmate Confinement dated April 14, 1994 between
the Company and New Mexico Corrections Department relating to
the Torrance County facility.(24)
10.105+ Emergency Contract for Inmate Confinement dated April 14, 1994
between the Company and New Mexico Corrections Department
relating to the Torrance County facility.(24)
10.106+ Agreement dated May 2, 1994 between the State of North
Carolina Department of Correction and the City of Mason,
Tennessee relating to the Mason County facility.(24)
10.107+ Amendment of Solicitation/Modification of Contract dated May
31, 1994 between the Company and the U.S. Department of
Justice, relating to the Laredo, Texas facility.(24)
10.108+ Contract dated May 31, 1994 between the Company and The
Department of Services for Children, Youth and Their Families
relating to the Shelby Training Center.(24)
<PAGE> 89
Exhibit
Number Description
10.109 ## Amendments to the Amended and Restated Corrections Corporation
of America Employee Savings and Stock Ownership Plan dated
June 3, 1994.(24)
10.110+ Modification of Intergovernmental Agreement dated June 1, 1994
between the Company and the U.S. Marshals Service relating to
the Santa Fe Juvenile Detention Center.(24)
10.111+ Contract for Inmate Confinement dated June 1, 1994 between the
Company and Nambe Pueblo, New Mexico relating to the Santa Fe
facility.(24)
10.112 International Joint Venture Agreement, dated June 23, 1994,
between the Company and Sodexho, S.A.(20)
10.113 Securities Purchase Agreement, dated June 23, 1994, between
the Company and Sodexho, S.A., including form of 8.5% Note,
form of Warrant, and form of 8.75% Notes.(21)
10.114 Stockholders Agreement, dated June 23, 1994, between the
Company and Sodexho, S.A.(22)
10.115+ Amendment of Solicitation/Modification of Contract, dated June
29, 1994 between the Company and the United States Marshals
Service.(24)
10.116+ Contract for Inmate Confinement dated July 1, 1994 between the
Company and the City of Santa Fe, New Mexico.(24)
10.117+ Contract for Inmate Confinement dated July 13, 1994 between
the Company and Eddie County, New Mexico, relating to the
Torrance County facility.(24)
<PAGE> 90
Exhibit
Number Description
10.118+ Management Services Agreement, dated as of August 2, 1994
between the Company and the Administration of Corrections of
the Commonwealth of Puerto Rico, Puerto Rico Public Buildings
Authority, relating to the Ponce, Puerto Rico facility.(24)
10.119+ Amendment of Solicitation/Modification of Contract, dated
August 3, 1994 with the Department Justice Federal Bureau of
Prisons.(24)
10.120+ Contract for Inmate Confinement effective September 1, 1994
between the Company and Torrance County, New Mexico.(24)
10.121+ Contract for Inmate Confinement dated September 1, 1994
between the Company and Pojoaque Tribal Police, relating to
the Santa Fe Detention Center.(24)
10.122+ Inmate Housing Payment Agreement dated September 1, 1994
between the Company and the Texas Department of Criminal
Justice Institutional Division relating to the Houston, Texas
facility.(24)
10.123+ Intergovernmental Cooperative Agreement, dated September 14,
1994 between the Company and the United States Marshals
Service, relating to the Pinal County facility.(24)
10.124+ Modification of Intergovernmental Agreement, dated October 1,
1994 between the Company and the United States Marshals
Service, relating to the Pinal County facility.(24)
10.125+ Amendment of Solicitation/Modification of Contract, dated
October 1, 1994 between the Company and the United States
Marshals Service relating to the Leavenworth facility.(24)
10.126+ Memorandum of Understanding dated October 13, 1994 between the
Company and New Mexico Corrections Department and Torrance
County, New Mexico, relating to the Torrance County
facility.(24)
10.127+ Provider Agreement dated October 14, 1994 between the Company
and the Department of Youth Development relating to the Tall
Trees facility.(24)
<PAGE> 91
Exhibit
Number Description
10.128+ Modification of Contract dated October 20, 1994 between the
Company and the Department of Justice, Immigration and
Naturalization Service, relating to the Houston, Texas
facility.(24)
10.129+ Agreement, dated as of November 30, 1994 between the Company
and the State of Alaska doing business in Florence, Arizona
relating to the Pinal County facility.(24)
10.130+ Amendment of Solicitation/Modification of Contract, dated
December 17, 1994 of the Department of Justice/Bureau of
Prisons.(24)
10.131+ Modification of Contract dated December 20, 1994 between the
Company and the Department of Justice, Immigration and
Naturalization Service, relating to the Laredo, Texas
facility.(24)
10.132 Share Exchange Agreement by and among the Company, TransCor
America, Inc. and the Shareholders of TransCor America, Inc.,
dated December 30, 1994.(23)
10.133+ Operation and Management Services Contract between the Company
and The State of Florida, Correctional Privatization
Commission, relating to the Bay County, Florida facility.(24)
10.134+ Management and Services Contract for Detention Facilities
between the Company and Hernando County, Florida.(24)
10.135+ First Amendment to the Design, Construction and Management
Services Contract between the Company and The Metropolitan
Government of Nashville and Davidson County.(24)
10.136+ Contract for Juvenile Confinement effective January 1, 1995
between the Company and Tipton County, Tennessee.(24)
10.137+ Amendment One to the Operation and Management Services
Agreement Dallas County Mode II State Jail Felony Facility
dated February 15, 1995 between the Company and Dallas County
Community Supervision and Corrections Department.(24)
10.138 ## Amended and Restated Corrections Corporation of America 1989
Stock Bonus Plan dated February 20, 1995.(24)
<PAGE> 92
Exhibit
Number Description
10.139 Corrections Corporation of America 1995 Employee Stock
Incentive Plan effective as of March 20, 1995.(26)
10.140* Stock Purchase Agreement, dated March 31, 1995, between the
Company and Chubb Security Holdings Australia Limited A.C.N.
003 590 921.
10.141 Share Exchange Agreement, dated as of April 25, 1995, among
the Company, Concept Incorporated, and the Stockholders of
Concept Incorporated.(25)
10.142* Note Purchase Agreement dated as of June 22, 1992, among
Pacific Mutual Life Insurance Company, PM Group Life Insurance
Company and the Company as amended by Amendment No. 1 to the
Note Purchase Agreement, dated as of August 25, 1992,
Amendment No. 2 to the Note Purchase Agreement, dated as of
October 29, 1992, Amendment No. 3 to Note Purchase Agreement,
dated as of April 29, 1993 and Amendment No. 4 to the Note
Purchase Agreement, dated as of April 25, 1995.
10.143* Stock Purchase Agreement, dated as of June 9, 1995, between
Sodexho S.A. and the Company concerning sale of shares of
Corrections Corporation of Australia Pty. Ltd. A.C.N. 010 921
641.
10.144* Stock Purchase Agreement, dated as of June 29, 1995, between
Sodexho S.A. and the Company.
10.145* Amendment No. 1 to Securities Purchase Agreement, dated as of
July 11, 1995, between Sodexho S.A. and the Company.
10.146* Amended and Restated Loan Agreement, dated as of July 13,
1995, between First Union National Bank of Tennessee and the
Company as amended by First Amendment to Amended and Restated
Loan Agreement dated as of September 28, 1995.
10.147* Letter of Credit, dated July 13, 1995, issued by First Union
Bank of North Carolina to the Company.
10.148* Purchase Agreement, dated July 17, 1995, between Concept
Incorporated and Landmark Organization Southwest, Inc.
<PAGE> 93
Exhibit
Number Description
10.149* Purchase Agreement, dated July 17, 1995, between Concept
Incorporated and U.C. Eloy, Inc.
10.150 Agreement and Plan of Merger, dated as of August 18, 1995,
among the Company, CMA Acquisition, Inc., CSG Acquisition,
Inc., Correction Management Affiliates, Inc., Correctional
Services Group, Inc., the shareholders of Correction
Management Affiliates, Inc. and the shareholders of
Correctional Services Group, Inc.(27)
10.151* Shareholders' Agreement, dated as of October 17, 1995, among
Corrections Corporation of Australia Pty. Ltd., the Company,
and Sodexho S.A.
10.152* First Amendment to Stock Purchase Agreement, dated October 17,
1995, between Sodexho S.A. and the Company.
10.153* First Amendment to Amended and Restated Corrections
Corporation of America 1989 Stock Bonus Plan, dated November
3, 1995.
10.154* Letter of Credit, dated as of December 15, 1995, issued by
First Union Bank of North Carolina to the Company.
10.155* Note Purchase Agreement, dated as of February 29, 1996,
between the Company and PMI Mezzanine Fund, L.P.
21. The Company has the following six wholly-owned subsidiaries:
CCA International, Inc., Technical and Business Institute of
America, inc., TransCor America, Inc., Concept Incorporated,
Correction Management Affiliates, Inc. and Correctional
Services Group, Inc.
23.* Consent of Experts.
24. Power of Attorney.
- ------------------------
(1) Incorporated herein by reference to exhibit of same number to
Company's Registration Statement on Form S-1, filed August 15,
1986 (Reg. No. 33-8052).
<PAGE> 94
(2) Incorporated herein by reference to exhibit of same number to
Amendment No. 1 to the Company's Registration Statement on
Form S-1, filed September 19, 1986 (Reg. No. 33-8052).
(3) Incorporated herein by reference to exhibit of same number to
Amendment No. 2 to the Company's Registration Statement on
Form S-1, filed October 1, 1986 (Reg. No. 33-8052).
(4) Incorporated herein by reference to Exhibit 4(b) to the
Company's Registration Statement on Form S-8, filed March 16,
1987 (Reg. No. 33-12503).
(5) Incorporated herein by reference to Exhibit 10(z) to the
Company's Annual Report on Form 10-K with respect to the
fiscal year ended December 31, 1986 (File No. 0-15719).
(6) Incorporated herein by reference to Exhibit 10(cc) to the
Company's Annual Report on Form 10-K with respect to the
fiscal year ended December 31, 1986 (File No. 0-15719).
(7) Incorporated herein by reference to Exhibit A to the Company's
definitive Proxy Statement relating to the 1988 Annual Meeting
of Stockholders (File No. 0-15719).
(8) Incorporated herein by reference to Exhibit B to the Company's
definitive Proxy Statement relating to the 1988 Annual Meeting
of Stockholders (File No. 0-15719).
(9) Incorporated herein by reference to exhibit of same number to
the Company's Annual Report on Form 10-K with respect to the
fiscal year ended December 31, 1987 (File No. 0-15719).
(10) Incorporated herein by reference to Exhibit 10(cc) to the
Company's Annual Report on Form 10-K with respect to the
fiscal year ended December 31, 1987 (File No. 0-15719).
(11) Incorporated herein by reference to exhibit of the same number
to the Company's Annual Report on Form 10-K with respect to
the fiscal year ended December 31, 1988 (File No. 0-15719).
(12) Incorporated herein by reference to exhibit of the same number
to the Company's Annual Report on Form 10-K with respect to
the fiscal year ended December 31, 1989 (File No. 0-15719).
(13) Incorporated herein by reference to exhibit of the same number
to the Company's Annual Report on Form 10-K with respect to
the fiscal year ended December 31, 1990 (File No. 0-15719).
<PAGE> 95
(14) Incorporated herein by reference to exhibit of the same number
to the Company's Annual Report on Form 10-K with respect to
the fiscal year ended December 31, 1991 (File No. 0-15719).
(15) Incorporated herein by reference to Exhibit 1 to the Company's
Registration Statement on Form 8-A, filed August 21, 1992
(File No. 0-15719).
(16) Incorporated herein by reference to exhibit of the same number
to the Company's Annual Report on Form 10-K with respect to
the fiscal year ended December 31, 1992 (File No. 0-15719).
(17) Incorporated herein by reference to exhibit of the same number
to the Company's Annual Report on Form 10-K with respect to
the fiscal year ended December 31, 1993 (File No. 0-15719).
(18) Incorporated herein by reference to Exhibit 2 to the Company's
Report on Form 8-K filed June 30, 1994 (File No. 0-15719).
(19) Incorporated herein by reference to Exhibit 2 to the Company's
Report on Form 8-K filed June 30, 1994 (File No. 0-15719).
(20) Incorporated herein by reference to Exhibit 1 to the Company's
Report on Form 8-K filed June 30, 1994 (File No. 0-15719).
(21) Incorporated herein by reference to Exhibit 2 to the Company's
Report on Form 8-K filed June 30, 1994 (File No. 0-15719).
(22) Incorporated herein by reference to Exhibit 3 to the Company's
Report on Form 8-K filed June 30, 1994 (File No. 0-15719).
(23) Incorporated herein by reference to Exhibit 3 to the Company's
Report on Form 8-K filed January 12, 1995 (File No. 1-13560).
(24) Incorporated herein by reference to exhibit of the same number
to the Company's Annual Report on Form 10-K with respect to
the fiscal year ended December 31, 1994 (File No. 1-13560).
(25) Incorporated herein by reference to Exhibit 2 to the Company's
Report on Form 8-K filed May 10, 1995 (File No. 1-13560).
(26) Incorporated herein by reference to Exhibit 4.3 to the
Company's Registration Statement on Form S-8 filed July 20,
1995 (Reg. No. 33-61173).
(27) Incorporated herein by reference to Exhibit 1 the Company's
Report on Form 8-K filed August 31, 1995 (File No. 1-13560).
<PAGE> 96
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
CORRECTIONS CORPORATION OF AMERICA
Date: March 25, 1996 By: /s/ Doctor R. Crants
------------------------------
Doctor R. Crants, Chairman of the Board and
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each person whose signature appears
below constitutes and appoints DOCTOR R. CRANTS and DARRELL K. MASSENGALE, and
each of them, as his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments to the Annual
Report on Form 10-K of Corrections Corporation of America for the fiscal year
ended December 31, 1995, and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission and the New York Stock Exchange, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or either of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Company and in the capacities and on the dated indicated.
Date: March 25, 1996 /s/ Doctor R. Crants
--------------------------------------------
Doctor R. Crants, Chairman of the Board,
Chief Executive Officer and Director
(principal executive officer)
Date: March 25, 1996 /s/ Darrell K. Massengale
--------------------------------------------
Darrell K. Massengale, Vice President,
Finance; Chief Financial Officer;
Secretary and Treasurer (principal financial
and accounting officer)
<PAGE> 97
Date: March 25, 1996 /s/ Thomas W. Beasley
---------------------------------------
Thomas W. Beasley, Chairman Emeritus
and Director
Date: March 25, 1996 /s/ T. Don Hutto
---------------------------------------
T. Don Hutto, Vice Chairman of the Board
and Director
Date: March 25, 1996 /s/ William F. Andrews
---------------------------------------
William F. Andrews, Director
Date: March 25, 1996 /s/ Richard H. Fulton
---------------------------------------
Richard H. Fulton, Director
Date: March 25, 1996 /s/ Samuel W. Bartholomew, Jr.
---------------------------------------
Samuel W. Bartholomew, Jr., Director
Date: March 25, 1996 /s/ Jean-Pierre Cuny
---------------------------------------
Jean-Pierre Cuny, Director
Date: March 25, 1996 /s/ W. Blake Brock
---------------------------------------
W. Blake Brock, Controller
<PAGE> 1
EXHIBIT 3(d)
CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION
OF
CORRECTIONS CORPORATION OF AMERICA
CORRECTIONS CORPORATION OF AMERICA, a corporation organized and
existing under and by virtue of the General Corporation Law of the State of
Delaware,
DOES HEREBY CERTIFY:
FIRST: That at a duly called meeting held on March 20, 1995, the
Board of Directors of the Corporation duly adopted resolutions setting forth a
proposed amendment to the Certificate of Incorporation of the Corporation,
declaring said amendment to be advisable and submitting the proposed amendment
to the stockholders of the Corporation for consideration thereby. The
resolution setting forth the proposed amendment is as follows:
RESOLVED, that the Certificate of Incorporation of this
Corporation be amended by deleting the second sentence of Article IV
of the Certificate of Incorporation of the Corporation in its entirety
and substituting in lieu thereof the following:
"IV. The total number of shares which the Corporation
shall have the authority to issue is Fifty-One Million (51,000,000)
shares, consisting of Fifty Million (50,000,000) shares of Common
Stock having One Dollar ($1.00) par value per share ("Common Stock")
and One Million (1,000,000) shares of Preferred Stock having One
Dollar ($1.00) par value per share ("Preferred Stock")."
SECOND: That thereafter, pursuant to resolution of the Board of
Directors of the Corporation, the amendment was submitted to a vote of the
stockholders of the Corporation and that the necessary number of shares as
required by statute were voted in favor of the amendment at the annual meeting
of stockholders held on May 26, 1995, called and held upon notice in accordance
with Section 222 of the Delaware General Corporation Law, as amended.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the Delaware General Corporation Law, as amended.
<PAGE> 2
IN WITNESS WHEREOF, Corrections Corporation of America has caused this
Certificate to be signed by Doctor R. Crants, its Chairman, and Darrell K.
Massengale, its Secretary, this 26th day of May, 1995.
CORRECTIONS CORPORATION OF AMERICA
By:/s/ Doctor R. Crants
-------------------------------
Doctor R. Crants, Chairman
Attest:
/s/ Darrell K. Massengale
- --------------------------------
Darrell K. Massengale, Secretary
ACKNOWLEDGEMENTS
State of Tennessee, County of Davidson.
Before me, ________________________________, a Notary Public of the
state and county aforesaid, personally appeared Doctor R. Crants, with whom I
am personally acquainted (or proved to me on the basis of satisfactory
evidence), and who, upon oath, acknowledged himself to be the Chairman of
Corrections Corporation of America, a Delaware corporation, the within named
bargainor, a corporation, and that he as such Chairman executed, on behalf of
the corporation, the foregoing instrument as the act and deed of the
corporation and that the facts stated therein are true.
Witness my hand and seal, at office in Nashville, Tennessee, this ____
day of May, 1995.
___________________________________
Notary Public
[SEAL]
My Commission Expires: __________
<PAGE> 3
State of Tennessee, County of Davidson.
Before me, ________________________________, a Notary Public of the
state and county aforesaid, personally appeared Darrell K. Massengale, with
whom I am personally acquainted (or proved to me on the basis of satisfactory
evidence), and who, upon oath, acknowledged himself to be the Secretary, of
Corrections Corporation of America, a Delaware corporation, the within named
bargainor, a corporation, and that he as such Secretary executed, on behalf of
the corporation, the foregoing instrument as the act and deed of the
corporation and that the facts stated therein are true.
Witness my hand and seal, at office in Nashville, Tennessee, this ____
day of May, 1995.
___________________________________
Notary Public
[SEAL]
My Commission Expires: _____________
<PAGE> 1
EXHIBIT 4(q)
WARRANT REPURCHASE AGREEMENT
This Warrant Repurchase Agreement is made and entered into this 1st
day of February, 1995, by and between First Union National Bank of Tennessee, a
national banking association ("Seller"), and Corrections Corporation of
America, a Delaware corporation headquartered in Nashville, Tennessee
("Buyer").
FOR AND IN CONSIDERATION of the mutual covenants contained herein and
other good and valuable consideration, the parties hereto agree as follows:
1. Recitals. Seller desires to sell to Buyer, and Buyer is
willing to purchase from Seller, warrants to purchase 60,000 shares of Common
Stock of Buyer owned by Seller (the "Warrants"), all in accordance with the
terms of this Agreement.
2. Redemption of The Warrants. Seller hereby agrees to sell and
assign, and Buyer hereby agrees to purchase all of the Warrants at the closing
on the terms and conditions set forth herein.
3. Payment of Purchase Price. The purchase price (the "Purchase
Price") for the Warrants shall be the product of 60,000 times the difference
between (i) the closing bid price of Buyer's Common Stock as reported on the
New York Stock Exchange on January 5, 1995 ($18.00), and (ii) $7.50, which
represents the current exercise price for the Shares of Common Stock underlying
the Warrants. At the Closing, Buyer shall deliver to Seller by wire transfer
or cash an amount equal to the Purchase Price. At the Closing, Seller shall
deliver to Buyer the certificate(s) evidencing the Warrants.
4. Warranties and Representations of Seller. Seller represents
and warrants that it is the lawful owner of, and has good and marketable title
to, the Warrants; the Warrants are subject to no liens or encumbrances
whatsoever; and Seller has full power and authority to enter into this
Agreement and to convey the valid title of the Warrants to Buyer free and clear
of all liens, pledges and encumbrances whatsoever. Neither the execution and
delivery of this Agreement nor the carrying out of the transactions
contemplated hereby will result in any violation of any term of any material
agreement or instrument to which the Seller is a party or by which it or any of
its properties is bound, or of any law or governmental order, rule or
regulation which is applicable to the Seller. No consents or approvals of any
persons or entities, governmental or otherwise, are required which have not
been, or will not have been prior to the closing, obtained in respect of the
execution and delivery by the Seller of this Agreement and the carrying out of
the transactions contemplated hereby on the part of the Seller.
5. Indemnification by Seller. Seller agrees to defend, indemnify
and hold harmless Buyer from, against in respect of any and all loss or damage
to Buyer in whole or in part resulting from:
<PAGE> 2
(a) Any breach of any of the warranties by Seller contained
herein, or any misstatement or omission of fact, or failure to state the facts
necessary to make those statements made not misleading, in or under this
Agreement; and
(b) Any liability or obligation arising out of any actions,
suits, proceedings, claims, demands, judgments, costs and expenses (including
court costs and reasonable legal and accounting fees) incident to any of the
foregoing.
6. Closing. The Closing of the purchase and sale of the Warrants
(the "Closing") shall take place on February 1, 1995 or on such other date as
agreed to by the parties hereto.
7. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Tennessee,
applicable to contracts made and to be performed therein.
8. Survival. All provisions of this Agreement shall survive the
Closing.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.
BUYER:
CORRECTIONS CORPORATION OF AMERICA
/s/ Darrell K. Massengale
-------------------------------------
Darrell K. Massengale, Vice President,
Finance and Chief Financial Officer
SELLER:
FIRST UNION NATIONAL BANK OF TENNESSEE
/s/ David M. Resha
-------------------------------------
David M. Resha, Senior Vice President
2
<PAGE> 1
EXHIBIT 4(r)
CORRECTIONS CORPORATION OF AMERICA
8.5% CONVERTIBLE, EXTENDABLE, SUBORDINATED
NOTE ORIGINALLY DUE SEPTEMBER 30, 1998
dated as of
No. 013 June 22, 1992
SECTION 1. PAYMENT OBLIGATION. CORRECTIONS CORPORATION OF
AMERICA, a corporation duly organized and existing under the laws of the State
of Delaware (herein called the "Corporation"), for value received, hereby
promises to pay to ATWELL & CO, or registered assigns (hereinafter referred to
as the "Holder"), the principal sum of Three Hundred Twenty-Five Thousand
Dollars ($325,000) on the Maturity Date, and to pay interest thereon from the
date hereof quarterly on September 30, December 31, March 31 and June 30 of
each year, commencing September 30, 1992, at (i) the Coupon Rate, or (ii) upon
the occurrence of a Triggering Event and until the date on which such
Triggering Event is cured or waived or until the date that is ninety (90) days
from initial occurrence of the Triggering Event, whichever is later, at the
Triggering Event Rate, until the principal hereof is paid to the person in
whose name this Note is registered at the close of business on the Business Day
immediately preceding the date such payment is due. Payment of the principal
of and interest on this Note will be made by cashiers check or by wire transfer
of immediately available funds, in currency of the United States of America as
at the time of payment is legal tender for payment of public and private debts,
at such address or to such account, as applicable, as shall be designated to
the Corporation by the Holder.
SECTION 2. DEFINITIONS. As used herein, the following terms
will be deemed to have the meanings set forth below:
"BOARD" means the board of directors of the Corporation.
"BUSINESS DAY" means each Monday, Tuesday, Wednesday, Thursday, or
Friday that is not a day on which banking institutions in Los Angeles,
California are authorized or obligated by law or executive order to
close.
"CHANGE EVENT" shall mean:
(a) the acquisition by any individual, entity, or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the
Exchange Act) of beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) of 50% or more
of the combined voting power of the then outstanding voting
securities of the Corporation entitled to vote generally in
the election of directors, but excluding, for this purpose,
any such acquisition by (i) the Corporation or any of its
subsidiaries, (ii) any employee benefit plan (or related
trust) of the Corporation or
<PAGE> 2
its subsidiaries, or (iii) any corporation with respect to
which, following such acquisition, more than 50% of the
combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in
the election of directors is then beneficially owned, directly
or indirectly, by individuals and entities who were the
beneficial owners of voting securities of the Corporation
immediately prior to such acquisition in substantially the
same proportion as their ownership, immediately prior to such
acquisition, of the combined voting power of the then
outstanding voting securities of the Corporation entitled to
vote generally in the election of directors; or
(b) the Incumbent Board shall cease for any reason to
constitute as least fifty percent (50%) of the members of the
Board; or
(c) approval by the stockholders of the Corporation of a
reorganization, merger, or consolidation, in each case, with
respect to which all or substantially all the individuals and
entities who were the respective beneficial owners of the
voting securities of the Corporation immediately prior to such
reorganization, merger, or consolidation do not, following
such reorganization, merger, or consolidation beneficially
own, directly or indirectly, more than 50% of the combined
voting power of the then outstanding voting securities
entitled to vote generally in the election of directors of
the corporation resulting from such reorganization, merger, or
consolidation; or
(d) the sale or other disposition of all or substantially all
the assets or property of the Corporation in one transaction
or a series of related transactions.
"CLOSING DATE" shall have the meaning ascribed thereto in Section 2.2
of the Note Purchase Agreement.
"COMMON STOCK" means the common stock of the Corporation, par value
$1.00 per share.
"CONVERSION PRICE" means $6.82 per share of Common Stock, subject to
adjustment from time to time as herein set forth.
"CONVERSION RATIO" means the number of Conversion Shares to be
delivered upon conversion of One Hundred Dollars ($100) of principal
amount of this Note. Subject to the provisions for adjustment set
forth herein, the Conversion Ration shall be determined as the
quotient of (i) the principal amount of this Note to be converted,
divided by (ii) the Conversion Price. Subject to the provisions for
adjustment set forth herein, the Conversion Ratio initially shall be
14.66:1.0.
"CONVERSION SHARES" means fully paid and nonassessable shares of
Common Stock issuable upon conversion of the indebtedness evidenced by
this Note.
2
<PAGE> 3
"CONVERTIBLE NOTES" means the Corporation's (a) $7,000,000 aggregate
principal amount 8.5% Convertible Subordinated Notes due November 7,
1999, and (b) the Corporation's $2,700,000 aggregate principal amount
8.5% Convertible Subordinated Notes due on various dates, the latest
of which is January 16, 2000.
"COUPON RATE" means eight and one-half percent (8.5%) per annum.
"CURRENT MARKET PRICE" when used with reference to shares of Common
Stock, shall mean the closing price per share of Common Stock on such
date and, when used with reference to shares of Common Stock for any
period shall mean the average of the daily closing prices per share of
Common Stock for such period. The closing price for each day shall be
the last quoted sale price or, if not so quoted, the average of the
high bid and low asked prices in the over-the-counter market, as
reported by the National Association of Securities Dealers, Inc.
Automated Quotation System or such other system then in use, or, if on
any such date the Common Stock is not quoted nor so reported, the
average of the closing bide and asked prices as furnished by a
professional market maker making a market in the Common Stock selected
by the Board. If the Common Stock is listed or admitted to trading on
a national securities exchange, the closing price shall be the last
sale price, regular way, or, in case no such sale takes place on such
day, the average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Common Stock is not
listed or admitted to trading on the New York Stock Exchange, as
securities listed on the principal national securities exchange on
which the Common Stock is listed or admitted to trading. If the
Common Stock is not publicly held or so listed or publicly traded,
"Current Market Price" shall mean the fair market value per share of
Common Stock as determined in good faith by the Board based on an
opinion of an independent investment banking firm with an established
national reputation as a valuer of securities, which opinion may be
based on such assumptions as such firm shall deem to be necessary and
appropriate.
"EVENT OF DEFAULT" shall have the meaning set forth in Section 7.1 of
the Note Purchase Agreement.
"EXCHANGE ACT" shall have the meaning set forth in Section 3.1 of the
Note Purchase Agreement.
"INCUMBENT BOARD" means the individuals who, as of the Closing Date,
constitute the Board; provided, however, that any individual becoming
a director subsequent to the Closing Date, whose election, or
nomination for election by the Corporation's stockholders, was
approved by a vote of at least a majority of the directors then
comprising the Incumbent Board shall be deemed to be a member of the
Incumbent Board.
3
<PAGE> 4
"MAJOR TRANSACTION" shall mean:
(a) approval by the stockholders of the Corporation of a
reorganization, merger, or consolidation, in each case, with
respect to which all or substantially all the individuals and
entities who were the respective beneficial owners of the
voting securities of the Corporation immediately prior to such
reorganization, merger, or consolidation do not, following
such reorganization, merger, or consolidation beneficially
own, directly or indirectly, more than 50% of the combined
voting power of the then outstanding voting securities
entitled to vote generally in the election of directors of the
Corporation resulting from such reorganization, merger, or
consolidation; or
(b) the sale or other disposition of all or substantially all
the assets or property of the Corporation in one transaction
or a series of related transactions.
"MANDATORY CONVERSION DATE" means the Business Day specified by the
Corporation, in compliance with the provisions hereof, as the date on
which all or a portion of the indebtedness evidenced by this Note will
be converted into shares of Common Stock pursuant to the Corporation's
right to compel such conversion.
"MANDATORY CONVERSION NOTICE" means a written notice substantially in
the form of the notice attached hereto as Exhibit A and incorporated
herein by this reference.
"MANDATORY PREPAYMENT DATE" means the Business Day specified by the
Holder, in compliance with the provision hereof, as the date on which
all or a portion of the indebtedness evidenced by this Note must be
prepaid pursuant to the Holder's right to compel such prepayment.
"MANDATORY PREPAYMENT NOTICE" means a written notice substantially in
the form of the notice attached hereto as Exhibit B and incorporated
herein by this reference.
"MATURITY DATE" means (i) September 30, 1998, or (ii) September 30,
1999, if the Holder of this Note elects, by written notice given to
the Corporation at least sixty (60) days but not more than one hundred
twenty (120) days prior to September 30, 1998, to extend the then
extant "Maturity Date" to September 30, 1999, or (iii) September 30,
2000, if the Holder of this Note elects, by written notice given to
the Corporation at least sixty (60) days but not more than one hundred
twenty (120) days prior to September 30, 1999, to extend the then
extant "Maturity Date" to September 30, 2000.
"NOTE" means this 8.5% convertible, extendable, subordinated note
issued by the Corporation.
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<PAGE> 5
"NOTE PURCHASE AGREEMENT" means that certain Note Purchase Agreement,
dated as of June 22, 1992, between the Corporation, Pacific Mutual
Life Insurance Company, and PM Group Life Insurance Company, as
amended from time to time.
"OPTIONAL CONVERSION NOTICE" means a written notice substantially in
the form of the notice attached hereto as Exhibit C and incorporated
herein by this reference.
"OPTIONAL PREPAYMENT NOTICE" means a written notice substantially in
the form of the notice attached hereto as Exhibit D and incorporated
herein by this reference.
"SENIOR INDEBTEDNESS" means the principal of and premium, if any, and
unpaid interest on (a) indebtedness (other than indebtedness
evidenced by the Convertible Notes, indebtedness that is subordinated
in right of payment to one or more item or type of indebtedness of the
Corporation, or indebtedness incurred in violation of the terms and
conditions of the Note Purchase Agreement) of the Corporation,
irrespective of whether secured and whether heretofore or hereafter
(i) incurred for borrowed money, or (ii) evidenced by a note or
similar instrument given in connection with the acquisition by the
Corporation of any business, properties, or assets, including
securities (but not including any account payable or other obligation
created or assumed by the Corporation in the ordinary course of
business in connection with the obtaining of materials or services),
(b) any refundings, renewals, extensions, or deferrals of any of the
indebtedness included as Senior Indebtedness by virtue of clause (a)
hereof, and (c) obligations under capital leases; in each case for the
payment of which the Corporation is liable directly or indirectly by
guarantee, letter of credit, obligation to purchase or acquire, or
otherwise, unless the terms of the instrument evidencing such
indebtedness or capital lease or pursuant to which such indebtedness
or capital lease is outstanding specifically provide that such
indebtedness or capital lease is not superior in right of payment to
the indebtedness evidenced by this Note.
"TRADING DAY" means, if the Common Stock is listed or admitted to
trading on any national securities exchange, a day on which such
exchange is open for the transaction of business, otherwise, a
Business Day.
"TRANCHE C CLOSING DATE" shall have the meaning ascribed thereto in
Section 3.1 of the Note Purchase Agreement.
"TRIGGERING EVENT" means the occurrence of any Unmatured Event of
Default or Event of Default described in clauses (i), (ii), and (iv)
through (x), inclusive, of Section 7.1 of the Note Purchase Agreement.
For purposes of determining the period during which the Triggering
Event Rate shall be in effect, a Triggering Event shall not be deemed
to have occurred until the date on which the Holder shall have given
notice of the occurrence thereof to the Corporation.
"TRIGGERING EVENT RATE" means ten and one-half percent (10.5%) per
annum.
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<PAGE> 6
"UNMATURED EVENT OF DEFAULT" shall mean any event or condition, the
occurrence of which would, with the lapse of time or the giving of
notice, or both, constitute an Event of Default.
SECTION 3. OPTIONAL CONVERSION. (a) Subject to and upon
compliance with the provisions of this Note, the Holder is entitled, at its
option, at any time on or before the close of business on the Business Day
prior to the Maturity Date, or in case this Note or a portion hereof is called
for conversion by the Corporation in accordance with the terms hereof, or the
Corporation elects to prepay in accordance with the terms hereof, then until
and including, but not after, the close of business on the third Business Day
prior to the Mandatory Conversion Date or the Optional Prepayment Date, to
convert all or a portion of the principal amount of the indebtedness evidenced
by this Note into Conversion Shares.
(b) The principal amount of the indebtedness evidenced by this
Note or any portion of the principal amount of the indebtedness evidenced
hereby that is One Thousand Dollars ($1,000), an integral multiple of One
Thousand Dollars ($1,000), or the remaining balance of the principal amount of
the indebtedness evidenced by this Note may be converted into Conversion
Shares. Subject to the provisions for adjustment set forth hereinafter, the
indebtedness evidenced by the Note shall be convertible into Conversion Shares
at a price per share equal to the Conversion Price and the number of Conversion
Shares to be deliverable to the Holder upon conversion of One Hundred Dollars
($100) of the principal amount of this Note shall be equal to the Conversion
Ratio.
(c) Conversion of all or a portion of the indebtedness
evidenced by this Note may be effected by the Holder upon the surrender to the
Corporation at the principal office of the Corporation in the State of
Tennessee or at the office of any agent or agents of the Corporation, as may be
designated by the Board, of this Note, duly endorsed or assigned to the
Corporation or in blank, accompanied by an Optional Conversion Notice to the
Corporation that the Holder elects to convert the principal amount of the
indebtedness evidenced by this Note or, if less than the entire principal
amount of the indebtedness evidenced by this Note is to be converted, the
portion thereof to be converted. Such Optional Conversion Notice shall specify
the name or names in which the Holder wishes the certificate or certificates
for shares of Common Stock to be issued. In case such notice shall specify a
name or names other than that of the Holder, such notice shall be accompanied
by payment of all transfer taxes payable upon the issuance of shares of Common
Stock in such name or names. Other than such taxes, the Corporation will pay
any and all issue and other taxes (other than taxes based on income) that may
be payable in respect of any issue or delivery of shares of Common Stock on
conversion of the indebtedness evidenced by this Note. No payment or
adjustment shall be made upon any conversion of this Note on account of any
dividends or other distributions payable on the Conversion Shares; provided,
however, that the Holder shall be entitled to receive the full amount of any
dividends or other distributions declared with respect to the Conversion Shares
with a record date on or after the effective date of such conversion.
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<PAGE> 7
As promptly as practicable, and in any event within five (5)
Business Days after the surrender of this Note and the receipt of such notice
relating thereto and, if applicable, payment of all transfer taxes (or the
demonstration to the satisfaction of the Corporation that such taxes have been
paid), the Corporation shall deliver or cause to be delivered, either by
personal delivery or by certified or registered mail or by a recognized
overnight courier service, in any such case, properly insured, to the Holder in
accordance with the written instructions of the Holder (i) certificates
representing the number of Conversion Shares to which the Holder shall be
entitled, and (ii) if less than the entire principal amount of indebtedness
evidenced by this Note, for the balance of the indebtedness that is not being
so converted. Such conversion shall be deemed to have been made at the close
of business on the date of giving such notice and of such surrender of this
Note so that the rights of the Holder (as a noteholder) with respect to the
principal amount being converted shall cease, and the person or persons
entitled to receive the Conversion Shares issuable upon conversion shall be
treated for all purposes as the record holder or holders of such Common Stock
as of such day. All accrued but unpaid interest through the Business Day
immediately preceding the date of such conversion with respect to the principal
amount of the indebtedness evidenced by this Note being converted shall be
payable upon conversion.
The Corporation shall not be required to convert, and no
surrender of this Note shall be effective for that purpose, while the transfer
books of the Corporation for the Common Stock are closed for any purpose (but
not for any period in excess of 15 days); but the surrender of this Note for
conversion during any period while such books are so closed shall become
effective for conversion immediately upon the reopening of such books, as if
the conversion had been made on the date this Note is surrendered, and at the
Conversion Ratio in effect at the date of such surrender.
(d) In case this Note is to be prepaid pursuant to the
mandatory prepayment provisions hereof, such right of conversion shall cease
and terminate as to the portion of this Note that is to be prepaid at the close
of business on the Business Day next preceding the date fixed for mandatory
prepayment unless the Corporation shall default in the payment of the Mandatory
Prepayment Amount.
(e) In connection with the conversion of the indebtedness
evidenced by this Note, no fractions of shares of Common Stock shall be issued,
but in lieu thereof the Corporation shall pay a cash adjustment in respect of
such fractional interest in an amount equal to such fractional interest
multiplied by the Current Market Price per share of Common Stock on the Trading
Day on which such indebtedness evidenced by this Note is deemed to have been
converted. If more than one note shall be surrendered for conversion by the
Holder at the same time, the number of full shares of Common Stock issuable on
conversion thereof shall be computed on the basis of the total amount of
indebtedness to be converted.
(f) (i) The Corporation shall at all times reserve and
keep available for issuance upon the conversion of the indebtedness evidenced
by this Note, free from any preemptive rights, such number of its authorized
but unissued shares of Common Stock as will from time to time
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<PAGE> 8
be sufficient to permit the conversion of all of the indebtedness evidenced by
this Note, and shall take all action required to increase the authorized number
of shares of Common Stock if necessary to permit the conversion of all of the
indebtedness evidenced by this Note.
(ii) If the Corporation shall issue shares of Common
Stock upon conversion of indebtedness evidenced by this Note as contemplated by
this Section 3, the Corporation shall issue together with each such share of
Common Stock any rights issued to holders of Common Stock of the Corporation,
irrespective of whether such rights shall be exercisable at such time, but only
if such rights are issued and outstanding and held by other holders of Common
Stock of the Corporation at such time and have not expired.
(g) The Conversion Ratio will be subject to adjustment
from time to time as follows:
(i) In case the Corporation shall at any time or from
time to time after the Closing Date (A) pay a dividend, or make a distribution,
on the outstanding shares of Common Stock in shares of Common Stock, (B)
subdivide the outstanding shares of Common Stock, (C) combine the outstanding
shares of Common Stock into a smaller number of shares, or (D) issue by
reclassification of the shares of Common Stock any shares of capital stock of
the Corporation, then, and in each such case, the Conversion Ratio in effect
immediately prior to such event or the record date therefor, whichever is
earlier, shall be adjusted so that the Holder shall be entitled to receive the
number of shares of Common Stock (or other capital stock) of the Corporation
that the Holder would have owned or have been entitled to receive after the
happening of any of the events described above, had the indebtedness evidenced
by this Note been converted immediately prior to the happening of such event or
the record date therefor, whichever is earlier. An adjustment made pursuant to
this clause (i) shall become effective (x) in the case of any such dividend or
distribution, immediately after the close of business on the record date for
the determination of holders of shares of Common Stock entitled to receive such
dividend or distribution, or (y) in the case of such subdivision,
reclassification, or combination, at the close of business on the day upon
which such corporate action becomes effective. No adjustment shall be made
pursuant to this clause (i) in connection with any transaction to which
subsection (h) applies.
(ii) In case the Corporation shall issue shares of
Common Stock (or rights, warrants, or other securities convertible into or
exchangeable for shares of Common Stock) after the Closing Date at a price per
share (or having a conversion price per share) less than the Current Market
Price per share of Common Stock, as of the date of issuance of such shares or
of such convertible securities, then, and in each such case, the Conversion
Ratio shall be adjusted so that the Holder shall be entitled to receive, upon
the conversion hereof, the number of shares of Common Stock determined by
multiplying (A) the applicable Conversion Ratio on the day immediately prior to
such date by (B) a fraction, the numerator of which shall be the sum of (1) the
number of shares of Common Stock outstanding on such date plus (2) the number
of additional shares of Common Stock issued (or into which the convertible
securities may convert), and the denominator of which shall be the sum of (x)
the number of shares of Common Stock
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<PAGE> 9
purchasable at the then Current Market Price per share with the aggregate
consideration received or receivable by the Corporation for the total number of
shares of Common Stock so issued (or into which the rights, warrants, or other
convertible securities may convert).
An adjustment made pursuant to this clause (ii) shall
be made on the next Business Day following the date on which any such issuance
is made and shall be effective retroactively to the close of business on the
date of such issuance. For purposes of this clause (ii), the aggregate
consideration received or receivable by the Corporation in connection with the
issuance of shares of Common Stock shall be deemed to be equal to the sum of
the aggregate offering price (before deduction of underwriting discounts or
commissions and expenses payable to third parties) of all such Common Stock,
rights, warrants, and convertible securities plus the minimum aggregate amount,
if any, payable upon exercise of conversion of any such rights, warrants, and
convertible securities into shares of Common Stock. The issuance of any shares
of Common Stock (whether treasury shares or newly issued shares) pursuant to
(a) a dividend or distribution on, or subdivision, combination or
reclassification of, the outstanding shares of Common Stock requiring an
adjustment in the conversion ratio pursuant to clause (i) of this subsection
(g), or (b) any restricted stock or stock option plan or program of the
Corporation, or (c) any option, warrant, right, or convertible security
outstanding as of the date hereof, or (d) the terms of a firmly committed
underwritten public offering, shall not be deemed to constitute an issuance of
Common Stock or convertible securities by the Corporation to which this clause
(ii) applies.
Upon the expiration of any unexercised options,
warrants, or rights to convert any convertible securities for which an
adjustment has been made pursuant to this clause (ii), the adjustment shall
forthwith be reversed to effect such rate of conversion as would have been in
effect at the time of such expiration or termination had such options, warrant,
rights or convertible securities, to the extent outstanding immediately prior
to such expiration or termination, never been issued. If the purchase price
provided for in any option, warrant, or rights to convert any convertible
securities for which an adjustment has been made pursuant to this clause (ii),
the additional consideration, if any, payable upon the conversion or exchange
of any convertible securities for which an adjustment has been made, or the
rate at which any convertible securities referred to above are convertible into
or exchangeable for Common Stock shall, at any time, increase or decrease
(other than under or by reason of provisions designed to protect against
dilution), then, the Conversion Ratio in effect at the time of such event shall
forthwith be readjusted to the Conversion Ratio that would have been in effect
at such time and such options, warrants, or rights or convertible securities
still outstanding provided for such changed purchase price, additional
consideration, or conversion rate, as the case may be, at the time initially
granted, issued or sold. No adjustment shall be made pursuant to this clause
(ii) in connection with any transaction to which subsection h applies.
(iii) In case the Corporation shall at any time or
from time to time after the Closing Date declare, order, pay, or make a
dividend or other distribution (including, without limitation, any distribution
of stock or other securities or property or rights or warrants to subscribe for
securities of the Corporation or any of its subsidiaries by way of dividend or
9
<PAGE> 10
spinoff), on its Common Stock, other than (A) dividends payable in cash in an
aggregate amount not to exceed 50% of net income from continuing operations
before extraordinary items of the Corporation, determined in accordance with
generally accepted accounting principles, during the period (treated as one
accounting period) commencing on March 31, 1992, and ending on the date such
dividend is paid; provided, that, to the extent required by the terms thereof,
such dividend shall have been previously consented to by the holders of the
notes issued pursuant to the Note Purchase Agreement, or (B) dividends or
distributions of shares of Common Stock which are referred to in clause (i) of
this subsection (g), then, and in each such case, the Conversion Ratio shall be
adjusted so that the Holder shall be entitled to receive, upon the conversion
hereof, the number of shares of Common Stock determined by multiplying (1) the
applicable Conversion Ratio on the day immediately prior to the record date
fixed for the determination of stockholders entitled to receive such dividend
or distribution by (2) a fraction, the numerator of which shall be the Current
Market Price per share of Common Stock for the period of 20 Trading Days
preceding such record date, and the denominator of which shall be such Current
Market Price per share of Common Stock less the fair market value, as
determined in good faith by the Board, a certified resolution with respect to
which shall be mailed to the Holder, per share of Common Stock of such dividend
or distribution. No adjustment shall be made pursuant to this clause (iii) in
connection with any transaction to which subsection (h) applies.
(iv) For purposes of this subsection (g), the number
of shares of Common Stock at any time outstanding shall not include any shares
of Common Stock then owned or held by or for the account of the Corporation.
(v) The term "dividend," as used in this
subsection (g), shall mean a dividend or other distribution upon stock of the
Corporation.
(vi) Anything in this subsection (g) to the contrary
notwithstanding, the Corporation shall not be required to give effect to any
adjustment in the Conversion Ratio unless and until the net effect of one or
more adjustments (each of which shall be carried forward), determined as above
provided, shall have resulted in a change of the Conversion Ratio by at least
one one-hundredth (.01) of one share of Common Stock, and when the cumulative
net effect of more than one adjustment so determined shall be to change the
Conversion Ratio by at least one one-hundredth (.01) of one share of Common
Stock, such change in Conversion Ratio shall thereupon be given effect.
(vii) The certificate of any firm of independent
public accountants of recognized standing selected by the Board (which may be
the firm of independent public accountants regularly employed by the
Corporation) shall be presumptively correct for any computation made under this
subsection (g).
(viii) If the Corporation shall take a record of the
holders of its Common Stock for the purpose of entitling them to receive a
dividend or other distribution, and shall thereafter and before the
distribution to stockholders thereof legally abandon its plan to pay or deliver
such dividend or distribution, then thereafter no adjustment in the number of
shares of
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<PAGE> 11
Common Stock issuable upon exercise of the right of conversion granted by this
subsection (g) or in the Conversion Ratio then in effect shall be required by
reason of the taking of such record.
(h) In the case of any Major Transaction occurring at any
time, at the option of the Holder, the indebtedness evidenced by the Note shall
thereafter be convertible into, in whole and in part and in lieu of the Common
Stock issuable upon such conversion prior to consummation of such Major
Transaction, the kind and amount of shares of stock and other securities and
property receivable (including cash) upon the consummation of such Major
Transaction by a holder of that number of shares of Common Stock into which
such indebtedness, or portion thereof, was convertible immediately prior to
such Major Transaction (including, on a pro rata basis, the cash, securities,
or property received by holders of Common Stock in any tender or exchange offer
that is a step in such Major Transaction). In case securities or property
other than Common Stock shall be issuable or deliverable upon conversion as
aforesaid, then all references in this Section 3 shall be deemed to apply, so
far as appropriate and nearly as may be, to such other securities or property.
(i) In case at any time or from time to time the Corporation
shall pay any stock dividend or make any other non-cash distribution of the
holders of its Common Stock, or shall offer for subscription pro rata to the
holders of its Common Stock any additional shares of stock of any class or any
other right, or there shall be any capital reorganization or reclassification
of the Common Stock of the Corporation or consolidation or merger of the
Corporation with or into another corporation or other entity, or any sale or
conveyance to another corporation or other entity of the assets or property of
the Corporation as an entirety or substantially as an entirety, or there shall
be a voluntary or involuntary dissolution, liquidation, or winding up of the
Corporation, then, in any one or more of said cases the Corporation shall give
at least 20 days prior written notice (the time of mailing of such notice shall
be deemed to be the time of giving thereof) to the Holder at the address of the
Holder as shown on the books of the Corporation as of the date of which (i) the
books of the Corporation shall close or a record shall be taken for such stock
dividend, distribution, or subscription rights, or (ii) such reorganization,
reclassification, consolidation, merger, sale, conveyance, dissolution,
liquidation, or winding up shall take place, as the case may be, provided that
in the case of any Major Transaction to which subsection (h) applies the
Corporation shall give at least 30 days prior written notice as aforesaid.
Such notice shall also specify the date as of which the holders of the Common
Stock of record shall participate in said dividend, distribution, or
subscription rights or shall be entitled to exchange their Common Stock for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, or conveyance or participate in
such dissolution, liquidation, or winding up, as the case may be. Failure to
give such notice shall not invalidate any action so taken.
(j) Anything herein to the contrary notwithstanding, the
issuance or sale of the following shares of Common Stock or options, warrants,
or other rights to purchase Common Stock shall be excluded from any calculation
of, and shall not be deemed issued or sold for purposes of calculating, any
reduction, adjustment, or readjustment of the Conversion Ratio hereunder: (i)
shares of Common Stock issued upon conversion of the indebtedness evidenced
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<PAGE> 12
by this Note or any portion thereof; (ii) shares of Common Stock or options,
warrants, or other rights to purchase Common Stock issuable, reserved for
issuance, or issued pursuant to a stock option plan, employee stock ownership
plan, or other compensatory benefit plan of the Corporation, duly adopted by
the Board; (iii) shares of Common Stock, issuable, reserved for issuance, or
issued pursuant to any currently outstanding warrants or options, or any
options, warrants, or other rights issuable, reserved for issuance, or issued
to officers of the Corporation in the future for compensatory purposes, if
fully authorized by the Board; and (iv) shares of Common Stock issued upon
conversion of the indebtedness evidenced by the Convertible Notes or the
currently issued and outstanding preferred stock.
SECTION 4. REPORTS AS TO ADJUSTMENTS. Upon any adjustment of
the Conversion Ratio then in effect and any increase or decrease in the number
of shares of Common Stock issuable upon the operation of the conversion set
forth in Section 3, then, and in each such case, the Corporation shall promptly
deliver to the Holder, a certificate signed by the President or a Vice
President and by the Treasurer or an Assistant Treasurer or the Secretary or an
Assistant Secretary of the Corporation setting forth in reasonable detail the
event requiring the adjustment and the method by which such adjustment was
calculated and specifying the Conversion Ratio then in effect following such
adjustment and the increased or decreased number of shares issuable upon the
conversion granted by Section 3, and shall set forth in reasonable detail the
method of calculation of each and a brief statement of the facts requiring such
adjustment. Where appropriate, such notice to the Holder may be given in
advance and included as part of the notice required under the provisions of
Section 3(i).
SECTION 5. MANDATORY CONVERSION. (a) At any time after
June 22, 1997, and so long as at such time the Common Stock is listed or
admitted to trading on a national securities exchange, the Corporation may
require the Holder to convert all or a portion of the principal amount of the
indebtedness evidenced by this Note into shares of Common Stock if, at such
time, the Current Market Price of the Common Stock has equalled or exceeded one
hundred fifty percent (150%) of the Conversion Price (as it may from time to
time be adjusted) for forty-five (45) consecutive Trading Days following the
forty-fifth monthly anniversary of the Closing Date. To exercise such right,
the Corporation must deliver a Mandatory Conversion Notice of the exercise of
such right to the Holder within thirty (30) days of the last day of such
forty-five (45) day period, such Mandatory Conversion Notice must be given at
least ten (10) Business Days, but not more than fifteen (15) Business Days
prior to the proposed Mandatory Conversion Date, and such Mandatory Conversion
Notice must specify the proposed Mandatory Conversion Date and the portion of
the principal amount of the indebtedness evidenced by this Note to be converted
into Common Stock.
(b) All conversions effected pursuant to the preceding
paragraph will be made effective as of the close of business on the Mandatory
Conversion Date at the Conversion Ratio in effect on the Mandatory Conversion
Date; provided, however, that, in order to be able to convert, the Current
Market Price on the Mandatory Conversion Date must equal or exceed one hundred
fifty percent (150%) of the Conversion Price in effect on the Mandatory
Conversion Date. If the Current Market Price on the Mandatory Conversion Date
does not equal or exceed
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<PAGE> 13
one hundred fifty percent (150%) of the Conversion Price in effect on the
Mandatory Conversion Date, the Corporation's election to require conversion
will be deemed void and no conversion will be effected pursuant to such notice.
Such event will not be deemed, however, to alter or restrict the Corporation's
right to again require conversion at such time as the Current Market Price
equals or exceeds one hundred fifty percent (150%) of the then current
Conversion Price for forty-five (45) consecutive Trading Days prior to such
time. Upon conversion required by the Corporation pursuant to this paragraph
and the immediately preceding paragraph, all accrued but unpaid interest with
respect to the principal amount of the indebtedness evidenced by this Note
being converted shall be payable in accordance with the provisions of the
following paragraph.
(c) Conversions of the indebtedness evidenced by this
Note effected by the exercise of the Corporation's right to require conversion
will be deemed effective as of the close of business on the Mandatory
Conversion Date without any action by the Holder and the Holder will, as of
such time, be a stockholder of the Corporation with respect to the number of
shares of Common Stock into which the principal balance evidenced by this Note
(or such portion of the principal balance evidenced by this Note as the
Corporation shall have specified) shall have been converted. The Holder agrees
promptly to surrender this Note for cancellation following mandatory
conversion. Certificates representing the shares of Common Stock issuable by
the Corporation as a result of the mandatory conversion of all or a portion of
the principal balance of the indebtedness evidenced by this Note and all
dividends and other distributions payable with respect to such shares and all
accrued but unpaid interest payable pursuant to the immediately preceding
paragraph will be retained by the Corporation pending surrender of this Note
for cancellation. As promptly as practicable, and in any event within five (5)
Business Days after the surrender of this Note, the Corporation shall deliver
or cause to be delivered, either by personal delivery or by certified or
registered mail or by a recognized overnight courier service, in any such case,
properly insured, to the Holder in accordance with the written instructions of
the Holder (i) certificates representing the number of Conversion Shares to
which the Holder shall be entitled, and (ii) if less than the entire principal
amount of indebtedness evidenced by this Note is being converted, a new
promissory note, in the form of this Note, for the balance of the indebtedness
that is not being so converted.
(d) In connection with the conversion of the indebtedness
evidenced by this Note, no fractions of shares of Common Stock shall be issued,
but in lieu thereof the Corporation shall pay a cash adjustment in respect of
such fractional interest in an amount equal to such fractional interest
multiplied by the Current Market Price per share of Common Stock on the Trading
Day on which such indebtedness evidenced by this Note is deemed to have been
converted. If more than one note shall be surrendered for conversion by the
Holder at the same time, the number of full shares of Common Stock issuable on
conversion thereof shall be computed on the basis of the total amount of
indebtedness to be converted.
SECTION 6. MANDATORY PREPAYMENT. In the case of any
Change Event occurring at any time, at the option of the Holder, the Holder may
require the Corporation to prepay all or a portion of the then outstanding
principal amount of the indebtedness evidenced
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<PAGE> 14
by this Note. To exercise such right of prepayment, the Holder must provide
the Corporation with a Mandatory Prepayment Notice at least thirty (30) days
prior to the proposed Mandatory Prepayment Date which Mandatory Prepayment
Notice shall specify the portion of the principal amount of the indebtedness
evidenced by this Note (which must be in integral multiples of One Thousand
Dollars ($1,000)) to be prepaid. On the Mandatory Prepayment Date specified,
the Corporation shall prepay the portion of the principal amount of the
indebtedness evidenced by this Note that the Holder has specified must be
prepaid on such date, plus accrued interest on such principal amount to the
date of the prepayment. Any prepayment shall be made by cashiers check or by
wire transfer of immediately available funds, in currency of the United States
of America as at the time of payment is legal tender for payment of public and
private debts, at such address or to such account, as applicable, as shall be
designated to the Corporation by the Holder.
SECTION 7. OPTIONAL PREPAYMENT. The Note shall be
subject to prepayment, at the option of the Corporation, at any time and from
time to time on and after July 1, 1997. To exercise such right of prepayment,
the Corporation must provide the Holder with an Optional Prepayment Notice at
least sixty (60) days prior to the proposed Optional Prepayment Date which
Optional Prepayment Notice shall specify the portion of the principal amount of
the indebtedness evidenced by this Note (which must be in integral multiples of
One Thousand Dollars ($1,000)) to be prepaid. The Holder's option to convert
the indebtedness evidenced by this Note as set forth in Section 3 hereof shall
continue notwithstanding the exercise of the option of the Corporation to
prepay under this Section 7, so long as the Holder requests conversion in
accordance with the terms hereof up to and including, but not after, the close
of business on the third Business Day prior to the Optional Prepayment Date.
On the Optional Prepayment Date specified, the Corporation shall prepay the
portion of the principal amount of the indebtedness evidenced by this Note that
the Corporation has specified is to be prepaid on such date, plus accrued
interest on such principal amount to the date of the prepayment. Any
prepayment shall be made by cashiers check or by wire transfer of immediately
available funds, in currency of the United States of America as at the time of
payment is legal tender for payment of public and private debts, at such
address or to such account, as applicable, as shall be designated to the
Corporation by the Holder. This Note shall not be subject to prepayment,
whether in whole or in part, on or before June 30, 1997.
SECTION 8. SUBORDINATION. (a) The Corporation covenants
and agrees, and the Holder likewise covenants and agrees, that no payment
shall be made by the Corporation on account of principal of or interest
on this Note, or otherwise, if there shall have occurred and be continuing, and
the Corporation and the Holder shall have received notice from the holder or
holders of, a default with respect to any Senior Indebtedness (i) permitting
the acceleration thereof and such default is the subject of a judicial
proceeding, or (ii) in an aggregate principal amount of not less than One
Million Dollars ($1,000,000) entitling such holder or holders of, a default
with respect to any Senior Indebtedness (i) permitting the acceleration thereof
and such default is the subject of a judicial proceeding, or (ii) in an
aggregate principal amount of not less than One Million Dollars ($1,000,000)
entitling such holder or holders to compel the acceleration thereof (provided,
however, that in the case of Senior Indebtedness issued pursuant to an
indenture, such notice may be validly given only by the trustee under such
indenture), unless and
14
<PAGE> 15
until such default or Event of Default shall have been cured or waived or shall
have ceased to exist or such notice is withdrawn or found by a court of
competent jurisdiction to be invalid.
(b) Upon any payment by the Corporation or distribution
of assets of the Corporation of any kind or character, whether in cash,
property, or securities, to creditors of the Corporation under any dissolution
or winding up or liquidation or reorganization of the Corporation, whether
voluntary or involuntary, or in bankruptcy, insolvency, receivership, or other
similar proceedings, all amounts due or to become due upon all Senior
Indebtedness shall first be paid in full in money or money's worth, or payment
thereof provided for, before any payment is made on account of the principal of
or interest on this Note and upon such dissolution or winding up or liquidation
or reorganization, any payment by the Corporation, or distribution of assets of
the Corporation of any kind or character, whether in cash, property, or
securities, to which the Holder would be entitled except for the provisions
hereof, shall be paid by the Corporation or by any receiver, trustee in
bankruptcy, liquidating trustee, agent, or other person making such payment or
distribution directly to the holders of Senior Indebtedness or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing any Senior Indebtedness
may have been issued, as their respective interests may appear, to the extent
necessary to pay all Senior Indebtedness in full in money or money's worth,
after giving effect to any concurrent payment or distribution to or for the
holders of Senior Indebtedness, before any payment or distribution is made to
the Holder.
(c) The foregoing notwithstanding, in the event that any
payment of or distribution of assets of the Corporation of any kind or
character, whether in cash, property or securities, prohibited by the
foregoing, shall be received by the Holder before all Senior Indebtedness is
paid in full in money or money's worth, or provision is made for such payment,
then and in such event such payment or distribution shall be paid over or
delivered to the holders of Senior Indebtedness or their representative or
representatives, or to the trustee or trustees under any indenture pursuant to
which any instruments evidencing any Senior Indebtedness may have been issued,
as their respective interests may appear, for application to the payment of all
Senior Indebtedness remaining unpaid to the extent necessary to pay all Senior
Indebtedness in full in money or money's worth, after giving effect to any
concurrent payment or distribution to or for the holders of such Senior
Indebtedness may have been issued, as their respective interests may appear,
for application to the payment of all Senior Indebtedness remaining unpaid to
the extent necessary to pay all Senior Indebtedness in full in money or money's
worth, after giving effect to any concurrent payment or distribution to or for
the holders of such Senior Indebtedness (but subject to the power of a court of
competent jurisdiction to make other equitable provision, which shall have been
determined by such court to give effect to the rights conferred herein upon the
Senior Indebtedness and the holders thereof with respect to this Note or the
Holder hereof by a lawful plan or reorganization or readjustment under
applicable bankruptcy law).
(d) The holders of Senior Indebtedness may, at any time
and from time to time, without the consent of or notice to the Holder, without
incurring responsibility to the Holder and without impairing or releasing the
obligations of the Holder to the holders of Senior Indebtedness: (i) change
the manner, place, or terms of payment or change or extend the time of payment
of,
15
<PAGE> 16
or renew or alter Senior Indebtedness, or otherwise amend, in any manner,
Senior Indebtedness is outstanding; provided, however, that the average
weighted maturity of such Senior Indebtedness shall not be decreased without
the consent of the Holder; (ii) sell, exchange, release, or otherwise deal with
any property pledged, mortgaged, or otherwise securing Senior Indebtedness;
(iii) release any person liable in any manner for the collection of Senior
Indebtedness; and (iv) exercise or refrain from exercising any rights against
the Corporation and any other person.
(e) Subject to the payment in full of all amounts then
due (whether by acceleration of the maturity thereof or otherwise) on account
of the principal of, premium, if any, and interest on all Senior Indebtedness
at the time outstanding, the Holder shall be subrogated to the rights of the
holders of Senior Indebtedness to receive payments or distributions of cash,
property, or securities of the Corporation applicable to the Senior
Indebtedness until the principal of and interest on this Note shall be paid in
full; and, for the purposes of such subrogation, no payments or distributions
by the Corporation to the holders of Senior Indebtedness of any cash, property,
or securities to which the Holder would be entitled except for the provisions
hereof, and no payments over pursuant to the provisions hereof to the holders
of Senior Indebtedness by the Holder, shall, as between the Corporation, its
creditors other than holders of Senior Indebtedness, and the Holder, be deemed
to be a payment by the Corporation to or on account of the Senior Indebtedness.
(f) It is understood that the foregoing provisions of
this Note are and are intended solely for the purpose of defining the relative
rights of the Holder on the one hand and the holders of Senior Indebtedness on
the other hand. Nothing contained in this Note is intended to or shall impair,
as among the Corporation, its creditors other than the holders of Senior
Indebtedness, and the Holder, the obligation of the Corporation, which is
absolute and unconditional, to pay to the Holder the principal of and interest
on this Note as and when the same shall become due and payable in accordance
with its terms, or is intended to or shall affect the relative rights of the
Holder and creditors of the Corporation other than the holders of Senior
Indebtedness, nor shall anything herein prevent the Holder from exercising all
remedies otherwise permitted by applicable law upon default under this Note or
the Note Purchase Agreement.
(g) Upon any payment or distribution of assets of the
Corporation referred to herein, the Holder shall be entitled to rely upon any
order or decree made by any court of competent jurisdiction in which such
dissolution, winding up, liquidation, or reorganization proceedings are
pending, or certificate of the receiver, trustee in bankruptcy, liquidating
trustee, agent, or other person making such payment or distribution, delivered
to the Holder, for the purpose of ascertaining the persons entitled to
participate in such distribution, the holders of Senior Indebtedness and other
indebtedness of the Corporation, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon, and all other facts pertinent
thereto.
(h) The Corporation shall give prompt written notice to
the Holder of any fact known to the Corporation that would prohibit the making
of any payment of moneys to or by the Corporation in respect of this Note.
16
<PAGE> 17
SECTION 9. ACCELERATION. This Note and the indebtedness
evidenced hereby is subject to acceleration under the terms and conditions set
forth in the Note Purchase Agreement.
SECTION 10. MISCELLANEOUS. (a) Any notice required by the
provisions of this Note to be given to the Holder or the Corporation shall be
given and deemed received or delivered in accordance with the provisions of
Section 10.4 of the Note Purchase Agreement.
(b) In the event of prepayment or conversion of this Note
in part only, a new note or notes for the unpaid or unconverted portion hereof
will be issued in the name or names requested by the Holder upon the
cancellation hereof.
(c) The transfer of this Note is registrable on the books
of the Corporation upon surrender of this Note for registration of transfer at
the offices of the Corporation in Nashville, Tennessee, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Corporation duly executed by, the Holder or its attorney duly authorized in
writing, and thereupon one or more new notes of authorized denominations and
for the same aggregate principal amount, will be issued to the designated
transferee or transferees. New notes are issuable only in registered form
without coupons in denominations of One Thousand Dollars ($1,000) and any
integral multiple thereof. This Note is exchangeable for a like aggregate
principal amount of notes of a different authorized denomination, as requested
by the Holder. No service charge shall be made of any such registration of
transfer or exchange, but the Corporation may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
(d) Prior to the due presentment of this Note for
registration of transfer, the Corporation and any agent of the Corporation may
treat the person in whose name this Note is registered as the owner hereof for
all purposes, irrespective of whether this Note be overdue, and neither the
Corporation nor any such agent shall be affected by notice to the contrary.
(e) This Note shall be governed by and construed in
accordance with the laws of the State of California.
(f) The Corporation agrees, to the extent permitted by
law, to pay to the Holder all costs and expenses (including attorneys' fees)
incurred by it in the collection hereof or the enforcement of any right or
remedy provided for herein (including such costs and expenses incurred in
connection with a workout or an insolvency or bankruptcy proceeding).
(g) The provisions of the Note Purchase Agreement are
hereby incorporated into this Note by this reference.
17
<PAGE> 18
IN WITNESS WHEREOF, the undersigned has executed this Note effective
as of the date first above written.
CORRECTIONS CORPORATION OF AMERICA,
A Delaware corporation
By:
--------------------------------------------
Doctor R. Crants, Chairman of the Board and
Chief Executive Officer
ATTEST:
- --------------------------------
Darrell K. Massengale, Secretary
18
<PAGE> 19
[FORM OF MANDATORY CONVERSION NOTICE]
- --------------------
- --------------------
- --------------------
Notice is hereby given that, in accordance with the terms and
conditions of the Note hereinafter described and that certain Note Purchase
Agreement, dated June 22, 1992, between Corrections Corporation of America,
Pacific Mutual Life Insurance Company, and PM Group Life Insurance Company, as
amended from time to time, Corrections Corporation of America hereby elects to
require conversion of the 8.5% Convertible, Extendable, Subordinated Note,
originally due September 30, 1998, issued by it (the "Note"). The Note to be
converted and the principal amount thereof to be converted are as follows:
<TABLE>
<CAPTION>
Principal Number of
Outstanding Amount to be Shares to
Note Number Principal Amount Converted Be Delivered
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
</TABLE>
The Mandatory Conversion Date will be .
----------------------
CORRECTIONS CORPORATION OF AMERICA
By:
------------------------------------
Name:
-------------------------------
Title:
-------------------------------
Exhibit A
19
<PAGE> 20
[FORM OF MANDATORY PREPAYMENT NOTICE]
TO: CORRECTIONS CORPORATION OF AMERICA
-------------------------
-------------------------
The undersigned owner of the attached Note hereby gives notice that,
in accordance with the terms and conditions of such Note and that certain Note
Purchase Agreement, dated June 22, 1992, between Corrections Corporation of
America, Pacific Mutual Life Insurance Company, and PM Group Life Insurance
Company, as amended from time to time, it hereby exercises its right to require
prepayment of such Note or portion thereof (which is $1,000 or an integral
multiple thereof), plus all accrued but unpaid interest with respect to such
principal amount.
The Mandatory Prepayment Date shall be _____________. The principal
amount to be prepaid shall be $__________________________.
[Name of Holder]
Dated: By:
-------------------- ------------------------------
Name:
----------------------------
Title:
----------------------------
Exhibit B
20
<PAGE> 21
[FORM OF CONVERSION NOTICE]
TO: CORRECTIONS CORPORATION OF AMERICA
-------------------------
-------------------------
The undersigned owner of the attached Note hereby gives notice that,
in accordance with the terms and conditions of such Note and the Note Purchase
Agreement, dated June 22, 1992, between Corrections Corporation of America,
Pacific Mutual Life Insurance Company, and PM Group Life Insurance Company, as
amended from time to time, it hereby exercises its right to convert such Note,
or portion thereof (which is $1,000 or an integral multiple thereof), below
designated, into shares of Common Stock of Corrections Corporation of America
and directs that the shares issuable and deliverable upon the conversion, and
any notes representing any unconverted principal amount thereof, be issued and
delivered to the registered holder of such Note unless a different name has
been indicated below. If shares or a new note representing unconverted
principal are to be issued in the name of a person other than the undersigned,
the undersigned will pay all transfer taxes payable with respect thereto.
[Name of Holder]
Dated: By:
------------------- ---------------------------
Name:
--------------------------
Title:
-------------------------
Principal Amount to be converted
(in an integral multiple of $1,000,
if less than all):
$
---------------------------
Exhibit C
21
<PAGE> 22
Fill in for registration of shares
of Common Stock and Note if to be
issued otherwise than to the
registered Holder.
- ----------------------------------
Name
- ----------------------------------
Address
- ----------------------------------
Please print name and address
(including zip code number)
SOCIAL SECURITY OR OTHER TAXPAYER
IDENTIFYING NUMBER
- ----------------------------------
22
<PAGE> 23
[FORM OF OPTIONAL PREPAYMENT NOTICE]
- --------------------
- --------------------
- --------------------
Notice is hereby given that, in accordance with the terms and
conditions of the Note hereinafter described and that certain Note Purchase
Agreement, dated June 22, 1992, between Corrections Corporation of America,
Pacific Mutual Life Insurance Company, and PM Group Life Insurance Company, as
amended from time to time, Corrections Corporation of America hereby elects to
prepay the 8.5% Convertible, Extendable, Subordinated Note, originally due
September 30, 1998, issued by it (the "Note"). Prepayment of such Note or
portion thereof (which is $1,000 or an integral multiple thereof), plus all
accrued but unpaid interest with respect to such principal amount shall be
effective on the Optional Prepayment Date set forth below.
The Optional Prepayment Date shall be ___________. The principal
amount to be prepaid shall be $_______________________.
CORRECTIONS CORPORATION OF AMERICA
By:
------------------------------------
Name:
-------------------------------
Title:
------------------------------
Exhibit D
23
<PAGE> 1
Exhibit 4(s)
CORRECTIONS CORPORATION OF AMERICA
8.5% CONVERTIBLE, EXTENDABLE, SUBORDINATED
NOTE ORIGINALLY DUE SEPTEMBER 30, 1998
dated as of
No. 014 December 2, 1992
SECTION 1. PAYMENT OBLIGATION. CORRECTIONS CORPORATION OF
AMERICA, a corporation duly organized and existing under the laws of the State
of Delaware (herein called the "Corporation"), for value received, hereby
promises to pay to ATWELL & CO, or registered assigns (hereinafter referred to
as the "Holder"), the principal sum of One Hundred Ninety-Five Thousand Dollars
($195,000) on the Maturity Date, and to pay interest thereon from the date
hereof quarterly on September 30, December 31, March 31 and June 30 of each
year, commencing December 31, 1992, at (i) the Coupon Rate, or (ii) upon the
occurrence of a Triggering Event and until the date on which such Triggering
Event is cured or waived or until the date that is ninety (90) days from
initial occurrence of the Triggering Event, whichever is later, at the
Triggering Event Rate, until the principal hereof is paid to the person in
whose name this Note is registered at the close of business on the Business Day
immediately preceding the date such payment is due. Payment of the principal
of and interest on this Note will be made by cashiers check or by wire transfer
of immediately available funds, in currency of the United States of America as
at the time of payment is legal tender for payment of public and private debts,
at such address or to such account, as applicable, as shall be designated to
the Corporation by the Holder.
SECTION 2. DEFINITIONS. As used herein, the following terms
will be deemed to have the meanings set forth below:
"BOARD" means the board of directors of the Corporation.
"BUSINESS DAY" means each Monday, Tuesday, Wednesday, Thursday, or
Friday that is not a day on which banking institutions in Los Angeles,
California are authorized or obligated by law or executive order to
close.
"CHANGE EVENT" shall mean:
(a) the acquisition by any individual, entity, or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the
Exchange Act) of beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) of 50% or more
of the combined voting power of the then outstanding voting
securities of the Corporation entitled to vote generally in
the election of directors, but excluding, for this purpose,
any such acquisition by (i) the Corporation or any of its
subsidiaries, (ii) any employee benefit plan (or related
trust) of the Corporation or
<PAGE> 2
its subsidiaries, or (iii) any corporation with respect to
which, following such acquisition, more than 50% of the
combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in
the election of directors is then beneficially owned, directly
or indirectly, by individuals and entities who were the
beneficial owners of voting securities of the Corporation
immediately prior to such acquisition in substantially the
same proportion as their ownership, immediately prior to such
acquisition, of the combined voting power of the then
outstanding voting securities of the Corporation entitled to
vote generally in the election of directors; or
(b) the Incumbent Board shall cease for any reason to
constitute as least fifty percent (50%) of the members of the
Board; or
(c) approval by the stockholders of the Corporation of a
reorganization, merger, or consolidation, in each case, with
respect to which all or substantially all the individuals and
entities who were the respective beneficial owners of the
voting securities of the Corporation immediately prior to such
reorganization, merger, or consolidation do not, following
such reorganization, merger, or consolidation beneficially
own, directly or indirectly, more than 50% of the combined
voting power of the then outstanding voting securities
entitled to vote generally in the election of directors of
the corporation resulting from such reorganization, merger, or
consolidation; or
(d) the sale or other disposition of all or substantially all
the assets or property of the Corporation in one transaction
or a series of related transactions.
"CLOSING DATE" shall have the meaning ascribed thereto in Section 2.2
of the Note Purchase Agreement.
"COMMON STOCK" means the common stock of the Corporation, par value
$1.00 per share.
"CONVERSION PRICE" means $7.14 per share of Common Stock, subject to
adjustment from time to time as herein set forth.
"CONVERSION RATIO" means the number of Conversion Shares to be
delivered upon conversion of One Hundred Dollars ($100) of principal
amount of this Note. Subject to the provisions for adjustment set
forth herein, the Conversion Ration shall be determined as the
quotient of (i) the principal amount of this Note to be converted,
divided by (ii) the Conversion Price. Subject to the provisions for
adjustment set forth herein, the Conversion Ratio initially shall be
14.0:1.0.
"CONVERSION SHARES" means fully paid and nonassessable shares of
Common Stock issuable upon conversion of the indebtedness evidenced by
this Note.
<PAGE> 3
"CONVERTIBLE NOTES" means the Corporation's (a) $7,000,000 aggregate
principal amount 8.5% Convertible Subordinated Notes due November 7,
1999, and (b) the Corporation's $2,700,000 aggregate principal amount
8.5% Convertible Subordinated Notes due on various dates, the latest
of which is January 16, 2000.
"COUPON RATE" means eight and one-half percent (8.5%) per annum.
"CURRENT MARKET PRICE" when used with reference to shares of Common
Stock, shall mean the closing price per share of Common Stock on such
date and, when used with reference to shares of Common Stock for any
period shall mean the average of the daily closing prices per share of
Common Stock for such period. The closing price for each day shall be
the last quoted sale price or, if not so quoted, the average of the
high bid and low asked prices in the over-the-counter market, as
reported by the National Association of Securities Dealers, Inc.
Automated Quotation System or such other system then in use, or, if on
any such date the Common Stock is not quoted nor so reported, the
average of the closing bide and asked prices as furnished by a
professional market maker making a market in the Common Stock selected
by the Board. If the Common Stock is listed or admitted to trading on
a national securities exchange, the closing price shall be the last
sale price, regular way, or, in case no such sale takes place on such
day, the average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Common Stock is not
listed or admitted to trading on the New York Stock Exchange, as
securities listed on the principal national securities exchange on
which the Common Stock is listed or admitted to trading. If the
Common Stock is not publicly held or so listed or publicly traded,
"Current Market Price" shall mean the fair market value per share of
Common Stock as determined in good faith by the Board based on an
opinion of an independent investment banking firm with an established
national reputation as a valuer of securities, which opinion may be
based on such assumptions as such firm shall deem to be necessary and
appropriate.
"EVENT OF DEFAULT" shall have the meaning set forth in Section 7.1 of
the Note Purchase Agreement.
"EXCHANGE ACT" shall have the meaning set forth in Section 3.1 of the
Note Purchase Agreement.
"INCUMBENT BOARD" means the individuals who, as of the Closing Date,
constitute the Board; provided, however, that any individual becoming
a director subsequent to the Closing Date, whose election, or
nomination for election by the Corporation's stockholders, was
approved by a vote of at least a majority of the directors then
comprising the Incumbent Board shall be deemed to be a member of the
Incumbent Board.
3
<PAGE> 4
"MAJOR TRANSACTION" shall mean:
(a) approval by the stockholders of the Corporation of a
reorganization, merger, or consolidation, in each case, with
respect to which all or substantially all the individuals and
entities who were the respective beneficial owners of the
voting securities of the Corporation immediately prior to such
reorganization, merger, or consolidation do not, following
such reorganization, merger, or consolidation beneficially
own, directly or indirectly, more than 50% of the combined
voting power of the then outstanding voting securities
entitled to vote generally in the election of directors of the
Corporation resulting from such reorganization, merger, or
consolidation; or
(b) the sale or other disposition of all or substantially all
the assets or property of the Corporation in one transaction
or a series of related transactions.
"MANDATORY CONVERSION DATE" means the Business Day specified by the
Corporation, in compliance with the provisions hereof, as the date on
which all or a portion of the indebtedness evidenced by this Note will
be converted into shares of Common Stock pursuant to the Corporation's
right to compel such conversion.
"MANDATORY CONVERSION NOTICE" means a written notice substantially in
the form of the notice attached hereto as Exhibit A and incorporated
herein by this reference..
"MANDATORY PREPAYMENT DATE" means the Business Day specified by the
Holder, in compliance with the provision hereof, as the date on which
all or a portion of the indebtedness evidenced by this Note must be
prepaid pursuant to the Holder's right to compel such prepayment.
"MANDATORY PREPAYMENT NOTICE" means a written notice substantially in
the form of the notice attached hereto as Exhibit B and incorporated
herein by this reference.
"MATURITY DATE" means (i) September 30, 1998, or (ii) September 30,
1999, if the Holder of this Note elects, by written notice given to
the Corporation at least sixty (60) days but not more than one hundred
twenty (120) days prior to September 30, 1998, to extend the then
extant "Maturity Date" to September 30, 1999, or (iii) September 30,
2000, if the Holder of this Note elects, by written notice given to
the Corporation at least sixty (60) days but not more than one hundred
twenty (120) days prior to September 30, 1999, to extend the then
extant "Maturity Date" to September 30, 2000.
"NOTE" means this 8.5% convertible, extendable, subordinated note
issued by the Corporation.
4
<PAGE> 5
"NOTE PURCHASE AGREEMENT" means that certain Note Purchase Agreement,
dated as of June 22, 1992, between the Corporation, Pacific Mutual
Life Insurance Company, and PM Group Life Insurance Company, as
amended from time to time.
"OPTIONAL CONVERSION NOTICE" means a written notice substantially in
the form of the notice attached hereto as Exhibit C and incorporated
herein by this reference.
"OPTIONAL PREPAYMENT NOTICE" means a written notice substantially in
the form of the notice attached hereto as Exhibit D and incorporated
herein by this reference.
"SENIOR INDEBTEDNESS" means the principal of and premium, if any, and
unpaid interest on (a) indebtedness (other than indebtedness
evidenced by the Convertible Notes, indebtedness that is subordinated
in right of payment to one or more item or type of indebtedness of the
Corporation, or indebtedness incurred in violation of the terms and
conditions of the Note Purchase Agreement) of the Corporation,
irrespective of whether secured and whether heretofore or hereafter
(i) incurred for borrowed money, or (ii) evidenced by a note or
similar instrument given in connection with the acquisition by the
Corporation of any business, properties, or assets, including
securities (but not including any account payable or other obligation
created or assumed by the Corporation in the ordinary course of
business in connection with the obtaining of materials or services),
(b) any refundings, renewals, extensions, or deferrals of any of the
indebtedness included as Senior Indebtedness by virtue of clause (a)
hereof, and (c) obligations under capital leases; in each case for the
payment of which the Corporation is liable directly or indirectly by
guarantee, letter of credit, obligation to purchase or acquire, or
otherwise, unless the terms of the instrument evidencing such
indebtedness or capital lease or pursuant to which such indebtedness
or capital lease is outstanding specifically provide that such
indebtedness or capital lease is not superior in right of payment to
the indebtedness evidenced by this Note.
"TRADING DAY" means, if the Common Stock is listed or admitted to
trading on any national securities exchange, a day on which such
exchange is open for the transaction of business, otherwise, a
Business Day.
"TRANCHE B CLOSING DATE" shall have the meaning ascribed thereto in
Section 3.1 of the Note Purchase Agreement.
"TRANCHE C CLOSING DATE" shall have the meaning ascribed thereto in
Section 3.1 of the Note Purchase Agreement.
"TRIGGERING EVENT" means the occurrence of any Unmatured Event of
Default or Event of Default described in clauses (i), (ii), and (iv)
through (x), inclusive, of Section 7.1 of the Note Purchase Agreement.
For purposes of determining the period during which the Triggering
Event Rate shall be in effect, a Triggering Event shall not be deemed
to have
5
<PAGE> 6
occurred until the date on which the Holder shall have given notice of
the occurrence thereof to the Corporation.
"TRIGGERING EVENT RATE" means ten and one-half percent (10.5%) per
annum.
"UNMATURED EVENT OF DEFAULT"shall mean any event or condition, the
occurrence of which would, with the lapse of time or the giving of
notice, or both, constitute an Event of Default.
SECTION 3. OPTIONAL CONVERSION. (a) Subject to and upon
compliance with the provisions of this Note, the Holder is entitled, at its
option, at any time on or before the close of business on the Business Day
prior to the Maturity Date, or in case this Note or a portion hereof is called
for conversion by the Corporation in accordance with the terms hereof, or the
Corporation elects to prepay in accordance with the terms hereof, then until
and including, but not after, the close of business on the third Business Day
prior to the Mandatory Conversion Date or the Optional Prepayment Date, to
convert all or a portion of the principal amount of the indebtedness evidenced
by this Note into Conversion Shares.
(b) The principal amount of the indebtedness evidenced by this
Note or any portion of the principal amount of the indebtedness evidenced
hereby that is One Thousand Dollars ($1,000), an integral multiple of One
Thousand Dollars ($1,000), or the remaining balance of the principal amount of
the indebtedness evidenced by this Note may be converted into Conversion
Shares. Subject to the provisions for adjustment set forth hereinafter, the
indebtedness evidenced by the Note shall be convertible into Conversion Shares
at a price per share equal to the Conversion Price and the number of Conversion
Shares to be deliverable to the Holder upon conversion of One Hundred Dollars
($100) of the principal amount of this Note shall be equal to the Conversion
Ratio.
(c) Conversion of all or a portion of the indebtedness
evidenced by this Note may be effected by the Holder upon the surrender to the
Corporation at the principal office of the Corporation in the State of
Tennessee or at the office of any agent or agents of the Corporation, as may be
designated by the Board, of this Note, duly endorsed or assigned to the
Corporation or in blank, accompanied by an Optional Conversion Notice to the
Corporation that the Holder elects to convert the principal amount of the
indebtedness evidenced by this Note or, if less than the entire principal
amount of the indebtedness evidenced by this Note is to be converted, the
portion thereof to be converted. Such Optional Conversion Notice shall specify
the name or names in which the Holder wishes the certificate or certificates
for shares of Common Stock to be issued. In case such notice shall specify a
name or names other than that of the Holder, such notice shall be accompanied
by payment of all transfer taxes payable upon the issuance of shares of Common
Stock in such name or names. Other than such taxes, the Corporation will pay
any and all issue and other taxes (other than taxes based on income) that may
be payable in respect of any issue or delivery of shares of Common Stock on
conversion of the indebtedness evidenced by this Note. No payment or
adjustment shall be made upon any conversion of this Note on account of any
dividends or other distributions payable on the Conversion Shares; provided,
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<PAGE> 7
however, that the Holder shall be entitled to receive the full amount of any
dividends or other distributions declared with respect to the Conversion Shares
with a record date on or after the effective date of such conversion.
As promptly as practicable, and in any event within five (5)
Business Days after the surrender of this Note and the receipt of such notice
relating thereto and, if applicable, payment of all transfer taxes (or the
demonstration to the satisfaction of the Corporation that such taxes have been
paid), the Corporation shall deliver or cause to be delivered, either by
personal delivery or by certified or registered mail or by a recognized
overnight courier service, in any such case, properly insured, to the Holder in
accordance with the written instructions of the Holder (i) certificates
representing the number of Conversion Shares to which the Holder shall be
entitled, and (ii) if less than the entire principal amount of indebtedness
evidenced by this Note, for the balance of the indebtedness that is not being
so converted. Such conversion shall be deemed to have been made at the close
of business on the date of giving such notice and of such surrender of this
Note so that the rights of the Holder (as a noteholder) with respect to the
principal amount being converted shall cease, and the person or persons
entitled to receive the Conversion Shares issuable upon conversion shall be
treated for all purposes as the record holder or holders of such Common Stock
as of such day. All accrued but unpaid interest through the Business Day
immediately preceding the date of such conversion with respect to the principal
amount of the indebtedness evidenced by this Note being converted shall be
payable upon conversion.
The Corporation shall not be required to convert, and no
surrender of this Note shall be effective for that purpose, while the transfer
books of the Corporation for the Common Stock are closed for any purpose (but
not for any period in excess of 15 days); but the surrender of this Note for
conversion during any period while such books are so closed shall become
effective for conversion immediately upon the reopening of such books, as if
the conversion had been made on the date this Note is surrendered, and at the
Conversion Ratio in effect at the date of such surrender.
(d) In case this Note is to be prepaid pursuant to the
mandatory prepayment provisions hereof, such right of conversion shall cease
and terminate as to the portion of this Note that is to be prepaid at the close
of business on the Business Day next preceding the date fixed for mandatory
prepayment unless the Corporation shall default in the payment of the Mandatory
Prepayment Amount.
(e) In connection with the conversion of the indebtedness
evidenced by this Note, no fractions of shares of Common Stock shall be issued,
but in lieu thereof the Corporation shall pay a cash adjustment in respect of
such fractional interest in an amount equal to such fractional interest
multiplied by the Current Market Price per share of Common Stock on the Trading
Day on which such indebtedness evidenced by this Note is deemed to have been
converted. If more than one note shall be surrendered for conversion by the
Holder at the same time, the number of full shares of Common Stock issuable on
conversion thereof shall be computed on the basis of the total amount of
indebtedness to be converted.
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<PAGE> 8
(f) (i) The Corporation shall at all times reserve and
keep available for issuance upon the conversion of the indebtedness evidenced
by this Note, free from any preemptive rights, such number of its authorized
but unissued shares of Common Stock as will from time to time be sufficient to
permit the conversion of all of the indebtedness evidenced by this Note, and
shall take all action required to increase the authorized number of shares of
Common Stock if necessary to permit the conversion of all of the indebtedness
evidenced by this Note.
(ii) If the Corporation shall issue shares of Common
Stock upon conversion of indebtedness evidenced by this Note as contemplated by
this Section 3, the Corporation shall issue together with each such share of
Common Stock any rights issued to holders of Common Stock of the Corporation,
irrespective of whether such rights shall be exercisable at such time, but only
if such rights are issued and outstanding and held by other holders of Common
Stock of the Corporation at such time and have not expired.
(g) The Conversion Ratio will be subject to adjustment
from time to time as follows:
(i) In case the Corporation shall at any time or from
time to time after the Tranche B Closing Date (A) pay a dividend, or make a
distribution, on the outstanding shares of Common Stock in shares of Common
Stock, (B) subdivide the outstanding shares of Common Stock, (C) combine the
outstanding shares of Common Stock into a smaller number of shares, or (D)
issue by reclassification of the shares of Common Stock any shares of capital
stock of the Corporation, then, and in each such case, the Conversion Ratio in
effect immediately prior to such event or the record date therefor, whichever
is earlier, shall be adjusted so that the Holder shall be entitled to receive
the number of shares of Common Stock (or other capital stock) of the
Corporation that the Holder would have owned or have been entitled to receive
after the happening of any of the events described above, had the indebtedness
evidenced by this Note been converted immediately prior to the happening of
such event or the record date therefor, whichever is earlier. An adjustment
made pursuant to this clause (i) shall become effective (x) in the case of any
such dividend or distribution, immediately after the close of business on the
record date for the determination of holders of shares of Common Stock entitled
to receive such dividend or distribution, or (y) in the case of such
subdivision, reclassification, or combination, at the close of business on the
day upon which such corporate action becomes effective. No adjustment shall be
made pursuant to this clause (i) in connection with any transaction to which
subsection (h) applies.
(ii) In case the Corporation shall issue shares of
Common Stock (or rights, warrants, or other securities convertible into or
exchangeable for shares of Common Stock) after the Tranche B Closing Date at a
price per share (or having a conversion price per share) less than the Current
Market Price per share of Common Stock, as of the date of issuance of such
shares or of such convertible securities, then, and in each such case, the
Conversion Ratio shall be adjusted so that the Holder shall be entitled to
receive, upon the conversion hereof, the number of shares of Common Stock
determined by multiplying (A) the applicable Conversion Ratio on the day
immediately prior to such date by (B) a fraction, the numerator of which shall
be the sum
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<PAGE> 9
of (1) the number of shares of Common Stock outstanding on such date plus (2)
the number of additional shares of Common Stock issued (or into which the
convertible securities may convert), and the denominator of which shall be the
sum of (x) the number of shares of Common Stock purchasable at the then Current
Market Price per share with the aggregate consideration received or receivable
by the Corporation for the total number of shares of Common Stock so issued (or
into which the rights, warrants, or other convertible securities may convert).
An adjustment made pursuant to this clause (ii) shall
be made on the next Business Day following the date on which any such issuance
is made and shall be effective retroactively to the close of business on the
date of such issuance. For purposes of this clause (ii), the aggregate
consideration received or receivable by the Corporation in connection with the
issuance of shares of Common Stock shall be deemed to be equal to the sum of
the aggregate offering price (before deduction of underwriting discounts or
commissions and expenses payable to third parties) of all such Common Stock,
rights, warrants, and convertible securities plus the minimum aggregate amount,
if any, payable upon exercise of conversion of any such rights, warrants, and
convertible securities into shares of Common Stock. The issuance of any shares
of Common Stock (whether treasury shares or newly issued shares) pursuant to
(a) a dividend or distribution on, or subdivision, combination or
reclassification of, the outstanding shares of Common Stock requiring an
adjustment in the conversion ratio pursuant to clause (i) of this subsection
(g), or (b) any restricted stock or stock option plan or program of the
Corporation, or (c) any option, warrant, right, or convertible security
outstanding as of the date hereof, or (d) the terms of a firmly committed
underwritten public offering, shall not be deemed to constitute an issuance of
Common Stock or convertible securities by the Corporation to which this clause
(ii) applies.
Upon the expiration of any unexercised options,
warrants, or rights to convert any convertible securities for which an
adjustment has been made pursuant to this clause (ii), the adjustment shall
forthwith be reversed to effect such rate of conversion as would have been in
effect at the time of such expiration or termination had such options, warrant,
rights or convertible securities, to the extent outstanding immediately prior
to such expiration or termination, never been issued. If the purchase price
provided for in any option, warrant, or rights to convert any convertible
securities for which an adjustment has been made pursuant to this clause (ii),
the additional consideration, if any, payable upon the conversion or exchange
of any convertible securities for which an adjustment has been made, or the
rate at which any convertible securities referred to above are convertible into
or exchangeable for Common Stock shall, at any time, increase or decrease
(other than under or by reason of provisions designed to protect against
dilution), then, the Conversion Ratio in effect at the time of such event shall
forthwith be readjusted to the Conversion Ratio that would have been in effect
at such time and such options, warrants, or rights or convertible securities
still outstanding provided for such changed purchase price, additional
consideration, or conversion rate, as the case may be, at the time initially
granted, issued or sold. No adjustment shall be made pursuant to this clause
(ii) in connection with any transaction to which subsection h applies.
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<PAGE> 10
(iii) In case the Corporation shall at any time or
from time to time after the Tranche B Closing Date declare, order, pay, or make
a dividend or other distribution (including, without limitation, any
distribution of stock or other securities or property or rights or warrants to
subscribe for securities of the Corporation or any of its subsidiaries by way
of dividend or spinoff), on its Common Stock, other than (A) dividends payable
in cash in an aggregate amount not to exceed 50% of net income from continuing
operations before extraordinary items of the Corporation, determined in
accordance with generally accepted accounting principles, during the period
(treated as one accounting period) commencing on March 31, 1992, and ending on
the date such dividend is paid; provided, that, to the extent required by the
terms thereof, such dividend shall have been previously consented to by the
holders of the notes issued pursuant to the Note Purchase Agreement, or (B)
dividends or distributions of shares of Common Stock which are referred to in
clause (i) of this subsection (g), then, and in each such case, the Conversion
Ratio shall be adjusted so that the Holder shall be entitled to receive, upon
the conversion hereof, the number of shares of Common Stock determined by
multiplying (1) the applicable Conversion Ratio on the day immediately prior to
the record date fixed for the determination of stockholders entitled to receive
such dividend or distribution by (2) a fraction, the numerator of which shall
be the Current Market Price per share of Common Stock for the period of 20
Trading Days preceding such record date, and the denominator of which shall be
such Current Market Price per share of Common Stock less the fair market value,
as determined in good faith by the Board, a certified resolution with respect
to which shall be mailed to the Holder, per share of Common Stock of such
dividend or distribution. No adjustment shall be made pursuant to this clause
(iii) in connection with any transaction to which subsection (h) applies.
(iv) For purposes of this subsection (g), the number
of shares of Common Stock at any time outstanding shall not include any shares
of Common Stock then owned or held by or for the account of the Corporation.
(v) The term "dividend," as used in this subsection
(g), shall mean a dividend or other distribution upon stock of the Corporation.
(vi) Anything in this subsection (g) to the contrary
notwithstanding, the Corporation shall not be required to give effect to any
adjustment in the Conversion Ratio unless and until the net effect of one or
more adjustments (each of which shall be carried forward), determined as above
provided, shall have resulted in a change of the Conversion Ratio by at least
one one-hundredth (.01) of one share of Common Stock, and when the cumulative
net effect of more than one adjustment so determined shall be to change the
Conversion Ratio by at least one one-hundredth (.01) of one share of Common
Stock, such change in Conversion Ratio shall thereupon be given effect.
(vii) The certificate of any firm of independent
public accountants of recognized standing selected by the Board (which may be
the firm of independent public accountants regularly employed by the
Corporation) shall be presumptively correct for any computation made under this
subsection (g).
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(viii) If the Corporation shall take a record of the
holders of its Common Stock for the purpose of entitling them to receive a
dividend or other distribution, and shall thereafter and before the
distribution to stockholders thereof legally abandon its plan to pay or deliver
such dividend or distribution, then thereafter no adjustment in the number of
shares of Common Stock issuable upon exercise of the right of conversion
granted by this subsection (g) or in the Conversion Ratio then in effect shall
be required by reason of the taking of such record.
(h) In the case of any Major Transaction occurring at any
time, at the option of the Holder, the indebtedness evidenced by the Note shall
thereafter be convertible into, in whole and in part and in lieu of the Common
Stock issuable upon such conversion prior to consummation of such Major
Transaction, the kind and amount of shares of stock and other securities and
property receivable (including cash) upon the consummation of such Major
Transaction by a holder of that number of shares of Common Stock into which
such indebtedness, or portion thereof, was convertible immediately prior to
such Major Transaction (including, on a pro rata basis, the cash, securities,
or property received by holders of Common Stock in any tender or exchange offer
that is a step in such Major Transaction). In case securities or property
other than Common Stock shall be issuable or deliverable upon conversion as
aforesaid, then all references in this Section 3 shall be deemed to apply, so
far as appropriate and nearly as may be, to such other securities or property.
(i) In case at any time or from time to time the Corporation
shall pay any stock dividend or make any other non-cash distribution of the
holders of its Common Stock, or shall offer for subscription pro rata to the
holders of its Common Stock any additional shares of stock of any class or any
other right, or there shall be any capital reorganization or reclassification
of the Common Stock of the Corporation or consolidation or merger of the
Corporation with or into another corporation or other entity, or any sale or
conveyance to another corporation or other entity of the assets or property of
the Corporation as an entirety or substantially as an entirety, or there shall
be a voluntary or involuntary dissolution, liquidation, or winding up of the
Corporation, then, in any one or more of said cases the Corporation shall give
at least 20 days prior written notice (the time of mailing of such notice shall
be deemed to be the time of giving thereof) to the Holder at the address of the
Holder as shown on the books of the Corporation as of the date of which (i) the
books of the Corporation shall close or a record shall be taken for such stock
dividend, distribution, or subscription rights, or (ii) such reorganization,
reclassification, consolidation, merger, sale, conveyance, dissolution,
liquidation, or winding up shall take place, as the case may be, provided that
in the case of any Major Transaction to which subsection (h) applies the
Corporation shall give at least 30 days prior written notice as aforesaid.
Such notice shall also specify the date as of which the holders of the Common
Stock of record shall participate in said dividend, distribution, or
subscription rights or shall be entitled to exchange their Common Stock for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, or conveyance or participate in
such dissolution, liquidation, or winding up, as the case may be. Failure to
give such notice shall not invalidate any action so taken.
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<PAGE> 12
(j) Anything herein to the contrary notwithstanding, the
issuance or sale of the following shares of Common Stock or options, warrants,
or other rights to purchase Common Stock shall be excluded from any calculation
of, and shall not be deemed issued or sold for purposes of calculating, any
reduction, adjustment, or readjustment of the Conversion Ratio hereunder: (i)
shares of Common Stock issued upon conversion of the indebtedness evidenced by
this Note or any portion thereof; (ii) shares of Common Stock or options,
warrants, or other rights to purchase Common Stock issuable, reserved for
issuance, or issued pursuant to a stock option plan, employee stock ownership
plan, or other compensatory benefit plan of the Corporation, duly adopted by
the Board; (iii) shares of Common Stock, issuable, reserved for issuance, or
issued pursuant to any currently outstanding warrants or options, or any
options, warrants, or other rights issuable, reserved for issuance, or issued
to officers of the Corporation in the future for compensatory purposes, if
fully authorized by the Board; and (iv) shares of Common Stock issued upon
conversion of the indebtedness evidenced by the Convertible Notes or the
currently issued and outstanding preferred stock.
SECTION 4. REPORTS AS TO ADJUSTMENTS. Upon any adjustment of
the Conversion Ratio then in effect and any increase or decrease in the number
of shares of Common Stock issuable upon the operation of the conversion set
forth in Section 3, then, and in each such case, the Corporation shall promptly
deliver to the Holder, a certificate signed by the President or a Vice
President and by the Treasurer or an Assistant Treasurer or the Secretary or an
Assistant Secretary of the Corporation setting forth in reasonable detail the
event requiring the adjustment and the method by which such adjustment was
calculated and specifying the Conversion Ratio then in effect following such
adjustment and the increased or decreased number of shares issuable upon the
conversion granted by Section 3, and shall set forth in reasonable detail the
method of calculation of each and a brief statement of the facts requiring such
adjustment. Where appropriate, such notice to the Holder may be given in
advance and included as part of the notice required under the provisions of
Section 3(i).
SECTION 5. MANDATORY CONVERSION. (a) At any time after
June 22, 1997, and so long as at such time the Common Stock is listed or
admitted to trading on a national securities exchange, the Corporation may
require the Holder to convert all or a portion of the principal amount of the
indebtedness evidenced by this Note into shares of Common Stock if, at such
time, the Current Market Price of the Common Stock has equalled or exceeded one
hundred fifty percent (150%) of the Conversion Price (as it may from time to
time be adjusted) for forty-five (45) consecutive Trading Days following the
forty-fifth monthly anniversary of the Tranche B Closing Date. To exercise
such right, the Corporation must deliver a Mandatory Conversion Notice of the
exercise of such right to the Holder within thirty (30) days of the last day of
such forty-five (45) day period, such Mandatory Conversion Notice must be given
at least ten (10) Business Days, but not more than fifteen (15) Business Days
prior to the proposed Mandatory Conversion Date, and such Mandatory Conversion
Notice must specify the proposed Mandatory Conversion Date and the portion of
the principal amount of the indebtedness evidenced by this Note to be converted
into Common Stock.
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(b) All conversions effected pursuant to the preceding
paragraph will be made effective as of the close of business on the Mandatory
Conversion Date at the Conversion Ratio in effect on the Mandatory Conversion
Date; provided, however, that, in order to be able to convert, the Current
Market Price on the Mandatory Conversion Date must equal or exceed one hundred
fifty percent (150%) of the Conversion Price in effect on the Mandatory
Conversion Date. If the Current Market Price on the Mandatory Conversion Date
does not equal or exceed one hundred fifty percent (150%) of the Conversion
Price in effect on the Mandatory Conversion Date, the Corporation's election to
require conversion will be deemed void and no conversion will be effected
pursuant to such notice. Such event will not be deemed, however, to alter or
restrict the Corporation's right to again require conversion at such time as
the Current Market Price equals or exceeds one hundred fifty percent (150%) of
the then current Conversion Price for forty-five (45) consecutive Trading Days
prior to such time. Upon conversion required by the Corporation pursuant to
this paragraph and the immediately preceding paragraph, all accrued but unpaid
interest with respect to the principal amount of the indebtedness evidenced by
this Note being converted shall be payable in accordance with the provisions of
the following paragraph.
(c) Conversions of the indebtedness evidenced by this
Note effected by the exercise of the Corporation's right to require conversion
will be deemed effective as of the close of business on the Mandatory
Conversion Date without any action by the Holder and the Holder will, as of
such time, be a stockholder of the Corporation with respect to the number of
shares of Common Stock into which the principal balance evidenced by this Note
(or such portion of the principal balance evidenced by this Note as the
Corporation shall have specified) shall have been converted. The Holder agrees
promptly to surrender this Note for cancellation following mandatory
conversion. Certificates representing the shares of Common Stock issuable by
the Corporation as a result of the mandatory conversion of all or a portion of
the principal balance of the indebtedness evidenced by this Note and all
dividends and other distributions payable with respect to such shares and all
accrued but unpaid interest payable pursuant to the immediately preceding
paragraph will be retained by the Corporation pending surrender of this Note
for cancellation. As promptly as practicable, and in any event within five (5)
Business Days after the surrender of this Note, the Corporation shall deliver
or cause to be delivered, either by personal delivery or by certified or
registered mail or by a recognized overnight courier service, in any such case,
properly insured, to the Holder in accordance with the written instructions of
the Holder (i) certificates representing the number of Conversion Shares to
which the Holder shall be entitled, and (ii) if less than the entire principal
amount of indebtedness evidenced by this Note is being converted, a new
promissory note, in the form of this Note, for the balance of the indebtedness
that is not being so converted.
(d) In connection with the conversion of the indebtedness
evidenced by this Note, no fractions of shares of Common Stock shall be issued,
but in lieu thereof the Corporation shall pay a cash adjustment in respect of
such fractional interest in an amount equal to such fractional interest
multiplied by the Current Market Price per share of Common Stock on the Trading
Day on which such indebtedness evidenced by this Note is deemed to have been
converted. If more than one note shall be surrendered for conversion by the
Holder at the same
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<PAGE> 14
time, the number of full shares of Common Stock issuable on conversion thereof
shall be computed on the basis of the total amount of indebtedness to be
converted.
SECTION 6. MANDATORY PREPAYMENT. In the case of any
Change Event occurring at any time, at the option of the Holder, the Holder may
require the Corporation to prepay all or a portion of the then outstanding
principal amount of the indebtedness evidenced by this Note. To exercise such
right of prepayment, the Holder must provide the Corporation with a Mandatory
Prepayment Notice at least thirty (30) days prior to the proposed Mandatory
Prepayment Date which Mandatory Prepayment Notice shall specify the portion of
the principal amount of the indebtedness evidenced by this Note (which must be
in integral multiples of One Thousand Dollars ($1,000)) to be prepaid. On the
Mandatory Prepayment Date specified, the Corporation shall prepay the portion
of the principal amount of the indebtedness evidenced by this Note that the
Holder has specified must be prepaid on such date, plus accrued interest on
such principal amount to the date of the prepayment. Any prepayment shall be
made by cashiers check or by wire transfer of immediately available funds, in
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts, at such address or to such
account, as applicable, as shall be designated to the Corporation by the
Holder.
SECTION 7. OPTIONAL PREPAYMENT. The Note shall be
subject to prepayment, at the option of the Corporation, at any time and from
time to time on and after December 2, 1997. To exercise such right of
prepayment, the Corporation must provide the Holder with an Optional Prepayment
Notice at least sixty (60) days prior to the proposed Optional Prepayment Date
which Optional Prepayment Notice shall specify the portion of the principal
amount of the indebtedness evidenced by this Note (which must be in integral
multiples of One Thousand Dollars ($1,000)) to be prepaid. The Holder's option
to convert the indebtedness evidenced by this Note as set forth in Section 3
hereof shall continue notwithstanding the exercise of the option of the
Corporation to prepay under this Section 7, so long as the Holder requests
conversion in accordance with the terms hereof up to and including, but not
after, the close of business on the third Business Day prior to the Optional
Prepayment Date. On the Optional Prepayment Date specified, the Corporation
shall prepay the portion of the principal amount of the indebtedness evidenced
by this Note that the Corporation has specified is to be prepaid on such date,
plus accrued interest on such principal amount to the date of the prepayment.
Any prepayment shall be made by cashiers check or by wire transfer of
immediately available funds, in currency of the United States of America as at
the time of payment is legal tender for payment of public and private debts, at
such address or to such account, as applicable, as shall be designated to the
Corporation by the Holder. This Note shall not be subject to prepayment,
whether in whole or in part, on or before December 2, 1997.
SECTION 8. SUBORDINATION. (a) The Corporation
covenants and agrees, and the Holder likewise covenants and agrees, that no
payment shall be made by the Corporation on account of principal of or interest
on this Note, or otherwise, if there shall have occurred and be continuing, and
the Corporation and the Holder shall have received notice from the holder or
holders of, a default with respect to any Senior Indebtedness (i) permitting
the acceleration thereof and such default is the subject of a judicial
proceeding, or (ii) in an aggregate principal
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<PAGE> 15
amount of not less than One Million Dollars ($1,000,000) entitling such holder
or holders of, a default with respect to any Senior Indebtedness (i) permitting
the acceleration thereof and such default is the subject of a judicial
proceeding, or (ii) in an aggregate principal amount of not less than One
Million Dollars ($1,000,000) entitling such holder or holders to compel the
acceleration thereof (provided, however, that in the case of Senior
Indebtedness issued pursuant to an indenture, such notice may be validly given
only by the trustee under such indenture), unless and until such default or
Event of Default shall have been cured or waived or shall have ceased to exist
or such notice is withdrawn or found by a court of competent jurisdiction to be
invalid.
(b) Upon any payment by the Corporation or distribution
of assets of the Corporation of any kind or character, whether in cash,
property, or securities, to creditors of the Corporation under any dissolution
or winding up or liquidation or reorganization of the Corporation, whether
voluntary or involuntary, or in bankruptcy, insolvency, receivership, or other
similar proceedings, all amounts due or to become due upon all Senior
Indebtedness shall first be paid in full in money or money's worth, or payment
thereof provided for, before any payment is made on account of the principal of
or interest on this Note and upon such dissolution or winding up or liquidation
or reorganization, any payment by the Corporation, or distribution of assets of
the Corporation of any kind or character, whether in cash, property, or
securities, to which the Holder would be entitled except for the provisions
hereof, shall be paid by the Corporation or by any receiver, trustee in
bankruptcy, liquidating trustee, agent, or other person making such payment or
distribution directly to the holders of Senior Indebtedness or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing any Senior Indebtedness
may have been issued, as their respective interests may appear, to the extent
necessary to pay all Senior Indebtedness in full in money or money's worth,
after giving effect to any concurrent payment or distribution to or for the
holders of Senior Indebtedness, before any payment or distribution is made to
the Holder.
(c) The foregoing notwithstanding, in the event that any
payment of or distribution of assets of the Corporation of any kind or
character, whether in cash, property or securities, prohibited by the
foregoing, shall be received by the Holder before all Senior Indebtedness is
paid in full in money or money's worth, or provision is made for such payment,
then and in such event such payment or distribution shall be paid over or
delivered to the holders of Senior Indebtedness or their representative or
representatives, or to the trustee or trustees under any indenture pursuant to
which any instruments evidencing any Senior Indebtedness may have been issued,
as their respective interests may appear, for application to the payment of all
Senior Indebtedness remaining unpaid to the extent necessary to pay all Senior
Indebtedness in full in money or money's worth, after giving effect to any
concurrent payment or distribution to or for the holders of such Senior
Indebtedness may have been issued, as their respective interests may appear,
for application to the payment of all Senior Indebtedness remaining unpaid to
the extent necessary to pay all Senior Indebtedness in full in money or money's
worth, after giving effect to any concurrent payment or distribution to or for
the holders of such Senior Indebtedness (but subject to the power of a court of
competent jurisdiction to make other equitable provision, which shall have been
determined by such court to give effect to the rights conferred herein upon the
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<PAGE> 16
Senior Indebtedness and the holders thereof with respect to this Note or the
Holder hereof by a lawful plan or reorganization or readjustment under
applicable bankruptcy law).
(d) The holders of Senior Indebtedness may, at any time
and from time to time, without the consent of or notice to the Holder, without
incurring responsibility to the Holder and without impairing or releasing the
obligations of the Holder to the holders of Senior Indebtedness: (i) change the
manner, place, or terms of payment or change or extend the time of payment of,
or renew or alter Senior Indebtedness, or otherwise amend, in any manner,
Senior Indebtedness is outstanding; provided, however, that the average
weighted maturity of such Senior Indebtedness shall not be decreased without
the consent of the Holder; (ii) sell, exchange, release, or otherwise deal with
any property pledged, mortgaged, or otherwise securing Senior Indebtedness;
(iii) release any person liable in any manner for the collection of Senior
Indebtedness; and (iv) exercise or refrain from exercising any rights against
the Corporation and any other person.
(e) Subject to the payment in full of all amounts then
due (whether by acceleration of the maturity thereof or otherwise) on account
of the principal of, premium, if any, and interest on all Senior Indebtedness
at the time outstanding, the Holder shall be subrogated to the rights of the
holders of Senior Indebtedness to receive payments or distributions of cash,
property, or securities of the Corporation applicable to the Senior
Indebtedness until the principal of and interest on this Note shall be paid in
full; and, for the purposes of such subrogation, no payments or distributions
by the Corporation to the holders of Senior Indebtedness of any cash, property,
or securities to which the Holder would be entitled except for the provisions
hereof, and no payments over pursuant to the provisions hereof to the holders
of Senior Indebtedness by the Holder, shall, as between the Corporation, its
creditors other than holders of Senior Indebtedness, and the Holder, be deemed
to be a payment by the Corporation to or on account of the Senior Indebtedness.
(f) It is understood that the foregoing provisions of
this Note are and are intended solely for the purpose of defining the relative
rights of the Holder on the one hand and the holders of Senior Indebtedness on
the other hand. Nothing contained in this Note is intended to or shall impair,
as among the Corporation, its creditors other than the holders of Senior
Indebtedness, and the Holder, the obligation of the Corporation, which is
absolute and unconditional, to pay to the Holder the principal of and interest
on this Note as and when the same shall become due and payable in accordance
with its terms, or is intended to or shall affect the relative rights of the
Holder and creditors of the Corporation other than the holders of Senior
Indebtedness, nor shall anything herein prevent the Holder from exercising all
remedies otherwise permitted by applicable law upon default under this Note or
the Note Purchase Agreement.
(g) Upon any payment or distribution of assets of the
Corporation referred to herein, the Holder shall be entitled to rely upon any
order or decree made by any court of competent jurisdiction in which such
dissolution, winding up, liquidation, or reorganization proceedings are
pending, or certificate of the receiver, trustee in bankruptcy, liquidating
trustee, agent, or other person making such payment or distribution, delivered
to the Holder, for the purpose of ascertaining the persons entitled to
participate in such distribution, the holders of
16
<PAGE> 17
Senior Indebtedness and other indebtedness of the Corporation, the amount
thereof or payable thereon, the amount or amounts paid or distributed thereon,
and all other facts pertinent thereto.
(h) The Corporation shall give prompt written notice to
the Holder of any fact known to the Corporation that would prohibit the making
of any payment of moneys to or by the Corporation in respect of this Note.
SECTION 9. ACCELERATION. This Note and the indebtedness
evidenced hereby is subject to acceleration under the terms and conditions set
forth in the Note Purchase Agreement.
SECTION 10. MISCELLANEOUS. (a) Any notice required by the
provisions of this Note to be given to the Holder or the Corporation shall be
given and deemed received or delivered in accordance with the provisions of
Section 10.4 of the Note Purchase Agreement.
(b) In the event of prepayment or conversion of this Note
in part only, a new note or notes for the unpaid or unconverted portion hereof
will be issued in the name or names requested by the Holder upon the
cancellation hereof.
(c) The transfer of this Note is registrable on the books
of the Corporation upon surrender of this Note for registration of transfer at
the offices of the Corporation in Nashville, Tennessee, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Corporation duly executed by, the Holder or its attorney duly authorized in
writing, and thereupon one or more new notes of authorized denominations and
for the same aggregate principal amount, will be issued to the designated
transferee or transferees. New notes are issuable only in registered form
without coupons in denominations of One Thousand Dollars ($1,000) and any
integral multiple thereof. This Note is exchangeable for a like aggregate
principal amount of notes of a different authorized denomination, as requested
by the Holder. No service charge shall be made of any such registration of
transfer or exchange, but the Corporation may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
(d) Prior to the due presentment of this Note for
registration of transfer, the Corporation and any agent of the Corporation may
treat the person in whose name this Note is registered as the owner hereof for
all purposes, irrespective of whether this Note be overdue, and neither the
Corporation nor any such agent shall be affected by notice to the contrary.
(e) This Note shall be governed by and construed in
accordance with the laws of the State of California.
(f) The Corporation agrees, to the extent permitted by
law, to pay to the Holder all costs and expenses (including attorneys' fees)
incurred by it in the collection hereof or the enforcement of any right or
remedy provided for herein (including such costs and expenses incurred in
connection with a workout or an insolvency or bankruptcy proceeding).
17
<PAGE> 18
(g) The provisions of the Note Purchase Agreement are
hereby incorporated into this Note by this reference.
IN WITNESS WHEREOF, the undersigned has executed this Note effective
as of the date first above written.
CORRECTIONS CORPORATION OF AMERICA,
A Delaware corporation
By:
--------------------------------------------
Doctor R. Crants, Chairman of the Board and
Chief Executive Officer
ATTEST:
- --------------------------------
Darrell K. Massengale, Secretary
18
<PAGE> 19
[FORM OF MANDATORY CONVERSION NOTICE]
- --------------------
- --------------------
- --------------------
Notice is hereby given that, in accordance with the terms and
conditions of the Note hereinafter described and that certain Note Purchase
Agreement, dated June 22, 1992, between Corrections Corporation of America,
Pacific Mutual Life Insurance Company, and PM Group Life Insurance Company, as
amended from time to time, Corrections Corporation of America hereby elects to
require conversion of the 8.5% Convertible, Extendable, Subordinated Note,
originally due September 30, 1998, issued by it (the "Note"). The Note to be
converted and the principal amount thereof to be converted are as follows:
<TABLE>
<S> <C> <C>
Principal Number of
Outstanding Amount to be Shares to
Note Number Principal Amount Converted Be Delivered
- -------------------------------------------------------------------------------------------------
</TABLE>
The Mandatory Conversion Date will be .
----------------------
CORRECTIONS CORPORATION OF AMERICA
By:
----------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
Exhibit A
19
<PAGE> 20
[FORM OF MANDATORY PREPAYMENT NOTICE]
TO: CORRECTIONS CORPORATION OF AMERICA
-------------------------
-------------------------
The undersigned owner of the attached Note hereby gives notice that,
in accordance with the terms and conditions of such Note and that certain Note
Purchase Agreement, dated June 22, 1992, between Corrections Corporation of
America, Pacific Mutual Life Insurance Company, and PM Group Life Insurance
Company, as amended from time to time, it hereby exercises its right to require
prepayment of such Note or portion thereof (which is $1,000 or an integral
multiple thereof), plus all accrued but unpaid interest with respect to such
principal amount.
The Mandatory Prepayment Date shall be _____________. The principal
amount to be prepaid shall be $__________________________.
[Name of Holder]
Dated: By:
-------------------- --------------------------
Name:
--------------------------
Title:
--------------------------
Exhibit B
20
<PAGE> 21
[FORM OF CONVERSION NOTICE]
TO: CORRECTIONS CORPORATION OF AMERICA
-------------------------
-------------------------
The undersigned owner of the attached Note hereby gives notice that,
in accordance with the terms and conditions of such Note and the Note Purchase
Agreement, dated June 22, 1992, between Corrections Corporation of America,
Pacific Mutual Life Insurance Company, and PM Group Life Insurance Company, as
amended from time to time, it hereby exercises its right to convert such Note,
or portion thereof (which is $1,000 or an integral multiple thereof), below
designated, into shares of Common Stock of Corrections Corporation of America
and directs that the shares issuable and deliverable upon the conversion, and
any notes representing any unconverted principal amount thereof, be issued and
delivered to the registered holder of such Note unless a different name has
been indicated below. If shares or a new note representing unconverted
principal are to be issued in the name of a person other than the undersigned,
the undersigned will pay all transfer taxes payable with respect thereto.
[Name of Holder]
Dated: By:
----------------- ---------------------------------
Name:
---------------------------------
Title:
---------------------------------
Principal Amount to be converted (in an
integral multiple of $1,000, if less
than all):
$
-------------------------
Exhibit C
21
<PAGE> 22
Fill in for registration of shares
of Common Stock and Note if to be
issued otherwise than to the
registered Holder.
- ----------------------------------
Name
- ----------------------------------
Address
- ----------------------------------
Please print name and address
(including zip code number)
SOCIAL SECURITY OR OTHER TAXPAYER
IDENTIFYING NUMBER
- ----------------------------------
22
<PAGE> 23
[FORM OF OPTIONAL PREPAYMENT NOTICE]
- --------------------
- --------------------
- --------------------
Notice is hereby given that, in accordance with the terms and
conditions of the Note hereinafter described and that certain Note Purchase
Agreement, dated June 22, 1992, between Corrections Corporation of America,
Pacific Mutual Life Insurance Company, and PM Group Life Insurance Company, as
amended from time to time, Corrections Corporation of America hereby elects to
prepay the 8.5% Convertible, Extendable, Subordinated Note, originally due
September 30, 1998, issued by it (the "Note"). Prepayment of such Note or
portion thereof (which is $1,000 or an integral multiple thereof), plus all
accrued but unpaid interest with respect to such principal amount shall be
effective on the Optional Prepayment Date set forth below.
The Optional Prepayment Date shall be ___________. The principal
amount to be prepaid shall be $_______________________.
CORRECTIONS CORPORATION OF AMERICA
By:
---------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Exhibit D
23
<PAGE> 1
EXHIBIT 4(t)
CORRECTIONS CORPORATION OF AMERICA
8.5% CONVERTIBLE, EXTENDABLE, SUBORDINATED
NOTE ORIGINALLY DUE SEPTEMBER 30, 1998
dated as of
No. 015
April 29, 1993
SECTION 1. PAYMENT OBLIGATION. CORRECTIONS CORPORATION OF
AMERICA, a corporation duly organized and existing under the laws of the State
of Delaware (herein called the "Corporation"), for value received, hereby
promises to pay to ATWELL & CO, or registered assigns (hereinafter referred to
as the "Holder"), the principal sum of Four Hundred Sixty-Six Thousand Five
Hundred Fifty Dollars ($466,550) on the Maturity Date, and to pay interest
thereon from the date hereof quarterly on September 30, December 31, March 31
and June 30 of each year, commencing June 30, 1993, at (i) the Coupon Rate, or
(ii) upon the occurrence of a Triggering Event and until the date on which such
Triggering Event is cured or waived or until the date that is ninety (90) days
from initial occurrence of the Triggering Event, whichever is later, at the
Triggering Event Rate, until the principal hereof is paid to the person in
whose name this Note is registered at the close of business on the Business Day
immediately preceding the date such payment is due. Payment of the principal
of and interest on this Note will be made by cashiers check or by wire transfer
of immediately available funds, in currency of the United States of America as
at the time of payment is legal tender for payment of public and private debts,
at such address or to such account, as applicable, as shall be designated to
the Corporation by the Holder.
SECTION 2. DEFINITIONS. As used herein, the following terms
will be deemed to have the meanings set forth below:
"BOARD" means the board of directors of the Corporation.
"BUSINESS DAY" means each Monday, Tuesday, Wednesday, Thursday, or
Friday that is not a day on which banking institutions in Los Angeles,
California are authorized or obligated by law or executive order to
close.
"CHANGE EVENT" shall mean:
(a) the acquisition by any individual, entity, or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the
Exchange Act) of beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) of 50% or more
of the combined voting power of the then outstanding voting
securities of the Corporation entitled to vote generally in
the election of directors, but excluding, for this purpose,
any such acquisition by (i) the Corporation or any of its
subsidiaries, (ii) any employee benefit plan (or related
trust) of the Corporation or
<PAGE> 2
its subsidiaries, or (iii) any corporation with respect to
which, following such acquisition, more than 50% of the
combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in
the election of directors is then beneficially owned, directly
or indirectly, by individuals and entities who were the
beneficial owners of voting securities of the Corporation
immediately prior to such acquisition in substantially the
same proportion as their ownership, immediately prior to such
acquisition, of the combined voting power of the then
outstanding voting securities of the Corporation entitled to
vote generally in the election of directors; or
(b) the Incumbent Board shall cease for any reason to
constitute as least fifty percent (50%) of the members of the
Board; or
(c) approval by the stockholders of the Corporation of a
reorganization, merger, or consolidation, in each case, with
respect to which all or substantially all the individuals and
entities who were the respective beneficial owners of the
voting securities of the Corporation immediately prior to such
reorganization, merger, or consolidation do not, following
such reorganization, merger, or consolidation beneficially
own, directly or indirectly, more than 50% of the combined
voting power of the then outstanding voting securities
entitled to vote generally in the election of directors of
the corporation resulting from such reorganization, merger, or
consolidation; or
(d) the sale or other disposition of all or substantially all
the assets or property of the Corporation in one transaction
or a series of related transactions.
"CLOSING DATE" shall have the meaning ascribed thereto in Section 2.2
of the Note Purchase Agreement.
"COMMON STOCK" means the common stock of the Corporation, par value
$1.00 per share.
"CONVERSION PRICE" means $7.14 per share of Common Stock, subject to
adjustment from time to time as herein set forth.
"CONVERSION RATIO" means the number of Conversion Shares to be
delivered upon conversion of One Hundred Dollars ($100) of principal
amount of this Note. Subject to the provisions for adjustment set
forth herein, the Conversion Ratio shall be determined as the quotient
of (i) the principal amount of this Note to be converted, divided by
(ii) the Conversion Price. Subject to the provisions for adjustment
set forth herein, the Conversion Ratio initially shall be 14.0:1.0.
2
<PAGE> 3
"CONVERSION SHARES" means fully paid and nonassessable shares of
Common Stock issuable upon conversion of the indebtedness evidenced by
this Note.
"CONVERTIBLE NOTES" means the Corporation's (a) $7,000,000 aggregate
principal amount 8.5% Convertible Subordinated Notes due November 7,
1999, and (b) the Corporation's $2,700,000 aggregate principal amount
8.5% Convertible Subordinated Notes due on various dates, the latest
of which is January 16, 2000.
"COUPON RATE" means eight and one-half percent (8.5%) per annum.
"CURRENT MARKET PRICE" when used with reference to shares of Common
Stock, shall mean the closing price per share of Common Stock on such
date and, when used with reference to shares of Common Stock for any
period shall mean the average of the daily closing prices per share of
Common Stock for such period. The closing price for each day shall be
the last quoted sale price or, if not so quoted, the average of the
high bid and low asked prices in the over-the-counter market, as
reported by the National Association of Securities Dealers, Inc.
Automated Quotation System or such other system then in use, or, if on
any such date the Common Stock is not quoted nor so reported, the
average of the closing bide and asked prices as furnished by a
professional market maker making a market in the Common Stock selected
by the Board. If the Common Stock is listed or admitted to trading on
a national securities exchange, the closing price shall be the last
sale price, regular way, or, in case no such sale takes place on such
day, the average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Common Stock is not
listed or admitted to trading on the New York Stock Exchange, as
securities listed on the principal national securities exchange on
which the Common Stock is listed or admitted to trading. If the
Common Stock is not publicly held or so listed or publicly traded,
"Current Market Price" shall mean the fair market value per share of
Common Stock as determined in good faith by the Board based on an
opinion of an independent investment banking firm with an established
national reputation as a valuer of securities, which opinion may be
based on such assumptions as such firm shall deem to be necessary and
appropriate.
"EVENT OF DEFAULT" shall have the meaning set forth in Section 7.1 of
the Note Purchase Agreement.
"EXCHANGE ACT" shall have the meaning set forth in Section 3.1 of the
Note Purchase Agreement.
"INCUMBENT BOARD" means the individuals who, as of the Closing Date,
constitute the Board; provided, however, that any individual becoming
a director subsequent to the Closing Date, whose election, or
nomination for election by the Corporation's stockholders, was
approved by a vote of at least a majority of the directors then
3
<PAGE> 4
comprising the Incumbent Board shall be deemed to be a member of the
Incumbent Board.
"MAJOR TRANSACTION" shall mean:
(a) approval by the stockholders of the Corporation of a
reorganization, merger, or consolidation, in each case, with
respect to which all or substantially all the individuals and
entities who were the respective beneficial owners of the
voting securities of the Corporation immediately prior to such
reorganization, merger, or consolidation do not, following
such reorganization, merger, or consolidation beneficially
own, directly or indirectly, more than 50% of the combined
voting power of the then outstanding voting securities
entitled to vote generally in the election of directors of the
Corporation resulting from such reorganization, merger, or
consolidation; or
(b) the sale or other disposition of all or substantially all
the assets or property of the Corporation in one transaction
or a series of related transactions.
"MANDATORY CONVERSION DATE" means the Business Day specified by the
Corporation, in compliance with the provisions hereof, as the date on
which all or a portion of the indebtedness evidenced by this Note will
be converted into shares of Common Stock pursuant to the Corporation's
right to compel such conversion.
"MANDATORY CONVERSION NOTICE" means a written notice substantially in
the form of the notice attached hereto as Exhibit A and incorporated
herein by this reference.
"MANDATORY PREPAYMENT DATE" means the Business Day specified by the
Holder, in compliance with the provision hereof, as the date on which
all or a portion of the indebtedness evidenced by this Note must be
prepaid pursuant to the Holder's right to compel such prepayment.
"MANDATORY PREPAYMENT NOTICE" means a written notice substantially in
the form of the notice attached hereto as Exhibit B and incorporated
herein by this reference.
"MATURITY DATE" means (i) September 30, 1998, or (ii) September 30,
1999, if the Holder of this Note elects, by written notice given to
the Corporation at least sixty (60) days but not more than one hundred
twenty (120) days prior to September 30, 1998, to extend the then
extant "Maturity Date" to September 30, 1999, or (iii) September 30,
2000, if the Holder of this Note elects, by written notice given to
the Corporation at least sixty (60) days but not more than one hundred
twenty (120) days prior to September 30, 1999, to extend the then
extant "Maturity Date" to September 30, 2000.
"NOTE" means this 8.5% convertible, extendable, subordinated note
issued by the Corporation.
4
<PAGE> 5
"NOTE PURCHASE AGREEMENT" means that certain Note Purchase Agreement,
dated as of June 22, 1992, between the Corporation, Pacific Mutual
Life Insurance Company, and PM Group Life Insurance Company, as
amended from time to time.
"OPTIONAL CONVERSION NOTICE" means a written notice substantially in
the form of the notice attached hereto as Exhibit C and incorporated
herein by this reference.
"OPTIONAL PREPAYMENT NOTICE" means a written notice substantially in
the form of the notice attached hereto as Exhibit D and incorporated
herein by this reference.
"SENIOR INDEBTEDNESS" means the principal of and premium, if any, and
unpaid interest on (a) indebtedness (other than indebtedness
evidenced by the Convertible Notes, indebtedness that is subordinated
in right of payment to one or more item or type of indebtedness of the
Corporation, or indebtedness incurred in violation of the terms and
conditions of the Note Purchase Agreement) of the Corporation,
irrespective of whether secured and whether heretofore or hereafter
(i) incurred for borrowed money, or (ii) evidenced by a note or
similar instrument given in connection with the acquisition by the
Corporation of any business, properties, or assets, including
securities (but not including any account payable or other obligation
created or assumed by the Corporation in the ordinary course of
business in connection with the obtaining of materials or services),
(b) any refundings, renewals, extensions, or deferrals of any of the
indebtedness included as Senior Indebtedness by virtue of clause (a)
hereof, and (c) obligations under capital leases; in each case for the
payment of which the Corporation is liable directly or indirectly by
guarantee, letter of credit, obligation to purchase or acquire, or
otherwise, unless the terms of the instrument evidencing such
indebtedness or capital lease or pursuant to which such indebtedness
or capital lease is outstanding specifically provide that such
indebtedness or capital lease is not superior in right of payment to
the indebtedness evidenced by this Note.
"TRADING DAY" means, if the Common Stock is listed or admitted to
trading on any national securities exchange, a day on which such
exchange is open for the transaction of business, otherwise, a
Business Day.
"TRANCHE C CLOSING DATE" shall have the meaning ascribed thereto in
Section 3.1 of the Note Purchase Agreement.
"TRIGGERING EVENT" means the occurrence of any Unmatured Event of
Default or Event of Default described in clauses (i), (ii), and (iv)
through (x), inclusive, of Section 7.1 of the Note Purchase Agreement.
For purposes of determining the period during which the Triggering
Event Rate shall be in effect, a Triggering Event shall not be deemed
to have occurred until the date on which the Holder shall have given
notice of the occurrence thereof to the Corporation.
"TRIGGERING EVENT RATE" means ten and one-half percent (10.5%) per
annum.
5
<PAGE> 6
"UNMATURED EVENT OF DEFAULT" shall mean any event or condition, the
occurrence of which would, with the lapse of time or the giving of
notice, or both, constitute an Event of Default.
SECTION 3. OPTIONAL CONVERSION. (a) Subject to and upon
compliance with the provisions of this Note, the Holder is entitled, at its
option, at any time on or before the close of business on the Business Day
prior to the Maturity Date, or in case this Note or a portion hereof is called
for conversion by the Corporation in accordance with the terms hereof, or the
Corporation elects to prepay in accordance with the terms hereof, then until
and including, but not after, the close of business on the third Business Day
prior to the Mandatory Conversion Date or the Optional Prepayment Date, to
convert all or a portion of the principal amount of the indebtedness evidenced
by this Note into Conversion Shares.
(b) The principal amount of the indebtedness evidenced by this
Note or any portion of the principal amount of the indebtedness evidenced
hereby that is One Thousand Dollars ($1,000), an integral multiple of One
Thousand Dollars ($1,000), or the remaining balance of the principal amount of
the indebtedness evidenced by this Note may be converted into Conversion
Shares. Subject to the provisions for adjustment set forth hereinafter, the
indebtedness evidenced by the Note shall be convertible into Conversion Shares
at a price per share equal to the Conversion Price and the number of Conversion
Shares to be deliverable to the Holder upon conversion of One Hundred Dollars
($100) of the principal amount of this Note shall be equal to the Conversion
Ratio.
(c) Conversion of all or a portion of the indebtedness
evidenced by this Note may be effected by the Holder upon the surrender to the
Corporation at the principal office of the Corporation in the State of
Tennessee or at the office of any agent or agents of the Corporation, as may be
designated by the Board, of this Note, duly endorsed or assigned to the
Corporation or in blank, accompanied by an Optional Conversion Notice to the
Corporation that the Holder elects to convert the principal amount of the
indebtedness evidenced by this Note or, if less than the entire principal
amount of the indebtedness evidenced by this Note is to be converted, the
portion thereof to be converted. Such Optional Conversion Notice shall specify
the name or names in which the Holder wishes the certificate or certificates
for shares of Common Stock to be issued. In case such notice shall specify a
name or names other than that of the Holder, such notice shall be accompanied
by payment of all transfer taxes payable upon the issuance of shares of Common
Stock in such name or names. Other than such taxes, the Corporation will pay
any and all issue and other taxes (other than taxes based on income) that may
be payable in respect of any issue or delivery of shares of Common Stock on
conversion of the indebtedness evidenced by this Note. No payment or
adjustment shall be made upon any conversion of this Note on account of any
dividends or other distributions payable on the Conversion Shares; provided,
however, that the Holder shall be entitled to receive the full amount of any
dividends or other distributions declared with respect to the Conversion Shares
with a record date on or after the effective date of such conversion.
6
<PAGE> 7
As promptly as practicable, and in any event within five (5)
Business Days after the surrender of this Note and the receipt of such notice
relating thereto and, if applicable, payment of all transfer taxes (or the
demonstration to the satisfaction of the Corporation that such taxes have been
paid), the Corporation shall deliver or cause to be delivered, either by
personal delivery or by certified or registered mail or by a recognized
overnight courier service, in any such case, properly insured, to the Holder in
accordance with the written instructions of the Holder (i) certificates
representing the number of Conversion Shares to which the Holder shall be
entitled, and (ii) if less than the entire principal amount of indebtedness
evidenced by this Note, for the balance of the indebtedness that is not being
so converted. Such conversion shall be deemed to have been made at the close
of business on the date of giving such notice and of such surrender of this
Note so that the rights of the Holder (as a noteholder) with respect to the
principal amount being converted shall cease, and the person or persons
entitled to receive the Conversion Shares issuable upon conversion shall be
treated for all purposes as the record holder or holders of such Common Stock
as of such day. All accrued but unpaid interest through the Business Day
immediately preceding the date of such conversion with respect to the principal
amount of the indebtedness evidenced by this Note being converted shall be
payable upon conversion.
The Corporation shall not be required to convert, and no
surrender of this Note shall be effective for that purpose, while the transfer
books of the Corporation for the Common Stock are closed for any purpose (but
not for any period in excess of 15 days); but the surrender of this Note for
conversion during any period while such books are so closed shall become
effective for conversion immediately upon the reopening of such books, as if
the conversion had been made on the date this Note is surrendered, and at the
Conversion Ratio in effect at the date of such surrender.
(d) In case this Note is to be prepaid pursuant to the
mandatory prepayment provisions hereof, such right of conversion shall cease
and terminate as to the portion of this Note that is to be prepaid at the close
of business on the Business Day next preceding the date fixed for mandatory
prepayment unless the Corporation shall default in the payment of the Mandatory
Prepayment Amount.
(e) In connection with the conversion of the indebtedness
evidenced by this Note, no fractions of shares of Common Stock shall be issued,
but in lieu thereof the Corporation shall pay a cash adjustment in respect of
such fractional interest in an amount equal to such fractional interest
multiplied by the Current Market Price per share of Common Stock on the Trading
Day on which such indebtedness evidenced by this Note is deemed to have been
converted. If more than one note shall be surrendered for conversion by the
Holder at the same time, the number of full shares of Common Stock issuable on
conversion thereof shall be computed on the basis of the total amount of
indebtedness to be converted.
(f) (i) The Corporation shall at all times reserve and
keep available for issuance upon the conversion of the indebtedness evidenced
by this Note, free from any preemptive rights, such number of its authorized
but unissued shares of Common Stock as will from time to time
7
<PAGE> 8
be sufficient to permit the conversion of all of the indebtedness evidenced by
this Note, and shall take all action required to increase the authorized number
of shares of Common Stock if necessary to permit the conversion of all of the
indebtedness evidenced by this Note.
(ii) If the Corporation shall issue shares of Common
Stock upon conversion of indebtedness evidenced by this Note as contemplated by
this Section 3, the Corporation shall issue together with each such share of
Common Stock any rights issued to holders of Common Stock of the Corporation,
irrespective of whether such rights shall be exercisable at such time, but only
if such rights are issued and outstanding and held by other holders of Common
Stock of the Corporation at such time and have not expired.
(g) The Conversion Ratio will be subject to adjustment
from time to time as follows:
(i) In case the Corporation shall at any time or from
time to time after the Tranche C Closing Date (A) pay a dividend, or make a
distribution, on the outstanding shares of Common Stock in shares of Common
Stock, (B) subdivide the outstanding shares of Common Stock, (C) combine the
outstanding shares of Common Stock into a smaller number of shares, or (D)
issue by reclassification of the shares of Common Stock any shares of capital
stock of the Corporation, then, and in each such case, the Conversion Ratio in
effect immediately prior to such event or the record date therefor, whichever
is earlier, shall be adjusted so that the Holder shall be entitled to receive
the number of shares of Common Stock (or other capital stock) of the
Corporation that the Holder would have owned or have been entitled to receive
after the happening of any of the events described above, had the indebtedness
evidenced by this Note been converted immediately prior to the happening of
such event or the record date therefor, whichever is earlier. An adjustment
made pursuant to this clause (i) shall become effective (x) in the case of any
such dividend or distribution, immediately after the close of business on the
record date for the determination of holders of shares of Common Stock entitled
to receive such dividend or distribution, or (y) in the case of such
subdivision, reclassification, or combination, at the close of business on the
day upon which such corporate action becomes effective. No adjustment shall be
made pursuant to this clause (i) in connection with any transaction to which
subsection (h) applies.
(ii) In case the Corporation shall issue shares of
Common Stock (or rights, warrants, or other securities convertible into or
exchangeable for shares of Common Stock) after the Tranche C Closing Date at a
price per share (or having a conversion price per share) less than the Current
Market Price per share of Common Stock, as of the date of issuance of such
shares or of such convertible securities, then, and in each such case, the
Conversion Ratio shall be adjusted so that the Holder shall be entitled to
receive, upon the conversion hereof, the number of shares of Common Stock
determined by multiplying (A) the applicable Conversion Ratio on the day
immediately prior to such date by (B) a fraction, the numerator of which shall
be the sum of (1) the number of shares of Common Stock outstanding on such date
plus (2) the number of additional shares of Common Stock issued (or into which
the convertible securities may convert), and the denominator of which shall be
the sum of (x) the number of shares of Common Stock
8
<PAGE> 9
purchasable at the then Current Market Price per share with the aggregate
consideration received or receivable by the Corporation for the total number of
shares of Common Stock so issued (or into which the rights, warrants, or other
convertible securities may convert).
An adjustment made pursuant to this clause (ii) shall
be made on the next Business Day following the date on which any such issuance
is made and shall be effective retroactively to the close of business on the
date of such issuance. For purposes of this clause (ii), the aggregate
consideration received or receivable by the Corporation in connection with the
issuance of shares of Common Stock shall be deemed to be equal to the sum of
the aggregate offering price (before deduction of underwriting discounts or
commissions and expenses payable to third parties) of all such Common Stock,
rights, warrants, and convertible securities plus the minimum aggregate amount,
if any, payable upon exercise of conversion of any such rights, warrants, and
convertible securities into shares of Common Stock. The issuance of any shares
of Common Stock (whether treasury shares or newly issued shares) pursuant to
(a) a dividend or distribution on, or subdivision, combination or
reclassification of, the outstanding shares of Common Stock requiring an
adjustment in the conversion ratio pursuant to clause (i) of this subsection
(g), or (b) any restricted stock or stock option plan or program of the
Corporation, or (c) any option, warrant, right, or convertible security
outstanding as of the date hereof, or (d) the terms of a firmly committed
underwritten public offering, shall not be deemed to constitute an issuance of
Common Stock or convertible securities by the Corporation to which this clause
(ii) applies.
Upon the expiration of any unexercised options,
warrants, or rights to convert any convertible securities for which an
adjustment has been made pursuant to this clause (ii), the adjustment shall
forthwith be reversed to effect such rate of conversion as would have been in
effect at the time of such expiration or termination had such options, warrant,
rights or convertible securities, to the extent outstanding immediately prior
to such expiration or termination, never been issued. If the purchase price
provided for in any option, warrant, or rights to convert any convertible
securities for which an adjustment has been made pursuant to this clause (ii),
the additional consideration, if any, payable upon the conversion or exchange
of any convertible securities for which an adjustment has been made, or the
rate at which any convertible securities referred to above are convertible into
or exchangeable for Common Stock shall, at any time, increase or decrease
(other than under or by reason of provisions designed to protect against
dilution), then, the Conversion Ratio in effect at the time of such event shall
forthwith be readjusted to the Conversion Ratio that would have been in effect
at such time and such options, warrants, or rights or convertible securities
still outstanding provided for such changed purchase price, additional
consideration, or conversion rate, as the case may be, at the time initially
granted, issued or sold. No adjustment shall be made pursuant to this clause
(ii) in connection with any transaction to which subsection h applies.
(iii) In case the Corporation shall at any time or
from time to time after the Tranche C Closing Date declare, order, pay, or make
a dividend or other distribution (including, without limitation, any
distribution of stock or other securities or property or rights or warrants to
subscribe for securities of the Corporation or any of its subsidiaries by way
of dividend or
9
<PAGE> 10
spinoff), on its Common Stock, other than (A) dividends payable in cash in an
aggregate amount not to exceed 50% of net income from continuing operations
before extraordinary items of the Corporation, determined in accordance with
generally accepted accounting principles, during the period (treated as one
accounting period) commencing on March 31, 1992, and ending on the date such
dividend is paid; provided, that, to the extent required by the terms thereof,
such dividend shall have been previously consented to by the holders of the
notes issued pursuant to the Note Purchase Agreement, or (B) dividends or
distributions of shares of Common Stock which are referred to in clause (i) of
this subsection (g), then, and in each such case, the Conversion Ratio shall be
adjusted so that the Holder shall be entitled to receive, upon the conversion
hereof, the number of shares of Common Stock determined by multiplying (1) the
applicable Conversion Ratio on the day immediately prior to the record date
fixed for the determination of stockholders entitled to receive such dividend
or distribution by (2) a fraction, the numerator of which shall be the Current
Market Price per share of Common Stock for the period of 20 Trading Days
preceding such record date, and the denominator of which shall be such Current
Market Price per share of Common Stock less the fair market value, as
determined in good faith by the Board, a certified resolution with respect to
which shall be mailed to the Holder, per share of Common Stock of such dividend
or distribution. No adjustment shall be made pursuant to this clause (iii) in
connection with any transaction to which subsection (h) applies.
(iv) For purposes of this subsection (g), the number
of shares of Common Stock at any time outstanding shall not include any shares
of Common Stock then owned or held by or for the account of the Corporation.
(v) The term "dividend," as used in this subsection
(g), shall mean a dividend or other distribution upon stock of the Corporation.
(vi) Anything in this subsection (g) to the contrary
notwithstanding, the Corporation shall not be required to give effect to any
adjustment in the Conversion Ratio unless and until the net effect of one or
more adjustments (each of which shall be carried forward), determined as above
provided, shall have resulted in a change of the Conversion Ratio by at least
one one-hundredth (.01) of one share of Common Stock, and when the cumulative
net effect of more than one adjustment so determined shall be to change the
Conversion Ratio by at least one one-hundredth (.01) of one share of Common
Stock, such change in Conversion Ratio shall thereupon be given effect.
(vii) The certificate of any firm of independent
public accountants of recognized standing selected by the Board (which may be
the firm of independent public accountants regularly employed by the
Corporation) shall be presumptively correct for any computation made under this
subsection (g).
(viii) If the Corporation shall take a record of the
holders of its Common Stock for the purpose of entitling them to receive a
dividend or other distribution, and shall thereafter and before the
distribution to stockholders thereof legally abandon its plan to pay or deliver
such dividend or distribution, then thereafter no adjustment in the number of
shares of
10
<PAGE> 11
Common Stock issuable upon exercise of the right of conversion granted by this
subsection (g) or in the Conversion Ratio then in effect shall be required by
reason of the taking of such record.
(h) In the case of any Major Transaction occurring at any
time, at the option of the Holder, the indebtedness evidenced by the Note shall
thereafter be convertible into, in whole and in part and in lieu of the Common
Stock issuable upon such conversion prior to consummation of such Major
Transaction, the kind and amount of shares of stock and other securities and
property receivable (including cash) upon the consummation of such Major
Transaction by a holder of that number of shares of Common Stock into which
such indebtedness, or portion thereof, was convertible immediately prior to
such Major Transaction (including, on a pro rata basis, the cash, securities,
or property received by holders of Common Stock in any tender or exchange offer
that is a step in such Major Transaction). In case securities or property
other than Common Stock shall be issuable or deliverable upon conversion as
aforesaid, then all references in this Section 3 shall be deemed to apply, so
far as appropriate and nearly as may be, to such other securities or property.
(i) In case at any time or from time to time the Corporation
shall pay any stock dividend or make any other non-cash distribution of the
holders of its Common Stock, or shall offer for subscription pro rata to the
holders of its Common Stock any additional shares of stock of any class or any
other right, or there shall be any capital reorganization or reclassification
of the Common Stock of the Corporation or consolidation or merger of the
Corporation with or into another corporation or other entity, or any sale or
conveyance to another corporation or other entity of the assets or property of
the Corporation as an entirety or substantially as an entirety, or there shall
be a voluntary or involuntary dissolution, liquidation, or winding up of the
Corporation, then, in any one or more of said cases the Corporation shall give
at least 20 days prior written notice (the time of mailing of such notice shall
be deemed to be the time of giving thereof) to the Holder at the address of the
Holder as shown on the books of the Corporation as of the date of which (i) the
books of the Corporation shall close or a record shall be taken for such stock
dividend, distribution, or subscription rights, or (ii) such reorganization,
reclassification, consolidation, merger, sale, conveyance, dissolution,
liquidation, or winding up shall take place, as the case may be, provided that
in the case of any Major Transaction to which subsection (h) applies the
Corporation shall give at least 30 days prior written notice as aforesaid.
Such notice shall also specify the date as of which the holders of the Common
Stock of record shall participate in said dividend, distribution, or
subscription rights or shall be entitled to exchange their Common Stock for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, or conveyance or participate in
such dissolution, liquidation, or winding up, as the case may be. Failure to
give such notice shall not invalidate any action so taken.
(j) Anything herein to the contrary notwithstanding, the
issuance or sale of the following shares of Common Stock or options, warrants,
or other rights to purchase Common Stock shall be excluded from any calculation
of, and shall not be deemed issued or sold for purposes of calculating, any
reduction, adjustment, or readjustment of the Conversion Ratio hereunder: (i)
shares of Common Stock issued upon conversion of the indebtedness evidenced
11
<PAGE> 12
by this Note or any portion thereof; (ii) shares of Common Stock or options,
warrants, or other rights to purchase Common Stock issuable, reserved for
issuance, or issued pursuant to a stock option plan, employee stock ownership
plan, or other compensatory benefit plan of the Corporation, duly adopted by
the Board; (iii) shares of Common Stock, issuable, reserved for issuance, or
issued pursuant to any currently outstanding warrants or options, or any
options, warrants, or other rights issuable, reserved for issuance, or issued
to officers of the Corporation in the future for compensatory purposes, if
fully authorized by the Board; and (iv) shares of Common Stock issued upon
conversion of the indebtedness evidenced by the Convertible Notes or the
currently issued and outstanding preferred stock.
SECTION 4. REPORTS AS TO ADJUSTMENTS. Upon any adjustment of
the Conversion Ratio then in effect and any increase or decrease in the number
of shares of Common Stock issuable upon the operation of the conversion set
forth in Section 3, then, and in each such case, the Corporation shall promptly
deliver to the Holder, a certificate signed by the President or a Vice
President and by the Treasurer or an Assistant Treasurer or the Secretary or an
Assistant Secretary of the Corporation setting forth in reasonable detail the
event requiring the adjustment and the method by which such adjustment was
calculated and specifying the Conversion Ratio then in effect following such
adjustment and the increased or decreased number of shares issuable upon the
conversion granted by Section 3, and shall set forth in reasonable detail the
method of calculation of each and a brief statement of the facts requiring such
adjustment. Where appropriate, such notice to the Holder may be given in
advance and included as part of the notice required under the provisions of
Section 3(i).
SECTION 5. MANDATORY CONVERSION. (a) At any time after
April 29, 1998, and so long as at such time the Common Stock is listed or
admitted to trading on a national securities exchange, the Corporation may
require the Holder to convert all or a portion of the principal amount of the
indebtedness evidenced by this Note into shares of Common Stock if, at such
time, the Current Market Price of the Common Stock has equalled or exceeded one
hundred fifty percent (150%) of the Conversion Price (as it may from time to
time be adjusted) for forty-five (45) consecutive Trading Days following the
forty-fifth monthly anniversary of the Tranche C Closing Date. To exercise
such right, the Corporation must deliver a Mandatory Conversion Notice of the
exercise of such right to the Holder within thirty (30) days of the last day of
such forty-five (45) day period, such Mandatory Conversion Notice must be given
at least ten (10) Business Days, but not more than fifteen (15) Business Days
prior to the proposed Mandatory Conversion Date, and such Mandatory Conversion
Notice must specify the proposed Mandatory Conversion Date and the portion of
the principal amount of the indebtedness evidenced by this Note to be converted
into Common Stock.
(b) All conversions effected pursuant to the preceding
paragraph will be made effective as of the close of business on the Mandatory
Conversion Date at the Conversion Ratio in effect on the Mandatory Conversion
Date; provided, however, that, in order to be able to convert, the Current
Market Price on the Mandatory Conversion Date must equal or exceed one hundred
fifty percent (150%) of the Conversion Price in effect on the Mandatory
Conversion Date. If the Current Market Price on the Mandatory Conversion Date
does not equal or exceed
12
<PAGE> 13
one hundred fifty percent (150%) of the Conversion Price in effect on the
Mandatory Conversion Date, the Corporation's election to require conversion
will be deemed void and no conversion will be effected pursuant to such notice.
Such event will not be deemed, however, to alter or restrict the Corporation's
right to again require conversion at such time as the Current Market Price
equals or exceeds one hundred fifty percent (150%) of the then current
Conversion Price for forty-five (45) consecutive Trading Days prior to such
time. Upon conversion required by the Corporation pursuant to this paragraph
and the immediately preceding paragraph, all accrued but unpaid interest with
respect to the principal amount of the indebtedness evidenced by this Note
being converted shall be payable in accordance with the provisions of the
following paragraph.
(c) Conversions of the indebtedness evidenced by this
Note effected by the exercise of the Corporation's right to require conversion
will be deemed effective as of the close of business on the Mandatory
Conversion Date without any action by the Holder and the Holder will, as of
such time, be a stockholder of the Corporation with respect to the number of
shares of Common Stock into which the principal balance evidenced by this Note
(or such portion of the principal balance evidenced by this Note as the
Corporation shall have specified) shall have been converted. The Holder agrees
promptly to surrender this Note for cancellation following mandatory
conversion. Certificates representing the shares of Common Stock issuable by
the Corporation as a result of the mandatory conversion of all or a portion of
the principal balance of the indebtedness evidenced by this Note and all
dividends and other distributions payable with respect to such shares and all
accrued but unpaid interest payable pursuant to the immediately preceding
paragraph will be retained by the Corporation pending surrender of this Note
for cancellation. As promptly as practicable, and in any event within five (5)
Business Days after the surrender of this Note, the Corporation shall deliver
or cause to be delivered, either by personal delivery or by certified or
registered mail or by a recognized overnight courier service, in any such case,
properly insured, to the Holder in accordance with the written instructions of
the Holder (i) certificates representing the number of Conversion Shares to
which the Holder shall be entitled, and (ii) if less than the entire principal
amount of indebtedness evidenced by this Note is being converted, a new
promissory note, in the form of this Note, for the balance of the indebtedness
that is not being so converted.
(d) In connection with the conversion of the indebtedness
evidenced by this Note, no fractions of shares of Common Stock shall be issued,
but in lieu thereof the Corporation shall pay a cash adjustment in respect of
such fractional interest in an amount equal to such fractional interest
multiplied by the Current Market Price per share of Common Stock on the Trading
Day on which such indebtedness evidenced by this Note is deemed to have been
converted. If more than one note shall be surrendered for conversion by the
Holder at the same time, the number of full shares of Common Stock issuable on
conversion thereof shall be computed on the basis of the total amount of
indebtedness to be converted.
SECTION 6. MANDATORY PREPAYMENT. In the case of any
Change Event occurring at any time, at the option of the Holder, the Holder may
require the Corporation to prepay all or a portion of the then outstanding
principal amount of the indebtedness evidenced
13
<PAGE> 14
by this Note. To exercise such right of prepayment, the Holder must provide
the Corporation with a Mandatory Prepayment Notice at least thirty (30) days
prior to the proposed Mandatory Prepayment Date which Mandatory Prepayment
Notice shall specify the portion of the principal amount of the indebtedness
evidenced by this Note (which must be in integral multiples of One Thousand
Dollars ($1,000)) to be prepaid. On the Mandatory Prepayment Date specified,
the Corporation shall prepay the portion of the principal amount of the
indebtedness evidenced by this Note that the Holder has specified must be
prepaid on such date, plus accrued interest on such principal amount to the
date of the prepayment. Any prepayment shall be made by cashiers check or by
wire transfer of immediately available funds, in currency of the United States
of America as at the time of payment is legal tender for payment of public and
private debts, at such address or to such account, as applicable, as shall be
designated to the Corporation by the Holder.
SECTION 7. OPTIONAL PREPAYMENT. The Note shall be
subject to prepayment, at the option of the Corporation, at any time and from
time to time on and after April 29, 1998. To exercise such right of
prepayment, the Corporation must provide the Holder with an Optional Prepayment
Notice at least sixty (60) days prior to the proposed Optional Prepayment Date
which Optional Prepayment Notice shall specify the portion of the principal
amount of the indebtedness evidenced by this Note (which must be in integral
multiples of One Thousand Dollars ($1,000)) to be prepaid. The Holder's option
to convert the indebtedness evidenced by this Note as set forth in Section 3
hereof shall continue notwithstanding the exercise of the option of the
Corporation to prepay under this Section 7, so long as the Holder requests
conversion in accordance with the terms hereof up to and including, but not
after, the close of business on the third Business Day prior to the Optional
Prepayment Date. On the Optional Prepayment Date specified, the Corporation
shall prepay the portion of the principal amount of the indebtedness evidenced
by this Note that the Corporation has specified is to be prepaid on such date,
plus accrued interest on such principal amount to the date of the prepayment.
Any prepayment shall be made by cashiers check or by wire transfer of
immediately available funds, in currency of the United States of America as at
the time of payment is legal tender for payment of public and private debts, at
such address or to such account, as applicable, as shall be designated to the
Corporation by the Holder. This Note shall not be subject to prepayment,
whether in whole or in part, on or before April 29, 1998.
SECTION 8. SUBORDINATION. (a) The Corporation
covenants and agrees, and the Holder likewise covenants and agrees, that no
payment shall be made by the Corporation on account of principal of or interest
on this Note, or otherwise, if there shall have occurred and be continuing, and
the Corporation and the Holder shall have received notice from the holder or
holders of, a default with respect to any Senior Indebtedness (i) permitting
the acceleration thereof and such default is the subject of a judicial
proceeding, or (ii) in an aggregate principal amount of not less than One
Million Dollars ($1,000,000) entitling such holder or holders of, a default
with respect to any Senior Indebtedness (i) permitting the acceleration thereof
and such default is the subject of a judicial proceeding, or (ii) in an
aggregate principal amount of not less than One Million Dollars ($1,000,000)
entitling such holder or holders to compel the acceleration thereof (provided,
however, that in the case of Senior Indebtedness issued pursuant to an
indenture, such notice may be validly given only by the trustee under such
indenture), unless and
14
<PAGE> 15
until such default or Event of Default shall have been cured or waived or shall
have ceased to exist or such notice is withdrawn or found by a court of
competent jurisdiction to be invalid.
(b) Upon any payment by the Corporation or distribution
of assets of the Corporation of any kind or character, whether in cash,
property, or securities, to creditors of the Corporation under any dissolution
or winding up or liquidation or reorganization of the Corporation, whether
voluntary or involuntary, or in bankruptcy, insolvency, receivership, or other
similar proceedings, all amounts due or to become due upon all Senior
Indebtedness shall first be paid in full in money or money's worth, or payment
thereof provided for, before any payment is made on account of the principal of
or interest on this Note and upon such dissolution or winding up or liquidation
or reorganization, any payment by the Corporation, or distribution of assets of
the Corporation of any kind or character, whether in cash, property, or
securities, to which the Holder would be entitled except for the provisions
hereof, shall be paid by the Corporation or by any receiver, trustee in
bankruptcy, liquidating trustee, agent, or other person making such payment or
distribution directly to the holders of Senior Indebtedness or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing any Senior Indebtedness
may have been issued, as their respective interests may appear, to the extent
necessary to pay all Senior Indebtedness in full in money or money's worth,
after giving effect to any concurrent payment or distribution to or for the
holders of Senior Indebtedness, before any payment or distribution is made to
the Holder.
(c) The foregoing notwithstanding, in the event that any
payment of or distribution of assets of the Corporation of any kind or
character, whether in cash, property or securities, prohibited by the
foregoing, shall be received by the Holder before all Senior Indebtedness is
paid in full in money or money's worth, or provision is made for such payment,
then and in such event such payment or distribution shall be paid over or
delivered to the holders of Senior Indebtedness or their representative or
representatives, or to the trustee or trustees under any indenture pursuant to
which any instruments evidencing any Senior Indebtedness may have been issued,
as their respective interests may appear, for application to the payment of all
Senior Indebtedness remaining unpaid to the extent necessary to pay all Senior
Indebtedness in full in money or money's worth, after giving effect to any
concurrent payment or distribution to or for the holders of such Senior
Indebtedness may have been issued, as their respective interests may appear,
for application to the payment of all Senior Indebtedness remaining unpaid to
the extent necessary to pay all Senior Indebtedness in full in money or money's
worth, after giving effect to any concurrent payment or distribution to or for
the holders of such Senior Indebtedness (but subject to the power of a court of
competent jurisdiction to make other equitable provision, which shall have been
determined by such court to give effect to the rights conferred herein upon the
Senior Indebtedness and the holders thereof with respect to this Note or the
Holder hereof by a lawful plan or reorganization or readjustment under
applicable bankruptcy law).
(d) The holders of Senior Indebtedness may, at any time
and from time to time, without the consent of or notice to the Holder, without
incurring responsibility to the Holder and without impairing or releasing the
obligations of the Holder to the holders of Senior Indebtedness: (i) change
the manner, place, or terms of payment or change or extend the time of payment
of,
15
<PAGE> 16
or renew or alter Senior Indebtedness, or otherwise amend, in any manner,
Senior Indebtedness is outstanding; provided, however, that the average
weighted maturity of such Senior Indebtedness shall not be decreased without
the consent of the Holder; (ii) sell, exchange, release, or otherwise deal with
any property pledged, mortgaged, or otherwise securing Senior Indebtedness;
(iii) release any person liable in any manner for the collection of Senior
Indebtedness; and (iv) exercise or refrain from exercising any rights against
the Corporation and any other person.
(e) Subject to the payment in full of all amounts then
due (whether by acceleration of the maturity thereof or otherwise) on account
of the principal of, premium, if any, and interest on all Senior Indebtedness
at the time outstanding, the Holder shall be subrogated to the rights of the
holders of Senior Indebtedness to receive payments or distributions of cash,
property, or securities of the Corporation applicable to the Senior
Indebtedness until the principal of and interest on this Note shall be paid in
full; and, for the purposes of such subrogation, no payments or distributions
by the Corporation to the holders of Senior Indebtedness of any cash, property,
or securities to which the Holder would be entitled except for the provisions
hereof, and no payments over pursuant to the provisions hereof to the holders
of Senior Indebtedness by the Holder, shall, as between the Corporation, its
creditors other than holders of Senior Indebtedness, and the Holder, be deemed
to be a payment by the Corporation to or on account of the Senior Indebtedness.
(f) It is understood that the foregoing provisions of
this Note are and are intended solely for the purpose of defining the relative
rights of the Holder on the one hand and the holders of Senior Indebtedness on
the other hand. Nothing contained in this Note is intended to or shall impair,
as among the Corporation, its creditors other than the holders of Senior
Indebtedness, and the Holder, the obligation of the Corporation, which is
absolute and unconditional, to pay to the Holder the principal of and interest
on this Note as and when the same shall become due and payable in accordance
with its terms, or is intended to or shall affect the relative rights of the
Holder and creditors of the Corporation other than the holders of Senior
Indebtedness, nor shall anything herein prevent the Holder from exercising all
remedies otherwise permitted by applicable law upon default under this Note or
the Note Purchase Agreement.
(g) Upon any payment or distribution of assets of the
Corporation referred to herein, the Holder shall be entitled to rely upon any
order or decree made by any court of competent jurisdiction in which such
dissolution, winding up, liquidation, or reorganization proceedings are
pending, or certificate of the receiver, trustee in bankruptcy, liquidating
trustee, agent, or other person making such payment or distribution, delivered
to the Holder, for the purpose of ascertaining the persons entitled to
participate in such distribution, the holders of Senior Indebtedness and other
indebtedness of the Corporation, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon, and all other facts pertinent
thereto.
(h) The Corporation shall give prompt written notice to
the Holder of any fact known to the Corporation that would prohibit the making
of any payment of moneys to or by the Corporation in respect of this Note.
16
<PAGE> 17
SECTION 9. ACCELERATION. This Note and the indebtedness
evidenced hereby is subject to acceleration under the terms and conditions set
forth in the Note Purchase Agreement.
SECTION 10. MISCELLANEOUS. (a) Any notice required by the
provisions of this Note to be given to the Holder or the Corporation shall be
given and deemed received or delivered in accordance with the provisions of
Section 10.4 of the Note Purchase Agreement.
(b) In the event of prepayment or conversion of this Note
in part only, a new note or notes for the unpaid or unconverted portion hereof
will be issued in the name or names requested by the Holder upon the
cancellation hereof.
(c) The transfer of this Note is registrable on the books
of the Corporation upon surrender of this Note for registration of transfer at
the offices of the Corporation in Nashville, Tennessee, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Corporation duly executed by, the Holder or its attorney duly authorized in
writing, and thereupon one or more new notes of authorized denominations and
for the same aggregate principal amount, will be issued to the designated
transferee or transferees. New notes are issuable only in registered form
without coupons in denominations of One Thousand Dollars ($1,000) and any
integral multiple thereof. This Note is exchangeable for a like aggregate
principal amount of notes of a different authorized denomination, as requested
by the Holder. No service charge shall be made of any such registration of
transfer or exchange, but the Corporation may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
(d) Prior to the due presentment of this Note for
registration of transfer, the Corporation and any agent of the Corporation may
treat the person in whose name this Note is registered as the owner hereof for
all purposes, irrespective of whether this Note be overdue, and neither the
Corporation nor any such agent shall be affected by notice to the contrary.
(e) This Note shall be governed by and construed in
accordance with the laws of the State of California.
(f) The Corporation agrees, to the extent permitted by
law, to pay to the Holder all costs and expenses (including attorneys' fees)
incurred by it in the collection hereof or the enforcement of any right or
remedy provided for herein (including such costs and expenses incurred in
connection with a workout or an insolvency or bankruptcy proceeding).
(g) The provisions of the Note Purchase Agreement are
hereby incorporated into this Note by this reference.
17
<PAGE> 18
IN WITNESS WHEREOF, the undersigned has executed this Note effective
as of the date first above written.
CORRECTIONS CORPORATION OF AMERICA,
A Delaware corporation
By:
-------------------------------------------
Doctor R. Crants, Chairman of the Board and
Chief Executive Officer
ATTEST:
- --------------------------------
Darrell K. Massengale, Secretary
18
<PAGE> 19
[FORM OF MANDATORY CONVERSION NOTICE]
- ---------------
- ---------------
- ---------------
Notice is hereby given that, in accordance with the terms and
conditions of the Note hereinafter described and that certain Note Purchase
Agreement, dated June 22, 1992, between Corrections Corporation of America,
Pacific Mutual Life Insurance Company, and PM Group Life Insurance Company, as
amended from time to time, Corrections Corporation of America hereby elects to
require conversion of the 8.5% Convertible, Extendable, Subordinated Note,
originally due September 30, 1998, issued by it (the "Note"). The Note to be
converted and the principal amount thereof to be converted are as follows:
<TABLE>
<CAPTION>
Principal Number of
Outstanding Amount to be Shares to
Note Number Principal Amount Converted Be Delivered
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
</TABLE>
The Mandatory Conversion Date will be .
-----------------------
CORRECTIONS CORPORATION OF AMERICA
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
Exhibit A
19
<PAGE> 20
[FORM OF MANDATORY PREPAYMENT NOTICE]
TO: CORRECTIONS CORPORATION OF AMERICA
--------------
--------------
The undersigned owner of the attached Note hereby gives notice that,
in accordance with the terms and conditions of such Note and that certain Note
Purchase Agreement, dated June 22, 1992, between Corrections Corporation of
America, Pacific Mutual Life Insurance Company, and PM Group Life Insurance
Company, as amended from time to time, it hereby exercises its right to require
prepayment of such Note or portion thereof (which is $1,000 or an integral
multiple thereof), plus all accrued but unpaid interest with respect to such
principal amount.
The Mandatory Prepayment Date shall be _____________. The principal
amount to be prepaid shall be $__________________________.
[Name of Holder]
Dated: By:
------------- ------------------------------
Name:
------------------------------
Title:
------------------------------
Exhibit B
20
<PAGE> 21
[FORM OF CONVERSION NOTICE]
TO: CORRECTIONS CORPORATION OF AMERICA
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The undersigned owner of the attached Note hereby gives notice that,
in accordance with the terms and conditions of such Note and the Note Purchase
Agreement, dated June 22, 1992, between Corrections Corporation of America,
Pacific Mutual Life Insurance Company, and PM Group Life Insurance Company, as
amended from time to time, it hereby exercises its right to convert such Note,
or portion thereof (which is $1,000 or an integral multiple thereof), below
designated, into shares of Common Stock of Corrections Corporation of America
and directs that the shares issuable and deliverable upon the conversion, and
any notes representing any unconverted principal amount thereof, be issued and
delivered to the registered holder of such Note unless a different name has
been indicated below. If shares or a new note representing unconverted
principal are to be issued in the name of a person other than the undersigned,
the undersigned will pay all transfer taxes payable with respect thereto.
[Name of Holder]
Dated: By:
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Name:
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Title:
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Principal Amount to be converted (in an integral multiple
of $1,000, if less than all):
$
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Exhibit C
21
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Fill in for registration of shares
of Common Stock and Note if to be
issued otherwise than to the
registered Holder.
- ---------------------------------
Name
- ---------------------------------
Address
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Please print name and address
(including zip code number)
SOCIAL SECURITY OR OTHER TAXPAYER
IDENTIFYING NUMBER
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22
<PAGE> 23
[FORM OF OPTIONAL PREPAYMENT NOTICE]
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Notice is hereby given that, in accordance with the terms and
conditions of the Note hereinafter described and that certain Note Purchase
Agreement, dated June 22, 1992, between Corrections Corporation of America,
Pacific Mutual Life Insurance Company, and PM Group Life Insurance Company, as
amended from time to time, Corrections Corporation of America hereby elects to
prepay the 8.5% Convertible, Extendable, Subordinated Note, originally due
September 30, 1998, issued by it (the "Note"). Prepayment of such Note or
portion thereof (which is $1,000 or an integral multiple thereof), plus all
accrued but unpaid interest with respect to such principal amount shall be
effective on the Optional Prepayment Date set forth below.
The Optional Prepayment Date shall be ___________. The principal
amount to be prepaid shall be $_______________________.
CORRECTIONS CORPORATION OF AMERICA
By:
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Name:
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Title:
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Exhibit D
23
<PAGE> 1
EXHIBIT 4(u)
THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO THE PROVISIONS
OF A NOTE PURCHASE AGREEMENT DATED AS OF FEBRUARY 29, 1996 BETWEEN THE
CORPORATION AND PMI MEZZANINE FUND, L.P. AND A REGISTRATION RIGHTS
AGREEMENT DATED AS OF FEBRUARY 29, 1996 BETWEEN THE CORPORATION AND
PMI MEZZANINE FUND, L.P., COPIES OF WHICH ARE ON FILE AT THE OFFICES
OF THE CORPORATION.
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 OR QUALIFIED UNDER ANY APPLICABLE STATE
SECURITIES OR BLUE SKY LAWS. THEY MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 AND
QUALIFICATION UNDER APPLICABLE STATE SECURITIES OR BLUE SKY LAWS, OR
PURSUANT TO AN EXEMPTION FROM SUCH REGISTRATION AND QUALIFICATION
REQUIREMENTS.
CORRECTIONS CORPORATION OF AMERICA
7.5% CONVERTIBLE, SUBORDINATED NOTE
DUE FEBRUARY 28, 2002
No. 013
February 29, 1996
SECTION 1. PAYMENT OBLIGATION. CORRECTIONS CORPORATION OF
AMERICA, a corporation duly organized and existing under the laws of the State
of Delaware (herein called the "Corporation"), for value received, hereby
promises to pay to ATWELL & CO., as nominee for PMI Mezzanine Fund, L.P., a
limited partnership duly organized and existing under the laws of the State of
Delaware (herein called "PMI"), or registered assigns (hereinafter referred to
as the "Holder"), the principal sum of Five Million Dollars ($5,000,000) on the
Maturity Date, and to pay interest thereon from the date hereof quarterly on
March 31, June 30, September 30, and December 31 of each year, commencing March
31, 1996, at (i) the Coupon Rate, or (ii) upon the occurrence of a Triggering
Event and until the date on which such Triggering Event is cured or waived or
until the date that is ninety (90) days from initial occurrence of the
Triggering Event, whichever is later, at the Triggering Event Rate, until the
principal hereof is paid to the person in whose name this Note is registered at
the close of business on the Business Day immediately preceding the date such
payment is due. Any payments due hereunder that fall due on a day that is not
a Business Day shall be payable on the first succeeding
<PAGE> 2
Business Day and such extension of time shall be included in the computation of
interest due hereunder. Payment of the principal of and interest on this Note
will be made by cashiers check or by wire transfer of immediately available
funds, in currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts, at such address or to
such account, as applicable, as shall be designated to the Corporation by the
Holder.
SECTION 2. DEFINITIONS. As used herein, the following terms
will be deemed to have the meanings set forth below:
"BOARD" means the board of directors of the Corporation.
"BUSINESS DAY" means each Monday, Tuesday, Wednesday, Thursday, or
Friday that is not a day on which banking institutions in Los Angeles,
California are authorized or obligated by law or executive order to
close.
"CHANGE EVENT" shall mean:
(a) the acquisition by any individual, entity, or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the
Exchange Act) of beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) of 50% or more
of the combined voting power of the then outstanding voting
securities of the Corporation entitled to vote generally in
the election of directors, but excluding, for this purpose,
any such acquisition by (i) the Corporation or any of its
subsidiaries, (ii) any employee benefit plan (or related
trust) of the Corporation or its subsidiaries, or (iii) any
corporation with respect to which, following such acquisition,
more than 50% of the combined voting power of the then
outstanding voting securities of such corporation entitled to
vote generally in the election of directors is then
beneficially owned, directly or indirectly, by individuals and
entities who were the beneficial owners of voting securities
of the Corporation immediately prior to such acquisition in
substantially the same proportion as their ownership,
immediately prior to such acquisition, of the combined voting
power of the then outstanding voting securities of the
Corporation entitled to vote generally in the election of
directors; or
(b) the Incumbent Board shall cease for any reason to
constitute at fifty percent (50%) of the members of the Board;
or
(c) approval by the stockholders of the Corporation of a
reorganization, merger, or consolidation, in each case, with
respect to which all or substantially all the individuals and
entities who were the respective beneficial owners of the
voting securities of the Corporation immediately prior to such
reorganization, merger, or consolidation do not, following
such
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reorganization, merger, or consolidation beneficially own,
directly or indirectly, more than 50% of the combined voting
power of the then outstanding voting securities entitled to
vote generally in the election of directors of the corporation
resulting from such reorganization, merger, or consolidation;
or
(d) the sale or other disposition of all or substantially all
the assets or property of the Corporation in one transaction
or a series of related transactions.
"CLOSING DATE" shall have the meaning ascribed thereto in Section 2.2
of the Note Purchase Agreement.
"COMMON STOCK" means the common stock of the Corporation, par value
$l.00 per share.
"CONVERSION PRICE" means $53.30 per share of Common Stock, subject to
adjustment from time to time as herein set forth.
"CONVERSION RATIO" means the number of Conversion Shares to be
delivered upon conversion of One Hundred Dollars ($100) of principal
amount of this Note. Subject to the provisions for adjustment set
forth herein, the Conversion Ratio shall be determined as the quotient
of (i) the principal amount of this Note to be converted, divided by
(ii) the Conversion Price. Subject to the provisions for adjustment
set forth herein, the Conversion Ratio initially shall be 1.8762.
"CONVERSION SHARES" means fully paid and nonassessable shares of
Common Stock issuable upon conversion of the indebtedness evidenced by
this Note.
"CONVERTIBLE NOTES" means the Corporation's (a) $7,000,000 aggregate
principal amount 8.5% Convertible Subordinated Notes due November 7,
1999, (b) $7,500,000 aggregate principal amount 8.5% Convertible,
Extendable, Subordinated Notes due on September 30, 1998 or, if
extended, on various dates, the latest of which is September 30, 2000,
(c) option to purchase the Floating Rate Notes, and (d) the Floating
Rate Notes when issued.
"CONVERTIBLE SECURITIES" means rights, warrants, options or other
securities convertible into or exchangeable for shares of Common
Stock.
"COUPON RATE" means seven and one-half percent (7.5%) per annum.
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"CURRENT MARKET PRICE" when used with reference to shares of Common
Stock, shall mean the closing price per share of Common Stock on such
date and, when used with reference to shares of Common Stock for any
period shall mean the average of the daily closing prices per share of
Common Stock for such period. If the Common Stock is listed or
admitted to trading on a national securities exchange, the closing
price for each day shall be the last sale price, regular way, or, in
case no such sale takes place on such day, the average of the closing
bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to
securities listed or admitted to trading on the New York Stock
Exchange or, if the Common Stock is not listed or admitted to trading
on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the
Common Stock is listed or admitted to trading. If the Common Stock is
not publicly held or so listed or publicly traded, "Current Market
Price" shall mean the fair market value per share of Common Stock as
determined in good faith by the Board based on an opinion of an
independent investment banking firm with an established national
reputation as a valuer of securities, which opinion may be based on
such assumptions as such firm shall deem to be necessary and
appropriate.
"EVENT OF DEFAULT" shall have the meaning set forth in Section 7.1 of
the Note Purchase Agreement.
"EXCHANGE ACT" shall have the meaning set forth in Section 3.1 of the
Note Purchase Agreement.
"FLOATING RATE NOTES" shall have the meaning set forth in the Sodexho
Agreement.
"INCUMBENT BOARD" means the individuals who, as of the Closing Date,
constitute the Board; provided, however, that any individual becoming
a director subsequent to the Closing Date, whose election, or
nomination for election by the Corporation's stockholders, was
approved by a vote of at least a majority of the directors then
comprising the Incumbent Board shall be deemed to be a member of the
Incumbent Board.
"MAJOR TRANSACTION" shall mean:
(a) approval by the stockholders of the Corporation of a
reorganization, merger, or consolidation, in each case, with
respect to which all or substantially all the individuals and
entities who were the respective beneficial owners of the
voting securities of the Corporation immediately prior to such
reorganization, merger, or consolidation do not, following
such reorganization, merger, or consolidation beneficially
own, directly or indirectly, more than 50% of the combined
voting power of the then
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outstanding voting securities entitled to vote generally in
the election of directors of the corporation resulting from
such reorganization, merger, or consolidation; or
(b) the sale or other disposition of all or substantially all
the assets or property of the Corporation in one transaction
or a series of related transactions.
"MANDATORY CONVERSION DATE" means the Business Day specified by the
Corporation, in compliance with the provisions hereof, as the date on
which all or a portion of the indebtedness evidenced by this Note will
be converted into shares of Common Stock pursuant to the Corporation's
right to compel such conversion.
"MANDATORY CONVERSION NOTICE" means a written notice substantially in
the form of the notice attached hereto as Exhibit A and incorporated
herein by this reference.
"MANDATORY PREPAYMENT DATE" means the Business Day specified by the
Holder, in compliance with the provisions hereof, as the date on which
all or a portion of the indebtedness evidenced by this Note must be
prepaid pursuant to the Holder's right to compel such prepayment.
"MANDATORY PREPAYMENT NOTICE" means a written notice substantially in
the form of the notice attached hereto as Exhibit B and incorporated
herein by this reference.
"MATURITY DATE" means February 28, 2002.
"NOTE" means this 7.5% convertible, subordinated note issued by the
Corporation.
"NOTE PURCHASE AGREEMENT" means that certain Note Purchase Agreement,
dated as of February 29, 1996, between the Corporation and PMI.
"OPTIONAL CONVERSION NOTICE" means a written notice substantially in
the form of the notice attached hereto as Exhibit C and incorporated
herein by this reference.
"SENIOR INDEBTEDNESS" means the principal of and premium, if any, and
unpaid interest on (a) indebtedness (other than indebtedness evidenced
by the Convertible Notes, indebtedness that is subordinated in right
of payment to one or more item or type of indebtedness of the
Corporation, or indebtedness incurred in violation of the terms and
conditions of the Note Purchase Agreement) of the Corporation,
irrespective of whether secured and whether heretofore or hereafter
(i) incurred for borrowed money, or (ii) evidenced by a note or
similar instrument given in connection with the acquisition by the
Corporation of any business, properties, or assets, including
securities (but not including any account payable or other obligation
created or assumed by the Corporation in the ordinary course of
business in
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connection with the obtaining of materials or services), (b) any
refundings, renewals, extensions, or deferrals of any of the
indebtedness included as Senior Indebtedness by virtue of clause (a)
hereof, and (c) obligations under capital leases; in each case for the
payment of which the Corporation is liable directly or indirectly by
guarantee, letter of credit, obligation to purchase or acquire, or
otherwise, unless the terms of the instrument evidencing such
indebtedness or capital lease or pursuant to which such indebtedness
or capital lease is outstanding specifically provide that such
indebtedness or capital lease is not superior in right of payment to
the indebtedness evidenced by this Note.
"SODEXHO AGREEMENT" means that certain Securities Purchase Agreement,
dated as of June 23, 1994, between Sodexho S.A., a French corporation,
or its designee and the Corporation, as amended by that certain
Amendment No. 1 to Securities Purchase Agreement, dated as of July 11,
1995.
"TRADING DAY" means, if the Common Stock is listed or admitted to
trading on any national securities exchange, a day on which such
exchange is open for the transaction of business, otherwise, a
Business Day.
"TRIGGERING EVENT" means the occurrence of any Unmatured Event of
Default of Event of Default described in clauses (i), (ii), and (iv)
through (x), inclusive, of Section 7.1 of the Note Purchase Agreement.
For purposes of determining the period during which the Triggering
Event Rate shall be in effect, a Triggering Event shall not be deemed
to have occurred until the date on which the Holder shall have given
notice of the occurrence thereof to the Corporation.
"TRIGGERING EVENT RATE" means nine and one-half percent (9.5%) per
annum.
"UNMATURED EVENT OF DEFAULT" shall mean any event or condition, the
occurrence of which would, with the lapse of time or the giving of
notice, or both, constitute an Event of Default.
SECTION 3. OPTIONAL CONVERSION. (a) Subject to and upon
compliance with the provisions of this Note, the Holder is entitled, at its
option, at any time on or before the close of business on the Business Day
prior to the Maturity Date, or in case this Note or a portion hereof is called
for conversion by the Corporation in accordance with the terms hereof, then
until and including, but not after, the close of business on the third Business
Day prior to the Mandatory Conversion Date, to convert all or a portion of the
principal amount of the indebtedness evidenced by this Note into Conversion
Shares.
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(b) The principal amount of the indebtedness evidenced by
this Note or any portion of the principal amount of the indebtedness evidenced
hereby that is One Thousand Dollars ($1,000), an integral multiple of One
Thousand Dollars ($1,000), or the remaining balance of the principal amount of
the indebtedness evidenced by this Note may be converted into Conversion
Shares. Subject to the provisions for adjustment set forth hereinafter, the
indebtedness evidenced by the Note shall be convertible into Conversion Shares
at a price per share equal to the Conversion Price and the number of Conversion
Shares to be deliverable to the Holder upon conversion of One Hundred Dollars
($100) of the principal amount of this Note shall be equal to the Conversion
Ratio.
(c) Conversion of all or a portion of the indebtedness
evidenced by this Note may be effected by the Holder upon the surrender to the
Corporation at the principal office of the Corporation in the State of
Tennessee or at the office of any agent or agents of the Corporation, as may be
designated by the Board, of this Note, duly endorsed or assigned to the
Corporation or in blank, accompanied by a Optional Conversion Notice to the
Corporation that the Holder elects to convert the principal amount of the
indebtedness evidenced by this Note or, if less than the entire principal
amount of the indebtedness evidenced by this Note is to be converted, the
portion thereof to be converted. Such Optional Conversion Notice shall specify
the name or names in which the Holder wishes the certificate or certificates
for shares of Common Stock to be issued. In case such notice shall specify a
name or names other than that of the Holder, such notice shall be accompanied
by payment of all transfer taxes payable upon the issuance of shares of Common
Stock in such name or names. Other than such taxes, the Corporation will pay
any and all issue and other taxes (other than taxes based on income) that may
be payable in respect of any issue or delivery of shares of Common Stock on
conversion of the indebtedness evidenced by this Note. No payment or
adjustment shall be made upon any conversion of this Note on account of any
dividends or other distributions payable on the Conversion Shares; provided,
however, that the Holder shall be entitled to receive the full amount of any
dividends or other distributions declared with respect to the Conversion Shares
with a record date on or after the effective date of such conversion.
As promptly as practicable, and in any event within five (5)
Business Days after the surrender of this Note and the receipt of such notice
relating thereto and, if applicable, payment of all transfer taxes (or the
demonstration to the satisfaction of the Corporation that such taxes have been
paid), the Corporation shall deliver or cause to be delivered, either by
personal delivery or by certified or registered mail or by a recognized
overnight courier service, in any such case, properly insured, to the Holder in
accordance with the written instructions of the Holder (i) certificates
representing the number of Conversion Shares to which the Holder shall be
entitled, and (ii) if less than the entire principal amount of indebtedness
evidenced by this Note is being converted, a new promissory note, in the form
of this Note, for the balance of the indebtedness that is not being so
converted. Such conversion shall be deemed to have been made at the close of
business on the date of giving such notice and of such surrender of this Note
so that the rights of the Holder (as a noteholder) with respect to the
principal amount being converted
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shall cease, and the person or persons entitled to receive the Conversion
Shares issuable upon conversion shall be treated for all purposes as the record
holder or holders of such Common Stock as of such day. All accrued but unpaid
interest through the Business Day immediately preceding the date of such
conversion with respect to the principal amount of the indebtedness evidenced
by this Note being converted shall be payable upon conversion.
The Corporation shall not be required to convert, and no
surrender of this Note shall be effective for that purpose, while the transfer
books of the Corporation for the Common Stock are closed for any purpose (but
not for any period in excess of 15 days); but the surrender of this Note for
conversion during any period while such books are so closed shall become
effective for conversion immediately upon the reopening of such books, as if
the conversion had been made on the date this Note is surrendered, and at the
Conversion Ratio in effect at the date of such surrender.
(d) In case this Note is to be prepaid pursuant to the
mandatory prepayment provisions hereof, such right of conversion shall cease
and terminate as to the portion of this Note that is to be prepaid at the close
of business on the Business Day next preceding the date fixed for mandatory
prepayment unless the Corporation shall default in the payment of the mandatory
prepayment amount.
(e) In connection with the conversion of the indebtedness
evidenced by this Note, no fractions of shares of Common Stock shall be issued,
but in lieu thereof the Corporation shall pay a cash adjustment in respect of
such fractional interest in an amount equal to such fractional interest
multiplied by the Current Market Price per share of Common Stock on the Trading
Day on which such indebtedness evidenced by this Note is deemed to have been
converted. If more than one note shall be surrendered for conversion by the
Holder at the same time, the number of full shares of Common Stock issuable on
conversion thereof shall be computed on the basis of the total amount of
indebtedness to be converted.
(f) (i) The Corporation shall at all times reserve and
keep available for issuance upon the conversion of the indebtedness evidenced
by this Note, free from any preemptive rights, such number of its authorized
but unissued shares of Common Stock as will from time to time be sufficient to
permit the conversion of all of the indebtedness evidenced by this Note, and
shall take all action required to increase the authorized number of shares of
Common Stock if necessary to permit the conversion of all of the indebtedness
evidenced by this Note.
(ii) If the Corporation shall issue shares of
Common Stock upon conversion of indebtedness evidenced by this Note as
contemplated by this Section 3, the Corporation shall issue together with each
such share of Common Stock any rights issued to holders of Common Stock of the
Corporation, irrespective of whether such rights shall be exercisable at such
time, but only if such rights are issued and outstanding and held by other
holders of Common Stock of the Corporation at such time and have not expired.
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(g) The Conversion Ratio will be subject to adjustment
from time to time as follows:
(i) In case the Corporation shall at any time or
from time to time after the Closing Date (A) pay a dividend, or make a
distribution, on the outstanding shares of Common Stock in shares of
Common Stock, (B) subdivide the outstanding shares of Common Stock,
(C) combine the outstanding shares of Common Stock into a smaller
number of shares, or (D) issue by reclassification of the shares of
Common Stock any shares of capital stock of the Corporation, then, and
in each such case, the Conversion Ratio in effect immediately prior to
such event or the record date therefor, whichever is earlier, shall be
adjusted so that the Holder shall be entitled to receive the number of
shares of Common Stock (or other capital stock) of the Corporation
that the Holder would have owned or have been entitled to receive
after the happening of any of the events described above, had the
indebtedness evidenced by this Note been converted immediately prior
to the happening of such event or the record date therefor, whichever
is earlier. An adjustment made pursuant to this clause (i) shall
become effective (x) in the case of any such dividend or distribution,
immediately after the close of business on the record date for the
determination of holders of shares of Common Stock entitled to receive
such dividend or distribution, or (y) in the case of such subdivision,
reclassification, or combination, at the close of business on the day
upon which such corporate action becomes effective. No adjustment
shall be made pursuant to this clause (i) in connection with any
transaction to which subsection (h) applies.
(ii) In case the Corporation shall issue shares of
Common Stock or Convertible Securities after the Closing Date at a
price per share (or having a conversion price per share) less than the
Current Market Price per share of Common Stock, as of the date of
issuance of such shares or of such Convertible Securities, then, and
in each such case, the Conversion Ratio shall be adjusted so that the
Holder shall be entitled to receive, upon the conversion hereof, the
number of shares of Common Stock determined by multiplying (A) the
applicable Conversion Ratio on the day immediately prior to such date
by (B) a fraction, the numerator of which shall be the sum of (1) the
number of shares of Common Stock outstanding on such date, plus (2)
the number of additional shares of Common Stock issued (or into which
the Convertible Securities may convert), and the denominator of which
shall be the sum of (a) the number of shares of Common Stock
outstanding on such date, plus (b) the number of shares of Common
Stock purchasable at the then Current Market Price per share with the
aggregate consideration received or receivable by the Corporation for
the total number of shares of Common Stock so issued (or into which
the Convertible Securities may convert). Notwithstanding the
foregoing, in the event that after the date hereof the Corporation (x)
issues the Floating Rate Notes, or (y) sells up to 1,000,000 shares
(dilution adjustments for future public stock issuances in excess of
1,000,000 shares after adjustment is made for the first 1,000,000
shares pursuant to this sentence, shall be made in accordance with the
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previous sentence) of its Common Stock to the public in a registered
offering or offerings (on Forms other than S-4, S-8, or any successor
Forms or similar Forms) (each such issuance an "Adjustment Event"),
then, and in each such case, the Conversion Ratio shall be adjusted so
that the holder shall be entitled to receive, upon the conversion
hereof, the number of shares of Common Stock determined by multiplying
the applicable Conversion Ratio on the day immediately prior to such
Adjustment Event by a fraction, (i) the numerator of which shall be
the number of shares of Common Stock outstanding, plus, in the case of
an Adjustment Event described in clause (x), the number of shares of
Common Stock into which the Floating Rate Notes may convert,
immediately after such Adjustment Event, and (ii) the denominator of
which shall be the number of shares of Common Stock outstanding,
immediately prior to such Adjustment Event.
An adjustment made pursuant to this clause (ii) shall
be made on the next Business Day following the date on which any such
issuance is made and shall be effective retroactively to the close of
business on the date of such issuance. For purposes of this clause
(ii), the aggregate consideration received or receivable by the
Corporation in connection with the issuance of shares of Common Stock
or of rights, warrants, or other securities convertible into shares of
Common Stock shall be deemed to be equal to the sum of the aggregate
offering price (before deduction of underwriting discounts or
commissions and expenses payable to third parties) of all such Common
Stock, rights, warrants, and convertible securities plus the minimum
aggregate amount, if any, payable upon exercise of conversion of any
such rights, warrants, and convertible securities into shares of
Common Stock. The issuance of any shares of Common Stock (whether
treasury shares or newly issued shares) pursuant to (a) a dividend or
distribution on, or subdivision, combination or reclassification of,
the outstanding shares of Common Stock requiring an adjustment in the
conversion ratio pursuant to clause (i) of this subsection (g), or (b)
other than as provided in clause (y) above, the terms of a firmly
committed underwritten public offering, shall not be deemed to
constitute an issuance of Common Stock or Convertible Securities by
the Corporation to which this clause (ii) applies.
Upon the expiration of any unexercised options,
warrants, or rights to convert any convertible securities for which an
adjustment has been made pursuant to this clause (ii), the adjustments
shall forthwith be reversed to effect such rate of conversion as would
have been in effect at the time of such expiration or termination had
such options, warrants, or rights or convertible securities, to the
extent outstanding immediately prior to such expiration or
termination, never been issued. If the purchase price provided for in
any option, warrant, or rights to convert any convertible securities
for which an adjustment has been made pursuant to this clause (ii),
the additional consideration, if any, payable upon the conversion or
exchange of any convertible securities for which an adjustment has
been made, or the rate at which any convertible securities referred to
above are convertible into or exchangeable for Common Stock shall, at
any time, increase or decrease (other than
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under or by reason of provisions designed to protect against
dilution), then, the Conversion Ratio in effect at the time of such
event shall forthwith be readjusted to the Conversion Ratio that would
have been in effect at such time had such options, warrants, or rights
or convertible securities still outstanding provided for such changed
purchase price, additional consideration, or conversion rate, as the
case may be, at the time initially granted, issued, or sold. No
adjustment shall be made pursuant to this clause (ii) in connection
with any transaction to which subsection (h) applies.
(iii) In case the Corporation shall at any time or
from time to time after the Closing Date declare, order, pay, or make
a dividend or other distribution (including, without limitation, any
distribution of stock or other securities or property or rights or
warrants to subscribe for securities of the Corporation or any of its
subsidiaries by way of dividend or spinoff), on its Common Stock,
other than (A) dividends payable in cash in an aggregate amount not to
exceed 50% of net income from continuing operations before
extraordinary items of the Corporation, determined in accordance with
generally accepted accounting principles, during the period (treated
as one accounting period) commencing on December 31, 1995, and ending
on the date such dividend is paid; provided, that, to the extent
required by the terms thereof, such dividend shall have been
previously consented to by the holders of the notes issued pursuant to
the Note Purchase Agreement, or (B) dividends or distributions of
shares of Common Stock which are referred to in clause (i) of this
subsection (g), then, and in each such case, the Conversion Ratio
shall be adjusted so that the Holder shall be entitled to receive,
upon the conversion hereof, the number of shares of Common Stock
determined by multiplying (1) the applicable Conversion Ratio on the
day immediately prior to the record date fixed for the determination
of stockholders entitled to receive such dividend or distribution by
(2) a fraction, the numerator of which shall be the Current Market
Price per share of Common Stock for the period of 30 Trading Days
preceding such record date, and the denominator of which shall be such
Current Market Price per share of Common Stock less the fair market
value, as determined in good faith by the Board, a certified
resolution with respect to which shall be mailed to the Holder, per
share of Common Stock of such dividend or distribution. No adjustment
shall be made pursuant to this clause (iii) in connection with any
transaction to which subsection (h) applies.
(iv) For purposes of this subsection (g), the number
of shares of Common Stock at any time outstanding shall not include
any shares of Common Stock then owned or held by or for the account of
the Corporation.
(v) The term "dividend," as used in this
subsection (g), shall mean a dividend or other distribution upon stock
of the Corporation.
-11-
<PAGE> 12
(vi) Anything in this subsection (g) to the contrary
notwithstanding, the Corporation shall not be required to give effect
to any adjustment in the Conversion Ratio unless and until the net
effect of one or more adjustments (each of which shall be carried
forward), determined as above provided, shall have resulted in a
change of the Conversion Ratio by at least one one-hundredth (.01) of
one share of Common Stock, and when the cumulative net effect of more
than one adjustment so determined shall be to change the Conversion
Ratio by at least one one-hundredth (.01) of one share of Common
Stock, such change in Conversion Ratio shall thereupon be given
effect.
(vii) The certificate of any firm of independent
public accountants of recognized standing selected by the Board (which
may be the firm of independent public accountants regularly employed
by the Corporation) shall be presumptively correct for any computation
made under this subsection (g).
(viii) If the Corporation shall take a record of the
holders of its Common Stock for the purpose of entitling them to
receive a dividend or other distribution, and shall thereafter and
before the distribution to stockholders thereof legally abandon its
plan to pay or deliver such dividend or distribution, then thereafter
no adjustment in the number of shares of Common Stock issuable upon
exercise of the right of conversion granted by this subsection (g) or
in the Conversion Ratio then in effect shall be required by reason of
the taking of such record.
(h) In the case of any Major Transaction occurring at any
time, at the option of the Holder, the indebtedness evidenced by the Note shall
thereafter be convertible into, in whole and in part and in lieu of the Common
Stock issuable upon such conversion prior to consummation of such Major
Transaction, the kind and amount of shares of stock and other securities and
property receivable (including cash) upon the consummation of such Major
Transaction by a holder of that number of shares of Common Stock into which
such indebtedness, or portion thereof, was convertible immediately prior to
such Major Transaction (including, on a pro rata basis, the cash, securities,
or property received by holders of Common Stock in any tender or exchange offer
that is a step in such Major Transaction). In case securities or property
other than Common Stock shall be issuable or deliverable upon conversion as
aforesaid, then all references in this Section 3 shall be deemed to apply, so
far as appropriate and nearly as may be, to such other securities or property.
(i) In case at any time or from time to time the Corporation
shall pay any stock dividend or make any other non-cash distribution to the
holders of its Common Stock, or shall offer for subscription pro rata to the
holders of its Common Stock any additional shares of stock of any class or any
other right, or there shall be any capital reorganization or reclassification
of the Common Stock of the Corporation or consolidation or merger of the
Corporation with or into another corporation or other entity, or any sale or
conveyance
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<PAGE> 13
to another corporation or other entity of the assets or property of the
Corporation as an entirety or substantially as an entirety, or there shall be a
voluntary or involuntary dissolution, liquidation, or winding up of the
Corporation, then, in any one or more of said cases the Corporation shall give
at least 20 days prior written notice (the time of mailing of such notice shall
be deemed to be the time of giving thereof) to the Holder at the address of the
Holder as shown on the books of the Corporation as of the date of which (i) the
books of the Corporation shall close or a record shall be taken for such stock
dividend, distribution, or subscription rights, or (ii) such reorganization,
reclassification, consolidation, merger, sale, conveyance, dissolution,
liquidation, or winding up shall take place, as the case may be, provided that
in the case of any Major Transaction to which subsection (h) applies the
Corporation shall give at least 30 days prior written notice as aforesaid.
Such notice also shall specify the date as of which the holders of the Common
Stock of record shall participate in said dividend, distribution, or
subscription rights or shall be entitled to exchange their Common Stock for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, or conveyance or participate in
such dissolution, liquidation, or winding up, as the case may be. Failure to
give such notice shall not invalidate any action so taken.
(j) Anything herein to the contrary notwithstanding, the
issuance or sale of the following shares of Common Stock or options, warrants,
or other rights to purchase Common Stock shall be excluded from any calculation
of, and shall not be deemed issued or sold for purposes of calculating, any
reduction, adjustment, or readjustment of the Conversion Ratio hereunder: (i)
shares of Common Stock issued upon conversion of the indebtedness evidenced by
this Note or any portion thereof; (ii) shares of Common Stock or options,
warrants, or other rights to purchase Common Stock issuable, reserved for
issuance, or issued pursuant to a stock option plan, employee stock ownership
plan, or other compensatory benefit plan of the Corporation, duly adopted by
the Board; (iii) shares of Common Stock, issuable, reserved for issuance, or
issued pursuant to any currently outstanding warrants or options (other than as
provided in clause (x) of subparagraph (g)(ii) above), or any options,
warrants, or other rights issuable, reserved for issuance, or issued to
officers of the Corporation in the future for compensatory purposes, if duly
authorized by the Board; and (iv) shares of Common Stock issued upon conversion
of the indebtedness evidenced by the Convertible Notes (other than as provided
in clause (x) of subparagraph (g)(ii) above).
Section 4. REPORTS AS TO ADJUSTMENTS. Upon any adjustment of
the Conversion Ratio then in effect and any increase or decrease in the number
of shares of Common Stock issuable upon the operation of the conversion set
forth in Section 3, then, and in each such case, the Corporation shall promptly
deliver to the Holder, a certificate signed by the President or a Vice
President and by the Treasurer or an Assistant Treasurer or the Secretary or an
Assistant Secretary of the Corporation setting forth in reasonable detail the
event requiring the adjustment and the method by which such adjustment was
calculated and specifying the Conversion Ratio then in effect following such
adjustment and the increased or decreased number of shares issuable upon the
conversion granted by
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<PAGE> 14
Section 3, and shall set forth in reasonable detail the method of calculation
of each and a brief statement of the facts requiring such adjustment. Where
appropriate, such notice to the Holder may be given in advance and included as
part of the notice required under the provisions of Section 3(i).
SECTION 5. MANDATORY CONVERSION. (a) At any time after the
fourth anniversary of the Closing Date, and so long as at such time the Common
Stock is listed or admitted to trading on a national securities exchange, the
Corporation may require the Holder to convert all or a portion of the principal
amount of the indebtedness evidenced by this Note into shares of Common Stock
if, at such time, the Current Market Price of the Common Stock has equalled or
exceeded one hundred fifty percent (150%) of the Conversion Price (as it may
from time to time be adjusted) for forty- five (45) consecutive Trading Days
following the forty-fifth monthly anniversary of the Closing Date. To exercise
such right, the Corporation must deliver a Mandatory Conversion Notice of the
exercise of such right to the Holder within thirty (30) days of the last day of
such forty-five (45) day period, such Mandatory Conversion Notice must be given
at least ten (10) Business Days, but not more than fifteen (15) Business Days
prior to the proposed Mandatory Conversion Date, and such Mandatory Conversion
Notice must specify the proposed Mandatory Conversion Date and the portion of
the principal amount of the indebtedness evidenced by this Note to be converted
into Common Stock.
(b) All conversions effected pursuant to the preceding
paragraph will be made effective as of the close of business on the Mandatory
Conversion Date at the Conversion Ratio in effect on the Mandatory Conversion
Date; provided, however, that, in order to be able to convert, the Current
Market Price on the Mandatory Conversion Date must equal or exceed one hundred
fifty percent (150%) of the Conversion Price in effect on the Mandatory
Conversion Date. If the Current Market Price on the Mandatory Conversion Date
does not equal or exceed one hundred fifty percent (150%) of the Conversion
Price in effect on the Mandatory Conversion Date, the Corporation's election to
require conversion will be deemed void and no conversion will be effected
pursuant to such notice. Such event will not be deemed, however, to alter or
restrict the Corporation's right to again require conversion at such time as
the Current Market Price equals or exceeds one hundred fifty percent (150%) of
the then current Conversion Price for forty-five (45) consecutive Trading Days
prior to such time. Upon conversion required by the Corporation pursuant to
this paragraph and the immediately preceding paragraph, all accrued but unpaid
interest with respect to the principal amount of the indebtedness evidenced by
this Note being converted shall be payable in accordance with the provisions of
the following paragraph.
(c) Conversions of the indebtedness evidenced by this Note
effected by the exercise of the Corporation's right to require conversion will
be deemed effective as of the close of business on the Mandatory Conversion
Date without any action by the Holder and the Holder will, as of such time, be
a stockholder of the Corporation with respect to the number of shares of Common
Stock into which the principal balance evidenced by this
-14-
<PAGE> 15
Note (or such portion of the principal balance evidenced by this Note as the
Corporation shall have specified) shall have been converted. The Holder agrees
promptly to surrender this Note for cancellation following mandatory
conversion. Certificates representing the shares of Common Stock issuable by
the Corporation as a result of the mandatory conversion of all or a portion of
the principal balance of the indebtedness evidenced by this Note and all
dividends and other distributions payable with respect to such shares and all
accrued but unpaid interest payable pursuant to the immediately preceding
paragraph will be retained by the Corporation pending surrender of this Note
for cancellation. As promptly as practicable, and in any event within five (5)
Business Days after the surrender of this Note, the Corporation shall deliver
or cause to be delivered, either by personal delivery or by certified or
registered mail or by a recognized overnight courier service, in any such case,
properly insured, to the Holder in accordance with the written instructions of
the Holder (i) certificates representing the number of Conversion Shares to
which the Holder shall be entitled, and (ii) if less than the entire principal
amount of indebtedness evidenced by this Note is being converted, a new
promissory note, in the form of this Note, for the balance of the indebtedness
that is not being so converted.
(d) In connection with the conversion of the indebtedness
evidenced by this Note, no fractions of shares of Common Stock shall be issued,
but in lieu thereof the Corporation shall pay a cash adjustment in respect of
such fractional interest in an amount equal to such fractional interest
multiplied by the Current Market Price per share of Common Stock on the Trading
Day on which such indebtedness evidenced by this Note is deemed to have been
converted. If more than one note shall be surrendered for conversion by the
Holder at the same time, the number of full shares of Common Stock issuable on
conversion thereof shall be computed on the basis of the total amount of
indebtedness to be converted.
SECTION 6. MANDATORY PREPAYMENT. In the case of any Change
Event occurring at any time, at the option of the Holder, the Holder may
require the Corporation to prepay all or a portion of the then outstanding
principal amount of the indebtedness evidenced by this Note. To exercise such
right of prepayment, the Holder must provide the Corporation with a Mandatory
Prepayment Notice at least thirty (30) days prior to the proposed Mandatory
Prepayment Date which Mandatory Prepayment Notice shall specify the portion of
the principal amount of the indebtedness evidenced by this Note (which must be
in integral multiples of One Thousand Dollars ($1,000)) to be prepaid. On the
Mandatory Prepayment Date specified, the Corporation shall prepay the portion
of the principal amount of the indebtedness evidenced by this Note that the
Holder has specified must be prepaid on such date, plus accrued interest on
such principal amount to the date of the prepayment. Any prepayment shall be
made by cashiers check or by wire transfer of immediately available funds, in
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts, at such address or to such
account, as applicable, as shall be designated to the Corporation by the
Holder.
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<PAGE> 16
SECTION 7. SUBORDINATION. (a) The Corporation covenants and
agrees, and the Holder likewise covenants and agrees, that no payment shall be
made by the Corporation on account of principal of or interest on this Note, or
otherwise, if there shall have occurred and be continuing, and the Corporation
and the Holder shall have received notice from the holder or holders of, a
default with respect to any Senior Indebtedness (i) permitting the acceleration
thereof and such default is the subject of a judicial proceeding, or (ii) in an
aggregate principal amount of not less than One Million Dollars ($1,000,000)
entitling such holder or holders to compel the acceleration thereof (provided,
however, that in the case of Senior Indebtedness issued pursuant to an
indenture, such notice may be validly given only by the trustee under such
indenture), unless and until such default or Event of Default shall have been
cured or waived or shall have ceased to exist or such notice is withdrawn or
found by a court of competent jurisdiction to be invalid.
(b) Upon any payment by the Corporation or distribution of
assets of the Corporation of any kind or character, whether in cash, property,
or securities, to creditors of the Corporation upon any dissolution or winding
up or liquidation or reorganization of the Corporation, whether voluntary or
involuntary, or in bankruptcy, insolvency, receivership, or other similar
proceedings, all amounts due or to become due upon all Senior Indebtedness
shall first be paid in full in money or money's worth, or payment thereof
provided for, before any payment is made on account of the principal of or
interest on this Note and upon such dissolution or winding up or liquidation or
reorganization, any payment by the Corporation, or distribution of assets of
the Corporation of any kind or character, whether in cash, property, or
securities, to which the Holder would be entitled except for the provisions
hereof, shall be paid by the Corporation or by any receiver, trustee in
bankruptcy, liquidating trustee, agent, or other person making such payment or
distribution directly to the holders of Senior Indebtedness or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing any Senior Indebtedness
may have been issued, as their respective interests may appear, to the extent
necessary to pay all Senior Indebtedness in full in money or money's worth,
after giving effect to any concurrent payment or distribution to or for the
holders of Senior Indebtedness, before any payment or distribution is made to
the Holder.
(c) The foregoing notwithstanding, in the event that any
payment of or distribution of assets of the Corporation of any kind or
character, whether in cash, property or securities, prohibited by the
foregoing, shall be received by the Holder before all Senior Indebtedness is
paid in full in money or money's worth, or provision is made for such payment,
then and in such event such payment or distribution shall be paid over or
delivered to the holders of Senior Indebtedness or their representative or
representatives, or to the trustee or trustees under any indenture pursuant to
which any instruments evidencing any Senior Indebtedness may have been issued,
as their respective interests may appear, for application to the payment of all
Senior Indebtedness remaining unpaid to the extent necessary to pay all Senior
Indebtedness in full in money or money's worth, after giving effect to any
concurrent payment or distribution to or for the holders of such Senior
-16-
<PAGE> 17
Indebtedness (but subject to the power of a court of competent jurisdiction to
make other equitable provision, which shall have been determined by such court
to give effect to the rights conferred herein upon the Senior Indebtedness and
the holders thereof with respect to this Note or the Holder hereof by a lawful
plan or reorganization or readjustment under applicable bankruptcy law).
(d) The holders of Senior Indebtedness may, at any time and
from time to time, without the consent of or notice to the Holder, without
incurring responsibility to the Holder and without impairing or releasing the
obligations of the Holder to the holders of Senior Indebtedness: (i) change
the manner, place, or terms of payment or change or extend the time of payment
of, or renew or alter Senior Indebtedness, or otherwise amend, in any manner,
Senior Indebtedness or any instrument evidencing the same or any agreement
under which such Senior Indebtedness is outstanding; provided, however, that
the average weighted maturity of such Senior Indebtedness shall not be
decreased without the consent of the Holder; (ii) sell, exchange, release, or
otherwise deal with any property pledged, mortgaged, or otherwise securing
Senior Indebtedness; (iii) release any person liable in any manner for the
collection of Senior Indebtedness; and (iv) exercise or refrain from exercising
any rights against the Corporation and any other person.
(e) Subject to the payment in full of all amounts then due
(whether by acceleration of the maturity thereof or otherwise) on account of
the principal of, premium, if any, and interest on all Senior Indebtedness at
the time outstanding, the Holder shall be subrogated to the rights of the
holders of Senior Indebtedness to receive payments or distributions of cash,
property, or securities of the Corporation applicable to the Senior
Indebtedness until the principal of and interest on this Note shall be paid in
full; and, for the purposes of such subrogation, no payments or distributions
by the Corporation to the holders of Senior Indebtedness of any cash, property,
or securities to which the Holder would be entitled except for the provisions
hereof, and no payments over pursuant to the provisions hereof to the holders
of Senior Indebtedness by the Holder, shall, as between the Corporation, its
creditors other than holders of Senior Indebtedness, and the Holder, be deemed
to be a payment by the Corporation to or on account of the Senior Indebtedness.
(f) It is understood that the foregoing provisions of this
Note are and are intended solely for the purpose of defining the relative
rights of the Holder on the one hand and the holders of Senior Indebtedness on
the other hand. Nothing contained in this Note is intended to or shall impair,
as among the Corporation, its creditors other than the holders of Senior
Indebtedness, and the Holder, the obligation of the Corporation, which is
absolute and unconditional, to pay to the Holder the principal of and interest
on this Note as and when the same shall become due and payable in accordance
with its terms, or is intended to or shall affect the relative rights of the
Holder and creditors of the Corporation other than the holders of Senior
Indebtedness, nor shall anything herein prevent the Holder from exercising all
remedies otherwise permitted by applicable law upon default under this Note or
the Note Purchase Agreement.
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<PAGE> 18
(g) Upon any payment or distribution of assets of the
Corporation referred to herein, the Holder shall be entitled to rely upon any
order or decree made by any court of competent jurisdiction in which such
dissolution, winding up, liquidation, or reorganization proceedings are
pending, or certificate of the receiver, trustee in bankruptcy, liquidating
trustee, agent, or other person making such payment or distribution, delivered
to the Holder, for the purpose of ascertaining the persons entitled to
participate in such distribution, the holders of Senior Indebtedness and other
indebtedness of the Corporation, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon, and all other facts pertinent
thereto.
(h) The Corporation shall give prompt written notice to the
Holder of any fact known to the Corporation that would prohibit the making of
any payment of moneys to or by the Corporation in respect of this Note.
SECTION 8. ACCELERATION. This Note and the indebtedness
evidenced hereby is subject to acceleration under the terms and conditions set
forth in the Note Purchase Agreement.
SECTION 9. NO OPTIONAL PREPAYMENT. This Note and the
indebtedness evidenced hereby shall not be prepaid at the option of the
Corporation.
SECTION 10. MISCELLANEOUS. (a) Any notice required by the
provisions of this Note to be given to the Holder or the Corporation shall be
given and deemed received or delivered in accordance with the provisions of
Section 10.4 of the Note Purchase Agreement.
(b) In the event of prepayment or conversion of this Note in
part only, a new note or notes for the unpaid or unconverted portion hereof
will be issued in the name or names requested by the Holder upon the
cancellation hereof.
(c) The transfer of this Note is registrable on the books of
the Corporation upon surrender of this Note for registration of transfer at the
offices of the Corporation in Nashville, Tennessee, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Corporation duly executed by, the Holder or its attorney duly authorized in
writing, and thereupon one or more new notes of authorized denominations and
for the same aggregate principal amount, will be issued to the designated
transferee or transferees. New notes are issuable only in registered form
without coupons in denominations of One Thousand Dollars ($1,000) and any
integral multiple thereof. This Note is exchangeable for a like aggregate
principal amount of notes of a different authorized denomination, as requested
by the Holder. No service charge shall be made for any such registration of
transfer or exchange, but the Corporation may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
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<PAGE> 19
(d) Prior to the due presentment of this Note for
registration of transfer, the Corporation and any agent of the Corporation may
treat the person in whose name this Note is registered as the owner hereof for
all purposes, irrespective of whether this Note be overdue, and neither the
Corporation nor any such agent shall be affected by notice to the contrary.
(e) This Note shall be deemed to be a contract made under the
laws of the State of New York and for all purposes shall be governed by,
construed under, and enforced in accordance with the laws of the State of New
York.
(f) The Corporation agrees, to the extent permitted by law,
to pay to the Holder all costs and expenses (including attorneys' fees)
incurred by it in the collection hereof or the enforcement of any right or
remedy provided for herein (including such costs and expenses incurred in
connection with a workout or an insolvency or bankruptcy proceeding).
(g) The provisions of the Note Purchase Agreement are hereby
incorporated into this Note by this reference.
[Remainder of page intentionally left blank.]
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<PAGE> 20
IN WITNESS WHEREOF, the undersigned has executed this Note
effective as of the date first above written.
CORRECTIONS CORPORATION OF AMERICA,
a Delaware corporation
By:
--------------------------------
Title:
--------------------------------
ATTEST:
- ------------------------------
Secretary
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<PAGE> 21
Exhibit A
[FORM OF MANDATORY CONVERSION NOTICE]
- -------------------------
- -------------------------
- -------------------------
Notice hereby is given that, in accordance with the terms and
conditions of the Note hereinafter described and that certain Note Purchase
Agreement, dated February 29, 1996, between Corrections Corporation of America
and PMI Mezzanine Fund, L.P., Corrections Corporation of America hereby elects
to require conversion of the 7.5% Convertible, Subordinated Note, due February
28, 2002, issued by it (the "Note"). The Note to be converted and the
principal amount thereof to be converted are as follows:
<TABLE>
<CAPTION> Principal Number of
Outstanding Amount to be Shares to
Note Number Principal Amount Converted Be Delivered
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
</TABLE>
The Mandatory Conversion Date will be .
---------------------
CORRECTIONS CORPORATION OF AMERICA
By:
--------------------------
Name:
-----------------------------
Title:
----------------------------
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<PAGE> 22
Exhibit B
[FORM OF MANDATORY PREPAYMENT NOTICE]
TO: CORRECTIONS CORPORATION OF AMERICA
----------------------------------
----------------------------------
The undersigned owner of the attached Note hereby gives notice that,
in accordance with the terms and conditions of such Note and that certain Note
Purchase Agreement, dated February 29, 1996, between Corrections Corporation of
America and PMI Mezzanine Fund, L.P., it hereby exercises its right to require
prepayment of such Note or portion thereof (which is $1,000 or an integral
multiple thereof), plus all accrued but unpaid interest with respect to such
principal amount.
The Mandatory Prepayment Date shall be ______________. The principal
amount to be prepaid shall be $___________ _________________.
[Name of Holder]
Dated: By:
--------------------- --------------------------------
Name:
------------------------------
Title:
------------------------------
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<PAGE> 23
Exhibit C
[FORM OF OPTIONAL CONVERSION NOTICE]
TO: CORRECTIONS CORPORATION OF AMERICA
----------------------------------
----------------------------------
The undersigned owner of the attached Note hereby gives notice that,
in accordance with the terms and conditions of such Note and the Note Purchase
Agreement, dated February 29, 1996, between Corrections Corporation of America,
PMI Mezzanine Fund, L.P., it hereby exercises its right to convert such Note,
or portion hereof (which is $1,000 or an integral multiple thereof) below
designated, into shares of Common Stock of Corrections Corporation of America
and directs that the shares issuable and deliverable upon the conversion, and
any notes representing any unconverted principal amount thereof, be issued and
delivered to the registered holder of such Note unless a different name has
been indicated below. If shares or a new note representing unconverted
principal are to be issued in the name of a person other than the undersigned,
the undersigned will pay all transfer taxes payable with respect thereto.
[Name of Holder]
Dated: By:
---------------- ---------------------------------------------
Name:
-------------------------------------------
Title:
------------------------------------------
Principal Amount to be converted (in an integral
if less than all):
$
----------------
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<PAGE> 24
Fill in for registration of shares
of Common Stock and note if to be
issued other than to the
registered Holder.
- ---------------------------------
Name
- ---------------------------------
Address
- ---------------------------------
Please print name and address
(including zip code number)
SOCIAL SECURITY OR OTHER TAXPAYER
IDENTIFYING NUMBER
- ---------------------------------
-24-
<PAGE> 1
EXHIBIT 10.140
STOCK PURCHASE AGREEMENT
BY AND BETWEEN
CHUBB SECURITY HOLDINGS AUSTRALIA LIMITED
AND
CORRECTIONS CORPORATION OF AMERICA
DATED AS OF MARCH ___, 1995
<PAGE> 2
STOCK PURCHASE AGREEMENT
This Agreement (the "Agreement") is made and entered into this ____
day of March, 1995, by and between Corrections Corporation of America, a
Delaware corporation having its principal place of business in Nashville,
Tennessee (the "Buyer"), and Chubb Security Holdings Australia Limited A.C.N.
003 590 921, a New South Wales Company, having its principal place of business
in New South Wales, Australia (the "Seller").
WHEREAS, Seller will at the Closing (as hereinafter defined) own
15,000 "W" class shares and 7,500 "H" class shares in the capital of
Corrections Corporation of Australia Pty. Ltd. A.C.N. 010 921 641, a Queensland
Company (the "Company") which shares collectively represent fifty (50%) percent
of the issued shares of the Company; and
WHEREAS, Buyer desires to acquire from Seller, and Seller desires to
sell to Buyer, all of the shares in the capital of the Company owned by Seller
upon and subject to the terms and conditions contained in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements herein contained, the parties agree as follows:
ARTICLE I
PURCHASE AND SALE OF SHARES
1.01. TRANSFER OF SHARES. Subject to all of the terms and
conditions of this Agreement, at the Closing, Seller hereby agrees to sell,
transfer and convey to Buyer, and Buyer agrees to purchase and acquire from
Seller, free and clear of all liens, claims, charges, restrictions, security
interests, equities, proxies, pledges and encumbrances of any kind, 15,000 "W"
class shares and 7,500 "H" class shares in the capital of the Company, which
shares collectively constitute fifty (50%) percent of the issued shares in the
capital of the Company (the foregoing shares of the Company are hereinafter
collectively referred to as the "Shares").
ARTICLE II
CONSIDERATION
2.01. PURCHASE PRICE. The Purchase Price for the Shares shall be
Five Million Dollars ($5,000,000) (Aust.) (the "Purchase Price"). The Purchase
Price shall be paid by Buyer to Seller at the Closing, by bank cheque, bank
wire transfer or such other method as may be mutually agreed upon by the
parties.
2.02. ASSUMPTION OF LIABILITIES. From and after the Closing, Buyer
shall be responsible for any and all obligations of Seller with respect to
providing equity financing to the Company,
<PAGE> 3
including, without limitation, payments in connection with the Company's
overdraft facility or the provision of any equity necessary for construction
and development of that certain new women's prison to be located in Victoria,
Australia (the "New Women's Prison"). The Buyer undertakes to procure a full
and conditional release for the Seller from all agreements entered into by it
in relation to the construction, development and operation of the New Women's
Prison and hereby indemnifies and shall keep indemnified the Seller from and
against any and all loss, damage, costs, expenses, obligations and liability
suffered or incurred by the Seller under or pursuant to any or all such
agreements until the Seller shall have been fully and unconditionally released
therefrom.
2.03. PERSONNEL SERVICES. Following the Closing and until March 31,
1996 or such earlier date as may be agreed to by the parties, Seller shall
provide various supervision and security operations personnel to the Borallon
Correctional Centre in accordance with the terms and conditions of that certain
Personnel Contract by and between Seller and Buyer to be attached hereto as
Exhibit A.
ARTICLE III
CLOSING; OBLIGATIONS OF THE PARTIES
3.01. CLOSING DATE. Subject to the fulfillment of Section 7.07, the
closing (the "Closing") shall take place and be effective for all purposes at
10:00 a.m., local time, on 14 April 1995 at the offices of Seller or at such
other time and place as the parties hereto mutually agree (the "Closing Date").
If the Buyer has not received the notification referred to in Section 7.07 from
the Commonwealth Government by 14 April 1995, the Closing Date shall be five
working days after the receipt of such notification or if no notification is
received within 40 days from the date that the Buyer has given notification to
the Commonwealth government of its intention to enter into this Agreement, then
five working days after the expiration of that 40 day period.
3.02. OBLIGATIONS OF THE PARTIES AT THE CLOSING.
(a) At the Closing, the events set out in clauses (i)
through (v) shall occur:
(i) the Buyer shall pay the consideration as
specified in Section 2.01;
(ii) the Seller shall deliver to the Buyer or to
such person as Buyer may direct, the share certificate issued by the Company
for the Shares together with an executed instrument of transfer in registrable
form (except for the payment of any applicable stamp duty) for the Shares in
favor of the Buyer or its nominee (as transferee) from the registered holder of
the Shares (as transferor).
(iii) the Seller shall deliver to the Buyer any
waiver, consent or other document which the Buyer may require to obtain a good
title to the Shares registered in the name
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of the Buyer or its nominee, including any Power of Attorney under which any
document required to be delivered under this Agreement has been executed.
(iv) the Seller and the Buyer shall cause a
meeting of the Directors of the Company to be convened and shall procure that
at the meeting:
(a) the Directors shall approve the
transfer of the Shares to the Buyer or its nominee and, subject to the
payment of stamp duty, direct the entries in the Company's share
register be made, the existing share certificate for the Shares be
cancelled and a new certificate in the name of the Buyer be issued;
(b) the Directors shall revoke any
authorities for the operation of the Company's bank account granted to
any nominee or officer of Seller or granted to any Director or
Secretary appointed by Seller or representing Seller;
(c) two (2) persons that Buyer shall
have previously nominated shall be appointed as Directors and one (1)
person previously nominated by the Purchaser shall be appointed as
Secretary of the Company in place of the Director and Secretary
nominated by Seller or representing Seller;
(d) the Directors shall revoke any
power/s of attorney granted by the Company prior to the meeting in
favor of Seller or any Director or Secretary appointed by Seller;
(e) Ian Richards Masters and Graeme
Francis Pettigrew shall each resign as Director of the Company. Their
resignations shall be accepted; and
(f) The Directors shall appoint as an
additional Secretary of the Company some person nominated for that
purpose by Messrs. Thomas W. Beasley and T. Don Hutto.
(v) Seller shall deliver to the Meeting of the
Directors of the Company:
(a) the written resignation of Messrs.
Masters and Pettigrew and an acknowledgement from them that they have
no claim of any nature against the Company;
(b) any property of the Company in the
possession of Seller or any employee of Seller or in the possession of
Messrs. Masters or/and Pettigrew; and
(vi) Buyer may by written notice to the Seller
waive compliance by the Seller with the requirements of this Section 3.02 on
the Seller's part to be performed.
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(vii) The Buyer and the Seller being the only
shareholders in the Company, and being the only shareholders or class of
shareholders entitled to appoint directors of the Company hereby agree that the
quorum necessary for a valid meeting of directors of the Company shall be
present if there shall be 3 directors present 2 of whom appointed by the "W"
class shareholders and 1 by the "C" class shareholders or vice versa.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
In order to induce Buyer to enter into this Agreement and consummate
the transactions contemplated hereby, Seller hereby represents and warrants as
follows:
4.01. ORGANIZATION AND GOOD STANDING. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
New South Wales and has full corporate power and authority to enter into this
Agreement and to carry out the transactions contemplated hereby.
4.02. OWNERSHIP OF SHARES; VALIDITY AND ENFORCEABILITY. Seller
represents and warrants that (i) Seller is the legal and beneficial owner of
the Shares, free and clear of all liens, claims, charges, restrictions,
security interests, equities, proxies, pledges or encumbrances of any kind;
(ii) Seller has the full right, power, authority and capacity to sell and
transfer the respective Shares owned by such Seller; (iii) by virtue of the
transfer of the Shares to Buyer at the Closing, Buyer will obtain full title to
such Shares, free and clear of all liens, claims, charges, restrictions,
security interests, equities, proxies, pledges, or encumbrances of any kind.
This Agreement constitutes a legal, valid and binding agreement of the Seller,
enforceable against Seller in accordance with its terms. As of the Closing
Date and upon receipt of the Purchase Price, Seller represents that it has no
claims of any kind against the Company.
4.03. CORPORATE POWER AND AUTHORITY: DUE AUTHORIZATION. Seller has
full corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The Board of Directors of
Seller has duly approved and authorized the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby, and no
other corporate proceedings on the part of Seller are necessary to approve and
authorize the execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby. This Agreement and each of the documents
to which Seller is a party constitutes, or will constitute when executed and
delivered, a valid and binding agreement of Seller, in each case enforceable in
accordance with its terms.
4.04. NO VIOLATION. The execution and delivery of this Agreement by
the Seller does not, and the consummation of the transactions contemplated
hereby will not, (a) violate or be in conflict with, or constitute a default
(or an event which, with notice or lapse of time, or both, would constitute a
default) with, or result in the termination of, or accelerate the performance
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required by, or excuse performance by any person of any of its obligations
under, or cause the performance required by, or exercise performance by any
person of any of its liabilities under, any provision of, or result in the
creation of any lien or security interest under, any agreement, indenture,
instrument, lease, security agreement, mortgage or lien to which the Seller is
a party or by which any of the Seller's assets or properties are bound; (b)
violate or be in conflict with any provision of the Articles of Association or
Bylaws of the Seller; (c) violate any order, arbitration award, judgment, writ,
injunction, decree, statute, rule, or regulation applicable to the Seller; or
(d) violate any other contractual or legal obligation or restriction to which
the Seller is subject.
4.05. ABSENCE OF QUESTIONABLE PAYMENTS. Neither the Seller nor
Messrs. Pettigrew and Masters or any other person acting on their behalf has at
any time directly or indirectly used funds for any illegal purpose, including
without limitation, the making of any improper political contribution, bribe or
kickback.
4.06. PROFESSIONAL FEES. The Seller has not done anything to cause
or incur any liability or obligation of the Company for investment banking,
brokerage, finders, agents or other fees, commissions, expenses or charges in
connection with the negotiation, preparation, execution or performance of this
Agreement or the consummation of the transactions contemplated hereby, and
Seller does not know of any claim by anyone for such a fee, commission, expense
or charge.
4.07. CONSENTS AND APPROVALS. Seller has obtained or will have
obtained prior to Closing, all consents, approvals, authorizations or orders of
third parties, including governmental authorities, necessary for the
authorization, execution and performance of this Agreement by Seller.
4.08. FULL DISCLOSURE. Neither this Agreement, nor any schedule,
exhibit, list, certificate or other instrument and document furnished or to be
furnished by Seller to Buyer pursuant to this Agreement, contains any untrue
statement of a material fact or omits to state any material fact required to be
stated herein or therein or necessary to make the statements and information
contained herein or therein not misleading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
In order to induce Seller to enter into this Agreement and consummate
the transactions contemplated hereby, Buyer hereby represents and warrants to
Seller as follows:
5.01. ORGANIZATION AND GOOD STANDING. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has full corporate power and authority to enter into this
Agreement and to carry out the transactions contemplated hereby.
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5.02. AUTHORIZATION. The Board of Directors of Buyer has taken all
action required by law, its Certificate of Incorporation, its Bylaws and
otherwise to authorize the execution and delivery by Buyer of this Agreement
and the consummation by Buyer of the transactions contemplated hereby.
5.03. VALID AND BINDING AGREEMENT. This Agreement constitutes a
valid and binding agreement of Buyer, enforceable against Buyer in accordance
with its terms.
5.04. NO VIOLATION. The execution and delivery of this Agreement by
Buyer does not, and the consummation of the transactions contemplated hereby
will not, (a) violate any provision, or result in the creation of any lien or
security interest under, any agreement, indenture, instrument, lease, security
agreement, mortgage or lien to which Buyer is a party or by which it is bound;
(b) violate any provision of Buyer's Certificate of Incorporation or Bylaws;
(c) violate any order, arbitration award, judgment, writ, injunction, decree,
statute, rule or regulation applicable to Buyer; or (d) violate any other
contractual or legal obligation or restriction to which Buyer is subject.
5.05. PROFESSIONAL FEES. Buyer has not done anything to cause or
incur any liability for investment banking, brokerage, finders, agents or other
fees, commissions, expenses or charges in connection with the negotiation,
preparation, execution and performance of this Agreement or the consummation of
the transactions contemplated hereby, and Buyer does not know of any claim by
anyone for such a commission or fee.
5.06. CONSENTS AND APPROVALS. Buyer has obtained or will have
obtained prior to Closing, all consents, approvals, authorizations or orders of
third parties, including governmental authorities, necessary for the
authorization, execution and performance of this Agreement by Buyer.
5.07. FULL DISCLOSURE. Neither this Agreement, nor any certificate
or other instrument or document furnished or to be furnished by Buyer to Seller
pursuant to this Agreement, contains any untrue statement of a material fact or
omits to state a material fact required to be stated herein or therein or
necessary to make the statements and information contained herein or therein
not misleading.
ARTICLE VI
COVENANTS AND AGREEMENTS OF SELLER
Seller agrees that from the date hereof until the Closing, and thereafter
if so specified, it will fulfill the following covenants and agreements unless
otherwise consented to by Buyer in writing:
6.01. FURTHER ASSURANCES. At any time and from time to time after
the Closing, at Buyer's request and without further consideration, Seller will
execute and deliver such other
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instruments of sale, transfer, conveyance, assignment, and delivery and
confirmation and take such action as the Buyer may reasonably deem necessary or
desirable in order more effectively to transfer, convey and assign to Buyer and
to place Buyer in possession and control of, and to confirm Buyer's title to,
the Shares, and to assist Buyer in exercising all rights and enjoying all
benefits with respect thereto.
6.02. CONSENTS AND APPROVALS. Seller shall, in a timely, accurate
and complete manner, take all necessary corporate and other action and use all
reasonable efforts to obtain all consents, approvals, permits, licenses and
amendments of agreements required of the Seller to carry out the transactions
contemplated in this Agreement.
6.03. NON-DISCLOSURE. (a) Except as agreed to in writing by Buyer,
Seller will not disclose to any other person not an employee of Seller (or a
person otherwise involved in the carrying out of the transactions contemplated
by this Agreement), nor make any public announcement of, the transactions
contemplated by this Agreement prior to the Closing. Any such disclosure to
employees will be made on a need-to-know basis and on the condition that such
employees agree to be bound by the same confidentiality terms.
(b) Seller absolutely and unconditionally covenants and
agrees with Buyer that, from the period commencing on the Closing Date and
continuing for a period of five years following the Closing Date, neither
Seller nor any of its officers, directors, employees or affiliates and their
successors and assigns will disclose to any other person not an employee of
Seller, any information which it may have obtained regarding the business of
the Company.
6.04. NON-COMPETITION.
(a) Seller and its affiliates absolutely and unconditionally
covenant and agree with the Buyer that, from the period commencing on the
Closing Date and continuing for a period of five years following the Closing
Date, neither Seller nor any of its directors, officers, employees or
affiliates will, either directly or indirectly, solely or jointly with any
other person or persons, as an employee, consultant or advisor (whether or not
engaged in business for profit), or as an individual proprietor, partner,
shareholder, director, officer, joint venturer, investor, lender or in any
other capacity, compete with the business of the Buyer in any and all parts of
the world outlined on the plan annexed to that certain Shareholders' Agreement
dated September 22, 1989 and subsequently amended, by and between Buyer and
Seller (the "Shareholders' Agreement") as Exhibit B. For purposes of this
Agreement, "compete with the business of the Buyer" shall mean engaging in the
business of developing, designing, managing or operating private correctional
facilities or providing extradition services therefore, provided, however, that
the foregoing restriction shall not prevent Seller from providing security
personnel for supervision and security operations to such entities.
(b) It is expressly understood, acknowledged and agreed by
Seller (i) that the restriction contained in Section 6.04(a) of this Agreement
represents a reasonable and necessary protection of the legitimate interests of
the Buyer and that its failure to observe and comply with
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its covenants and agreements in that paragraph will cause irreparable harm to
the Buyer; (ii) it is and will continue to be difficult to ascertain the
nature, scope and extent of the harm; and (iii) a remedy at law for such
failure by the Seller will be inadequate. Accordingly, it is the intention of
the parties that, in addition to any other rights or remedies which the Buyer
may have in the event of any breach of Section 6.04(a), the Buyer shall be
entitled, and is expressly and irrevocably authorized by Seller, to demand and
obtain specific performance, including, without limitation, temporary and
permanent injunctive relief and all other appropriate equitable relief against
Seller in order to enforce against Seller the covenants and agreements
contained in that Section of this Agreement.
(c) If any court of competent jurisdiction shall at any time
deem the duration of the restriction contained in Section 6.04(a) of this
Agreement to be too lengthy or the scope thereof to be too broad, the
restrictive time period shall be deemed to be the longest period permissible by
law, and the scope shall be deemed to comprise the broadest scope permissible
by law. The parties hereby agree that such court may modify the objectionable
provision so as to make it valid, reasonable and enforceable and agree to be
bound by the terms of such provision, as modified by the court.
6.05. EXCLUSIVITY. Unless and until this Agreement terminates,
neither Seller nor any of its directors, officers, employees, investment
bankers, commercial banks, representatives or agents shall, directly or
indirectly, solicit, initiate, or knowingly encourage initiation of any
inquiries or proposals from or provide any confidential information to or
participate in any discussion or negotiations with, any person (other than
Buyer and its affiliates and their respective directors, officers, employees,
investment bankers, commercial banks, representatives and agents) concerning
the sale of the Shares, nor shall Seller accept any proposal with respect to,
or otherwise enter into any such sale or other similar transaction.
ARTICLE VII
CONDITIONS TO BUYER'S OBLIGATIONS
All obligations of Buyer hereunder are subject to the fulfillment,
prior to or at the Closing, of each of the following conditions:
7.01. REPRESENTATIONS AND WARRANTIES. The representations and
warranties made by the Seller in this Agreement shall be true when made and at
and as of the time of the Closing as though such representations and warranties
were made at and as of such date.
7.02. PERFORMANCE. Seller shall have performed and complied with
all agreements, obligations, and conditions required by this Agreement to be so
complied with or performed.
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7.03. OFFICER'S CERTIFICATE. Seller shall have delivered to Buyer a
Certificate of an officer of Seller dated the Closing Date, certifying as to
the fulfillment of the conditions specified in Sections 7.01 and 7.02 hereof.
7.04. CONSENTS AND APPROVALS. Buyer shall have received all consents
required for the consummation of the transactions contemplated hereby, all of
which consents shall be in form and substance satisfactory to Buyer.
7.05. RENEWAL OF BORALLON CONTRACT. That certain contract by and
between the Company and the Queensland Corrective Service Commission with
respect to the Borallon Correctional Centre shall have been renewed on terms
and conditions satisfactory to Buyer.
7.06. FAVORABLE TAX RULING. The Company shall have received, in the
opinion of Buyer, a favorable 51 AD tax code ruling as to the expensing of the
infrastructure of the New Women's Prison.
7.07. COMMONWEALTH APPROVAL. The Buyer shall have received
notification from the Commonwealth government that it does not object to the
Buyer acquiring the Seller's shares pursuant to this Agreement, as provided for
in S.26(2) of the Foreign Acquisitions & Takeovers Act (Commonwealth). The
Buyer agrees to notify the Treasurer of the Commonwealth of this Agreement and
its intention to acquire the Seller's shares forthwith upon the execution of
this Agreement.
ARTICLE VIII
CONDITIONS TO SELLER'S OBLIGATIONS
All obligations of Seller under this Agreement are subject to the
fulfillment, prior to or at the Closing, of each of the following conditions:
8.01. REPRESENTATIONS AND WARRANTIES. The representations and
warranties made by the Buyer in this Agreement shall be true when made and at
and as of the time of the Closing as though such representations and warranties
were made at and as of such date.
8.02. PERFORMANCE. Buyer shall have performed and complied with all
agreements, obligations, and conditions required by this Agreement to be so
complied with or performed.
8.03. OFFICER'S CERTIFICATE. Buyer shall have delivered to Seller a
Certificate of an officer of Buyer, dated the Closing Date, certifying as to
the fulfillment of the conditions specified in Sections 8.01 and 8.02 hereof.
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ARTICLE IX
INDEMNIFICATION
9.01. INDEMNIFICATION BY SELLER. The Seller hereby agrees to
defend, indemnify and hold harmless Buyer and shall reimburse Buyer for, from
and against each claim, loss, liability, cost and expense (including, without
limitation, interest, penalties, costs of preparation and investigation, and
the reasonable fees, disbursements and expenses of attorneys, accountants and
other professional advisors) (collectively, "Losses"), directly or indirectly
relating to, resulting from or arising out of:
(a) Any untrue representation, misrepresentation, breach
of warranty or nonfulfillment of any covenant, undertaking, agreement or other
obligation by or of Seller contained herein, or in any certificate, schedule,
document or instrument delivered to Buyer pursuant hereto.
(b) Without prejudice to the Buyer's undertaking and
indemnity in Section 2.02 any and all liabilities or obligations of the Seller
to the Company arising outside of this Agreement.
(c) Any other Loss incidental to any of the foregoing.
9.02. INDEMNIFICATION BY BUYER. Buyer hereby agrees to defend,
indemnify and hold harmless Seller, and shall reimburse Seller for, from and
against Losses directly or indirectly relating to, resulting from or arising
out of:
(a) Any untrue representation, misrepresentation, breach
of warranty or nonfulfillment of any covenant, undertaking, agreement or other
obligation by Buyer contained herein or in any certificate, document or
instrument delivered to Seller pursuant hereto.
(b) Any other Loss incidental to the foregoing.
9.03. PROCEDURE. The indemnified party shall promptly notify the
indemnifying party of any claim, demand, action or proceeding for which
indemnification will be sought under Sections 9.01 or 9.02 of this Agreement,
and, if such claim, demand, action or proceeding is a third party claim,
demand, action or proceeding, the indemnifying party will have the right at its
expense to assume the defense thereof using counsel reasonably acceptable to
the indemnified party. The indemnified party shall have the right to
participate, at its own expense, with respect to any such third party claim,
demand, action or proceeding. In connection with any such third party claim,
demand, action or proceeding, Buyer and the Seller shall cooperate with each
other and provide each other with access to relevant books and records in their
possession. No such third party claim, demand, action or proceeding shall be
settled without the prior written consent of the indemnified party. If a firm
written offer is made to settle any such third party claim, demand, action or
proceeding and the indemnifying party proposes to accept such settlement and
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the indemnified party refuses to consent to such settlement, then: (i) the
indemnifying party shall be excused from, and the indemnified party shall be
solely responsible for, all further defense of such third party claim, demand,
action or proceeding; and (ii) the maximum liability of the indemnifying party
relating to such third party claim, demand, action or proceeding shall be the
amount of the proposed settlement if the amount thereafter recovered from the
indemnified party on such third party claim, demand, action or proceeding is
greater than the amount of the proposed settlement.
ARTICLE X
SURVIVAL OF REPRESENTATIONS
10.01. SURVIVAL OF REPRESENTATIONS. All representations, warranties,
covenants, indemnities and agreements by the parties contained in this
Agreement shall survive the Closing and any investigation at any time made by
or on behalf of any party hereto, and other than the covenants of the Seller
contained in Section 6.04 hereof and the undertaking and indemnities of the
Buyer contained in Section 2.02, shall expire on the second anniversary of the
Closing Date.
10.02. STATEMENTS AS REPRESENTATIONS. All statements contained in
any certificate, schedule, list, document or other writing delivered pursuant
hereto or in connection with the transactions contemplated hereby shall be
deemed representations and warranties for all purposes of this Agreement.
10.03. REMEDIES CUMULATIVE. The remedies provided herein shall be
cumulative and shall not preclude the assertion by any party hereto of any
other rights or the seeking of any other remedies against the other party
hereto.
10.04. LIMITATION ON SELLER'S LIABILITY. Notwithstanding any other
provisions of this Agreement, under no circumstances whatsoever shall the
liability of the Seller for:
(a) breach of any and all of the warranties and representations
contained in Article IV hereof; and
(b) under the indemnity given by the Seller under Article IX
hereof in relation to such warranties and representations; and
(c) breach of any and all of any warranties and conditions as to
title to the Shares that may be implied by law into the sale and purchase of
the Shares exceed in the aggregate for any and all claims a sum equal to the
Purchase price.
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ARTICLE XI
TERMINATION OF AGREEMENT
11.01. TERMINATION. This Agreement may be terminated at any time
prior to the Closing:
(a) By mutual agreement of Seller and Buyer.
(b) By Buyer, if there has been a material violation or
breach by the Seller of any of the agreements, representations or warranties
contained in this Agreement which has not been waived in writing, or if any of
the conditions set forth in Article VII hereof have not been satisfied by the
Closing or have not been waived in writing by Buyer.
(c) By Seller, if there has been a material violation or
breach by the Buyer of any of the agreements, representations or warranties
contained in this Agreement which has not been waived in writing, or if any of
the conditions set forth in Article VIII hereof have not been satisfied by the
Closing or have not been waived in writing by Seller.
(d) By either Buyer or Seller if the transactions
contemplated by this Agreement shall not have been consummated on or before
[April 30, 1995].
(e) By either Buyer or the Seller if the other makes an
assignment for the benefit of creditors, files a voluntary petition in
bankruptcy or seeks or consents to any reorganization or similar relief under
any present or future bankruptcy act or similar law, or is adjudicated a
bankrupt or insolvent, or if a third party commences any bankruptcy,
insolvency, reorganization or similar proceeding involving the other.
11.02. EFFECT OF TERMINATION. In the absence of fraud or willful
breach on the part of Seller, or on the part of Buyer, then Seller will not
have any liability to Buyer, or Buyer will not have any liability to Seller, as
the case may be, under this Agreement if Seller or Buyer terminates this
Agreement pursuant to Section 11.01.
ARTICLE XII
MISCELLANEOUS
12.01. EXPENSES. All fees and expenses incurred by Seller, including
without limitation, legal fees and expenses, in connection with this Agreement
will be borne by Seller and all fees and expenses incurred by Buyer, including,
without limitation, legal fees and expenses, in connection with this Agreement
will be borne by Buyer, provided, however, that Buyer shall be responsible for
all stamp duty which may be due to any jurisdiction or governmental entity as a
result of the Closing of the purchase of the Shares.
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12.02. ASSIGNABILITY; PARTIES IN INTEREST.
(a) Buyer may assign any and all of its rights hereunder
to any affiliate of or any direct or indirect subsidiary of Buyer, and Buyer
shall advise Seller of any such assignment and shall designate such party as
the assignee and transferee of the securities purchased. Any such assignee
shall assume all of Buyer's duties, obligations and undertakings hereunder, but
the assignor shall remain liable thereunder.
(b) Seller may not assign, transfer or otherwise dispose
of any of its rights hereunder without the prior written consent of Buyer.
(c) All the terms and provisions of this Agreement shall
be binding upon, shall inure to the benefit of and shall be enforceable by the
respective heirs, successors, assigns and legal or personal representatives of
the parties hereto.
12.03. ENTIRE AGREEMENT; AMENDMENTS. This Agreement, including the
exhibits, schedules, lists and other documents and writings referred to herein
or delivered pursuant hereto, which form a part hereof, contains the entire
understanding of the parties with respect to its subject matter. There are no
restrictions, agreements, promises, warranties, covenants or undertakings other
than those expressly set forth herein or therein. This Agreement supersedes
all prior agreements and undertakings between the parties with respect to its
subject matter. This Agreement may be amended only by a written instrument
duly executed by all parties or their respective heirs, successors, assigns or
legal personal representatives. Any condition to a party's obligations
hereunder may be waived, but only by a written instrument signed by the party
entitled to the benefits thereof. The failure or delay of any party at any
time or times to require performance of any provision or to exercise its rights
with respect to any provision hereof, shall in no manner operate as a waiver of
or affect such party's right at a later time to enforce the same.
12.04. HEADINGS. The section and paragraph headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretations of this Agreement.
12.05. SEVERABILITY. The invalidity of any term or terms of this
Agreement shall not affect any other term of this Agreement, which shall remain
in full force and effect.
12.06. NOTICES. All notices, request, claims, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if delivered or mailed (registered or certified mail, postage
prepaid, return receipt requested) as follows:
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If to Seller:
Chubb Security Holdings Australia Limited
P. O. Box 1955
149-155 Milton Street
Ashfield NSW 2131
Australia
Attn: Mr. Graeme Francis Pettigrew
If to Buyer:
Corrections Corporation of America
102 Woodmont Boulevard, Suite 800
Nashville, Tennessee 37205
Attn: Doctor R. Crants
With a copy to:
Elizabeth E. Moore, Esq.
Stokes & Bartholomew, P.A.
424 Church Street, Suite 2800
Nashville, Tennessee 37219
or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address shall
only be effective upon receipt.
12.07. GOVERNING LAW. This Agreement shall be governed by and be
interpreted under the laws of Queensland without regard to the conflicts of law
principles thereof. Each party hereby irrevocably submits to the non-exclusive
jurisdiction of any state or federal court located in Queensland over any
action or proceeding to enforce any right under this Agreement. The parties
further acknowledge that irrevocable damage would occur in the event that any
of the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. Accordingly, the parties shall be
entitled to an injunction to prevent breaches of the provisions of this
Agreement and to enforce specifically the terms and provisions hereof in any
court in Queensland. This being in addition to any other remedy to which they
may be entitled at law or equity.
12.08. COUNTERPARTS. This Agreement may be executed simultaneously
in one or more counterparts, with the same effect as if the signatories
executing the several counterparts had executed one counterpart, provided,
however, that the several executed counterparts shall together have been signed
by Buyer and the Seller. All such executed counterparts shall together
constitute one and the same instrument.
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12.09. DISPUTE RESOLUTION.
(a) Any party to this agreement claiming that a dispute
has arisen under this agreement between any of the parties to this agreement
shall give notice to the other party in dispute designating as its
representative in negotiations relating to the dispute a person with authority
to settle the dispute and the other party given written notice shall promptly
give notice in writing to the first party designating as its representative in
negotiations relating to the dispute a person with similar authority.
(b) The designated persons shall within 10 days of the
last designation required by subsection (a), following whatever investigations
each deems appropriate, seek to resolve the dispute.
(c) If the dispute is not resolved within the following
10 days (or within such further period as the representatives may agree is
appropriate) the parties in dispute shall within a further 10 days seek to
agree on a process for resolving the whole or part of the dispute through means
other than litigation, such as further negotiations, mediation, conciliation,
independent expert determination and so on.
(d) The parties acknowledge that the purpose of any
exchange of information or documents or the making of any offer of settlement
pursuant to this Section is to attempt to settle the dispute between the
parties. No party may use any information or documents obtained through the
dispute resolution process established by this Section for any purpose other
than in an attempt to settle a dispute between that party and the other party
to this Agreement.
(e) After the expiration of the time established by this
Section for agreement on a dispute resolution process, any party which has
complied with the provisions of this Section may in writing terminate the
dispute resolution process provided for in this Section and may then commence
Court proceedings relating to the dispute.
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officers of Buyer and by the Seller on the
date first above written.
BUYER:
CORRECTIONS CORPORATION OF AMERICA
By:
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Title:
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15
<PAGE> 17
SELLER:
CHUBB SECURITY HOLDINGS AUSTRALIA
LIMITED
By:
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Title:
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16
<PAGE> 1
EXHIBIT 10.142
NOTE PURCHASE AGREEMENT
BETWEEN
PACIFIC MUTUAL LIFE INSURANCE COMPANY
PM GROUP LIFE INSURANCE COMPANY
AND
CORRECTIONS CORPORATION OF AMERICA
DATED AS OF JUNE 22, 1992
$7,500,000 CONVERTIBLE, EXTENDABLE, SUBORDINATED NOTES
ORIGINALLY DUE SEPTEMBER 30, 1998
<PAGE> 2
This NOTE PURCHASE AGREEMENT (this "Agreement"), dated as of
June 22, 1992, between PACIFIC MUTUAL LIFE INSURANCE COMPANY, a California
corporation ("PM"), PM GROUP LIFE INSURANCE COMPANY ("PMGLIC") and CORRECTIONS
CORPORATION OF AMERICA, a Delaware corporation (the "Corporation").
WHEREAS, the Corporation has duly authorized the issuance of
convertible, extendable, subordinated notes in the aggregate principal amount
of $7,500,000 that are to be convertible into shares of the Corporation's
common stock;
WHEREAS, Purchaser wishes to purchase the convertible,
extendable, subordinated notes from the Corporation, and the Corporation wishes
to sell such convertible, extendable, subordinated notes to Purchaser; and
WHEREAS, Purchaser and the Corporation are entering into this
Agreement to provide for such purchase and sale and to establish various rights
and obligations in connection therewith.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants herein set forth, the parties hereto agree as follows:
1. AUTHORIZATION OF ISSUE OF THE NOTES. The Corporation has duly
authorized the issuance of convertible, extendable, subordinated notes (the
"Notes") in the aggregate principal amount of $7,500,000, to be dated the date
of issuance thereof, to bear interest on the unpaid balance thereof from the
date thereof quarterly at the Coupon Rate and, upon the occurrence of a
Triggering Event and until the date on which such Triggering Event is cured or
waived or until the date that is ninety (90) days from the initial occurrence
of Triggering Event, whichever is later, at the Triggering Event Rate, until
the principal thereof shall become due and payable. The indebtedness evidenced
by the Notes shall be convertible into shares of the Corporation's common
stock, $1.00 par value, upon such terms and at a conversion rate as set forth
in the Notes. The Tranche A Notes shall be substantially in the form attached
hereto as Exhibit A, the Tranche B Notes shall be substantially in the form
attached hereto as Exhibit B, and the Tranche C Notes shall be substantially in
the form attached hereto as Exhibit C. The Tranche A Notes shall be issued to
Purchaser on the Closing Date; the Tranche B Notes shall be issued to Purchaser
on the Tranche B Closing Date; and the Tranche C Notes shall be issued to
Purchaser on the Tranche C Closing Date.
2. SALE AND PURCHASE OF THE NOTES; CLOSING DATES; CONDITIONS
PRECEDENT; CONDITION SUBSEQUENT.
2.1 Sale and Purchase of the Notes. Subject to the terms
and conditions of this Agreement, PM, either directly or through one or more
Affiliates, agrees to purchase, and the Corporation agrees to sell and issue to
PM, or such Affiliates: (i) on the Closing
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<PAGE> 3
Date, a Tranche A Note for a purchase price of Two Million One Hundred
Seventy-Five Thousand Dollars ($2,175,000); (ii) on the Tranche B Closing Date,
a Tranche B Note for a purchase price of Two Million One Hundred Seventy-Five
Thousand Dollars (2,175,000); and (iii) at PM's sole option, on the Tranche C
Closing Date, a Tranche C Note for a purchase price of Two Million One Hundred
Fifty Thousand Dollars ($2,150,000), for a total purchase price of Six Million
Five Hundred Thousand Dollars ($6,500,000). Subject to the terms and
conditions of this Agreement, PMGLIC, either directly or through one or more
Affiliates, agrees to purchase, and the Corporation agrees to sell and issue to
PMGLIC, or such Affiliates: (i) on the Closing Date, a Tranche A Note for a
purchase price of Three Hundred Twenty-Five Thousand Dollars ($325,000); (ii)
on the Tranche B Closing Date, a Tranche B Note for a purchase price of Three
Hundred Twenty-Five Thousand Dollars ($325,000); and (iii) at PMGLIC's sole
option, on the Tranche C Closing Date, a Tranche C Note for a purchase price of
Three Hundred Fifty Thousand Dollars ($350,000), for a total purchase price of
One Million Dollars ($1,000,000).
2.2 Closing Date; Tranche B Closing Date; Tranche C
Closing Date. The closing of the sale and purchase of the Tranche A Notes
shall take place at the offices of Brobeck, Phleger & Harrison, 550 South Hope
Street, Los Angeles, California 90071, counsel to Purchaser at 10:00 a.m.,
local time, on June 22, 1992 or at such other time, date, or place as the
Corporation and Purchaser shall mutually agree (which time, date, and place are
referred to in this Agreement as the "Closing Date"). To exercise their
respective rights to cause the issuance and sale of the Tranche B Notes, the
Corporation or the Purchaser must provide the other with a Tranche B Notice at
least five (5) Business Days days prior to the proposed Tranche B Closing Date
which Tranche B Notice shall specify the proposed Tranche B Closing Date. The
closing of the sale and purchase of the Tranche B Notes shall take place on the
Tranche B Closing Date so specified in the Tranche B Notice and at such time
and place on such date as the Corporation and Purchaser shall mutually agree.
To exercise its right to cause the issuance and sale of the Tranche C Notes, if
in its sole and absolute discretion it determines to do so, the Purchaser must
provide the Corporation with a Tranche C Notice at least five (5) Business Days
days prior to the proposed Tranche C Closing Date which Tranche C Notice shall
specify the proposed Tranche C Closing Date. The closing of the sale and
purchase of the Tranche C Notes shall take place on the Tranche C Closing Date
so specified in the Tranche C Notice and at such time and place on such date as
the Corporation and Purchaser shall mutually agree.
2.3 Closing Date Conditions. Purchaser's obligation to
purchase the Tranche A Notes on the Closing Date shall be subject to the
performance by the Corporation of its agreements hereunder that by the terms
hereof are to be performed at or prior to the time of delivery of the Tranche A
Notes and to the following further conditions precedent:
(i) Closing Date. The Closing Date shall
occur on or before June 26, 1992;
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<PAGE> 4
(ii) Closing Certificate. Purchaser shall
have received a certificate dated the Closing Date, signed by the
President or a Vice President of the Corporation, to the effect that:
(i) the representations and warranties of the Corporation set forth in
Sections 4.1 through 4.22 are true and correct in all material
respects on and with respect to the Closing Date; (ii) the Corporation
has performed all of its obligations hereunder that are to be
performed on or prior to the Closing Date; and (iii) no Unmatured
Event of Default or Event of Default has occurred and is continuing;
(iii) Legality. The Tranche A Notes shall
qualify as a legal investment for Purchaser under the laws and
regulations of each jurisdiction to which Purchaser is subject
(without reference to any so- called "basket" provision which permits
the making of an investment without restrictions to the character of
the particular investment being made) and the purchase of and payment
for the Tranche A Notes shall not be prohibited by any applicable law
or governmental regulation.
(iv) Satisfactory Proceedings. All corporate
proceedings taken in connection with the transactions contemplated by
this Agreement, and all documents necessary to the consummation
thereof, shall be satisfactory in form and substance to Purchaser and
special counsel to Purchaser, and Purchaser shall have received a copy
(executed or certified as may be appropriate) of all documents or
corporate proceedings taken in connection with the consummation of
said transactions, including the following:
a. Certified copies of the
Certificate of Incorporation and By-laws of the Corporation;
b. Certified copies of resolutions
of the Board of Directors of the Corporation authorizing the
execution, delivery, and performance of this Agreement, the
Notes, the Registration Rights Agreement, and any other
documents provided for in this Agreement; and
c. A certificate of the Secretary of
the Corporation certifying the names of the officer or
officers of the Corporation authorized to sign this Agreement,
the Notes, the Registration Rights Agreement, and any other
documents provided for in this Agreement, together with a
sample of the true signature of each such officer;
(v) Legal Opinion. Purchaser shall have
received from Stokes & Bartholomew and Irell & Manella, counsel and
local counsel to the Corporation, opinion letters dated the Closing
Date, in form and substance satisfactory to Purchaser and their
counsel, and covering the matters set forth in Exhibit D hereto;
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<PAGE> 5
(vi) Issuance of the Tranche A Notes. The
Corporation shall have executed and delivered the Tranche A Notes to
Purchaser or their nominees;
(vii) Registration Rights Agreement. The
Corporation and Purchaser shall have entered into a registration
rights agreement in the form of Exhibit E hereto (the "Registration
Rights Agreement");
(viii) Closing Fee. The Corporation shall pay to
Purchaser a closing fee of $75,000 (net of any commitment delivery fee
($25,000) or commitment acceptance fee ($50,000) previously paid to
Purchaser) by wire transfer of immediately available funds;
(ix) No Material Adverse Change. No material
adverse change in the business, condition, or operations (financial or
otherwise) of the Corporation and its Subsidiaries taken as a whole
from that set forth in the balance sheet as of March 31, 1992,
included in the SEC Reports, other than changes disclosed to Purchaser
in writing prior to the execution and delivery by Purchaser of this
Agreement, shall have occurred;
(x) Approvals and Consents. The Corporation
shall have duly received all authorizations, consents, approvals,
licenses, franchises, permits, and certificates by or of all federal,
state, and local governmental authorities necessary for the issuance
of the Tranche A Notes;
(xi) Payment of Legal Fees. The Corporation
shall have reimbursed the Purchaser in full for the fees and expenses
of its counsel, Brobeck, Phleger & Harrison, incurred in connection
with the preparation, negotiation, and execution of this Agreement,
the Notes, the Registration Rights Agreement, and any other documents
executed in connection herewith;
(xii) Representations and Warranties. The
representations and warranties of the Corporation contained in this
Agreement shall be true and correct in all respects on and as of the
Closing Date, as though made on and as of such date (except to the
extent that such representations and warranties relate solely to an
earlier date); and
(xiii) Events of Default. No Unmatured Event of
Default or Event of Default shall have occurred and be continuing on
the Closing Date, nor shall either result from the purchase and sale
of the Tranche A Notes.
2.4 Waiver of Conditions. If, on the Closing Date, the
Corporation fails to deliver the Tranche A Notes to Purchaser or if any of the
other conditions specified in Section 2.3 have not been satisfied, Purchaser
shall be relieved of all further obligations under this Agreement. Without
limiting the foregoing, if the conditions specified in
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<PAGE> 6
Section 2.3 have not been satisfied, Purchaser may waive compliance by the
Corporation with any such condition to such extent as it may in its sole
discretion determine. Nothing in this Section 2.4 shall operate to relieve the
Corporation of any of its obligations hereunder or to waive any of Purchaser's
rights against the Corporation occassioned by any such breach.
2.5 Condition Subsequent. The following shall be a condition
subsequent to the purchase and sale of the Tranche A Notes and the failure to
satisfy the following shall constitute an Event of Default hereunder:
(i) Escrow Agreement. Withing thirty (30)
days of the Closing Date, the Corporation, the Purchaser, and NationsBank (or
another third party acceptable to Purchaser in its sole and absolute
discretion) shall have entered into an escrow agreement (the "Escrow
Agreement"), together with appropriate financing statements signed by the
Corporation, in each case in form and substance satisfactory to Purchaser.
2.6 Tranche B Closing Date Conditions. Purchaser's
obligation to purchase the Tranche B Notes on the Tranche B Closing Date shall
be subject to the performance by the Corporation of its agreements hereunder
that by the terms hereof are to be performed at or prior to the time of
delivery of the Tranche B Notes and to the following further conditions
precedent:
(i) Closing Certificate. Purchaser shall have
received a certificate dated the Tranche B Closing Date, signed by the
President or a Vice President of the Corporation, to the effect that:
(i) the representations and warranties of the Corporation set forth in
Sections 4.1 through 4.22 are true and correct in all material
respects on and with respect to the Tranche B Closing Date (except to
the extent that such representations and warranties relate solely to
an earlier date); (ii) the Corporation has performed all of its
obligations hereunder that are to be performed on or prior to the
Tranche B Closing Date; and (iii) no Unmatured Event of Default or
Event of Default has occurred and is continuing;
(ii) Legality. The Tranche B Notes shall
qualify as a legal investment for Purchaser under the laws and
regulations of each jurisdiction to which Purchaser is subject
(without reference to any so-called "basket" provision which permits
the making of an investment without restrictions to the character of
the particular investment being made) and the purchase of and payment
for the Tranche B Notes shall not be prohibited by any applicable law
or governmental regulation.
(iii) Satisfactory Proceedings. All corporate
proceedings taken in connection with the issuance of the Tranche B
Notes, shall be satisfactory in form and substance to Purchaser and
special counsel to Purchaser, and Purchaser shall have received a copy
(executed or certified as may be appropriate) of all documents
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<PAGE> 7
or corporate proceedings taken in connection with the consummation of said
issuance, including the following:
a. Certified copies of the
Certificate of Incorporation and By-laws of the Corporation or
a certificate of the Secretary of the Corporation certifying
that such documents have not been changed from the copies that
were provided to Purchaser on the Closing Date;
b. Certified copies of resolutions
of the Board of Directors of the Corporation authorizing the
execution, delivery, and performance of this Agreement, the
Notes, the Registration Rights Agreement, and any other
documents provided for in this Agreement or a certificate of
the Secretary of the Corporation certifying that such
resolutions have not been changed from the copies that were
provided to Purchaser on the Closing Date and that such
resolutions remain in full force and effect; and
c. A certificate of the Secretary of
the Corporation certifying the names of the officer or
officers of the Corporation authorized to sign this Agreement,
the Notes, the Registration Rights Agreement, and any other
documents provided for in this Agreement, together with a
sample of the true signature of each such officer or a
certificate of the Secretary of the Corporation certifying
that such certifications have not been changed from the copies
that were provided to Purchaser on the Closing Date and that
such resolutions remain in full force and effect;
(iv) Legal Opinion. Purchaser shall have
received from Stokes & Bartholomew and Irell & Manella, counsel and
local counsel to the Corporation, updated opinion letters dated the
Tranche B Closing Date, in the form and substance of the opinions
rendered by such counsel on the Closing Date;
(v) Issuance of the Tranche B Notes. The
Corporation shall have executed and delivered the Tranche B Notes to
Purchaser or their nominees;
(vi) Tranche B Closing Fee. The Corporation
shall pay to Purchaser a closing fee of $75,000 by wire transfer of
immediately available funds;
(vii) No Material Adverse Change. No material
adverse change in the business, condition, or operations (financial or
otherwise) of the Corporation and its Subsidiaries taken as a whole
from that set forth in the balance sheet as of March 31, 1992,
included in the SEC Reports, other than changes disclosed to Purchaser
in writing prior to the execution and delivery by Purchaser of this
Agreement, shall have occurred;
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<PAGE> 8
(viii) Approvals and Consents. The Corporation
shall have duly received all authorizations, consents, approvals,
licenses, franchises, permits, and certificates by or of all federal,
state, and local governmental authorities necessary for the issuance
of the Tranche B Notes;
(ix) Payment of Legal Fees. The Corporation
shall have reimbursed the Purchaser in full for the fees and expenses
of its counsel, Brobeck, Phleger & Harrison, incurred in connection
with the preparation, execution, and delivery of the Escrow Agreement
and the Tranche B Notes;
(x) Representations and Warranties. The
representations and warranties of the Corporation contained in this
Agreement shall be true and correct in all respects on and as of the
Tranche B Closing Date, as though made on and as of such date (except
to the extent that such representations and warranties relate solely
to an earlier date);
(xi) Events of Default. No Unmatured Event of
Default or Event of Default shall have occurred and be continuing on
the Tranche B Closing Date, nor shall either result from the purchase
and sale of the Tranche B Notes;
(xii) Escrow Agreement. The Corporation shall
have deposited into the escrow account created under and pursuant to
the Escrow Agreement (either from the proceeds of sale from the sale
of its Estancia Facility or otherwise) the sum of not less than Five
Million Dollars ($5,000,000); provided, however, that the Corporation
shall be able to satisfy this condition in the event that it has
deposited into the escrow account created under and pursuant to the
Escrow Agreement (either from the proceeds of sale from the sale of
its Estancia Facility or otherwise) the sum of not less than Two
Million Five Hundred Thousand Dollars ($2,500,000) and if it instructs
the Purchaser to deposit up to Two Million Five Hundred Thousand
Dollars ($2,500,000) of the proceeds from the sale of the Tranche B
Notes into such escrow account so that after giving effect to such
additional deposit the total amount of funds contained in such escrow
account is not less than Five Million Dollars ($5,000,000); and
(xiii) Tranche B Closing Date. The Tranche B
Closing Date shall occur on or before December 15, 1992.
2.7 Waiver of Conditions. If, on the Tranche B Closing
Date, the Corporation fails to deliver the Tranche B Notes to Purchaser or if
any of the other conditions specified in Section 2.6 have not been satisfied,
Purchaser shall be relieved of all further obligations under this Agreement.
Without limiting the foregoing, if the conditions specified in Section 2.6 have
not been satisfied, Purchaser may waive compliance by the Corporation with any
such condition to such extent as it may in its sole discretion determine, it
being expressly understood and agreed that the Corporation is to use its best
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<PAGE> 9
efforts to satisfy the conditions specified in Section 2.6 and the Corporation
is obligated to accept the financing provided by the purchase and sale of the
Tranche B Notes if Purchaser is prepared to provide it. Nothing in this
Section 2.7 shall operate to relieve the Corporation of any of its obligations
hereunder or to waive any of Purchaser's rights against the Corporation
occassioned by any such breach.
2.8 Tranche C Closing Date Conditions. Purchaser shall have
no obligation to purchase the Tranche C Notes unless it, in its sole and
absolute discretion it determines to do so. If it does so determine to
purchase the Tranche C Notes then its obligation to purchase the Tranche C
Notes on the Tranche C Closing Date shall be subject to the performance by the
Corporation of its agreements hereunder that by the terms hereof are to be
performed at or prior to the time of delivery of the Tranche C Notes and to the
following further conditions precedent:
(i) Tranche C Closing Date. The Tranche C
Closing Date shall occur on or before December 15, 1992;
(ii) Closing Certificate. Purchaser shall have
received a certificate dated the Tranche C Closing Date, signed by the
President or a Vice President of the Corporation, to the effect that:
(i) the representations and warranties of the Corporation set forth in
Sections 4.1 through 4.22 are true and correct in all material
respects on and with respect to the Tranche C Closing Date (except to
the extent that such representations and warranties relate solely to
an earlier date); (ii) the Corporation has performed all of its
obligations hereunder that are to be performed on or prior to the
Tranche C Closing Date; and (iii) no Unmatured Event of Default or
Event of Default has occurred and is continuing;
(iii) Legality. The Tranche C Notes shall
qualify as a legal investment for Purchaser under the laws and
regulations of each jurisdiction to which Purchaser is subject
(without reference to any so- called "basket" provision which permits
the making of an investment without restrictions to the character of
the particular investment being made) and the purchase of and payment
for the Tranche C Notes shall not be prohibited by any applicable law
or governmental regulation.
(iii) Satisfactory Proceedings. All corporate
proceedings taken in connection with the issuance of the Tranche C
Notes, shall be satisfactory in form and substance to Purchaser and
special counsel to Purchaser, and Purchaser shall have received a copy
(executed or certified as may be appropriate) of all documents or
corporate proceedings taken in connection with the consummation of
said issuance, including the following:
d. Certified copies of the
Certificate of Incorporation and By-laws of the Corporation or
a certificate of the Secretary of the Corporation certifying
that such documents have not been changed from the copies that
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<PAGE> 10
were provided to Purchaser on the Closing Date or the Tranche
B Closing Date, as applicable;
e. Certified copies of resolutions
of the Board of Directors of the Corporation authorizing the
execution, delivery, and performance of this Agreement, the
Notes, the Registration Rights Agreement, and any other
documents provided for in this Agreement or a certificate of
the Secretary of the Corporation certifying that such
resolutions have not been changed from the copies that were
provided to Purchaser on the Closing Date, or the Tranche B
Closing Date, as applicable, and that such resolutions remain
in full force and effect; and
f. A certificate of the Secretary of
the Corporation certifying the names of the officer or
officers of the Corporation authorized to sign this Agreement,
the Notes, the Registration Rights Agreement, and any other
documents provided for in this Agreement, together with a
sample of the true signature of each such officer or a
certificate of the Secretary of the Corporation certifying
that such certifications have not been changed from the copies
that were provided to Purchaser on the Closing Date, or the
Tranche B Closing Date, as applicable, and that such
resolutions remain in full force and effect;
(iv) Legal Opinion. Purchaser shall have
received from Stokes & Bartholomew and Irell & Manella, counsel and
local counsel to the Corporation, updated opinion letters dated the
Tranche C Closing Date, in the form and substance of the opinions
rendered by such counsel on the Closing Date;
(v) Issuance of the Tranche C Notes. The
Corporation shall have executed and delivered the Tranche C Notes to
Purchaser or their nominees;
(vi) Tranche C Closing Fee. The Corporation
shall pay to Purchaser a closing fee of $75,000 by wire transfer of
immediately available funds;
(vii) No Material Adverse Change. No material
adverse change in the business, condition, or operations (financial or
otherwise) of the Corporation and its Subsidiaries taken as a whole
from that set forth in the balance sheet as of March 31, 1992,
included in the SEC Reports, other than changes disclosed to Purchaser
in writing prior to the execution and delivery by Purchaser of this
Agreement, shall have occurred;
(viii) Approvals and Consents. The Corporation
shall have duly received all authorizations, consents, approvals,
licenses, franchises, permits, and certificates by or of all federal,
state, and local governmental authorities necessary for the issuance
of the Tranche C Notes;
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<PAGE> 11
(ix) Payment of Legal Fees. The Corporation
shall have reimbursed the Purchaser in full for the fees and expenses
of its counsel, Brobeck, Phleger & Harrison, incurred in connection
with the preparation, execution, and delivery of the Tranche C Notes;
(x) Representations and Warranties. The
representations and warranties of the Corporation contained in this
Agreement shall be true and correct in all respects on and as of the
Tranche C Closing Date, as though made on and as of such date (except
to the extent that such representations and warranties relate solely
to an earlier date); and
(xi) Events of Default. No Unmatured Event of
Default or Event of Default shall have occurred and be continuing on
the Tranche C Closing Date, nor shall either result from the purchase
and sale of the Tranche C Notes.
2.9 Waiver of Conditions. If, on the Tranche C Closing
Date, the Corporation fails to deliver the Tranche C Notes to Purchaser or if
any of the other conditions specified in Section 2.8 have not been satisfied,
Purchaser shall be relieved of all further obligations under this Agreement.
Without limiting the foregoing, if the conditions specified in Section 2.8 have
not been satisfied, Purchaser may waive compliance by the Corporation with any
such condition to such extent as it may in its sole discretion determine, it
being expressly understood and agreed that the Corporation is to use its best
efforts to satisfy the conditions specified in Section 2.8 and the Corporation
is obligated to accept the financing provided by the purchase and sale of the
Tranche C Notes if Purchaser is prepared to provide it. Nothing in this
Section 2.9 shall operate to relieve the Corporation of any of its obligations
hereunder or to waive any of Purchaser's rights against the Corporation
occassioned by any such breach.
2.10 Effect of Exercise of Certain Mandatory Prepayment
Options. Anything contained herein to contrary notwithstanding, if Purchaser,
or any one of them, exercises the right contained in Section 6(a) of the
Tranche A Notes or the Tranche B Notes, as applicable, to require the
Corporation to prepay such Notes, then, thereafter, the Corporation shall not
be obligated to accept the financing provided by the purchase and sale of the
Tranche B Notes or the Tranche C Notes, as applicable, irrespective of whether
Purchaser is prepared to provide it.
3. DEFINITIONS; CONSTRUCTION.
3.1 Definitions. For purposes of this Agreement,
the following terms shall have the following meanings:
"Affiliate" has the meaning set forth in Rule 12b-2 under the
Exchange Act (as in effect on the date of this Agreement), it being
understood that any limited
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<PAGE> 12
partner of a partnership shall not be an Affiliate of such partnership
solely by virtue of its status as such a limited partner.
"Agreement" shall have the meaning ascribed thereto in the
preamble.
"Business Day" means each Monday, Tuesday, Wednesday,
Thursday, or Friday that is not a day on which banking institutions in
Los Angeles, California are authorized or obligated by law or
executive order to close.
"Capital Lease" means as to any Person any lease or rental of
real or personal property that, under generally accepted accounting
principles, is or will be required to be capitalized on the balance
sheet of such Person.
"Capital Lease Obligation" means any rental obligation in
respect of a Capital Lease taken at the amount thereof accounted for
as indebtedness (net of interest expense) in accordance with generally
accepted accounting principles.
"Certificate of Designation" means the Certificate of
Designation that sets forth the rights and preferences of the
Preferred Stock.
"Closing Date" shall have the meaning ascribed thereto in
Section 2.2 hereof.
"Commission" means the United States Securities and Exchange
Commission.
"Common Stock" means the common stock of the Corporation, par
value $l.00 per share.
"Confidential Information" shall have the meaning ascribed
thereto in Section 9.1 hereof.
"Consolidated Fixed Charge Coverage" means at the end of any
fiscal quarter the quotient of (a) twice the Consolidated Operating
Cash Flow for such fiscal quarter and the immediately preceding fiscal
quarter, divided by (b) Consolidated Fixed Charges for the next
succeeding four fiscal quarters.
"Consolidated Fixed Charges" means, for any period, the sum of
Consolidated Rentals and Consolidated Interest Expense for such
period. In the event that Consolidated Fixed Charges are to be
determined for any future period or periods and any component of
Consolidated Rentals or Consolidated Interest Expense may fluctuate or
is determined on the basis of a rate or criterion that may fluctuate
during such period, Consolidated Rentals or Consolidated Interest
Expense, as the case may be, shall be calculated assuming that such
amount, rate, or criterion in effect on the date such calculation is
made shall be in effect throughout such period.
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<PAGE> 13
"Consolidated Interest Expense" means, for any period, total
interest, whether paid or accrued (including that attributable to
Capital Leases), of the Corporation and the Restricted Subsidiaries on
a consolidated basis, including all amounts payable on the First
Mortgage Notes and all commissions, discounts, and other fees and
charges owed with respect to letters of credit and banker's acceptance
financing and net costs under interest rate exchange or cap agreements
providing interest rate protection, all as determined in conformity
with generally accepted accounting principles.
"Consolidated Net Income" means, for any period, the net
earnings (or losses) of the Corporation and the Restricted
Subsidiaries, on a consolidated basis, for such period taken as a
single accounting period determined in conformity with generally
accepted accounting principles consistently applied, but excluding:
a. any gain that under generally accepted accounting
principles consistently applied would be properly classified
as an extraordinary gain;
b. any gain arising from a sale of capital assets that
is not made in the ordinary course of business of the
Corporation or its Restricted Subsidiaries;
c. any gain arising from any write-up of assets;
d. the proceeds of any life insurance policy;
e. earnings of any Person substantially all of the
assets of that have been acquired in any manner (whether
through merger or otherwise) to the extent that such earnings
were realized prior to the date of such acquisition; and
f. earnings of any Person to which substantially all the
assets of the Corporation shall have been sold or transferred,
into which the Corporation shall have been merged, or with
which the Corporation shall have been consolidated, to the
extent that such earnings were realized prior to the date of
such transfer, merger, or consolidation.
All losses (including any loss that, under generally accepted
accounting principles consistently applied, would be properly
classified as an extraordinary loss) shall be included in determining
such net earnings (or losses).
"Consolidated Net Worth" means, as of the time of any
determination thereof, the excess of (a) the sum of (i) the par value
(or value stated on the books of the Corporation) of the capital stock
of all classes of the Corporation, plus (or minus in the case of
surplus deficit) (ii) the amount of consolidated surplus, whether
capital or earned, of the Corporation and the Restricted Subsidiaries,
plus (iii) the face amount of the Subordinated Funded Debt, over (b)
the amount of all treasury stock; all determined on a consolidated
basis for the Corporation and the Restricted
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Subsidiaries in accordance with generally accepted accounting
principles consistent with those followed in the preparation of the
financial statements referred to in Section 4.5, including the making
of appropriate deductions for minority interests, if any, in the
Restricted Subsidiaries.
"Consolidated Operating Cash Flow" means for any period,
without duplication, (a) Consolidated Net Income plus (b) to the
extent deducted in computing Consolidated Net Income, depreciation and
amortization and other similar non-cash charges, accrued income tax
expense and interest expense of the Corporation and the Restricted
Subsidiaries for such period.
"Consolidated Rentals" means, for any period, all amounts
payable by the Corporation and any Restricted Subsidiary as lessee or
sublessee relating to Operating Leases.
"Consolidated Senior Funded Debt" means all Funded Debt other
than Subordinated Funded Debt.
"Consolidated Total Capitalization" means, as of the time of
any determination thereof, the sum of Consolidated Senior Funded Debt
and Consolidated Net Worth.
"Conversion Shares" means the shares of Common Stock issuable
upon conversion of the indebtedness evidenced by the Notes.
"Convertible Notes" means the Corporation's (a) $7,000,000
aggregate principal amount 8.5% Convertible Subordinated Notes due
November 7, 1999, and (b) the Corporation's $2,700,000 aggregate
principal amount 8.5% Convertible Subordinated Notes due on various
dates, the latest of which is January 16, 2000.
"Corporation" shall have the meaning ascribed thereto in the
preamble to this Agreement and shall include the Corporation's
permitted successors and assigns.
"Coupon Rate" means (i) with respect to the Tranche A Notes
and the Tranche B Notes, eight and one-half percent (8.5%) per annum;
and (ii) with respect to the Tranche C Notes, the greater of: (a)
eight and one-half percent (8.5%) per annum, or (b) two and
nine-tenths percentage points (2.90) above the Treasury Rate as of the
Tranche C Closing Date for notes having a maturity of three years from
the date of issuance thereof.
"ERISA" means the Employee Retirement Income Security Act of
1974.
"Escrow Agreement" shall have the meaning ascribed thereto in
Section 2.5(i) hereof.
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<PAGE> 15
"Estancia Facility" means the Corporation's Torrance County
Detention Center located in Estancia, New Mexico.
"Event of Default" shall have the meaning set forth in Section
7.1.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any similar federal statute, and the rules and regulations
of the Commission thereunder, all as the same shall be in effect at
the time. Reference to a particular section of the Exchange Act shall
include reference to the comparable section, if any, of any successor
federal statute.
"Federal Government Contract" means a contract between the
Corporation and the federal government of the United States of America
or any subdivision or agency thereof.
"Foreign Government Contract" means a contract between the
Corporation and any foreign (other nation) government or any
subdivision or agency thereof.
"First Mortgage Note Purchase Agreement" means the Note
Purchase Agreement dated as of December 6, 1990, as amended, between
the Corporation and the purchasers of the First Mortgage Notes listed
therein.
"First Mortgage Notes" means the Corporation's $20,000,000
aggregate principal amount of 11.08% first mortgage notes due November
30, 2000 issued pursuant to the First Mortgage Note Purchase
Agreement.
"Funded Debt" means and includes without duplication (a) any
obligation payable more than one year from the date of the creation
thereof (including the current portion of Funded Debt), that under
generally accepted accounting principles is shown on the balance sheet
as a liability (including obligations under Capital Leases and
excluding reserves for deferred income taxes and other reserves to the
extent that such reserves do not constitute an obligation), (b)
guarantees, endorsements (other than endorsements of negotiable
instruments for collection in the ordinary course of business), and
other contingent liabilities (whether direct or indirect) in
connection with the obligations, stock, or dividends of any Person,
including obligations under contracts to supply funds to or in any
other manner invest in any Person, (c) obligations under any contract
to purchase, sell, or lease (as lessee or lessor) property or to
purchase or sell services, primarily for the purpose of enabling a
Person to make payment of obligations or to assure the holder of such
obligations against loss including obligations under any contract for
the purchase of materials, supplies, or other property or services if
such contract (or any related document) requires that payment for such
materials, supplies, or other property or services shall be made
regardless of whether delivery of such materials, supplies, or other
property or services is ever made or tendered, (d) obligations under
any
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<PAGE> 16
contract to pay or purchase obligations of a Person, or to advance or
supply funds for the payment or purchase of such obligations, and (e)
any agreement to assure a creditor of a Person against loss.
"Government Contract" means any Federal Government Contract,
Foreign Government Contract, or any State Government Contract.
"indemnified party" shall have the meaning ascribed thereto in
Section 10.1 hereof.
"indemnifying party" shall have the meaning ascribed thereto
in Section 10.1 hereof.
"Margin Stock" shall have the meaning given such term in
Regulation G (12 CFR part 207) of the Board of Governors of the
Federal Reserve System.
"Notes" shall have the meaning ascribed thereto in Section 1
hereof.
"Operating Lease" means any lease of real, personal, or mixed
property that is not a Capital Lease.
"Permitted Businesses" means the design, construction,
ownership, start up, management, or operation of detention and
correctional facilities together with associated consulting and
educational services.
"Person" means any individual, partnership, joint venture,
corporation, trust, unincorporated organization, government, or
department or agency of a government.
"PM" shall have the meaning ascribed thereto in the preamble
to this Agreement.
"PMGLIC" shall have the meaning ascribed thereto in the
preamble to this Agreement.
"Preferred Stock" means the Corporation's Series A Cumulative
Convertible Preferred Stock, $1.00 par value per share.
"Purchaser" shall mean PM and PMGLIC, individually and
collectively, and shall include PM's and PMGLIC's permitted successors
and assigns.
"Registration Rights Agreement" shall have the meaning
ascribed thereto in Section 2.3(vii) hereof.
"Representative" shall have the meaning ascribed thereto in
Section 7.1 hereof.
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<PAGE> 17
"Restricted Subsidiary" means a Subsidiary of the Corporation
that is (a) organized under the laws of any state of the United States
of America and at least 80% of the total combined voting power of all
classes of Voting Stock shall at the time as of which any
determination is being made, be owned by the Corporation either
directly or through any Restricted Subsidiary, (b) engaged in a
Permitted Business and (c) whose assets and operations are located
within the United States of America.
"Security" or "Securities" means the Notes or the Conversion
Shares.
"SEC Reports" shall have the meaning ascribed thereto in
Section 4.4 hereof.
"Securities Act" means the Securities Act of 1933.
"Senior Indebtedness" shall have the meaning ascribed to such
term in the Notes.
"State Government Contract" means a contract between the
Corporation or any of its Subsidiaries and the government of any
state, county, or municipality or any political subdivision or agency
thereof.
"Subordinated Funded Debt" means the indebtedness of the
Corporation evidenced by the Convertible Notes.
"Subsidiary" means any corporation, partnership, or other
entity of which a majority of the total combined voting power of all
classes of Voting Stock at the time as of which any determination is
being made, is owned by a Person either directly, through one or more
Subsidiaries or both.
"Tranche B Closing Date" means the Business Day specified by
the Corporation or PM, on behalf of the Purchaser, as applicable, in
compliance with the provisions hereof, as the date on which all of the
Tranche B Notes are to be issued by the Corporation and purchased by
Purchaser in accordance with the provisions hereof.
"Tranche B Notice" means a written notice substantially in the
form of the notice attached hereto as Exhibit F and incorporated
herein by this reference.
"Tranche C Closing Date" means the Business Day specified by
PM, on behalf of the Purchaser, in compliance with the provisions
hereof, as the date on which all of the Tranche C Notes are to be
issued by the Corporation and purchased by Purchaser in accordance
with the provisions hereof.
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<PAGE> 18
"Tranche C Notice" means a written notice substantially in the
form of the notice attached hereto as Exhibit G and incorporated
herein by this reference.
"Tranche A Note" means any one or more of the Notes issued on
the Closing Date or any substitute or replacement therefor; the
aggregate amount of the Tranche A Notes shall be Two Million Five
Hundred Thousand Dollars ($2,500,000).
"Tranche B Note" means any one or more of the Notes issued on
the Tranche B Closing Date or any substitute or replacement therefor;
the aggregate amount of the Tranche B Notes shall be Two Million Five
Hundred Thousand Dollars ($2,500,000).
"Tranche C Note" means any one or more of the Notes issued on
the Tranche C Closing Date or any substitute or replacement therefor;
the aggregate amount of the Tranche C Notes shall be Two Million Five
Hundred Thousand Dollars ($2,500,000).
"Transfer" shall have the meaning ascribed thereto in Section
8.4 hereof.
"Treasury Rate" shall mean, as of the date of any
determination thereof, the rate per annum, as determined by Purchaser,
equal to the arithmetic average of the two most recent weekly average
bid-side yields on issues of United States Treasury Securities, as
published by the Federal Reserve Board for release on the first
business day of the week in which such determination is made in its
Statistical Release H.15 (519) under the heading "Treasury Constant
Maturities" for the two calendar weeks ending on the two Wednesdays
immediately preceding the date of such release or, if such average is
not published for such periods, of such reasonably comparable index as
may be designated for such period by Purchaser.
"Triggering Event" means the occurrence of any Unmatured Event
of Default of Event of Default described in clauses (i), (ii), and
(iv) through (x), inclusive, of Section 7.1. For purposes of
determining the period during which the Triggering Event Rate shall be
in effect, a Triggering Event shall not be deemed to have occurred
until the date on which Purchaser shall have given notice of the
occurrence thereof to the Corporation.
"Triggering Event Rate" means (i) with respect to the Tranche
A Notes and the Tranche B Notes, ten and one-half percent (10.5%) per
annum; and (ii) with respect to the Tranche C Notes, the greater of:
(a) ten and one-half percent (10.5%) per annum, or (b) two and
nine-tenths percentage points (2.90) above the Treasury Rate as of the
Tranche C Closing Date for notes having a maturity of three years from
the date of issuance thereof.
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<PAGE> 19
"Unmatured Event of Default" shall mean any event or
condition, the occurrence of which would, with the lapse of time or
the giving of notice, or both, constitute an Event of Default.
"Voting Stock" means, when used with respect to any Person,
any shares of stock or other ownership interests of such Person having
general voting power under ordinary circumstances to elect a majority
of the board of directors of such Person (irrespective of whether at
the time stock or ownership interests of any other class or classes
shall have or might have voting power by reason of the happening of
any contingency).
"Warrants" means the warrants dated as of December 6, 1990
evidencing the right to purchase 250,000 shares of Common Stock of the
Corporation between the Corporation and the purchasers of the First
Mortgage Notes.
3.2 Construction. Unless the context of this
Agreement clearly requires otherwise, references to the plural include the
singular and to the singular include the plural, the part includes the whole,
the terms "include" and "including" are not limiting, and the term "or" has,
except where otherwise indicated, the inclusive meaning represented by the
phrase "and/or". The words "hereof," "herein," "hereby," "hereunder" and
similar terms in this Agreement refer to this Agreement as a whole and not to
any particular provision of this Agreement. Section, subsection, clause,
exhibit, and schedule references are to this Agreement unless otherwise
specified. Any reference herein to this Agreement, the Notes, or the
Registration Rights Agreement includes any and all alterations, amendments,
changes, extensions, modifications, renewals, or supplements thereto or
thereof, as applicable.
3.3 Changes in Acccounting Principles. If any changes in
accounting principles from those in effect at the time of preparation of the
financial statements referred to in Section 4.5 are hereafter occasioned by the
promulgation of rules, regulations, pronouncements, and opinions by or required
by the Financial Accounting Standards Board or the American Institute of
Certified Public Accountants (or successors thereto or organizations with
similar functions) result in a change in the method of calculation of financial
covenants, standards, or terms found in this Agreement or there is any change
in the Corporation's fiscal quarters or fiscal year, the parties hereto agree
to enter into negotiations to amend this Agreement so as to equitably reflect
such changes with the desired result that the criteria for evaluating the
financial condition of the Corporation shall be the same after such changes as
if such changes had not been made.
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<PAGE> 20
4. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION. The
Corporation represents and warrants to Purchaser, as of the date hereof, and as
of the Closing Date, the Tranche B Closing Date, and the Tranche C Closing
Date, that:
4.1 Organization and Qualification. Each of
the Corporation and its Subsidiaries is a corporation duly organized
and existing in good standing under the laws of the jurisdiction in
which it is incorporated and has the power to own its respective
property and to carry on its respective business as now being
conducted. Each of the Corporation and its Subsidiaries is duly
qualified as a foreign corporation to do business and in good standing
in every jurisdiction in which the nature of the respective business
conducted or property owned by it makes such qualification necessary
and where the failure so to qualify would have a material adverse
effect on the business or financial position of the Corporation and
its Subsidiaries taken as a whole.
4.2 Due Authorization. The execution and
delivery of this Agreement and the Registration Rights Agreement and
the issuance and sale of the Notes and the Conversion Shares by the
Corporation and compliance by the Corporation with all the provisions
of this Agreement, the Registration Rights Agreement, the Notes, and
the Conversion Shares (i) are within the corporate power and authority
of the Corporation; (ii) do not require the approval or consent of any
stockholders of the Corporation; and (iii) have been authorized by all
requisite corporate proceedings on the part of the Corporation. This
Agreement, the Notes, and the Registration Rights Agreement have been
duly executed and delivered by the Corporation and constitute valid
and binding agreements of the Corporation enforceable in accordance
with their respective terms, except that (i) such enforcement may be
subject to bankruptcy, insolvency, reorganization, moratorium, or
other similar laws now or hereafter in effect relating to creditors
rights, and (ii) the remedy of specific performance and injunctive and
other form of equitable relief may be subject to equitable defenses
and to the discretion of the court before which any proceeding
therefor may be brought. The Corporation has furnished to Purchaser
true and correct copies of the Corporation's current Certificate of
Incorporation and By-laws.
4.3 Subsidiaries. The Subsidiaries of the
Corporation, together with their jurisdiction of incorporation, are
set forth on Schedule 4.3 hereto.
4.4 SEC Reports. The Corporation has filed
all proxy statements, reports, and other documents required to be
filed by it under the Exchange Act and the Corporation has furnished
Purchaser copies of its Annual Report on Form 10-K for the fiscal year
ended December 31, 1991, and all proxy statements and reports under
the Exchange Act filed by the Corporation after such date, each as
filed with the Commission (collectively, the "SEC Reports"). Each SEC
Report was in
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<PAGE> 21
substantial compliance with the requirements of its respective report
form and did not, on the date of filing, contain any untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
4.5 Financial Statements. The financial
statements (including any related schedules or notes) included in the
SEC Reports have been prepared in accordance with generally accepted
accounting principles consistently followed (except as indicated in
the notes thereto) throughout the periods involved and fairly present
the consolidated financial condition, results of operations, and
changes in stockholders' equity of the Corporation and its
Subsidiaries as of the dates thereof and for the periods ended on such
dates (in each case subject, as to interim statements, to changes
resulting from year-end adjustments (none of which will be material in
amount or effect)), and the Corporation has no material liabilities,
contingent or otherwise, not reflected in the balance sheet as of
March 31, 1992 included in the SEC Reports or otherwise referred to in
the SEC Reports or otherwise disclosed to Purchaser in writing prior
to the execution by Purchaser of this Agreement, other than any such
liabilities incurred in the ordinary course of business since March
31, 1992. There has been no material adverse change in the business,
condition, or operations (financial or otherwise) of the Corporation
and its Subsidiaries taken as a whole from that set forth in the
balance sheet as of March 31, 1992 included in the SEC Reports, other
than changes disclosed or referred to in the SEC Reports or otherwise
disclosed to Purchaser in writing prior to the execution by Purchaser
of this Agreement.
4.6 Actions Pending; Compliance with Law.
Except as disclosed on Schedule 4.6 hereto, there is no action, suit,
criminal investigation, or proceeding pending or, to the knowledge of
the Corporation, threatened by any public official or governmental
authority, against the Corporation or any of its Subsidiaries or any
of their respective properties or assets by or before any court,
arbitrator, or governmental body, department, commission, board,
bureau, agency, or instrumentality, which questions the validity of
this Agreement, the Notes, the Registration Rights Agreement, or the
Conversion Shares or any action taken or to be taken pursuant hereto
or thereto, or, except as set forth in the SEC Reports, that are
reasonably likely to result in any material adverse change in the
business or financial condition of Corporation, and neither the
Corporation nor any of its Subsidiaries is in default in any material
respect with respect to any judgment, order, writ, injunction, decree,
or award, and, except as disclosed in the SEC Reports, the businesses
of the Corporation and its Subsidiaries are in compliance in all
material respects with applicable federal, state, local, and foreign
governmental laws and regulations and all Government Contracts, all to
the extent necessary to avoid any material adverse effect on the
business, properties, or condition (financial or other) of the
Corporation and its Subsidiaries taken as a whole.
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4.7 Title to Properties; Insurance. The
Corporation and its Subsidiaries have good and valid title to their
respective properties and assets, free of all liens and encumbrances
other than those referred to in the financial statements of the
Corporation (or the notes thereto) for the quarter ended March 31,
1992, included in the SEC Reports, except in each case for such
defects in title and such other liens and encumbrances that are
otherwise disclosed or referred to in the SEC Reports or that do not
in the aggregate materially detract from the value to the Corporation
of the properties and assets of the Corporation and its Subsidiaries
taken as a whole. The Corporation and its Subsidiaries maintain
insurance in such amounts (to the extent available in the public
market), including self-insurance, retainage, and deductible
arrangements, and of such a character as the Corporation believes is
reasonable for companies engaged in the same or similar business.
4.8 Governmental Consents, Etc. The
Corporation is not required to obtain any consent, approval, or
authorization of, or to make any declaration or filing with, any
governmental authority as a condition to or in connection with the
valid execution, delivery, and performance of this Agreement, the
Notes, or the Registration Rights Agreement and the valid offer,
issue, sale, or delivery of the Notes or the Conversion Shares, or the
performance by the Corporation of its obligations in respect thereof,
except for any filings required to effect any registration pursuant to
the Registration Rights Agreement, and filings required pursuant to
state and federal securities laws that will be timely made after the
Closing Date, the Tranche B Closing Date, or the Tranche C Closing
Date, as applicable.
4.9 Holding Corporation Act and Investment
Corporation Act Status. The Corporation is not a "holding company" or
a "public utility company" as such terms are defined in the Public
Utility Holding Corporation Act of 1935. The Corporation is not an
"investment company," or a company "controlled" by an "investment
company," within the meaning of the Investment Corporation Act of 1940.
4.10 Taxes. The Corporation and its
Subsidiaries have filed or caused to be filed all income tax returns
that are required to be filed and have paid or caused to be paid all
taxes as shown on said returns and on all assessments received by it
to the extent that such taxes have become due, except taxes the
validity or amount of which is being contested in good faith by
appropriate proceedings and with respect to which adequate reserves
have been set aside. The federal income tax returns of the
Corporation and its Subsidiaries have been examined and reported on by
the Internal Revenue Service (or closed by applicable statutes) and
all tax liabilities including additional assessments have been
satisfied for all fiscal years prior to and including the fiscal year
ended December 31, 1987. The Corporation and its Subsidiaries have
paid or caused to be paid, or have established reserves that the
Corporation reasonably believes to be adequate in all material
respects, for all federal income tax liabilities and state income tax
liabilities
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applicable to the Corporation and its Subsidiaries for all fiscal
years that have not been examined and reported on by the taxing
authorities (or closed by applicable statutes).
4.11 Conflicting Agreements and Charter Provisions.
Neither the Corporation nor its Subsidiaries is a party to any
contract or agreement or subject to any charter or other corporate
restriction that materially and adversely affects its business,
property, or assets or financial condition. Except as set forth on
Schedule 4.11 attached hereto, neither the execution and delivery of
this Agreement, the Notes, or the Registration Rights Agreement nor
the issuance of the Conversion Shares nor fulfillment of or compliance
with the terms and provisions hereof or thereof or the prepayment of
the Notes as contemplated hereby and by the Notes, and the conversion
of the indebtedness evidenced by the Notes into the Conversion Shares
as contemplated hereby and by the Notes will conflict with or result
in a breach of the terms, conditions, or provisions of, or give rise
to a right of termination under, or constitute a default under, or
result in any violation of, the Certificate of Incorporation or
By-laws of the Corporation or any mortgage, agreement, instrument,
order, judgment, decree, statute, law, rule, or regulations to which
the Corporation or any of its Subsidiaries or any of their respective
properties is subject. Neither the Corporation nor any of its
Subsidiaries is in default under any outstanding indenture or other
debt instrument or with respect to the payment of the principal of or
interest on any outstanding obligations for borrowed money, is in
default under any of their respective contracts or agreements, or
under any instrument by which the Corporation or any of its
Subsidiaries is bound, in each case that materially and adversely
affects the business, operations, or financial condition of the
Corporation and its Subsidiaries taken as a whole.
4.12 Capitalization. The authorized capital
stock of the Corporation consists of (i) 30,000,000 shares of Common
Stock, of which, as of the date hereof, 9,288,881 shares are
outstanding and no shares are held in its treasury; and (ii) 1,000,000
shares of preferred stock, $1.00 par value, of which, as of the date
hereof, 50,000 shares are outstanding; all of such outstanding shares
have been validly issued and are fully paid and nonassessable. No
shares of Common Stock of the Corporation are entitled to preemptive
rights. The Preferred Stock is entitled to only those preemptive
rights that are set forth in the Certificate of Designation. Except
for the options and warrants listed on Schedule 4.12 hereto and except
for the Warrants, the Preferred Stock, and the Convertible Notes,
there are no outstanding options, warrants, scrip, rights to subscribe
to, calls, or commitments of any character whatsoever relating to, or
securities or rights convertible into, shares of any capital stock of
the Corporation, or contracts, commitments, understandings, or
arrangements by which the Corporation is or may become bound to issue
additional shares of its capital stock or options, warrants, or rights
to purchase or acquire any shares of its capital stock. Since March
31, 1992, the Corporation has not changed the amount of its authorized
capital stock or subdivided or otherwise changed any shares of any
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<PAGE> 24
class of its capital stock, whether by way of reclassification,
recapitalization, stock split, or otherwise, or issued or reissued, or
agreed to issue or reissue, any of its capital stock, except as
disclosed in this Section 4.12 and has not since such date declared or
paid any dividend in cash or stock or made any other distribution of
assets to its stockholders.
4.13 Disclosure. Neither this Agreement nor
the SEC Reports nor the financial statements included in the SEC
Reports nor any certificate or written disclosure statement referred
to herein and furnished to Purchaser by or on behalf of the
Corporation in connection with the transactions contemplated hereby
contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained
herein and therein not misleading. There is no fact peculiar to the
Corporation or any of its Subsidiaries that the Corporation has not
disclosed to Purchaser in writing that materially affects adversely
or, so far as the Corporation can now reasonably foresee, will
materially affect adversely the properties, business, or condition
(financial or otherwise) of the Corporation and its Subsidiaries taken
as a whole or the ability of the Corporation to perform this
Agreement, the Notes, the Registration Rights Agreement or its
obligations in respect of the Conversion Shares.
4.14 Status of Conversion Shares. The
Conversion Shares have been duly authorized by all necessary corporate
action on the part of the Corporation (no consent or approval of
stockholders being required by law, the Certificate of Incorporation
or the By-laws of the Corporation, or otherwise), and such shares of
Common Stock have been validly reserved for issuance, and upon
issuance, will be validly issued and outstanding, fully paid, and
nonassessable.
4.15 Registration Under Exchange Act. The
Conversion Shares will not be registered as a class pursuant to
Section 12 of the Exchange Act and such registration is not required
except as otherwise required by the provisions of the Registration
Rights Agreement.
4.16 ERISA. No accumulated funding deficiency
(as defined in Section 302 of ERISA and Section 412 of the Code),
irrespective of whether waived, exists with respect to any Plan (as
defined below) (other than a Multiemployer Plan (as defined below)).
No liability to the Pension Benefit Guaranty Corporation has been
incurred with respect to any Plan (other than a Multiemployer Plan) by
the Corporation or any of its Subsidiaries that is or would be
materially adverse to the Corporation and its Subsidiaries taken as a
whole. Neither the Corporation nor any of its Subsidiaries has
incurred any withdrawal liability under Title IV of ERISA with respect
to any Multiemployer Plan that is or would be materially adverse to
the Corporation and its Subsidiaries taken as a whole. The execution
and delivery of this Agreement and the Registration Rights Agreement
and the issuance and sale of the Notes and the conversion of the
indebtedness evidenced by the Notes into the
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Conversion Shares will not involve any transaction that is subject to
the prohibitions of Section 406 of ERISA or in connection with which a
tax could be imposed pursuant to Section 4975 of the Code. The
representation by the Corporation in the immediately preceding
sentence is made in reliance upon and subject to the accuracy of
Purchaser's representation in Section 5.3 as to the source of the
funds to be used to pay the purchase price of the Conversion Shares.
As used in this Section 4.16, the term "Plan" shall mean an "employee
pension benefit plan" (as defined in Section 3(2) of ERISA) that is or
has been established or maintained, or to which contributions are or
have been made, by the Corporation or by any trade or business,
irrespective of whether incorporated, that, together with the
Corporation, is under common control, as described in Section 414(b)
or (c) of the Code, and the term "Multiemployer Plan" shall mean any
Plan that is a "multiemployer plan" (as such term is defined in
Section 4001 (a) (3) of ERISA).
4.17 Possession of Franchises, Licenses, Etc.
The Corporation and its Subsidiaries possess all franchises,
certificates, licenses, permits, and other authorizations from
governmental or political subdivisions or regulatory authorities and
all patents, trademarks, service marks, trade names, copyrights,
licenses, and other rights, free from burdensome restrictions, that
are necessary in any material respect to the Corporation and its
Subsidiaries, taken as a whole for the ownership, maintenance, and
operation of their respective properties and assets, and neither the
Corporation nor any of its Subsidiaries is in violation of any thereof
in any material respect.
4.18 Environmental and Other Regulations. The
Corporation and its Subsidiaries are in compliance in all material
respects with all laws and regulations, including those relating to
environmental control, equal employment opportunity, and employee
safety, in all jurisdictions in which the Corporation and its
Subsidiaries are presently doing business and where the failure to
effect such compliance would have a material adverse effect on the
business, operations, or financial condition of the Corporation and
its Subsidiaries taken as a whole.
4.19 Offering of Securities. Neither the
Corporation nor any Person acting on its behalf has offered the
Securities or any similar securities of the Corporation for sale to,
solicited any offers to buy the Securities or any similar securities
of the Corporation from, or otherwise approached or negotiated with
respect to the Corporation with any Person other than Purchaser and a
limited number of other "accredited investors" (as defined in Rule
501(a) under the Securities Act). Neither the Corporation nor any
Person acting on its behalf has taken or will take any action
(including any offering of any securities of the Corporation under
circumstances that would require the integration of such offering with
the offering of the Securities under the Securities Act and the rules
and regulations of the Commission thereunder) that might subject the
offering, issuance,
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or sale of the Securities to the registration requirements of Section
5 of the Securities Act.
4.20 Brokers or Finders. Except for the fee of
Page Capital Inc. that will be paid by the Corporation, no agent,
broker, investment banker, or other firm or Person is or will be
entitled to any broker's fee or any other commission or similar fee as
a result of the activities of the Corporation or its Subsidiaries,
agents, or employees undertaken in connection with any of the
transactions contemplated by this Agreement or the Registration Rights
Agreement.
4.21 Offering of Notes. Neither the
Corporation nor, to the best knowledge of the Corporation, any person
authorized to act on behalf of the Corporation has taken or will take
any action that would subject the issuance or sale of the Notes to the
provisions of Section 5 of the Securities Act or violate the
provisions of any securities, "blue sky", or similar law of any
applicable jurisdiction.
4.22 Regulations G, T, U, and X. Neither the
Corporation nor any of its Subsidiaries owns or has any present
intention of acquiring any Margin Stock. Neither the Corporation, any
of its Subsidiaries, nor any agent acting on its behalf has taken take
any action that might cause this Agreement to violate Regulations G,
T, U, or X or any other regulation of the Board of Governors of the
Federal Reserve System or to violate the Exchange Act.
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5. REPRESENTATIONS AND WARRANTIES OF PURCHASER.
Purchaser represents and warrants to the Corporation, as of the date hereof and
as of the Closing Date, the Tranche B Closing Date, and the Tranche C Closing
Date, as follows:
5.1 Due Authorization. Purchaser has all
right, power, and authority to enter into this Agreement and the
Registration Rights Agreement and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this
Agreement and the Registration Rights Agreement by Purchaser and the
consummation by Purchaser of the transactions contemplated hereby and
thereby have been duly authorized by all necessary corporate action on
behalf of Purchaser. This Agreement and the Registration Rights
Agreement have been duly executed and delivered by Purchaser and
constitute valid and binding agreements of Purchaser enforceable in
accordance with their terms, except that (i) such enforcement may be
subject to bankruptcy, insolvency, reorganization, moratorium, or
other similar laws now or hereafter in effect relating to creditors'
rights, and (ii) the remedy of specific performance and injunctive and
other forms of equitable relief may be subject to equitable defenses
and to the discretion of the court before which any proceeding
therefor may be brought.
5.2 Conflicting Agreements and Other Matters.
Neither the execution and delivery of this Agreement or the
Registration Rights Agreement nor the performance by Purchaser of its
obligations hereunder or thereunder will conflict with, result in a
breach of the terms, conditions, or provisions of, constitute a
default under, result in the creation of any mortgage, security
interest, encumbrance, lien, or charge of any kind upon any of the
properties or assets of Purchaser pursuant to, or require any consent,
approval, or other action by or any notice to or filing with any court
or administrative or governmental body pursuant to the organizational
documents or agreements of Purchaser or any agreement, instrument,
order, judgment, decree, statute, law, rule, or regulation by which
Purchaser is bound, except, possibly, for filings after the Closing
Date, the Tranche B Closing Date, and the Tranche C Closing Date, as
applicable, under Section 13(d) of the Exchange Act.
5.3 Acquisition for Investment; Source of
Funds. Purchaser is acquiring the Notes (and its rights with respect
to the Conversion Shares) for its own account for the purpose of
investment and not with a view to or for sale in connection with any
distribution thereof, and Purchaser has no present intention or plan
to effect any distribution of the Conversion Shares. No part of the
funds used by Purchaser to purchase the Notes hereunder constitutes
assets allocated to any separate account (as defined in Section 3 of
ERISA) maintained by Purchaser or assets of any employee benefit plan
(as defined in Section 3(3) of ERISA) other than a governmental plan
(as defined in Section 3(32) of ERISA).
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5.4 Brokers or Finders. No agent, broker,
investment banker, or other firm or Person is or will be entitled to
any broker's fee or any other commission or similar fee as a result of
the activities of Purchaser or its Subsidiaries, agents, or employees
undertaken in connection with any of the transactions contemplated by
this Agreement or the Registration Rights Agreement.
5.5 Accredited Investor. Purchaser is an
"accredited investor" within the meaning of Rule 501 promulgated under
the Securities Act.
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6. COVENANTS.
The Corporation covenants that so long as any amount due or to
become due under the Notes or this Agreement remains unpaid:
6.1 Financial Statements and Other Reports.
(i) it will, as soon as practicable
and in any event within 45 days after the end of each quarterly period
(other than the last quarterly period) in each fiscal year, furnish to
Purchaser statements of consolidated net income and cash flows and a
statement of changes in consolidated stockholders equity of the
Corporation and its Subsidiaries for the period from the beginning of
the then current fiscal year to the end of such quarterly period, and
a consolidated balance sheet of the Corporation and its Subsidiaries
as of the end of such quarterly period, setting forth in each case in
comparative form figures for the corresponding period or date in the
preceding fiscal year, all in reasonable detail and certified by an
authorized financial officer of the Corporation, subject to changes
resulting from year-end adjustments; provided, however, that delivery
pursuant to clause (iii) below of a copy of the Quarterly Report on
Form 10-Q of the Corporation for such quarterly period filed with the
Commission shall be deemed to satisfy the requirements of this clause
(i);
(ii) it will, as soon as practicable
and in any event within 90 days after the end of each fiscal year,
furnish to Purchaser statements of consolidated net income and cash
flows and a statement of changes in consolidated stockholders' equity
of the Corporation and its Subsidiaries for such year, and a
consolidated balance sheet of the Corporation and its Subsidiaries as
of the end of such year, setting forth in each case in comparative
form the corresponding figures from the preceding fiscal year, all in
reasonable detail and examined and reported on by independent public
accountants of recognized standing selected by the Corporation;
provided, however, that delivery pursuant to clause (iii) below of a
copy of the Annual Report on Form 10-K of the Corporation for such
fiscal year filed with the Commission shall be deemed to satisfy the
requirements of this clause (ii);
(iii) it will, promptly upon transmission
thereof, furnish to Purchaser copies of all financial statements,
proxy statements, notices, and reports as it shall send to its
stockholders and copies of all registration statements (without
exhibits), other than registration statements relating to employee
benefit or dividend reinvestment plans, and all regular and periodic
reports as it shall file with the Commission; and
(iv) it will, with reasonable promptness,
furnish to Purchaser such other financial and other data of the
Corporation and its Subsidiaries as such
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Purchaser may request, including operating financial information for
each facility owned or operated by the Corporation or any of its
Subsidiaries.
Together with each delivery of financial statements
required by clauses (i) and (ii) above, the Corporation will deliver
to Purchaser a certificate of an authorized financial officer of the
Corporation regarding compliance by the Corporation with the covenants
set forth in Sections 6.6., 6.7, and 6.8. At such other time or times
that the Corporation delivers a compliance certificate to any other
holder of Funded Debt, the Corporation will deliver such certificate,
and any supporting detail, to the Purchaser.
6.2 Inspection of Property. The Corporation
will permit representatives of Purchaser to visit and inspect, at
Purchaser's expense, any of the properties of the Corporation and its
Subsidiaries, to examine the corporate books and make copies or
extracts therefrom and to discuss the affairs, finances, and accounts
of the Corporation and its Subsidiaries with the principal officers of
the Corporation, all at such reasonable times, upon reasonable notice,
and as often as Purchaser may reasonably request; provided, however,
that the foregoing shall be subject to compliance with reasonable
safety requirements and shall not require the Corporation or any of
its Subsidiaries to permit any inspection that, in the reasonable
judgment of the Corporation, would result in the violation of any
statute or regulation with respect to confidentiality or security.
Purchaser agrees that the information received pursuant to this
Section 6.2 or Section 6.1(iv) is subject to Section 9 hereof.
6.3 Dividends, Distributions, and Redemptions.
The Corporation will not declare or pay any dividend on, or make any
other distribution in respect of, or redeem any shares of Common Stock
or any other shares of capital stock of the Corporation other than, so
long as no Event of Default or Unmatured Event of Default has occurred
and is continuing hereunder or under the Notes, cash dividends on its
Preferred Stock in accordance with the terms of the Certificate of
Designation; provided, however, that, so long as no Event of Default
or Unmatured Event of Default has occurred and is continuing hereunder
or under the Notes, nothing in this Section 6.3 shall prevent the
Corporation from purchasing or redeeming any shares of Preferred Stock
in accordance with the terms of the Certificate of Designation.
6.4 Certain Acquisitions. Without the prior
written consent of Purchaser, the Corporation will not purchase or
otherwise acquire the business, assets, or securities of any other
Person other than in the ordinary course of the Corporation's
business.
6.5 Use of Proceeds; Regulations G, T, U, and
X. All of the proceeds of the sale of the Notes will be used by the
Corporation for general corporate purposes. None of such proceeds
will be used, directly or indirectly, for
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<PAGE> 31
the purpose of purchasing or carrying any Margin Stock or for the
purpose of reducing or retiring any indebtedness that was originally
incurred to purchase or carry Margin Stock or for any other purpose
that might constitute this transaction a "purpose credit" within the
meaning of Regulations G, T, U, or X.
6.6 Consolidated Net Worth. The Corporation
will not permit Consolidated Net Worth at any time to be less than the
sum of (a) $35,569,167 at March 31, 1992, plus (b) an amount during
each fiscal quarter thereafter equal to the sum of (i) the amount of
Consolidated Net Worth required hereunder for the immediately
preceding fiscal quarter, plus (ii) if positive, fifty percent (50%)
of Consolidated Net Income for such immediately preceding fiscal
quarter.
6.7 Consolidated Fixed Charges.
a. The Corporation shall not permit
Consolidated Fixed Charge Coverage to be less than (i) 1.75 as at the
end of any fiscal quarter occurring in 1992, and (ii) 2.00 as at the
end of any fiscal quarter occurring thereafter.
b. The Corporation will not, and
will not permit any Restricted Subsidiary to, incur, assume, or suffer
to exist any obligation under Operating Leases or under any
transaction giving rise to Consolidated Interest Expense after the
Closing Date unless, after giving effect on a pro forma basis to such
obligation or transaction, the Corporation will be in compliance with
Section 6.7(a) (calculated as at the end of the most recently
completed fiscal quarter).
6.8 Consolidated Senior Funded Debt. The
Corporation will not permit Consolidated Senior Funded Debt to exceed
eighty percent (80%) of Consolidated Total Capitalization.
6.9 Attendance at Board Meeting. The designee
of the Purchaser (such individual to be identified to the Corporation
in a writing signed by the Purchaser) shall have the right to attend
all meetings of the Board of Directors of the Corporation in a
nonvoting observer capacity, to receive notice of such meetings, and
to receive the information provided by the Corporation to the Board of
Directors. The Corporation agrees to provide the Purchaser with at
least fifteen (15) days prior written notice of any proposed meeting
of the Board of Directors of the Corporation. The reasonable
out-of-pocket costs and expenses of any such individual attending a
Board of Directors meeting of the Corporation shall be reimbursed by
the Corporation.
6.10 Compliance with laws. The Corporation at
all times will, and will cause each of its Subsidiaries to, observe
and comply in all material respects with all laws (including
environmental laws applicable to the Corporation and its
Subsidiaries), ordinances, orders, judgments, rules, regulations,
certifications,
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franchises, permits, licenses, directions, and requirements of all
governmental authorities that are now and may at any time be
applicable to the Corporation or its Subsidiaries, a violation of
which could reasonably be expected to have a material adverse effect
on the business, assets, operations, prospects, or condition
(financial or otherwise) of the Corporation and its Subsidiaries taken
as a whole, except such thereof as shall be contested in good faith
and by appropriate proceedings promptly instituted and diligently
conducted by the Corporation or its Subsidiaries, as the case may be,
so long as adequate reserves or other appropriate provisions as shall
be required in accordance with generally accepted accounting
principles shall have been made therefor.
6.11 Maintenance of Properties; Insurance. The
Corporation will maintain and will cause its Subsidiaries to maintain
in good repair, working order, and condition (normal wear and tear
excepted) all properties used or useful in the business of the
Corporation and its Subsidiaries and from time to time will make or
cause to be made all appropriate repairs, renewals, and replacements
thereof. The Corporation will maintain and will cause its
Subsidiaries to maintain in full force and effect, with financially
sound and reputable insurers acceptable to Purchaser, insurance
(subject to customary deductibles and retentions) with respect to its
properties and business and the properties and business of its
Subsidiaries against hazards, contingencies, loss, or damage of the
kinds customarily insured against by corporations of established
reputation or similar size engaged in the same or similar business and
similarly situated, of such types and in such amounts as are
customarily carried under similar circumstances by such other
corporations; provided, however, in no event shall the coverage and
amount of such insurance be less than the coverage and amount of
insurance in force on the Closing Date. Without limiting the
generality of the foregoing, the Corporation will maintain (i) public
liability insurance against claims for personal injury, death, or
property damage occurring upon, in, about or in connection with the
use of any property owned, occupied, or controlled by the Corporation
or any of its Subsidiaries in an amount per occurrence of at least
$10,000,000, (ii) workers' compensation and business interruption
insurance covering loss of rents and builders' all risk insurance, and
(iii) such other insurance for the Corporation and its Subsidiaries as
may be required by law.
6.12 Performance of Government Contracts. The
Corporation will, and will cause each of its Subsidiaries to perform
each and every term and condition of the Government Contracts relating
to the facilities owned or operated by the Corporation or such
Subsidiary and will not, and will not permit any Subsidiary to consent
to any termination, cancellation, or material amendment, modification,
or supplement to any Government Contract relating to the facilities
owned or operated by the Corporation or any of its Subsidiaries which
termination, cancellation, amendment, modification, or supplement
could reasonably be expected to have a material adverse effect on the
business, assets, operations, prospects, or condition (financial or
otherwise) of the Corporation and its Subsidiaries taken as a whole.
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6.13 Notice to Purchaser. When any Unmatured
Event of Default or Event of Default has occurred, the Corporation
agrees to give written notice thereof to Purchaser within three (3)
days of the Corporation's discovery of such event.
6.14 Waiver of Stay, Extension, or Usury Laws.
The Corporation covenants (to the extent that it may lawfully do so)
that it will not at any time insist upon, plead, or in any manner
whatsoever claim or take the benefit or advantage of any stay or
extension law or any usury law or other law which would prohibit or
forgive the Corporation from paying all or any portion of the
principal of, or interest, or premium, if any on the Notes as
contemplated herein, wherever enacted, now or at any time hereafter in
force, or which may affect the covenants or the performance of this
Agreement; and (to the extent that it may lawfully do so) the
Corporation hereby expressly waives all benefit or advantage of any
such law, and covenants that it will not hinder, delay, or impede the
execution of any power herein granted to the holders of the Notes, but
will suffer and permit the execution of every such power as though no
such law had been enacted.
6.15 Conduct of Business. The Corporation will
not, and will not permit any of its Subsidiaries to, engage in any
business other than the construction and management of prisons and
other correctional facilities for governmental agencies, the ownership
and operation of a proprietary school, and other businesses or
activities substantially similar or related thereto.
6.16 Amendments or Waivers of Certain
Documents. The Corporation will not agree to any material amendment,
modification, supplement to, or waiver of any agreement related to the
Convertible Notes. The Corporation agrees to give the Purchaser prior
written notice of any proposed material amendment, modification,
supplement to, or waiver of any agreement relating to Senior
Indebtedness.
6.17 Limitation on Issuance of Other
Subordinated Indebtedness Senior to the Notes. The Corporation will
not create, incur, assume, guarantee, or in any other manner become
liable with respect to any indebtedness that is subordinate in right
of payment to any Senior Indebtedness unless such indebtedness is also
pari passu with, or subordinate pursuant to provisions substantially
similar to those contained in the Notes, in right of payment to the
Notes.
6.18 Limitation on Subsidiary Funded Debt. The
Corporation shall not permit any of its Subsidiaries to incur, create,
assume, or guarantee any Funded Debt (which shall be deemed to include
preferred stock issued by a Subsidiary of the Corporation that is not
held by the Corporation), unless, after giving effect thereto, (a) the
total amount of Funded Debt of the Corporation's Subsidiaries does not
exceed 10% of Consolidated Total Capitalization, and (b) the
Corporation would be
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entitled to incur at least $1.00 of additional Consolidated Senior
Funded Debt under Section 6.8.
6.19 Sale of Estancia Facility; Funding of the
Escrow Account. The Corporation agrees that, within one (1) Business
Day of the date on which such sale is consummated, it will deposit the
net proceeds (after the payment of prior encumbrances and related tax
obligations and the payment of related transactional costs and
expenses) of sale of its Estancia Facility up to Five Million Dollars
($5,000,000) into the escrow account created under and pursuant to the
Escrow Agreement. In the event that the Estancia Facility is not sold
on or before August 31, 1992, then, on each of August 31, 1992,
September 30, 1992, and November 31, 1992, the Corporation shall
deposit into the escrow account created under and pursuant to the
Escrow Agreement an amount equal to one-third (1/3) of the outstanding
principal balance of the Notes as of August 31, 1992. In the event
that the Estancia Facility is sold but the net proceeds of sale
deposited into the escrow account created under and pursuant to the
Escrow Agreement are less than the outstanding principal balance of
the Notes, then, on each of August 31, 1992, September 30, 1992, and
November 31, 1992, the Corporation shall deposit equal additional
amounts into such escrow account (i.e., each equal to one-third (1/3)
of the required sum) so that, after giving effect to all of such
addditional deposits, the amount that has been deposited to the escrow
is equal to the outstanding principal balance of the Notes as of
August 31, 1992.
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7. EVENTS OF DEFAULT; REMEDIES THEREFOR.
7.1 Events of Default. Any one or more of the
following shall constitute an "Event of Default":
(i) default in the payment of any interest due
under the Notes when it becomes due and payable, and continuance of
such default for a period of five (5) days; or
(ii) default in the payment of the principal of
the Notes when due (whether at scheduled maturity, as a result of a
mandatory prepayment requirement, by acceleration, or otherwise); or
(iii) default under any bond, debenture, note,
or other evidence of indebtedness for money borrowed in excess of
$100,000 by the Corporation or any of its Subsidiaries, whether such
indebtedness now exists or shall hereafter be created, which default
(i) shall consist of a failure to pay such indebtedness at final
maturity and after the expiration of any applicable grace period, or
(ii) shall have resulted in such indebtedness (A) becoming or being
declared due and payable prior to the date on which it would otherwise
have become due and payable, without such acceleration having been
rescinded or annulled, or (B) having been discharged within a period
of ten (10) days after there shall have been given, by registered or
certified mail, to the Corporation or such Subsidiary, as applicable,
by any holder of such indebtedness a written notice specifying such
default and requiring the Corporation or such Subsidiary, as
applicable, to cause such indebtedness to be discharged; or
(iv) default shall occur in the observance or
performance of any covenant or agreement or any other provision of
this Agreement or the Notes that is not remedied within twenty (20)
days after receipt by the Corporation of written notice of such
default from Purchaser;
(v) any representation or warranty made by the
Corporation herein, or made by the Corporation in any statement or
certificate furnished by the Corporation in connection with the
consummation of the issuance and delivery of the Notes or thereafter
pursuant to the terms of this Agreement, is untrue in any material
respect as of the date of the issuance or making thereof; or
(vi) a final judgment or judgments entered by a
court of competent jurisdiction for the payment of money aggregating
in excess of $1,000,000 is or are outstanding against the Corporation
or any of its Subsidiaries and any one such judgment in excess of
$1,000,000 has, or such judgments aggregating in excess of $1,000,000
have remained unpaid, unvacated, unbonded, or unstayed by appeal or
otherwise for a period of thirty (30) days from the date of entry; or
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(vii) a court or other governmental authority or
agency having jurisdiction in the premises shall enter a decree or
order (a) for the appointment of a receiver, liquidator, assignee,
trustee, sequestrator, or other similar official of the Corporation or
any Subsidiary of the Corporation or of a material portion of the
assets of either, or for the winding-up or liquidation of its affairs,
and such decree or order shall remain in force, undischarged and
unstayed for a period of more than thirty (30) days, or (b) for the
sequestration or attachment of any material portion of the assets of
the Corporation or any Subsidiary of the Corporation, without its
unconditional return to the possession of the Corporation or such
Subsidiary, or its unconditional release from such sequestration or
attachment, within thirty (30) days thereafter; or
(viii) the Corporation or any Subsidiary of the
Corporation makes an assignment for the benefit of creditors, or the
Corporation or any Subsidiary of the Corporation applies for or
consents to the appointment of a custodian, liquidator, trustee, or
receiver for the Corporation or such Subsidiary or for a material
portion of the assets of either; or
(ix) the entry of a decree or order by a court
having jurisdiction in the premises adjudging the Corporation or any
of its Subsidiaries a bankrupt or insolvent, or approving as properly
filed a petition seeking reorganization, arrangement, adjustment, or
composition of or in respect of the Corporation under federal
bankruptcy law or any other applicable federal or state law, or
appointing a receiver, liquidator, assignee, trustee, sequestrator, or
other similar official for the Corporation or any of its Subsidiaries
or of any substantial part of its property, or ordering the winding up
or liquidation of its affairs, and the continuance of any such decree
or order unstayed and in effect for a period of sixty (60) consecutive
days or until an order for relief has been entered; or
(x) the institution by the Corporation or any
of its Subsidiaries of proceedings to be adjudicated a debtor or
insolvent, or the consent by it to the institution of bankruptcy or
insolvency proceedings against it, or the filing by it of a petition
or answer or consent seeking reorganization or relief under federal
bankruptcy law or any other applicable federal or state law or the
consent by it to the filing such petition or to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator, or similar
official for the Corporation or any of its Subsidiaries or of any
substantial part of its property, or the making by it of an assignment
for the benefit of creditors, or the admission by it in writing of its
inability to pay its debts generally as they become due, or the taking
of corporate action by the Corporation or any of its Subsidiaries in
furtherance of any such action.
7.2 Acceleration of Maturities. When any Event of Default
described in clauses (i) through (vi), inclusive, of Section 7.1 has
occurred and is continuing, Purchaser may, by notice in writing sent
to the Corporation, declare the entire
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principal and all interest accrued on the Notes to be, and the Notes
shall thereupon become, forthwith due and payable, without any
presentment, demand, protest, or other notice of any kind, all of
which are hereby expressly waived. When any Event of Default
described in clauses (vii) through (x), inclusive, of Section 7.1 has
occurred, then the Notes shall immediately become due and payable
without presentment, demand, protest, or notice of any kind. When any
Event of Default described in clause (iv) of Section 7.1 has occurred
and is continuing as a result of the Corporation's breach of its
obligation to use its best efforts to satisfy one or more of the
conditions to the issuance and sale of the Tranche B Notes or the
Tranche C Notes or as a result of the Corporation's breach of its
obligation to convert the indebtedness evidenced by the Notes into
Conversion Shares in accordance with the terms and conditions of the
Notes, Purchaser shall be entitled to specific performance of such
obligation of the Corporation; it being expressly acknowledged and
agreed by the Corporation that no adequate remedy at law exists for
any such breach and that Purchaser will be irreparably harmed by any
such breach by the Corporation. Upon the Notes becoming due and
payable as a result of any Event of Default as aforesaid, the
Corporation shall forthwith pay to Purchaser the entire principal and
interest accrued on the Notes. No course of dealing on the part of
Purchaser nor any delay or failure on the part of Purchaser to
exercise any right shall operate as a waiver of such right or
otherwise prejudice Purchaser's rights, powers, and remedies. The
Corporation further agrees, to the extent permitted by law, to pay to
Purchaser all costs and expenses (including attorneys' fees) incurred
by it in the collection of the Notes upon any default hereunder or
thereon (including such costs and expenses incurred in connection with
a workout or an insolvency or bankruptcy proceeding).
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8. AGREEMENTS OF PURCHASER. Purchaser agrees with the
Corporation as follows:
8.1 Transfer of the Notes. Purchaser will not attempt to
sell, transfer, convey, exchange, or otherwise dispose of all or any
part of the Notes, except in accordance with applicable law.
8.2 No General Solicitation. Purchaser acknowledges and
agrees that it has not received nor is it aware of any general
solicitation or general advertising of the Notes, including any
advertisement, article, notice, or other communication published in
any newspaper, magazine, or similar media or broadcast over television
or radio, and that it was not invited to attend any seminar or meeting
by means of any such general solicitation or general advertising.
8.3 No Registration. Purchaser understands and agrees
that, neither the Notes nor, except as provided in the Registration
Rights Agreement, any Conversion Shares will be registered under the
Securities Act or any state securities law, that the Notes and
Conversion Shares may be required to be held until they are
subsequently registered under the Securities Act and any applicable
state securities law, or any corresponding provisions of succeeding
laws, unless an exemption from the registration requirements of such
laws is available, and that the Corporation is under no obligation to
register the Notes or, except as provided in the Registration Rights
Agreement, any Conversion Shares, for resale.
8.4 Transfer Restrictions; Legends. Purchaser
understands and agrees that the Notes and, when issued, the Conversion
Shares have not been registered under the Securities Act or the
securities laws of any state and that they may be sold or otherwise
disposed of only in one or more transactions registered under the
Securities Act and, where applicable, such laws unless an exemption
from the registration requirements of the Securities Act and, where
applicable, such laws is available. Purchaser acknowledges that,
except as provided in the Registration Rights Agreement, the Purchaser
has no right to require the Corporation to register the Conversion
Shares. The Purchaser understands and agrees that each certificate
representing Conversion Shares shall bear the following legends:
"THE TRANSFER OF THE SECURITIES REPRESENTED BY
THIS CERTIFICATE IS RESTRICTED BY AN AGREEMENT ON
FILE AT THE OFFICES OF THE CORPORATION."
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT
BE SOLD OR OTHERWISE DISPOSED OF
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EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS OR AN APPLICABLE EXEMPTION TO THE
REGISTRATION REQUIREMENTS OF SUCH ACT OR SUCH LAWS."
Purchaser will not, directly or indirectly, sell, transfer, pledge,
encumber, or otherwise dispose of (collectively, "Transfers") any
Conversion Shares except for (i) Transfers to any Affiliate of
Purchaser, (ii) Transfers to other institutional investors that are
not competitors of the Corporation in blocks of not less than 10,000
shares (or such lesser number as may then be outstanding), (iii)
Transfers pursuant to any bona fide tender or exchange offer to
acquire Voting Stock of the Corporation or pursuant to any merger,
consolidation, or other business combination of the Corporation with
any other Person; or (iv) the redemption of the Conversion Shares.
8.5 Restrictions on Conversion. Purchaser further
understands and agrees that any conversion of the indebtedness
evidenced by the Notes into Conversion Shares must comply with all
applicable securities laws, including the Securities Act and any
applicable state securities laws, as such laws exist on the date
hereof and on such future dates that the indebtedness evidenced by the
Notes, or any portion thereof, may be converted into Conversion
Shares.
8.6 Further Cooperation. Purchaser will do all acts and
things reasonably requested of it by the Corporation in connection
with any attempt by the Corporation to achieve compliance with federal
and state securities laws in connection with the offering and sale of
the Notes or the conversion of all or any portion of the indebtedness
evidenced by the Notes into Conversion Shares.
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9. NONDISCLOSURE OF CONFIDENTIAL INFORMATION.
9.1 Without the prior written consent of the
Corporation, any information relating to the Corporation provided to
Purchaser in connection with its acquisition of the Notes or the
Conversion Shares that is either confidential, proprietary, or
otherwise not generally available to the public (but excluding
information Purchaser has obtained independently from third-party
sources without Purchaser's knowledge that the source has violated any
fiduciary or other duty not to disclose such information (the
"Confidential Information") will be kept confidential by Purchaser and
their directors, officers, employees, agents, auditors, participants,
transferees, assignees, and representatives (collectively,
"Representatives"), using the same standard of care in safeguarding
the Confidential Information as Purchaser employs in protecting its
own proprietary information that Purchaser desires not to disseminate
or publish. It is understood (a) that such Representatives shall be
informed by Purchaser of the confidential nature of the Confidential
Information, (b) that such Representatives shall be bound by the
provisions of this Section 9.1 as a condition of receiving the
Confidential Information, and (c) that, in any event, Purchaser shall
be responsible for any breach of Sections 9.1, 9.2, 9.3, or 9.4 of
this Agreement by any of its Representatives (other than Purchaser's
participants, transferees, or assignees).
9.2 Without the prior consent of the
Corporation, other than as required by applicable law, Purchaser will
not, and will direct its Representatives not to disclose to any Person
(other than its Representatives) either the fact that the Confidential
Information has been made available to Purchaser or that Purchaser has
inspected any portion of the Confidential Information.
9.3 If Purchaser or its Representatives are
requested or required (by oral question, interrogatories, requests for
information or documents, subpoena, civil investigative demand, or
similar process) to disclose any Confidential Information, Purchaser
will, as soon as practicable, notify the Corporation of such request
or requirement so that the Corporation may seek an appropriate
protective order. If, in the absence of a protective order or the
receipt of a waiver hereunder, Purchaser or its Representatives is, in
the opinion of Purchaser's counsel, compelled to disclose the
Confidential Information or else stand liable for contempt or suffer
other censure or significant penalty, Purchaser, or its
Representative, as the case may be, may disclose only such of the
Confidential Information to the party compelling disclosure as is
required by law. Purchaser shall not be liable for the disclosure of
Confidential Information pursuant to the preceding sentence.
Purchaser will exercise all reasonable efforts to assist the
Corporation in obtaining a protective order or other reliable
assurance that confidential treatment will be accorded the
Confidential Information.
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<PAGE> 41
10. MISCELLANEOUS.
10.1 Indemnification. Each party (an "indemnifying
party") hereto agrees to indemnify and hold harmless the other parties
(an "indemnified party") against and in respect of any and all claims,
demands, losses, costs, expenses, obligations, liabilities, damages,
recoveries, and deficiencies, including reasonable attorneys' fees,
that such indemnified party and each of its officers and directors
shall incur or suffer, that arise, result from, or relate to any
breach of, or failure by such indemnifying party to perform, any of
its representations, warranties, covenants, or agreements set forth in
this Agreement, the Notes, or the Registration Rights Agreement.
10.2 Survival of Covenants, Representations, and
Warranties. All covenants, representations, and warranties made by
the Corporation herein and in any certificates delivered pursuant
hereto, irrespective of whether in connection with the transactions
occurring on the Closing Date, the Tranche B Closing Date, or the
Tranche C Closing Date, and shall survive the closing and the delivery
of this Agreement, the Notes, the Escrow Agreement, and the
Registration Rights Agreement, regardless of any investigation made by
Purchaser or on its behalf.
10.3 Successors and Assigns. This Agreement shall be
binding upon the Corporation and its successors and assigns and shall
inure to the Purchaser's benefit and to the benefit of its successors
and assigns, including each successive holder or holders of the Notes
or any interest therein.
10.4 Notices. Unless otherwise provided in this
Agreement, all notices or demands by any party relating to this
Agreement or any other agreement entered into in connection herewith
shall be in writing and (except for financial statements and other
informational documents which may be sent by first-class mail, postage
prepaid) shall be personally delivered or sent by registered or
certified mail, postage prepaid, return receipt requested, or by
prepaid telex, telefacsimile, or telegram (with messenger delivery
specified) to the Corporation or to Purchaser, as the case may be, at
the addresses set forth below:
If to PM, to: PACIFIC MUTUAL LIFE INSURANCE COMPANY
700 Newport Center Drive
Newport Beach, CA 92660
Attention: Mezzanine Investments
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<PAGE> 42
With a copy to: BROBECK, PHLEGER & HARRISON
550 South Hope Street
Los Angeles, CA 90071
Attention: John Francis Hilson, Esq.
If to PMGLIC, to: PM GROUP LIFE INSURANCE COMPANY
700 Newport Center Drive
Newport Beach, CA 92660
Attention: Mezzanine Investments
With a copy to: BROBECK, PHLEGER & HARRISON
550 South Hope Street
Los Angeles, CA 90071
Attention: John Francis Hilson, Esq.
If to the Corporation, to: CORRECTIONS CORPORATION OF AMERICA
The CCA Building
102 Woodmont Boulevard
Nashville, Tennessee 37205
Attention: Doctor R. Crants, Jr.
With a copy to: STOKES & BARTHOLOMEW, P.A.
424 Church Street, Suite 2800
Nashville, Tennessee 37219
Attention: Elizabeth Enoch Moore, Esq.
The parties hereto may change the address at which they are to
receive notices hereunder, by notice in writing in the foregoing
manner given to the other. The failure of the Corporation or
Purchaser to send a copy of notice to the individuals who are shown
above as being required to receive copies shall not invalidate or
otherwise affect the validity of a notice that is otherwise
effectively given. All notices or demands sent in accordance with
this Section 10.4 shall be deemed received on the earlier of the date
of actual receipt or three (3) days after the deposit thereof in the
mail or the transmission thereof by telefacsimile or other similar
method as set forth above.
10.5 Expenses. In addition to the payments provided for
in Section 2.3(xi), Section 2.6(ix), and Section 2.8(ix), the
Corporation agrees to pay Purchaser for all fees and all out-of-pocket
expenses incurred by Purchaser arising in connection with this
Agreement, the Notes, the Registration Rights Agreement, the Escrow
Agreement, and the transactions hereby and thereby contemplated,
including the conversion of the indebtedness evidenced by the Notes
into Conversion Shares, all stamp and other taxes payable with respect
to the issuance of the Conversion Shares,
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<PAGE> 43
filing fees, reasonable fees and expenses of counsel, and all such
expenses incurred with respect to the preparation, execution,
delivery, or enforcement of any provision of such agreement or
instrument, or any amendment or waivers requested by the Corporation
(irrespective of whether the same become effective) under or in
respect of any such agreement, including costs and expenses in any
bankruptcy proceeding.
10.6 Descriptive Headings. The descriptive headings of
the various Sections or parts of this Agreement are for convenience
only and shall not affect the meaning or construction of any of the
provisions hereof.
10.7 Satisfaction Requirement. If any agreement,
certificate, or other writing, or any action taken or to be taken, is
by the terms of this Agreement required to be satisfactory to
Purchaser, the determination of such satisfaction shall be made by
Purchaser in its sole and exclusive judgment exercised in good faith.
10.8 Remedies. In case any one or more of the covenants
or agreements set forth in this Agreement, the Notes, the Escrow
Agreement, or the Registration Rights Agreement shall have been
breached by the Corporation or Purchaser, the Corporation or
Purchaser, as applicable, may proceed to protect and enforce its
rights either by suit in equity or by action at law, including an
action for damages as a result of any such breach or an action for
specific performance of any such covenant or agreement contained in
this Agreement, the Notes, the Escrow Agreement, or the Registration
Rights Agreement.
10.9 Entire Agreement. This Agreement, the Notes, the
Escrow Agreement, the Registration Rights Agreement, and the other
writings referred to herein or delivered pursuant hereto contain the
entire agreement among the parties with respect to the subject matter
hereof and supersede all prior and contemporaneous arrangements or
understandings with respect thereto.
10.10 Amendments. This Agreement may be amended, and the
observance of any term of this Agreement may be waived, with (and only
with) the written consent of the Corporation and Purchaser.
10.11 Severability. Should any part of this Agreement, for
any reason, be determined to be invalid or unenforceable, such
determination shall not affect the validity or enforceability of any
remaining portion, which remaining portion shall remain in full force
and effect as if this Agreement had been executed with the invalid or
unenforceable part hereof eliminated, and it is hereby declared the
intention of the parties hereto that they would have executed the
remaining portion of this Agreement without including therein any such
part which may, for any reason, be hereafter declared invalid or
unenforceable.
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<PAGE> 44
10.12 Execution in Counterparts; Telecopy Execution. This
Agreement may be executed in any number of counterparts and by
different parties on separate counterparts, each of which
counterparts, when so executed and delivered, shall be deemed to be an
original and all of which counterparts, taken together, shall
constitute but one and the same Agreement. This Agreement shall
become effective upon the execution of a counterpart hereof by each of
the parties hereto. Delivery of an executed counterpart of the
signature page(s) of this Agreement by telecopier shall be equally
effective as delivery of a manually executed counterpart. Any party
delivering an executed counterpart of the signature page(s) of this
Agreement by telecopier shall thereafter also promptly deliver a
manually executed counterpart, but the failure to deliver such
manually executed counterpart shall not affect the validity,
enforceability, and binding effect of this Agreement.
10.13 Governing Law. This Agreement, the Notes issued and
sold hereunder, and the Escrow Agreement and the Registration Rights
Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of California.
10.14 Consent to Jurisdiction. The Corporation irrevocably
submits to the non-exclusive jurisdiction of any California state or
federal court sitting in the City of Los Angeles, California over any
suit, action, or proceeding arising out of or relating to this
Agreement, the Notes, the Escrow Agreement, or the Registration Rights
Agreement. To the fullest extent it may effectively do so under
applicable law, the Corporation irrevocably waives and agrees not to
assert, by way of motion, as a defense, or otherwise, any claim that
it is not subject to the jurisdiction of any such court, any objection
that it may now or hereafter have to the laying of the venue of any
such suit, action, or proceeding brought in any such court, and any
claim that any such suit, action, or proceeding brought in any such
court has been brought in an inconvenient forum.
10.15 Enforcement of Judgments; Service of Process; Jury
Trial Waiver. The Corporation agrees, to the fullest extent it may
effectively do so under applicable law, that a judgment in any suit,
action, or proceeding of the nature referred to in Section 10.14
brought in any such court shall be conclusive and binding upon the
Corporation and may be enforced in the courts of the United States of
America or the State of California (or any other court to the
jurisdiction of which the Corporation is or may be subject) by a suit
upon such judgment.
THE CORPORATION AGREES THAT SERVICE OF PROCESS SUFFICIENT FOR
PERSONAL JURISDICTION IN ANY ACTION, SUIT, OR PROCEEDING OF THE NATURE
REFERRED TO IN SECTION 10.14 MAY BE MADE BY REGISTERED OR CERTIFIED
MAIL TO THE CORPORATION'S ADDRESS SET FORTH IN SECTION 10.4.
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<PAGE> 45
EACH PARTY HERETO HEREBY EXPRESSLY WAIVES ITS RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT, THE NOTES, THE ESCROW AGREEMENT, THE
REGISTRATION RIGHTS AGREEMENT, OR ANY OTHER RELATED DOCUMENT TO BE
DELIVERED PURSUANT HERETO, OR ANY DEALINGS BETWEEN THEM RELATING TO
THE SUBJECT MATTER OF THIS TRANSACTION AND THE CONTRACTUAL
RELATIONSHIP THAT IS BEING ESTABLISHED. THE SCOPE OF THIS WAIVER IS
INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE
FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS
TRANSACTION, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY
CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH PARTY
HERETO ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER
INTO A BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THIS
WAIVER IN ENTERING INTO THIS AGREEMENT, AND THAT EACH WILL CONTINUE TO
RELY ON THIS WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH PARTY
HERETO FURTHER WARRANTS AND REPRESENTS THAT EACH HAS REVIEWED THIS
WAIVER WITH ITS LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY
WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE
MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO
ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS, OR MODIFICATIONS TO
THIS AGREEMENT, THE NOTES, THE ESCROW AGREEMENT, THE REGISTRATION
RIGHTS AGREEMENT, OR THE RELATED DOCUMENTS TO BE DELIVERED PURSUANT
HERETO. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A
WRITTEN CONSENT TO A TRIAL BY THE COURT.
10.15 No Limitation on Service or Suit. Nothing herein
shall affect the right of Purchaser to serve process in any manner
permitted by law, or limit any right that Purchaser may have to bring
proceedings against the Corporation in the courts of any jurisdiction
or to enforce in any lawful manner a judgment obtained in one
jurisdiction in any other jurisdiction.
10.16 Direct Payment. Notwithstanding anything to the
contrary contained in this Agreement or the Notes, the Corporation
will punctually pay when due the principal of: (a) the Tranche A
Notes, and any interest thereon, without any presentment thereof,
directly to the Purchaser or to the nominee of the Purchaser at the
address set forth in Schedule 1 or such other address as the Purchaser
or the Purchaser's nominee may from time to time designate in writing
to the Corporation,
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<PAGE> 46
or, if a bank account with a United States bank is designated for the
Purchaser or the Purchaser's nominee on Schedule 1 hereto or in any
written notice to the Corporation from the Purchaser or the
Purchaser's nominee, the Corporation will make such payments in
immediately available funds to such bank account, marked for attention
as indicated; (b) the Tranche B Notes, and any interest thereon,
without any presentment thereof, directly to the Purchaser or to the
nominee of the Purchaser at the address set forth in Schedule 2 or
such other address as the Purchaser or the Purchaser's nominee may
from time to time designate in writing to the Corporation, or, if a
bank account with a United States bank is designated for the Purchaser
or the Purchaser's nominee on Schedule 2 hereto or in any written
notice to the Corporation from the Purchaser or the Purchaser's
nominee, the Corporation will make such payments in immediately
available funds to such bank account, marked for attention as
indicated; and (c) the Tranche C Notes, and any interest thereon,
without any presentment thereof, directly to the Purchaser or to the
nominee of the Purchaser at the address set forth in Schedule 3 or
such other address as the Purchaser or the Purchaser's nominee may
from time to time designate in writing to the Corporation, or, if a
bank account with a United States bank is designated for the Purchaser
or the Purchaser's nominee on Schedule 3 hereto or in any written
notice to the Corporation from the Purchaser or the Purchaser's
nominee, the Corporation will make such payments in immediately
available funds to such bank account, marked for attention as
indicated. The Purchaser agrees that in the event that it shall sell
or transfer any Notes, it will, prior to the delivery of such Notes,
make a notation thereon of all principal, if any, prepaid on such
Notes and will also note thereon the date to which interest has been
paid on such Notes. The Corporation agrees that transferees of Notes
shall be entitled to the benefits of this Section 10.16 so long as any
such transferee has made the same agreements relating to the
transferred Notes as the Purchaser have made in this Section 10.16.
The Corporation shall be entitled to presume conclusively that the
Purchaser or any subsequent noteholders remain the holders of the
Notes until such Notes shall have been presented to the Corporation
as evidence of the transfer of such Notes.
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<PAGE> 47
The execution hereof by the Corporation, PM, and PMGLIC shall
constitute a contract among them for the uses and purposes hereinabove set
forth.
CORRECTIONS CORPORATION OF
AMERICA
By:
--------------------------------
Title:
-----------------------------
PACIFIC MUTUAL LIFE INSURANCE
COMPANY
By:
--------------------------------
Title:
-----------------------------
PM GROUP LIFE INSURANCE
COMPANY
By:
--------------------------------
Title:
-----------------------------
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<PAGE> 48
AMENDMENT NO. 1
TO
NOTE PURCHASE AGREEMENT
THIS AMENDMENT NO. 1 TO NOTE PURCHASE AGREEMENT (this
"Amendment"), dated as of August 25, 1992, is entered into by and among Pacific
Mutual Life Insurance Company ("PM"), PM Group Life Insurance Company
("PMGLIC") (PM and PMGLIC shall be referred to herein as the "Purchaser"), and
Corrections Corporation of America (the "Corporation").
R E C I T A L S
WHEREAS, the Corporation and the Purchaser are parties to that
certain Note Purchase Agreement dated as of June 22, 1992 (the "Agreement");
WHEREAS, the Corporation has requested that the Purchaser
agree to make certain amendments to the Agreement; and
WHEREAS, the Corporation is willing to amend the Agreement as
set forth herein.
A G R E E M E N T
NOW, THEREFORE, in consideration of the foregoing and subject
to the terms and conditions herein contained, the parties hereto agree as
follows:
SECTION 1. Definitions. Initially capitalized terms used in
this Amendment shall have the meanings ascribed thereto in the Agreement, as
amended hereby, unless otherwise defined herein.
SECTION 2. Amendments to the Agreement.
2.1 Amendment of Section 2.5 of the Agreement. Section
2.5 of the Agreement is hereby amended by deleting clause (i) thereof in its
entirety and inserting in its place the following new clause (i):
(i) Escrow Agreement. Within sixty-five (65)
days after the Closing Date, the Corporation, the Purchaser,
and NationsBank (or another third party acceptable to
Purchaser in its sole and absolute discretion) shall have
entered into an escrow agreement (the "Escrow Agreement"),
together with appropriate financing statements signed by the
Corporation, in each case in form and substance satisfactory
to Purchaser.
<PAGE> 49
2.2 Amendment of Section 2.6 of the Agreement. Section
2.6 of the Agreement is hereby amended by deleting clause (xiii) thereof in its
entirety and inserting in its place the following new clause (xiii):
(xiii) Tranche B Closing Date. The Tranche B
Closing Date shall occur on or after November 1, 1992, and on
or before December 15, 1992.
2.3 Amendment of Section 2.8 of the Agreement. Section
2.8 of the Agreement is hereby amended by deleting clause (i) thereof in its
entirety and inserting in its place the following new clause (i):
(i) Tranche C Closing Date. The Tranche C Closing
Date shall occur on or after November 1, 1992, and on or
before December 15, 1992.
2.4 Amendment of Section 3.1 of the Agreement. Section
3.1 of the Agreement is hereby amended by deleting the definition of "Coupon
Rate" in its entirety and inserting in its place the following new definition:
"Coupon Rate" means (i) with respect to the Tranche A
Notes, eight and one-half percent (8.5%) per annum; and (ii)
with respect to the Tranche B Notes and the Tranche C Notes,
the greater of: (a) eight and one-half percent (8.5%) per
annum, or (b) two and nine-tenths (2.90) percentage points
above the Treasury Rate as of the Tranche B Closing Date or
the Tranche C Closing Date, as applicable, for notes having a
maturity of three (3) years from the date of issuance thereof.
2.5 Amendment of Section 6.19 of the Agreement. Section
6.19 of the Agreement is hereby amended and restated to read in its entirety as
follows:
6.19 Sale of Estancia Facility; Funding of the
Escrow Account.
(a) Within one (1) Business Day after
the date on which the sale of the Estancia Facility is
consummated, the Corporation shall deposit the net proceeds of
such sale (after the payment of prior encumbrances, related
tax obligations, related transactional costs and expenses, and
the Corporation's existing obligations to The Canada Life
Assurance Company in an amount not to exceed Seven Million
Dollars ($7,000,000), plus accrued interest) in an amount of
up to the outstanding principal balance of the Notes at the
time the sale is consummated into the escrow account created
under and pursuant to the Escrow Agreement.
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(b) In the event that the sale of the
Estancia Facility is not consummated on or before August 31,
1992, then, on each of August 31, 1992, September 30, 1992,
and October 31, 1992, the Corporation shall deposit into the
escrow account created under and pursuant to the Escrow
Agreement an amount equal to one-third (1/3) of the
outstanding principal balance of the Notes as of August 31,
1992.
(c) In the event that the sale of the
Estancia Facility is consummated on or before August 31, 1992,
but the net proceeds of the sale deposited into the escrow
account created under and pursuant to the Escrow Agreement are
less than the outstanding principal balance of the Notes,
then, on each of August 31, 1992, September 30, 1992, and
October 31, 1992, the Corporation shall deposit equal
additional amounts into such escrow account (i.e., each equal
to one-third (1/3) of the required sum) so that, after giving
effect to all of such additional deposits, the amount that has
been deposited into such escrow account is equal to the
outstanding principal balance of the Notes as of August 31,
1992.
(d) The Corporation shall grant to
Purchaser a security interest in all of the Corporation's
right, title and interest in and to the Escrow Agreement and
in the funds on deposit under the Escrow Agreement and the
proceeds thereof in order to secure prompt repayment of all of
the obligations owed by the Corporation to Purchaser under the
Notes and this Agreement. The Corporation and Purchaser shall
file any all UCC-1 financing statements and take such other
actions as may be necessary to perfect Purchaser's security
interest described above under Tennessee law. In connection
therewith, the Corporation shall pay any and all recording
taxes that may be payable under Tennessee law in order to file
such UCC-1 financing statements. In recognition of the fact
that at the time the Escrow Agreement is executed only the
Tranche A Notes will have been purchased, the Corporation,
contemporaneously with the execution of the Escrow Agreement
and the filing of the UCC-1 financing statements, shall pay
recording tax based on an obligation secured of Two Million
Five Hundred Thousand Dollars ($2,500,000). Upon the purchase
of the Tranche B Notes or the Tranche C Notes, the Corporation
and Purchaser shall file amendments to the UCC-1 financing
statements and take such other actions reflecting the
increased amount of the obligation secured and the Corporation
shall thereupon pay an additional recording tax in accordance
with the requirements of Tennessee law. The Corporation
hereby grants to Purchaser its power of attorney to execute
any and all such
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<PAGE> 51
amendments to UCC-1 financing statements, on the Corporation's
behalf and in the Corporation's name. The Corporation agrees
that Purchaser may pay any and all such additional recording
taxes and may add the amount of any such payments to the
obligations owed by the Corporation to Purchaser under the
Notes and this Agreement.
2.6 Amendment of Section 6 of the Agreement. Section 6
of the Agreement is hereby amended by adding and inserting the following new
Section 6.20:
6.20 Issuance of Warrants with respect to Tranche
B Notes and Tranche C Notes. Upon the purchase of the Tranche
B Notes and the Tranche C Notes, the Corporation shall issue
warrants (in form and substance satisfactory to Purchaser) to
Purchaser, to compensate Purchaser for any dilution in the
value of its investment in the Corporation that Purchaser may
suffer due to the Corporation's proposed issuance of warrants
to its shareholders on or about September 15, 1992. The value
of the warrants to be issued to Purchaser in connection with
the purchase of the Tranche B Notes and the Tranche C Notes
shall be based on an assumption that the purchase of the
Tranche B Notes and the Tranche C Notes occurred one day prior
to the proposed issuance of warrants to the Corporation's
shareholders.
SECTION 3. Amendment of Exhibit B to the Agreement. Exhibit
B to the Agreement (form of Tranche B Notes) is hereby amended by deleting the
definition of Coupon Rate from Section 2 thereof in its entirety and inserting
in its place the following new definition:
"Coupon Rate" means _______________ percent (__%) per
annum.
SECTION 4. Effectiveness of this Amendment.
This Amendment shall become effective only upon the
satisfaction of the following conditions:
(a) The Corporation shall have delivered to the
Purchaser an executed copy of this Amendment;
(b) The Escrow Agreement shall have been duly
executed by the parties thereto and shall be in full force and effect, and two
fully executed original copies thereof shall have been delivered to the
Purchaser;
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<PAGE> 52
(c) The Corporation shall have executed and
caused the recording of UCC-1 financing statement(s), in form and substance
satisfactory to the Purchaser, for the purpose of perfecting the Purchaser's
security interest in the Corporation's right, title, and interest in the Escrow
Agreement and the funds held in escrow pursuant thereto, and the Corporation
shall have paid recording taxes payable in connection with the recording
thereof based on an obligation secured of Two Million Five Hundred Thousand
Dollars ($2,500,000); and
(d) The Purchaser shall have received full
payment of all of its out-of-pocket expenses arising in connection with the
negotiation, preparation, execution, and delivery of this Amendment and the
Escrow Agreement, including the fees and expenses of the Purchaser's legal
counsel.
SECTION 5. Representations and Warranties of the Corporation.
In order to induce the Purchaser to enter into this Amendment,
the Corporation hereby makes the following representations and warranties to
the Purchaser:
5.1 Corporate Power and Authorization. The Corporation
has the requisite corporate power and authority to execute, deliver and perform
its obligations under this Amendment and the Escrow Agreement.
5.2 No Conflict. Neither the execution and delivery by
the Corporation of this Amendment and the Escrow Agreement nor the consummation
of the transactions contemplated or required hereby or thereby nor compliance
by the Corporation with the terms, conditions and provisions hereof or thereof
will conflict with or result in a breach of any of the terms, conditions or
provisions of the Certificate of Incorporation or Bylaws of the Corporation or
any law, regulation, order, writ, injunction or decree of any court or
governmental instrumentality or any agreement or instrument to which the
Corporation is a party or by which any of its properties is bound, or
constitute a default thereunder or result in the creation or imposition of any
lien.
5.3 Authorization; Governmental Approvals. The execution
and delivery by the Corporation of this Amendment and the Escrow Agreement and
the consummation of the transactions contemplated hereby and thereby (i) have
been duly authorized by all necessary corporate action on the part of the
Corporation and (ii) do not and will not require any authorization, consent,
approval or license from or any registration, qualification, designation,
declaration or filing with, any court or governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign.
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<PAGE> 53
5.4 Valid and Binding Effect. This Amendment and the
Escrow Agreement have been duly and validly executed and delivered by the
Corporation and constitute the legal, valid and binding obligation of the
Corporation, enforceable in accordance with their respective terms.
5.5 Absence of Default. No event has occurred and is
continuing or will result from the consummation of the transactions
contemplated by this Amendment or the Escrow Agreement that would constitute an
Event of Default under the Agreement.
SECTION 6. Miscellaneous.
6.1 Ratification of the Agreement. Except as
specifically amended by this Amendment, the terms, conditions and provisions of
the Agreement shall not be affected by this Amendment and shall remain in full
force and effect and are hereby ratified and confirmed.
6.2 No Implied Waiver. The execution, delivery and
performance of this Amendment shall not, except as expressly provided herein,
constitute a waiver or modification of any provision of, or operate as a waiver
of any right, power or remedy of the Purchaser under, the Agreement or
prejudice any right or remedy that the Purchaser may have or may have in the
future under or in connection with the Agreement or any instrument or agreement
referred to therein. The Corporation acknowledges and agrees that the
representations and warranties of the Corporation contained in the Agreement
and in this Amendment shall survive the execution and delivery of this
Amendment and the effectiveness hereof.
6.3 Governing Law. This Amendment shall be governed by,
and construed and enforced in accordance with, the laws of the State of
California.
6.4 Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed to be an original, but all
of which together shall constitute one and the same instrument.
-6-
<PAGE> 54
IN WITNESS WHEREOF, the undersigned have caused this Amendment
to be executed by their duly authorized officers as of the date first written
above.
CORRECTIONS CORPORATION OF AMERICA PACIFIC MUTUAL LIFE
INSURANCE COMPANY
By: By:
--------------------------- -------------------------
Its: Its:
-------------------------- ------------------------
PM GROUP LIFE INSURANCE COMPANY
By:
--------------------------
Its:
-------------------------
-7-
<PAGE> 55
AMENDMENT NO. 2
TO
NOTE PURCHASE AGREEMENT
THIS AMENDMENT NO. 2 TO NOTE PURCHASE AGREEMENT (this
"Amendment"), dated as of October 29, 1992, is entered into by and among
Pacific Mutual Life Insurance Company ("PM"), PM Group Life Insurance Company
("PMGLIC") (PM and PMGLIC shall be referred to herein collectively as the
"Purchaser"), and Corrections Corporation of America (the "Corporation").
R E C I T A L S
WHEREAS, the Corporation and the Purchaser are parties to that
certain Note Purchase Agreement, dated as of June 22, 1992, that was amended by
that certain Amendment No. 1 to Note Purchase Agreement, dated as of August 25,
1992 (as so amended, the "Agreement");
WHEREAS, the Corporation has requested that the Purchaser
agree to make certain amendments to the Agreement; and
WHEREAS, the Purchaser is willing to amend the Agreement as
set forth herein.
A G R E E M E N T
NOW, THEREFORE, in consideration of the foregoing and subject
to the terms and conditions herein contained, the parties hereto agree as
follows:
SECTION 1. Definitions. Initially capitalized terms used in
this Amendment shall have the meanings ascribed thereto in the Agreement, as
amended hereby, unless otherwise defined herein.
SECTION 2. Amendments to the Agreement.
2.1 Amendment of Section 2.1 of the Agreement. Section
2.1 of the Agreement is hereby amended by deleting such Section in its
entirety and inserting in its place the following new Section 2.1:
2.1 Sale and Purchase of the Notes. Subject to
the terms and conditions of this Agreement, PM, either
directly or through one or more Affiliates, agrees to
purchase, and the Corporation agrees to sell and issue to PM,
or such Affiliates: (i) on the Closing Date, a Tranche A Note
for a purchase price of Two Million One Hundred Seventy-
<PAGE> 56
Five Thousand Dollars ($2,175,000); (ii) on the Tranche B
Closing Date, a Tranche B Note for a purchase price of One
Million Three Hundred Five Thousand Dollars (1,305,000); and
(iii) at PM's sole option, on the Tranche C Closing Date, a
Tranche C Note for a purchase price of Three Million Twenty
Thousand Dollars ($3,020,000), for a total purchase price of
Six Million Five Hundred Thousand Dollars ($6,500,000).
Subject to the terms and conditions of this Agreement, PMGLIC,
either directly or through one or more Affiliates, agrees to
purchase, and the Corporation agrees to sell and issue to
PMGLIC, or such Affiliates: (i) on the Closing Date, a Tranche
A Note for a purchase price of Three Hundred Twenty-Five
Thousand Dollars ($325,000); (ii) on the Tranche B Closing
Date, a Tranche B Note for a purchase price of One Hundred
Ninety Five Thousand Dollars ($195,000); and (iii) at PMGLIC's
sole option, on the Tranche C Closing Date, a Tranche C Note
for a purchase price of Four Hundred Eighty Thousand Dollars
($480,000), for a total purchase price of One Million Dollars
($1,000,000).
2.2 Amendment of Section 2.6 of the Agreement. Section
2.6 of the Agreement is hereby amended by deleting clauses (vi), (xii), and
(xiii) thereof in their entirety and inserting in their place the following new
clauses (vi), (xii), and (xiii), and also adding the following new clause
(xiv):
(vi) Tranche B Closing Fee. The Corporation shall
pay to Purchaser a closing fee of $45,000 by wire transfer of
immediately available funds;
(xii) Casa Grande Approvals. The Corporation shall
have furnished Purchaser with evidence, satisfactory to
Purchaser, that all necessary regulatory approvals have been
obtained to permit the Corporation to build a 302 bed U.S.
Marshal Services staging area in Casa Grande, Arizona;
(xiii) Tranche B Closing Date. The Tranche B
Closing Date shall occur on or before December 15, 1992; and
(xiv) Bank Financing Commitment. The Corporation
shall have furnished Purchaser with evidence, satisfactory to
Purchaser, of a commitment by First Union Bank to provide at
least $5,000,000 of financial accommodations to the
Corporation.
2.3 Amendment of Section 2.8 of the Agreement. Section
2.8 of the Agreement is hereby amended by deleting clause (i) thereof in its
entirety and inserting in its place the following new clause (i):
-2-
<PAGE> 57
(i) Tranche C Closing Date. The Tranche C
Closing Date shall occur on or before June 30, 1993.
2.4 Amendment of Section 3.1 of the Agreement. Section
3.1 of the Agreement is hereby amended by deleting the definitions of "Tranche
B Note" and "Tranche C Note" in their entirety and inserting in their place the
following new definitions:
"Tranche B Note" means any one or more of the Notes
issued on the Tranche B Closing Date or any substitute or
replacement therefor; the aggregate amount of the Tranche B
Notes shall be One Million Five Hundred Thousand Dollars
($1,500,000).
"Tranche C Note" means any one or more of the Notes
issued on the Tranche C Closing Date or any substitute or
replacement therefor; the aggregate amount of the Tranche C
Notes shall be Three Million Five Hundred Thousand Dollars
($3,500,000).
2.5 Amendment of Section 6.19 of the Agreement. Section
6.19 of the Agreement is hereby amended by deleting such Section in its
entirety and inserting in its place the following new Section 6.19:
6.19 Sale of Estancia Facility; Funding of the
Escrow Account.
[Intentionally Omitted]
SECTION 3. Termination of the Escrow Agreement. Concurrently
with the effectiveness of this Amendment, the parties to the Escrow Agreement
shall terminate the Escrow Agreement and all funds then held in escrow pursuant
to the Escrow Agreement shall be delivered to the Corporation
SECTION 4. Effectiveness of this Amendment.
This Amendment shall become effective only upon the
satisfaction of the following conditions:
(a) The Corporation shall have delivered to the
Purchaser an executed copy of this Amendment; and
(b) The Purchaser shall have received full
payment of all of its out-of-pocket expenses arising in connection with the
negotiation, preparation, execution, and delivery of the Agreement, the Tranche
A Notes, Amendment No. 1 to the Agreement, and the Escrow Agreement, and all
related transactions,
-3-
<PAGE> 58
including the fees and expenses of the Purchaser's legal counsel that have not
previously been paid.
SECTION 5. Representations and Warranties of the Corporation.
In order to induce the Purchaser to enter into this Amendment,
the Corporation hereby makes the following representations and warranties to
the Purchaser:
5.1 Corporate Power and Authorization. The Corporation
has the requisite corporate power and authority to execute, deliver and perform
its obligations under this Amendment.
5.2 No Conflict. Neither the execution and delivery by
the Corporation of this Amendment nor the consummation of the transactions
contemplated or required hereby nor compliance by the Corporation with the
terms, conditions and provisions hereof will conflict with or result in a
breach of any of the terms, conditions or provisions of the Certificate of
Incorporation or Bylaws of the Corporation or any law, regulation, order, writ,
injunction or decree of any court or governmental instrumentality or any
agreement or instrument to which the Corporation is a party or by which any of
its properties is bound, or constitute a default thereunder or result in the
creation or imposition of any lien.
5.3 Authorization; Governmental Approvals. The execution
and delivery by the Corporation of this Amendment and the consummation of the
transactions contemplated hereby (i) have been duly authorized by all necessary
corporate action on the part of the Corporation and (ii) do not and will not
require any authorization, consent, approval or license from or any
registration, qualification, designation, declaration or filing with, any court
or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign.
5.4 Valid and Binding Effect. This Amendment has been
duly and validly executed and delivered by the Corporation and constitutes the
legal, valid and binding obligation of the Corporation, enforceable in
accordance with its terms.
5.5 Absence of Default. No event has occurred and is
continuing or will result from the consummation of the transactions
contemplated by this Amendment that would constitute an Event of Default under
the Agreement.
SECTION 6. Miscellaneous.
6.1 Ratification of the Agreement. Except as
specifically amended by this Amendment, the terms, conditions and provisions of
the Agreement shall not
-4-
<PAGE> 59
be affected by this Amendment and shall remain in full force and effect and are
hereby ratified and confirmed.
6.2 No Implied Waiver. The execution, delivery and
performance of this Amendment shall not, except as expressly provided herein,
constitute a waiver or modification of any provision of, or operate as a waiver
of any right, power or remedy of the Purchaser under, the Agreement or
prejudice any right or remedy that the Purchaser may have or may have in the
future under or in connection with the Agreement or any instrument or agreement
referred to therein. The Corporation acknowledges and agrees that the
representations and warranties of the Corporation contained in the Agreement
and in this Amendment shall survive the execution and delivery of this
Amendment and the effectiveness hereof.
6.3 Governing Law. This Amendment shall be governed by,
and construed and enforced in accordance with, the laws of the State of
California.
6.4 Counterparts; Telecopy Execution. This Agreement may
be executed in two or more counterparts, each of which shall be deemed to be an
original, but all of which together shall constitute one and the same
instrument. Delivery of an executed counterpart of this Amendment by
telefacsimile shall be equally as effective as delivery of a manually executed
counterpart. Any party delivering an executed counterpart of this Amendment by
telefacsimile shall also deliver a manually executed counterpart, but the
failure to deliver a manually executed counterpart shall not affect the
validity, enforceability, and binding effect of this Amendment.
-5-
<PAGE> 60
IN WITNESS WHEREOF, the undersigned have caused this Amendment
to be executed by their duly authorized officers as of the date first written
above.
CORRECTIONS CORPORATION PACIFIC MUTUAL LIFE
OF AMERICA INSURANCE COMPANY
By: By:
--------------------------- ----------------------------
Its: Its:
------------------------- --------------------------
PM GROUP LIFE INSURANCE COMPANY
By:
--------------------------
Its:
-------------------------
-6-
<PAGE> 61
AMENDMENT NO. 3
TO
NOTE PURCHASE AGREEMENT
THIS AMENDMENT NO. 3 TO NOTE PURCHASE AGREEMENT (this
"Amendment"), dated as of April 29, 1993, is entered into by and among Pacific
Mutual Life Insurance Company ("PM"), PM Group Life Insurance Company
("PMGLIC") (PM and PMGLIC shall be referred to herein collectively as the
"Purchaser"), and Corrections Corporation of America (the "Corporation").
R E C I T A L S
WHEREAS, the Corporation and the Purchaser are parties to that
certain Note Purchase Agreement, dated as of June 22, 1992, that was amended by
that certain Amendment No. 1 to Note Purchase Agreement, dated as of August 25,
1992 and by that certain Amendment No. 2 to Note Purchase Agreement, dated as
of October 29, 1992 (as so amended, the "Agreement");
WHEREAS, the Corporation has requested that the Purchaser
agree to make certain amendments to the Agreement; and
WHEREAS, the Purchaser is willing to amend the Agreement as
set forth herein.
A G R E E M E N T
NOW, THEREFORE, in consideration of the foregoing and subject
to the terms and conditions herein contained, the parties hereto agree as
follows:
SECTION 1. Definitions. Initially capitalized terms used in
this Amendment shall have the meanings ascribed thereto in the Agreement, as
amended hereby, unless otherwise defined herein.
SECTION 2. Amendments to the Agreement.
2.1 Amendment of Section 2.1 of the Agreement. Section
2.1 of the Agreement is hereby amended by deleting such Section in its entirety
and inserting in its place the following new Section 2.1:
2.1 Sale and Purchase of the Notes. Subject to
the terms and conditions of this Agreement, PM, either
directly or through one or more Affiliates, agrees to
purchase, and the Corporation agrees to sell and issue to
PM, or such Affiliates: (i) on the Closing Date, a Tranche
<PAGE> 62
A Note for a purchase price of Two Million One Hundred
Seventy-Five Thousand Dollars ($2,175,000); (ii) on the
Tranche B Closing Date, a Tranche B Note for a purchase price
of One Million Three Hundred Five Thousand Dollars
(1,305,000); and (iii) at PM's sole option, on the Tranche C
Closing Date, a Tranche C Note for a purchase price of Three
Million Thirty-Three Thousand Four Hundred Fifty Dollars
($3,033,450), for a total purchase price of Six Million Five
Hundred Thirteen Thousand Four Hundred Fifty Dollars
($6,513,450). Subject to the terms and conditions of this
Agreement, PMGLIC, either directly or through one or more
Affiliates, agrees to purchase, and the Corporation agrees to
sell and issue to PMGLIC, or such Affiliates: (i) on the
Closing Date, a Tranche A Note for a purchase price of Three
Hundred Twenty-Five Thousand Dollars ($325,000); (ii) on the
Tranche B Closing Date, a Tranche B Note for a purchase price
of One Hundred Ninety Five Thousand Dollars ($195,000); and
(iii) at PMGLIC's sole option, on the Tranche C Closing Date,
a Tranche C Note for a purchase price of Four Hundred
Sixty-Six Thousand Five Hundred Fifty Dollars ($466,550), for
a total purchase price of Nine Hundred Eighty-Six Thousand
Five Hundred Fifty Dollars ($986,550).
2.2 Amendment of Section 2.8 of the Agreement. Section
2.8 of the Agreement is hereby amended by deleting clause (vi) thereof in its
entirety and inserting in its place the following new clause (vi), and also
adding the following new clauses (xii), (xiii), and (xiv):
(vi) Tranche C Closing Fee. The Corporation shall
pay to Purchaser a closing fee of $105,000 by wire transfer of
immediately available funds;
(xii) Financing for Repayment of New Mexico IRB
Indebtedness. The Corporation shall have obtained a
commitment for long term real estate secured financing, on
terms acceptable to Purchaser, to repay approximately
$5,000,000 of the New Mexico IRB Indebtedness;
(xiii) Use of Proceeds of Tranche C Notes. As a
condition subsequent to the purchase of the Tranche C Notes,
the Corporation shall use the entire proceeds of the Tranche C
Notes to repay the New Mexico IRB Indebtedness on or prior to
May 3, 1993;
(xiv) Repayment of New Mexico IRB Indebtedness.
As a condition subsequent to the purchase of the Tranche C
Notes, the Corporation shall repay in full the New Mexico IRB
Indebtedness on or prior to May 3, 1993.
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<PAGE> 63
2.3 Amendment of Section 3.1 of the Agreement. Section
3.1 of the Agreement is hereby amended by inserting the following new
definition:
"New Mexico IRB Indebtedness" means the principal,
interest, and fees owing by the Corporation with respect to
those certain 9.2% taxable revenue bonds issued in 1989 and
scheduled to mature in 2004 in connection with financing for
the New Mexico Women's Prison.
SECTION 3. Effectiveness of this Amendment.
This Amendment shall become effective upon the execution and
delivery of this Amendment by the Purchaser and the Corporation.
SECTION 4. Representations and Warranties of the Corporation.
In order to induce the Purchaser to enter into this Amendment,
the Corporation hereby makes the following representations and warranties to
the Purchaser:
4.1 Corporate Power and Authorization. The Corporation
has the requisite corporate power and authority to execute, deliver and perform
its obligations under this Amendment.
4.2 No Conflict. Neither the execution and delivery by
the Corporation of this Amendment nor the consummation of the transactions
contemplated or required hereby nor compliance by the Corporation with the
terms, conditions and provisions hereof will conflict with or result in a
breach of any of the terms, conditions or provisions of the Certificate of
Incorporation or Bylaws of the Corporation or any law, regulation, order, writ,
injunction or decree of any court or governmental instrumentality or any
agreement or instrument to which the Corporation is a party or by which any of
its properties is bound, or constitute a default thereunder or result in the
creation or imposition of any lien.
4.3 Authorization; Governmental Approvals. The execution
and delivery by the Corporation of this Amendment and the consummation of the
transactions contemplated hereby (i) have been duly authorized by all necessary
corporate action on the part of the Corporation and (ii) do not and will not
require any authorization, consent, approval or license from or any
registration, qualification, designation, declaration or filing with, any court
or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign.
-3-
<PAGE> 64
4.4 Valid and Binding Effect. This Amendment has been
duly and validly executed and delivered by the Corporation and constitutes the
legal, valid and binding obligation of the Corporation, enforceable in
accordance with its terms.
4.5 Absence of Default. No event has occurred and is
continuing or will result from the consummation of the transactions
contemplated by this Amendment that would constitute an Event of Default under
the Agreement.
SECTION 5. Miscellaneous.
5.1 Ratification of the Agreement. Except as
specifically amended by this Amendment, the terms, conditions and provisions of
the Agreement shall not be affected by this Amendment and shall remain in full
force and effect and are hereby ratified and confirmed.
5.2 No Implied Waiver. The execution, delivery and
performance of this Amendment shall not, except as expressly provided herein,
constitute a waiver or modification of any provision of, or operate as a waiver
of any right, power or remedy of the Purchaser under, the Agreement or
prejudice any right or remedy that the Purchaser may have or may have in the
future under or in connection with the Agreement or any instrument or agreement
referred to therein. The Corporation acknowledges and agrees that the
representations and warranties of the Corporation contained in the Agreement
and in this Amendment shall survive the execution and delivery of this
Amendment and the effectiveness hereof.
5.3 Governing Law. This Amendment shall be governed by,
and construed and enforced in accordance with, the laws of the State of
California.
5.4 Counterparts; Telecopy Execution. This Agreement may
be executed in two or more counterparts, each of which shall be deemed to be an
original, but all of which together shall constitute one and the same
instrument. Delivery of an executed counterpart of this Amendment by
telefacsimile shall be equally as effective as delivery of a manually executed
counterpart. Any party delivering an executed counterpart of this Amendment by
telefacsimile shall also deliver a manually executed counterpart, but the
failure to deliver a manually executed counterpart shall not affect the
validity, enforceability, and binding effect of this Amendment.
-4-
<PAGE> 65
IN WITNESS WHEREOF, the undersigned have caused this Amendment
to be executed by their duly authorized officers as of the date first written
above.
CORRECTIONS CORPORATION PACIFIC MUTUAL LIFE
OF AMERICA INSURANCE COMPANY
By: By:
-------------------------- -------------------------
Its: Its:
-------------------------- -------------------------
PM GROUP LIFE INSURANCE COMPANY
By:
--------------------------
Its:
--------------------------
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<PAGE> 66
AMENDMENT NUMBER FOUR
TO
NOTE PURCHASE AGREEMENT
THIS AMENDMENT NUMBER FOUR TO NOTE PURCHASE AGREEMENT (this
"Amendment"), dated as of April 25, 1995, is entered into by and among PACIFIC
MUTUAL LIFE INSURANCE COMPANY ("PM"), PM GROUP LIFE INSURANCE COMPANY
("PMGLIC") (PM and PMGLIC shall be referred to herein collectively as the
"Purchaser"), and CORRECTIONS CORPORATION OF AMERICA (the "Corporation").
R E C I T A L S
WHEREAS, the Corporation and the Purchaser are parties to that
certain Note Purchase Agreement, dated as of June 22, 1992, that was amended by
that certain Amendment No. 1 to Note Purchase Agreement, dated as of August 25,
1992, by that certain Amendment No. 2 to Note Purchase Agreement, dated as of
October 29, 1992, and by that certain Amendment No. 3 to Note Purchase
Agreement, dated as of April 29, 1993 (as so amended, the "Agreement");
WHEREAS, the Corporation has requested that the Purchaser
agree to make certain amendments to the Agreement; and
WHEREAS, the Purchaser is willing to amend the Agreement as
set forth herein.
A G R E E M E N T
NOW, THEREFORE, in consideration of the foregoing and subject
to the terms and conditions herein contained, the parties hereto agree as
follows:
SECTION 1. DEFINITIONS. Initially capitalized terms used in
this Amendment shall have the meanings ascribed thereto in the Agreement, as
amended hereby, unless otherwise defined herein.
SECTION 2. AMENDMENTS TO THE AGREEMENT.
2.1 Amendment of Section 3.1 of the Agreement.
Section 3.1 of the Agreement is hereby amended by (a) adding the defined terms
"Amendment Effective Date," "Concept," "Concept Acquisition," "Concept Acquired
Indebtedness," "Concept Share Exchange Agreement," "Eloy Facility," "UCI,"
"United Concept Partnership," and "United Concept Partnership Debt," as set
forth
<PAGE> 67
below, and (b) deleting the defined term "Funded Debt" in its entirety and
substituting therefor the following defined term:
"Amendment Effective Date" means the date when each
of the conditions set forth in Section 4 of this Amendment have been satisfied
or waived.
"Concept" means Concept Incorporated, a Delaware
corporation.
"Concept Acquisition" means the acquisition by the
Corporation of Concept pursuant to the terms and conditions of the Concept
Share Exchange Agreement.
"Concept Acquired Indebtedness" means Funded Debt of
Concept existing immediately prior to the consummation of the Concept
Acquisition; provided, however, that the foregoing shall not include the United
Concept Partnership Debt.
"Concept Share Exchange Agreement" means a share
exchange agreement, containing such terms and conditions as reasonably may be
acceptable to Purchaser, involving the exchange of shares between the
Corporation and the stockholders of Concept.
"Eloy Facility" means the Bureau of Prisons facility
that is located in Eloy, Arizona and owned by United Concept Partnership.
"Funded Debt" means and includes without duplication
(a) any obligation payable more than one year from the date of the creation
thereof (including the current portion of Funded Debt), that under generally
accepted accounting principles is shown on the balance sheet as a liability
(including obligations under Capital Leases and excluding reserves for deferred
income taxes and other reserves to the extent that such reserves do not
constitute an obligation), (b) guarantees, endorsements (other than
endorsements of negotiable instruments for collection in the ordinary course of
business), and other contingent liabilities (whether direct or indirect) in
connection with the obligations, stock, or dividends of any Person, including
obligations under contracts to supply funds to or in any other manner invest in
any Person, (c) obligations under any contract to purchase, sell, or lease (as
lessee or lessor) property or to purchase or sell services, primarily for the
purpose of enabling a Person to make payment of obligations or to assure the
holder of such obligations against loss including obligations under any
contract for the purchase of materials, supplies, or other property or services
if such contract (or any related document) requires that payment for such
materials, supplies, or other property or services shall be made regardless of
whether delivery of such materials, supplies, or other property or services is
ever made or tendered, (d) obligations
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<PAGE> 68
under any contract to pay or purchase obligations of a Person, or to advance or
supply funds for the payment or purchase of such obligations, and (e) any
agreement to assure a creditor of a Person against loss. For all purposes of
this Agreement (other than for purposes of calculating United Concept
Partnership Funded Debt), all United Concept Partnership Funded Debt shall be
deemed to constitute "Funded Debt."
"UCI" means United Concept, Inc., a Delaware
corporation, fifty percent of the issued and outstanding common stock of which
is owned by Concept.
"United Concept Partnership" means United Concept
Limited Partnership, a Delaware limited partnership of which UCI is the
managing general partner.
"United Concept Partnership Funded Debt" means (a)
the approximately $30,000,000 of indebtedness of United Concept Partnership
that is secured by a first mortgage lien upon the Eloy Facility, and (b) any
and all other indebtedness of United Concept Partnership that constitutes
Funded Debt (without giving effect to the last sentence of such definition).
2.2 Amendment of Section 6.18 of the Agreement. Section
6.18 of the Agreement is hereby amended by deleting such Section in its
entirety and adding and inserting in its place the following new Section 6.18:
"6.18 Limitation on Subsidiary Funded Debt. The
Corporation shall not permit any of its Subsidiaries to incur,
create, assume, or guarantee any Funded Debt (which shall be
deemed to include preferred stock issued by a Subsidiary of
the Corporation that is not held by the Corporation), unless,
after giving effect thereto, (a) the total amount of Funded
Debt of the Corporation's Subsidiaries does not exceed 10% of
Consolidated Total Capitalization, and (b) the Corporation
would be entitled to incur at least $1.00 of additional
Consolidated Senior Funded Debt under Section 6.8. The
foregoing to the contrary notwithstanding, Concept shall be
entitled to be obligated with respect to (and there shall be
excluded from the above calculation both on the Amendment
Effective Date and thereafter) the United Concept Partnership
Debt and the Concept Acquired Debt, so long as the aggregate
amount of Funded Debt of the Corporation incurred, assumed, or
acquired in connection with the Concept Acquisition (inclusive
of the United Concept Partnership Debt and the Concept
Acquired Debt does not exceed Forty Million Dollars
($40,000,000)."
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION.
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<PAGE> 69
In order to induce the Purchaser to enter into this Amendment,
the Corporation hereby makes the following representations and warranties to
the Purchaser:
3.1 Corporate Power and Authorization. The Corporation
has the requisite corporate power and authority to execute, deliver, and
perform its obligations under this Amendment.
3.2 No Conflict. Neither the execution and delivery by
the Corporation of this Amendment nor the consummation of the transactions
contemplated or required hereby nor compliance by the Corporation with the
terms, conditions, and provisions hereof will conflict with or result in a
breach of any of the terms, conditions, or provisions of the Certificate of
Incorporation or Bylaws of the Corporation or any law, regulation, order, writ,
injunction, or decree of any court or governmental instrumentality or any
agreement or instrument to which the Corporation is a party or by which any of
its properties is bound, or constitute a default thereunder or result in the
creation or imposition of any lien.
3.3 Authorization; Governmental Approvals. The execution
and delivery by the Corporation of this Amendment and the consummation of the
transactions contemplated hereby (i) have been duly authorized by all necessary
corporate action on the part of the Corporation and (ii) do not and will not
require any authorization, consent, approval, or license from or any
registration, qualification, designation, declaration, or filing with, any
court or governmental department, commission, board, bureau, agency, or
instrumentality, domestic or foreign.
3.4 Valid and Binding Effect. This Amendment has been
duly and validly executed and delivered by the Corporation and constitutes the
legal, valid, and binding obligation of the Corporation, enforceable in
accordance with its terms.
3.5 Absence of Default. No event has occurred and is
continuing or will result from the consummation of the transactions
contemplated by this Amendment that would constitute an Event of Default under
the Agreement.
SECTION 4. CONDITIONS.
4.1 Conditions to the Effectiveness of this
Amendment. The effectiveness of this Amendment is subject to the fulfillment,
to the satisfaction of Purchaser, of each of the following conditions:
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<PAGE> 70
(a) Purchaser shall have received an
executed counterpart of this Amendment duly executed and delivered by the
Corporation and each Purchaser; and
(b) Each Purchaser shall have received an
executed replacement Tranche A Note (in the form of Exhibit A attached hereto),
Tranche B Note (in the form of Exhibit B attached hereto), and Tranche C Note
(in the form of Exhibit C attached hereto), each duly executed and delivered by
the Corporation.
SECTION 5. MISCELLANEOUS.
5.1 Ratification of the Agreement. Except as
specifically amended by this Amendment, the terms, conditions and provisions of
the Agreement shall not be affected by this Amendment and shall remain in full
force and effect and are hereby ratified and confirmed.
5.2 No Implied Waiver. The execution, delivery, and
performance of this Amendment shall not, except as expressly provided herein,
constitute a waiver or modification of any provision of, or operate as a waiver
of any right, power, or remedy of the Purchaser under, the Agreement or
prejudice any right or remedy that the Purchaser may have or may have in the
future under or in connection with the Agreement or any instrument or agreement
referred to therein. The Corporation acknowledges and agrees that the
representations and warranties of the Corporation contained in the Agreement
and in this Amendment shall survive the execution and delivery of this
Amendment and the effectiveness hereof.
5.3 Governing Law. This Amendment shall be governed by,
and construed and enforced in accordance with, the laws of the State of
California.
5.4 Counterparts; Telecopy Execution. This Agreement may
be executed in two or more counterparts, each of which shall be deemed to be an
original, but all of which together shall constitute one and the same
instrument. Delivery of an executed counterpart of this Amendment by
telefacsimile shall be equally as effective as delivery of a manually executed
counterpart. Any party delivering an executed counterpart of this Amendment by
telefacsimile shall also deliver a manually executed counterpart, but the
failure to deliver a manually executed counterpart shall not affect the
validity, enforceability, and binding effect of this Amendment.
-5-
<PAGE> 71
IN WITNESS WHEREOF, the undersigned have caused this Amendment
to be executed by their duly authorized officers as of the date first written
above.
CORRECTIONS CORPORATION OF PACIFIC MUTUAL LIFE
AMERICA INSURANCE COMPANY
By: By:
------------------------- -------------------------
Its: Its:
------------------------- -------------------------
PM GROUP LIFE INSURANCE
COMPANY
By:
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Its:
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EXHIBIT 10.143
STOCK PURCHASE AGREEMENT
BY AND BETWEEN
CORRECTIONS CORPORATION OF AMERICA
AND
SODEXHO S.A.
DATED AS OF JUNE 9, 1995
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STOCK PURCHASE AGREEMENT
This Agreement (the "Agreement") is made and entered into this 9th day
of June, 1995, by and between Corrections Corporation of America, a Delaware
corporation having its principal place of business in Nashville, Tennessee (the
"Seller"), and Sodexho S.A., a French corporation, having its principal place
of business in France (the "Buyer").
WHEREAS, Seller will at the Closing (as hereinafter defined) own
45,000 "C" class shares in the capital of Corrections Corporation of Australia
Pty. Ltd. A.C.N. 010 921 641, a Queensland company (the "Company") which shares
collectively represent one hundred (100%) percent of the issued shares of the
Company; and
WHEREAS, Buyer desires to acquire from Seller, and Seller desires to
sell to Buyer, shares in the capital of the Company owned by Seller which
shares collectively represent fifty percent (50%) of the issued shares of the
Company (the "Shares") upon and subject to the terms and conditions contained
in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements herein contained, the parties agree as follows:
ARTICLE I
PURCHASE AND SALE OF SHARES
1.01. TRANSFER OF SHARES. Subject to all of the terms and
conditions of this Agreement, at the Closing, Seller hereby agrees to sell,
transfer and convey to Buyer, and Buyer agrees to purchase and acquire from
Seller, free and clear of all liens, claims, charges, restrictions, security
interests, equities, proxies, pledges and encumbrances of any kind, 22,500 "C"
class shares in the capital of the Company, which shares collectively
constitute fifty percent (50%) of the issued shares in the capital of the
Company (the foregoing shares of the Company are hereinafter collectively
referred to as the "Shares").
ARTICLE II
CONSIDERATION
2.01. PURCHASE PRICE. The Purchase Price for the Shares shall be
Three Million Seven Hundred Seventeen Thousand Dollars ($3,717,000.00) (U.S.)
(the "Purchase Price"). The Purchase Price shall be paid by Buyer to Seller at
the Closing, by bank cheque, bank wire transfer or such other method as may be
mutually agreed upon by the parties.
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2.02. COMPANY OBLIGATIONS. By entering into this Agreement, Buyer
understands and agrees that from and after the Closing, Buyer shall have the
obligations set forth in Schedule 2.02 hereto.
ARTICLE III
CLOSING; OBLIGATIONS OF THE PARTIES
3.01. CLOSING DATE. Subject to the provisions of Section 7.05 and
Section 8.05, the closing (the "Closing") shall take place and be effective for
all purposes at 10:00 a.m., local time, on ___ July 1995 at the offices of
Seller or at such other time and place as the parties hereto mutually agree
(the "Closing Date").
3.02. OBLIGATIONS OF THE PARTIES AT THE CLOSING.
(a) At the Closing, the events set out in clauses (i) through (v)
shall occur:
(i) the Buyer shall pay the consideration as specified
in Section 2.01.
(ii) the Seller shall deliver to the Buyer or to such
person as Buyer may direct, the share certificate issued by the Company for the
Shares together with an executed instrument of transfer in registrable form
(except for the payment of any applicable stamp duty) for the Shares in favor
of the Buyer or its nominee (as transferee) from the registered holder of the
Shares (as transferor).
(iii) the Seller shall deliver to the Buyer any waiver,
consent or other document which the Buyer may require to obtain a good title to
the Shares registered in the name of the Buyer or its nominee, including any
Power of Attorney under which any document required to be delivered under this
Agreement has been executed.
(iv) the Seller shall cause a meeting of the Directors of
the Company to be convened and shall procure that at the meeting:
(a) the Directors shall approve the transfer of
the Shares to the Buyer or its nominee and, subject to the payment of stamp
duty, direct the entries in the Company's share register be made, the existing
share certificate for the Shares be cancelled and a new certificate in the name
of the Buyer be issued;
(b) Two (2) persons nominated by Buyer shall be
appointed as directors;
(v) Buyer may by written notice to the Seller waive
compliance by the Seller with the requirements of this Section 3.02 on the
Seller's part to be performed.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
In order to induce Buyer to enter into this Agreement and consummate
the transactions contemplated hereby, Seller hereby represents and warrants as
follows:
4.01. ORGANIZATION AND GOOD STANDING. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has full corporate power and authority to enter into this
Agreement and to carry out the transactions contemplated hereby.
4.02. OWNERSHIP OF SHARES; VALIDITY AND ENFORCEABILITY. Seller
represents and warrants that (i) Seller is the legal and beneficial owner of
the Shares, free and clear of all liens, claims, charges, restrictions,
security interests, equities, proxies, pledges or encumbrances of any kind;
(ii) Seller has the full right, power, authority and capacity to sell and
transfer the respective Shares owned by such Seller; (iii) by virtue of the
transfer of the Shares to Buyer at the Closing, Buyer will obtain full title to
such Shares, free and clear of all liens, claims, charges, restrictions,
security interests, equities, proxies, pledges, or encumbrances of any kind.
This Agreement constitutes a legal, valid and binding agreement of the Seller,
enforceable against Seller in accordance with its terms.
4.03. CORPORATE POWER AND AUTHORITY: DUE AUTHORIZATION. Seller has
full corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The Board of Directors of
Seller has duly approved and authorized the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby, and no
other corporate proceedings on the part of Seller are necessary to approve and
authorize the execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby. This Agreement and each of the documents
to which Seller is a party constitutes, or will constitute when executed and
delivered, a valid and binding agreement of Seller, in each case enforceable in
accordance with its terms.
4.04. NO VIOLATION. The execution and delivery of this Agreement by
the Seller does not, and the consummation of the transactions contemplated
hereby will not, (a) violate or be in conflict with, or constitute a default
(or an event which, with notice or lapse of time, or both, would constitute a
default) with, or result in the termination of, or accelerate the performance
required by, or excuse performance by any person of any of its obligations
under, or cause the performance required by, or exercise performance by any
person of any of its liabilities under, any provision of, or result in the
creation of any lien or security interest under, any agreement, indenture,
instrument, lease, security agreement, mortgage or lien to which the Seller is
a party or by which any of the Seller's assets or properties are bound; (b)
violate or be in conflict with any provision of the Certificate of
Incorporation or Bylaws of the Seller; (c) violate any order, arbitration
award, judgment, writ, injunction, decree, statute, rule, or regulation
applicable to the
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Seller; or (d) violate any other contractual or legal obligation or restriction
to which the Seller is subject.
4.05. ABSENCE OF QUESTIONABLE PAYMENTS. Neither the Seller nor any
other person acting on its behalf has at any time directly or indirectly used
funds for any illegal purpose, including without limitation, the making of any
improper political contribution, bribe or kickback.
4.06. ORGANIZATION AUTHORITY AND GOOD STANDING. The Company is a
company duly organized, validly existing, and in good standing under the laws
of Queensland, Australia. The Company has full corporate power and authority
to carry on its business as now conducted and possesses all governmental and
other permits, licenses, and other authorization to own, lease, or operate its
assets and properties as now owned, leased, and operated and to carry on its
business as presently conducted.
4.07. NO CONFLICTS. The execution and delivery of this Agreement
does not, and the consummation of the transactions contemplated hereby will
not, (a)violate any provision, or result in the creation of any lien or
security interest under, any agreement, indenture, instrument, lease, security
agreement, mortgage, or lien to which Company is a party or by which it is
bound; (b) violate any order, arbitration award, judgment, writ, injunction,
decree, statute, rule, or regulation applicable to Company; or (c) violate any
other contractual or legal obligation or restriction to which Company is
subject. That certain Shareholders Agreement dated September 27, 1989 and
subsequently amended by and among Seller and certain other shareholders of the
Company has been terminated.
4.08. SUBSIDIARIES. The entities listed on Schedule 4.08 hereto
(the "Subsidiaries") are the only subsidiaries in which the Company owns,
directly or indirectly, any capital stock or other equity interest, or with
respect to which the Company, alone or in combination with others, is in a
control position. Each of the Subsidiaries is a corporation duly organized,
validly existing, and in good standing under the laws of the jurisdiction of
its incorporation. Each of the Subsidiaries has the power and authority and
possesses all governmental and other permits, licenses, and other
authorizations to own or lease its properties and to carry on its business as
now conducted. The outstanding capital stock of each of the Subsidiaries is
validly issued, fully paid, and non-assessable. The Company has good and valid
title to the equity interests in the Subsidiaries, free and clear of all liens,
claims, charges, restrictions, security interests, equities, proxies, pledges,
or encumbrances of any kind, except as set forth on Schedule 4.08. Except
where otherwise indicated herein, or unless the context otherwise requires, any
reference to the Company herein shall include the Company and the Subsidiaries.
4.09. LITIGATION. Except as set forth in Schedule 4.09, there are
no claims, actions, suits, proceedings, inquiries, or investigations pending or
threatened by or against, or otherwise affecting the Company at law or in
equity, or by any federal, state, municipal, or other governmental department,
commission, board, agency, instrumentality, or authority which, if adversely
decided, have a material adverse effect on the condition (financial or
otherwise), assets, liabilities, earnings, prospects, or business of the
Company. There are no claims, action, or suits
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pending or threatened by or against or otherwise affecting the Company at law
or in equity, questioning the validity of this Agreement or the transactions
contemplated hereby.
4.10. TITLE TO ASSETS. Except as set forth in Schedule 4.10, the
Company is the record, legal, and beneficial owner of, and has good marketable
title to, all the Assets (as defined herein), free and clear of all mortgages,
security interests, liens, leases, covenants, assessments, easements, options,
rights of refusal and set-off, restrictions, reservations, defects in the
title, encroachments, and other encumbrances, direct, contingent, or otherwise.
The Assets are all assets set forth in the financial statements of the Company
and owned or leased by the Company or otherwise utilized in the operation of
the Company's business, excluding those items disposed of and replaced since
December 31, 1994, in the ordinary course of business, but including the
replacements thereof.
4.11 TAX MATTERS. Seller and the Company have duly and timely
filed all tax reports and returns required to be filed by the Company and have
duly paid all taxes and other charges due or claimed to be due from the Company
by foreign, federal, state, or local taxing authorities (including, without
limitation, those due in respect of its properties, income, franchises,
licenses, sales, and payrolls); and true and correct copies of all tax reports
and returns relating to such taxes and other charges for the period since
December 31, 1990, have been heretofore delivered to Buyer. Since January 1,
1990, the Company has not incurred tax liabilities other than in the ordinary
course of business; there are no tax liens (other than liens for current taxes
not yet due) upon any properties or assets of the Company (whether real,
personal or mixed, tangible or intangible), and, except as reflected in the
financial statements of the Company, there are no pending or threatened
questions or examinations relating to, or claims asserted for, taxes or
assessments against the Company, and there is no basis for such question or
claim.
4.12. CAPITALIZATION. The authorized capital stock of the Company
consists of 15,000,000 "C" class shares of $1.00 each and of 1,000,000 "E"
class shares of $1.00 each. The issued capital stock is 45,000 "C" class
shares and no "E" class shares. Except for the issued "C" class and "E" class
shares, there are no shares of capital stock or other securities of the Company
issued and outstanding. There are no outstanding options, warrants, or rights
to purchase or acquire from the Company or the Seller, any securities of the
Company, and there are no contracts, commitments, agreements, understandings,
arrangements, or restrictions as to which the Company or the Seller is a party
or by which either of them is bound relating to any shares of capital stock or
other securities of the Company (including the Shares), whether or not
outstanding on the stock of the Company.
4.13. SHARES. All of the shares of issued capital stock of the
Company are duly authorized, validly issued, and outstanding and fully paid and
nonassessable, and free of preemptive rights.
4.14. CONTRACTS. Schedule 4.14 hereto sets forth a complete and
accurate list of all contracts, agreements, consulting arrangements, purchase
orders, leases, subleases, options, and commitments, oral or written, and all
assignments, amendments, schedules, exhibits, and
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appendices thereof, affecting or relating to the Company's business, the
Company's assets, or any interest therein to which the Company is a party or by
which the Company or its business assets or the Company's stock is bound or
affected, including, without limitation, service contracts, equipment leases,
and leases of space and ground leases (collectively, the "Contracts"); provided
there shall be no breach of this Section 4.14 if Immaterial Contracts as
defined below, are omitted. "Immaterial Contracts" shall mean contracts having
a remaining term of less than one (1) year and involving an expenditure of less
than US$25,000 in the aggregate for all obligations under any one contract or
$1,000,000 for all such contracts.
4.15. LICENSES AND PERMITS. The Company has all local, state, and
federal licenses, permits, registrations, certificates, consents,
accreditation, and approvals (collectively, the "Licenses and Permits")
necessary to conduct its business in a manner currently conducted. There is no
default under any of the Company's Licenses and Permits, no notices have been
received by the Company or its employees, agents, or representatives with
respect to threatened, pending, or possible revocation, termination,
suspension, or limitation of any such License or Permit, and there exists no
grounds for revocation, suspension, or limitation of any such License or
Permit.
4.16. RELATED PARTY TRANSACTIONS. All transactions between Seller
and its affiliates on the one hand and the Company and its affiliates on the
other hand prior to the date hereof were conducted at arm's length and at fair
value.
4.17. FINANCIAL STATEMENTS. Seller has delivered to Buyer: (a)
audited consolidated balance sheets of the Company as of December 31, 1994, and
the related audited consolidated statements of income, changes in stockholders'
equity, and changes in financial position for the fiscal year then ended,
including the notes thereto, together with the report thereon of Arthur
Andersen LLP, independent certified public accountants (the "Audited Financial
Statements"), and (b) an unaudited consolidated balance sheet of the Company as
of April 30, 1995 (the "Unaudited Balance Sheet") and the related unaudited
consolidated statements of income, changes in shareholders' equity, and changes
in financial position for the period then ended, including the notes thereto
(the "Unaudited Financial Statements") (the Audited Financial Statements and
the Unaudited Financial Statements are collectively referred to herein as the
"Financial Statements"). The Financial Statements are true, complete, and
correct, and fairly present the consolidated assets, liabilities, financial
condition, and results of operations of the Company as of the respective dates
thereof, and for the periods therein referred to, subject, in the case of the
Unaudited Financial Statements, to normal recurring year-end adjustments.
4.18. NO UNDISCLOSED LIABILITY. The Company does not have any
liabilities or obligations of any nature, whether absolute, accrued,
contingent, or otherwise, and whether due or to become due (including, without
limitation, liabilities for taxes and interest, penalties, and other charges
payable with respect thereto which are not reflected or reserved against in
Financial Statements or disclosed in the notes thereto.) The reserves
reflected in the Financial Statements are adequate, appropriate, and reasonable
in accordance with generally accepted accounting principles applied on a
consistent basis. Furthermore, Seller does not have actual knowledge of
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or actual knowledge of any basis for the assertion against the Company of any
such liability or obligation of any nature not fully reflected or reserved
against in the Financial Statements.
4.19. PROFESSIONAL FEES. The Seller has not done anything to cause
or incur any liability or obligation of the Company for investment banking,
brokerage, finders, agents or other fees, commissions, expenses or charges in
connection with the negotiation, preparation, execution or performance of this
Agreement or the consummation of the transactions contemplated hereby, and
Seller does not know of any claim by anyone for such a fee, commission, expense
or charge.
4.20. OFFERING OF SHARES. The offer, issuance and sale of the
Shares by the Seller to Buyer will not require registration under United States
securities laws.
4.21. CONSENTS AND APPROVALS. Subject to the provisions of Section
7.05, Seller has obtained or will have obtained prior to Closing, all consents,
approvals, authorizations or orders of third parties, including governmental
authorities, necessary for the authorization, execution and performance of this
Agreement by Seller.
4.22. FULL DISCLOSURE. Neither the representations appearing in
Article IV of this Agreement, nor any schedule, exhibit, list, certificate or
other instrument and document furnished or to be furnished by Seller to Buyer
pursuant to this Agreement, contains any untrue statement of a material fact or
omits to state any material fact required to be stated herein or therein or
necessary to make the statements and information contained herein or therein
not misleading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
In order to induce Seller to enter into this Agreement and consummate
the transactions contemplated hereby, Buyer hereby represents and warrants to
Seller as follows:
5.01. ORGANIZATION AND GOOD STANDING. Buyer is a societe anonyme
duly organized, validly existing and in good standing under the laws of France
and has full corporate power and authority to enter into this Agreement and to
carry out the transactions contemplated hereby.
5.02. AUTHORIZATION. The Board of Directors of Buyer has taken all
action required to authorize the execution and delivery by Buyer of this
Agreement and the consummation by Buyer of the transactions contemplated
hereby.
5.03. VALID AND BINDING AGREEMENT. This Agreement constitutes a
valid and binding agreement of Buyer, enforceable against Buyer in accordance
with its terms.
5.04. NO VIOLATION. The execution and delivery of this Agreement by
Buyer does not, and the consummation of the transactions contemplated hereby
will not, (a) violate any provision,
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or result in the creation of any lien or security interest under, any
agreement, indenture, instrument, lease, security agreement, mortgage or lien
to which Buyer is a party or by which it is bound; (b) violate any order,
arbitration award, judgment, writ, injunction, decree, statute, rule or
regulation applicable to Buyer; or (c) violate any other contractual or legal
obligation or restriction to which Buyer is subject.
5.05. PURCHASE FOR INVESTMENT. Buyer is acquiring the Shares for
its own account and not with a view to, or present intention of, distribution
thereof in violation of the federal securities laws of the United States or
Australia or any state securities or blue sky laws, and the Shares will not be
disposed of in contravention of such laws.
5.06. PROFESSIONAL FEES. Buyer has not done anything to cause or
incur any liability for investment banking, brokerage, finders, agents or other
fees, commissions, expenses or charges in connection with the negotiation,
preparation, execution and performance of this Agreement or the consummation of
the transactions contemplated hereby, and Buyer does not know of any claim by
anyone for such a commission or fee.
5.07. CONSENTS AND APPROVALS. Buyer has obtained or will have
obtained prior to Closing, all consents, approvals, authorizations or orders of
third parties, including governmental authorities, necessary for the
authorization, execution and performance of this Agreement by Buyer.
5.08. FULL DISCLOSURE. Neither the representations appearing in
Article V of this Agreement, nor any certificate or other instrument or
document furnished or to be furnished by Buyer to Seller pursuant to this
Agreement, contains any untrue statement of a material fact or omits to state a
material fact required to be stated herein or therein or necessary to make the
statements and information contained herein or therein not misleading.
ARTICLE VI
COVENANTS AND AGREEMENTS OF PARTIES
The parties hereto agree that from the date hereof until the Closing, and
thereafter if so specified, it will fulfill the following covenants and
agreements unless otherwise consented to by Buyer in writing:
6.01. FURTHER ASSURANCES. At any time and from time to time after
the Closing, at the request of the other party hereto and without further
consideration, each of Seller and Buyer will execute and deliver such other
instruments of sale, transfer, conveyance, assignment, and delivery and
confirmation and take such action as may reasonably be requested by the other
party hereto in order more effectively to transfer, convey and assign to Buyer
and to place Buyer in possession and control of, and to confirm Buyer's title
to, the Shares, and to assist Buyer in exercising all rights and enjoying all
benefits with respect thereto.
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6.02. CONSENTS AND APPROVALS. Each of Seller and Buyer shall, in a
timely, accurate and complete manner, take all necessary corporate and other
action and use all reasonable efforts to obtain all consents, approvals,
permits, licenses and amendments of agreements required to carry out the
transactions contemplated in this Agreement.
6.03. NON-DISCLOSURE. Except as agreed to in writing by the other
party hereto, neither Seller nor Buyer will disclose to any other person not an
employee of such entity (or a person otherwise involved in the carrying out of
the transactions contemplated by this Agreement), nor make any public
announcement of, the transactions contemplated by this Agreement prior to the
Closing. Any such disclosure to employees will be made on a need-to-know basis
and on the condition that such employees agree to be bound by the same
confidentiality terms.
6.04. SCHEDULES. Seller hereby agrees to deliver the Schedules
referred to herein and required to be delivered pursuant to the terms hereof,
to the Buyer within fourteen (14) days of the execution of this Agreement.
ARTICLE VII
CONDITIONS TO BUYER'S OBLIGATIONS
All obligations of Buyer hereunder are subject to the fulfillment,
prior to or at the Closing, of each of the following conditions:
7.01. REPRESENTATIONS AND WARRANTIES. The representations and
warranties made by the Seller in this Agreement shall be true when made and at
and as of the time of the Closing as though such representations and warranties
were made at and as of such date.
7.02. PERFORMANCE. Seller shall have performed and complied with
all agreements, obligations, and conditions required by this Agreement to be so
complied with or performed.
7.03. DUE DILIGENCE. Buyer shall have completed to its satisfaction,
a due diligence review of the Company.
7.04. OFFICER'S CERTIFICATE. Seller shall have delivered to Buyer a
Certificate of an officer of Seller dated the Closing Date, certifying as to
the fulfillment of the conditions specified in Sections 7.01 and 7.02 hereof.
7.05. SHAREHOLDERS AGREEMENT. The parties hereto shall have entered
into a Shareholders Agreement or, if necessary, an amendment to the Articles of
Association with regard to the issues outlined in Schedule 7.05 hereto which
Agreement shall be in form and substance mutually agreeable to both parties.
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7.06. GOVERNMENTAL APPROVAL. (a) The Buyer shall have received
notification from The Treasurer of the Commonwealth Government of Australia
(the "Treasurer") that the Treasurer does not object to the Buyer acquiring the
Shares on the terms set out in this Agreement. If the Buyer has not done so
prior to the execution of this Agreement it shall forthwith notify the
Treasurer of its intention to acquire the Shares as required by the Foreign
Acquisitions & Takeovers Act 1975 (the "Act");
(b) If the Treasurer shall have made an order pursuant to Section
18(2) of the Act prohibiting the acquisition of the Shares by the Buyer, then
this Agreement shall terminate;
(c) If the Treasurer indicates, within 30 days of notification,
that, pursuant to Section 25(1A) of the Act, he is prepared to grant his
consent to the acquisition of the Shares by the Buyer, subject to the
fulfillment by the Buyer of certain specified conditions, then the Buyer shall
advise the Treasurer and the Seller in writing within seven days thereafter
whether it accepts these conditions. If the Buyer accepts the conditions,
Buyer shall use its best reasonable efforts to comply with such conditions
within five days of the Treasurer's notification of the conditions and the
Closing shall be within five days of such compliance. If the Buyer does not
accept the Treasurer's conditions, then this Agreement will be at an end;
(d) If the Buyer has given notice to the Treasurer of his
intention to acquire the Shares, 30 days has expired from the date of such
notification and the Treasurer has not made any order under the Act or has not
made any decision under Section 25(1A) of the Act, then Closing shall be 5
working days from the date of expiration of that period of 30 days;
(e) If:
(i) before the end of thirty days after the date on which
the Treasurer has received notice from the Buyer of its intention to acquire
the Shares, the Treasurer has made an order under Section 22 of the Act in
relation to the proposed acquisition of the Shares;
(ii) an order is published in the Gazette as required by
the Act; and
(iii) 90 days pass after the day on which the order is
published:
(a) the Treasurer has not made a decision under
Section 25(1A); or
(b) made any other order under the Act,
then the Closing shall be five working days after the
expiration of that ninety day period.
(f) The purchase of the Shares by Buyer shall have been approved
by the States of Victoria and Queensland governments as required by existing
contracts by and between the Company and such governments.
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(g) The Victorian government shall have completed to its
satisfaction a probity investigation of Buyer in connection with the Company's
New Women's Prison Project in Victoria.
(h) The governments of the States of Victoria and Queensland shall
have completed to their satisfaction a probity investigation of the directors
of the Company designated by Buyer and appointed pursuant to Clause
3.02(a)(iv)(b) hereof.
ARTICLE VIII
CONDITIONS TO SELLER'S OBLIGATIONS
All obligations of Seller under this Agreement are subject to the
fulfillment, prior to or at the Closing, of each of the following conditions:
8.01. REPRESENTATIONS AND WARRANTIES. The representations and
warranties made by the Buyer in this Agreement shall be true when made and at
and as of the time of the Closing as though such representations and warranties
were made at and as of such date.
8.02. PERFORMANCE. Buyer shall have performed and complied with all
agreements, obligations, and conditions required by this Agreement to be so
complied with or performed.
8.03. OFFICER'S CERTIFICATE. Buyer shall have delivered to Seller a
Certificate of an officer of Buyer, dated the Closing Date, certifying as to
the fulfillment of the conditions specified in Sections 8.01 and 8.02 hereof.
8.04. CONSENTS. Seller shall have received all consents required for
the consummation of the transactions contemplated hereby, all of which consents
shall be in form and substance satisfactory to Seller.
8.05. GOVERNMENT APPROVALS. (a) The Buyer shall have received the
approval of the Treasurer as described in Section 7.05 hereof.
(b) The purchase of the Shares by Buyer shall have been approved by
the States of Victoria and Queensland governments as required by existing
contracts by and between the Company and such governments.
(c) The Victorian government shall have completed to its
satisfaction a probity investigation of Buyer in connection with the Company's
New Women's Prison Project in Victoria.
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(d) The governments of the States of Victoria and Queensland shall
have completed to their satisfaction a probity investigation of the directors
of the Company designated by Buyer and appointed pursuant to Clause
3.02(a)(iv)(b) hereof.
ARTICLE IX
INDEMNIFICATION
9.01. INDEMNIFICATION BY SELLER. The Seller hereby agrees to
defend, indemnify and hold harmless Buyer, its directors, officers, employees,
affiliates and agents, and shall reimburse Buyer for, from and against each
claim, loss, diminution in value, damages, liability, cost and expense
(including, without limitation, interest, penalties, costs of preparation and
investigation, and the reasonable fees, disbursements and expenses of
attorneys, accountants and other professional advisors) (collectively,
"Losses"), directly or indirectly relating to, resulting from or arising out
of:
(a) Any untrue representation, misrepresentation, breach of
warranty or nonfulfillment of any covenant, undertaking, agreement or other
obligation by or of Seller contained herein, or in any certificate, schedule,
document or instrument delivered to Buyer pursuant hereto.
(b) Any other Loss incidental to any of the foregoing.
9.02. INDEMNIFICATION BY BUYER. Buyer hereby agrees to defend,
indemnify and hold harmless Seller, its directors, officers, employees,
affiliates and agents, and shall reimburse Seller for, from and against Losses
directly or indirectly relating to, resulting from or arising out of:
(a) Any untrue representation, misrepresentation, breach of
warranty or nonfulfillment of any covenant, undertaking, agreement or other
obligation by Buyer contained herein or in any certificate, document or
instrument delivered to Seller pursuant hereto.
(b) Any other Loss incidental to the foregoing.
9.03. PROCEDURE. (a) The indemnified party shall promptly notify
the indemnifying party of any claim, demand, action or proceeding for which
indemnification will be sought under Sections 9.01 or 9.02 of this Agreement
(but the failure to so notify shall not relieve the indemnifying party from its
obligations hereunder unless such failure irrevocably prejudices the
indemnifying party), and, if such claim, demand, action or proceeding is a
third party claim, demand, action or proceeding, the indemnifying party will
have the right at its expense to assume the defense thereof using counsel
reasonably acceptable to the indemnified party. The indemnified party shall
have the right to participate, at its own expense, with respect to any such
third party claim, demand, action or proceeding. In connection with any such
third party claim, demand, action or proceeding, Buyer and the Seller shall
cooperate with each other and provide each other with access to relevant books
and records in their possession. No such third party
12
<PAGE> 14
claim, demand, action or proceeding shall be settled without the prior written
consent of the indemnified party. If a firm written offer is made to settle
any such third party claim, demand, action or proceeding and the indemnifying
party proposes to accept such settlement and the indemnified party refuses to
consent to such settlement, then: (i) the indemnifying party shall be excused
from, and the indemnified party shall be solely responsible for, all further
defense of such third party claim, demand, action or proceeding; and (ii) the
maximum liability of the indemnifying party relating to such third party claim,
demand, action or proceeding shall be the amount of the proposed settlement if
the amount thereafter recovered from the indemnified party on such third party
claim, demand, action or proceeding is greater than the amount of the proposed
settlement.
(b) If the indemnified party reasonably determines (i) that there
may be a conflict between the positions of the indemnifying party and the
indemnified party in defending such claim or action, or (ii) that there may be
legal defenses available to such indemnified party different from or in
addition to those available to the indemnifying party, then separate counsel
for the indemnified party shall be entitled to participate in and conduct the
defense, or such different defenses, and the indemnifying party shall be liable
for any reasonable legal or other expenses incurred by the indemnified party in
connection with the defense.
(c) Judgments against and settlements entered into by the
indemnified party pursuant to Section 9.03(a) shall unconditionally release the
indemnifying party from liability for the particular claim, demand, action, or
proceeding for which indemnification was sought.
ARTICLE X
SURVIVAL OF REPRESENTATIONS
10.01. SURVIVAL OF REPRESENTATIONS. All representations, warranties,
covenants, indemnities and agreements by the parties contained in this
Agreement shall survive the Closing and any investigation at any time made by
or on behalf of any party hereto, and shall expire on the third anniversary of
the Closing Date.
10.02. STATEMENTS AS REPRESENTATIONS. All statements contained in
any certificate, schedule, list, document or other writing delivered pursuant
hereto or in connection with the transactions contemplated hereby shall be
deemed representations and warranties for all purposes of this Agreement.
10.03. REMEDIES CUMULATIVE. The remedies provided herein shall be
cumulative and shall not preclude the assertion by any party hereto of any
other rights or the seeking of any other remedies against the other party
hereto.
13
<PAGE> 15
ARTICLE XI
TERMINATION OF AGREEMENT
11.01. TERMINATION. This Agreement may be terminated at any time
prior to the Closing:
(a) By Buyer, if there has been a material violation or breach by
the Seller of any of the agreements, representations or warranties contained in
this Agreement which has not been waived in writing, or if any of the
conditions set forth in Article VII hereof have not been satisfied by the
Closing or have not been waived in writing by Buyer.
(b) By Seller, if there has been a material violation or breach by
the Buyer of any of the agreements, representations or warranties contained in
this Agreement which has not been waived in writing, or if any of the
conditions set forth in Article VIII hereof have not been satisfied by the
Closing or have not been waived in writing by Seller.
(c) By either Buyer or Seller if the transactions contemplated by
this Agreement shall not have been consummated on or before August 15, 1995.
(d) By either Buyer or the Seller if the other makes an assignment
for the benefit of creditors, files a voluntary petition in bankruptcy or seeks
or consents to any reorganization or similar relief under any present or future
bankruptcy act or similar law, or is adjudicated a bankrupt or insolvent, or if
a third party commences any bankruptcy, insolvency, reorganization or similar
proceeding involving the other.
11.02. EFFECT OF TERMINATION. In the absence of fraud or willful
breach on the part of Seller, or on the part of Buyer, then Seller will not
have any liability to Buyer, or Buyer will not have any liability to Seller, as
the case may be, under this Agreement if Seller or Buyer terminates this
Agreement pursuant to Section 11.01.
ARTICLE XII
MISCELLANEOUS
12.01. EXPENSES. All fees and expenses incurred by Seller, including
without limitation, legal fees and expenses, in connection with this Agreement
will be borne by Seller and all fees and expenses incurred by Buyer, including,
without limitation, legal fees and expenses, in connection with this Agreement
will be borne by Buyer, provided, however, that Buyer shall be responsible for
all stamp duty which may be due to any jurisdiction or governmental entity as a
result of the Closing of the purchase of the Shares.
14
<PAGE> 16
12.02. ASSIGNABILITY; PARTIES IN INTEREST.
(a) Buyer may assign any and all of its rights hereunder to any
affiliate of or any direct or indirect subsidiary of Buyer, and Buyer shall
advise Seller of any such assignment and shall designate such party as the
assignee and transferee of the securities purchased. Any such assignee shall
assume all of Buyer's duties, obligations and undertakings hereunder, but the
assignor shall remain liable thereunder.
(b) Seller may not assign, transfer or otherwise dispose of any of
its rights hereunder without the prior written consent of Buyer.
(c) All the terms and provisions of this Agreement shall be
binding upon, shall inure to the benefit of and shall be enforceable by the
respective heirs, successors, assigns and legal or personal representatives of
the parties hereto.
12.03. ENTIRE AGREEMENT; AMENDMENTS. This Agreement, including the
exhibits, schedules, lists and other documents and writings referred to herein
or delivered pursuant hereto, which form a part hereof, contains the entire
understanding of the parties with respect to its subject matter. There are no
restrictions, agreements, promises, warranties, covenants or undertakings other
than those expressly set forth herein or therein. This Agreement supersedes
all prior agreements and undertakings between the parties with respect to its
subject matter. This Agreement may be amended only by a written instrument
duly executed by all parties or their respective heirs, successors, assigns or
legal personal representatives. Any condition to a party's obligations
hereunder may be waived, but only by a written instrument signed by the party
entitled to the benefits thereof. The failure or delay of any party at any
time or times to require performance of any provision or to exercise its rights
with respect to any provision hereof, shall in no manner operate as a waiver of
or affect such party's right at a later time to enforce the same.
12.04. HEADINGS. The section and paragraph headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretations of this Agreement.
12.05. SEVERABILITY. The invalidity of any term or terms of this
Agreement shall not affect any other term of this Agreement, which shall remain
in full force and effect.
12.06. NOTICES. All notices, request, claims, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if delivered or mailed (registered or certified mail, postage
prepaid, return receipt requested) as follows:
15
<PAGE> 17
If to Seller:
Corrections Corporation of America
102 Woodmont Boulevard, Suite 800
Nashville, Tennessee 37205
Attn: Doctor R. Crants
With a copy to:
Elizabeth E. Moore, Esq.
Stokes & Bartholomew, P.A.
424 Church Street, Suite 2800
Nashville, Tennessee 37219
If to Buyer:
Sodexho S.A.
3, avenue Newton
78180 Montigny-le-Bretonneux
FRANCE
Attn: Jean-Pierre Cuny
With a copy to:
Ropes & Gray
One International Place
Boston, MA 02110
Attn: Howard K. Fuguet, Esq.
or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address shall
only be effective upon receipt.
12.07. GOVERNING LAW. This Agreement shall be governed by and be
interpreted under the laws of Queensland without regard to the conflicts of law
principles thereof. Each party hereby irrevocably submits to the non-exclusive
jurisdiction of any state or federal court located in Queensland over any
action or proceeding to enforce any right under this Agreement. The parties
further acknowledge that irrevocable damage would occur in the event that any
of the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. Accordingly, the parties shall be
entitled to an injunction to prevent breaches of the provisions of this
Agreement and to enforce specifically the terms and provisions hereof in any
court in Queensland. This being in addition to any other remedy to which they
may be entitled at law or equity.
12.08. COUNTERPARTS. This Agreement may be executed simultaneously
in one or more counterparts, with the same effect as if the signatories
executing the several counterparts had
16
<PAGE> 18
executed one counterpart, provided, however, that the several executed
counterparts shall together have been signed by Buyer and the Seller. All such
executed counterparts shall together constitute one and the same instrument.
12.09. DISPUTE RESOLUTION.
(a) Any party to this Agreement claiming that a dispute has arisen
in connection with the negotiation, execution, interpretation, performance or
nonperformance of this Agreement between any of the parties to this Agreement
shall give notice to the other party in dispute designating as its
representative in negotiations relating to the dispute a person with authority
to settle the dispute and the other party given written notice shall promptly
give notice in writing to the first party designating as its representative in
negotiations relating to the dispute a person with similar authority.
(b) The designated persons shall within 10 days of the last
designation required by subsection (a), following whatever investigations each
deems appropriate, seek to resolve the dispute.
(c) If the dispute is not resolved within the following 10 days
(or within such further period as the representatives may agree is appropriate)
the parties hereto agree that such dispute shall be solely and finally settled
by arbitration in accordance with the international rules of the International
Chamber of Commerce. All such proceedings shall be conducted in Geneva,
Switzerland.
(d) The parties acknowledge that the purpose of any exchange of
information or documents or the making of any offer of settlement pursuant to
this Section is to attempt to settle the dispute between the parties. No party
may use any information or documents obtained through the dispute resolution
process established by this Section for any purpose other than in an attempt to
settle a dispute between that party and the other party to this Agreement.
(e) After the expiration of the time established by this Section
for agreement on a dispute resolution process, any party which has complied
with the provisions of this Section may in writing terminate the dispute
resolution process provided for in this Section and may then commence Court
proceedings relating to the dispute.
17
<PAGE> 19
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officers of Buyer and by the Seller on the
date first above written.
BUYER:
SODEXHO S.A.
By:
---------------------------------
Title:
------------------------------
SELLER:
CORRECTIONS CORPORATION OF AMERICA
By:
---------------------------------
Title:
------------------------------
18
<PAGE> 20
SCHEDULES TO
STOCK PURCHASE AGREEMENT
BY AND BETWEEN
CORRECTIONS CORPORATION OF AMERICA
AND
SODEXHO S.A.
DATED AS OF JUNE 9, 1995
<PAGE> 21
SCHEDULE 4.08
SUBSIDIARIES
1. Corrections Corporation of New Zealand Limited.
2. Excor Investments Pty. Ltd. A.C.N. 011 043 002.
3. Viccor Investments Pty. Ltd. A.C.N. 068 569 120.
<PAGE> 22
SCHEDULE 4.09
LITIGATION
None.
<PAGE> 23
SCHEDULE 4.10
ASSETS TO WHICH THE COMPANY DOES NOT HAVE CLEAR TITLE
None.
<PAGE> 24
SCHEDULE 4.14
MATERIAL CONTRACTS
1. Contract (CCA) with the Government of the State of Queensland for the
management of the Borallon Prison. The Contract runs for the period
1st April 1995 to the 31st March 2000.
2. Contract (CCA) with the Government of the State of Victoria for the
provision of transport and escort services of inmates to and from and
in the Geelong Courts, Victorian County Courts; the security of prison
inmates in St. Augustine's Ward of St. Vincent's Hospital, Melbourne.
This Contract runs for the period 1st July 1994 to the 30th June 1997
and has 2 option provisions (in favour of CCA) for 3 years each.
3. Contract (Viccor) with the Government of the State of Victoria for the
design, construction, ownership, finance and management of a 125 bed
women's correctional centre at Melton, Victoria. Under this Contract
construction commenced on the 5th June 1995 and is to be completed by
the 30th June 1996. The correctional centre is to commence operations
on the 1st July 1996. The Contract for the management of the centre
runs for a period of 5 years commencing on the 1st July 1996 and has 5
options (in favour of CCA's subsidiary Excor Investments Pty. Ltd.)
of 3 years each. The Contract with the Government of the State of
Victoria for the women's correctional centre provides for CCA's
subsidiary Excor Investments Pty. Ltd. to lease the land at Melton for
a period of 40 years; to construct a prison on that land; and for
CCA's subsidiary to provide a prison for the Government of the State
of Victoria for a period of up to 20 years.
4. And as follows:
(a) Prison Services Agreement (5/6/95)
(b) Ground Lease (5/6/95)
(c) Tripartite Agreement (5/6/95)
(d) Accommodation Services Support Agreement (5/6/95)
(e) Project Facility Agreement (5/6/95)
(f) Equity Support Agreement (5/6/95)
<PAGE> 1
EXHIBIT 10.144
STOCK PURCHASE AGREEMENT
BETWEEN
SODEXHO S.A.
AND
CORRECTIONS CORPORATION OF AMERICA
DATED AS OF JUNE 29, 1995
<PAGE> 2
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT, dated as of June 29, 1995, between
Sodexho S.A., a French corporation or its designee (the "Purchaser"), and
Corrections Corporation of America, a Delaware corporation (the "Company").
W I T N E S S E T H:
WHEREAS, the Company and the Purchaser are parties to a Stockholders
Agreement dated June 23, 1994, (the "Stockholders Agreement") pursuant to which
the Purchaser is entitled to participate in future offerings by the Company of
its securities; and
WHEREAS, on April 25, 1995, the Company issued 1,362,496 shares of
common stock of the Company in exchange for all of the outstanding shares of
Concept Incorporated in a share exchange; and
WHEREAS, as a result of such issuance by the Company of its securities
and in accordance with Section 9 of the Stockholders Agreement, on May 12,
1995, the Purchaser exercised its right to purchase from the Company 272,500
shares of the Company's Common Stock, $1.00 par value per share (the Common
Stock"); and
WHEREAS, the Purchaser and the Company are entering into this
Agreement to provide for such purchase and sale and to establish various rights
and obligations in connection therewith.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein set forth, the parties hereto agree as follows:
1. Purchase and Sales of Shares. Upon the terms set forth
herein, the Company agrees to sell to the Purchaser and the Purchaser agrees to
purchase from the Company an aggregate of 272,500 shares of Common Stock (the
"Shares") at a purchase price of $30.50 per share for an aggregate purchase
price of $8,311,250 (the "Purchase Price").
2. Closing.
2.1 Closing Date. The closing (the "Closing") of the
purchase and sale of the Shares shall take place on June 29, 1995 at the
offices of the Company or at such other time and place as the parties hereto
mutually agree.
2.2 Obligations at Closing. At the closing of the
purchase and sale of the Shares (the "Closing"):
(i) the Company shall deliver to the Purchaser a stock
certificate in definitive form registered in the name of the Purchaser
representing the Shares being purchased by it pursuant hereto; and
<PAGE> 3
(ii) the Purchaser shall concurrently pay to the Company
the Purchase Price by wire transfer of immediately available funds.
3. Representations and Warranties of the Company. The Company
represents and warrants as of the date hereof as follows:
3.1 Organization and Qualification. Each of the Company
and its subsidiaries is a corporation duly organized and existing in good
standing under the laws of the jurisdiction in which it is incorporated and has
the power to own its respective property and to carry on its respective
business as now being conducted. Each of the Company and its subsidiaries is
duly qualified as a foreign corporation to do business and in good standing in
every jurisdiction in which the nature of the respective business conducted or
property owned by it makes such qualification necessary and where the failure
so to qualify would have a material adverse effect on the business or financial
position of the Company and its subsidiaries taken as a whole.
3.2 Due Authorization. The execution and delivery of
this Agreement (i) are within the corporate power and authority of the Company;
(ii) do not require the approval or consent of any stockholders of the Company;
and (iii) have been authorized by all requisite corporate proceedings on the
part of the Company. This Agreement has been duly executed and delivered by
the Company and constitutes a valid and binding agreement of the Company
enforceable in accordance with its respective terms, except that (i) such
enforcement may be subject to bankruptcy, insolvency, reorganization,
moratorium, or other similar laws now or hereafter in effect relating to
creditors' rights, and (ii) the remedy of specific performance and injunctive
and other forms of equitable relief may be subject to equitable defenses and to
the discretion of the court before which any proceeding therefor may be
brought.
3.3 SEC Reports. (a) The Company has filed in a timely
manner with the Securities and Exchange Commission (the "SEC") all proxy
statements, reports, and other documents required to be filed by it under the
Exchange Act, including its Annual Report on Form 10-K for the fiscal year
ended December 31, 1994 (collectively, the "SEC Reports"). Each SEC Report was
in substantial compliance with the requirements of its respective report form
and did not on the date of filing contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which there were made, not misleading.
(b) The financial statements (including any related
schedules and/or notes) included in the SEC Reports have been prepared in
accordance with generally accepted accounting principles consistently followed
(except as indicated in the notes thereto) throughout the periods involved and
fairly present the consolidated financial condition, results of operations and
changes in stockholders' equity of the Company and its subsidiaries as of the
dates thereof and for the periods ended on such dates (in each case subject, as
to interim statements, to changes resulting from normal year-end audit
adjustments (none of which will be material in amount or effect)), and the
Company has no material liabilities, contingent or otherwise, not reflected in
the balance sheet as of December 31, 1994 included in the SEC Reports or
otherwise referred to in
2
<PAGE> 4
the SEC Reports or otherwise disclosed to the Purchaser in writing prior to the
execution by the Purchaser of this Agreement, other than any such liabilities
incurred in the ordinary course of business since December 31, 1994. There has
been no material adverse change in the business, prospects, condition or
operations (financial or otherwise) of the Company and its subsidiaries taken
as a whole from that set forth in the SEC Reports, other than changes disclosed
or referred to in the SEC Reports or otherwise disclosed to the Purchaser in
writing prior to the execution by the Purchaser of this Agreement.
3.4 Actions Pending; Compliance with Law. There is no
action, suit, investigation, proceeding claim or penalty pending or, to the
knowledge of the Company, threatened by any public official or governmental
authority or agency, against the Company or any of its properties or assets by
or before any court, arbitrator or governmental body, department, commission,
board, bureau, agency or instrumentality, which questions the validity of this
Agreement, or the Shares or any action taken or to be taken pursuant hereto or
thereto, or, except as set forth in the SEC Reports, which are reasonably
likely to result in any material adverse change in the business, prospects or
financial condition of the Company.
3.5 Conflicts. Except as set forth on Schedule 3.5
hereto, neither the execution and delivery of this Agreement, and the issuance
of the Shares nor fulfillment of or compliance with the terms and provisions
hereof, will conflict with or result in a breach of the terms, conditions or
provisions of, or give rise to a right of termination under, or constitute a
default under, or result in any violation of, the Certificate of Incorporation
or Bylaws of the Company or any mortgage, agreement, security, instrument,
order, judgment, decree, statute, law, rule or regulations to which the Company
or any of its subsidiaries or any of their respective property is subject.
Neither the Company nor any of its subsidiaries is in default under any
outstanding indenture or other debt instrument or with respect to the payment
of the principal of or interest on any outstanding obligations for borrowed
money, is in default under any of their respective contracts or agreements, or
under any instrument by which the Company or any of its subsidiaries is bound,
in each case which materially and adversely affects the business, operations or
condition (financial or otherwise) of the Company and its subsidiaries taken as
a whole.
3.6 Capitalization. The authorized capital stock of the
Company consists of (a) 50,000,000 shares of Common Stock, of which, as of the
date hereof, 14,924,475 shares are outstanding and 63,356 shares are held in
its treasury; and (b) 1,000,000 shares of preferred stock, $1.00 par value, and
as the date hereof, no shares of which are issued and outstanding; all of such
outstanding shares have been validly issued and are fully paid and
nonassessable. No class of capital stock of the Company is entitled to
preemptive rights. The Company has no contractual obligations with respect to
preemptive rights other than those previously granted to the Purchaser. Except
for the convertible notes, options and warrants listed on Schedule 3.6 hereto,
there are no outstanding options, warrants, convertible notes, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, shares of any capital stock of the
Company, or contracts, commitments, understandings, or arrangements by which
the Company is or may become bound to issue additional shares of its capital
stock or options, warrants or rights to purchase or acquire any shares of its
capital stock.
3
<PAGE> 5
Since May 26, 1995, the Company has not changed the amount of its authorized
capital stock or subdivided or otherwise changed any shares of any class of its
capital stock, whether by way of reclassification, recapitalization, stock
split or otherwise, or issued or reissued, or agreed to issue or reissue, any
of its capital stock, except as disclosed in this Section 3.6 and has not since
such date declared or paid any dividend in cash or stock or made any other
distribution of assets to its stockholders. Except as disclosed in Schedule
3.6(b) hereto and Schedule 4.12 of that certain Securities Purchase Agreement
dated June 23, 1994 by and between the Company and the Purchaser, there are no
existing rights with respect to registration under the Securities Act of 1933,
as amended, of any of the Company's capital stock.
3.7 Disclosure. Neither this Agreement nor the SEC
Reports nor the financial statements included in the SEC Reports nor any
certificate or written disclosure statement referred to herein and furnished to
the Purchaser by or on behalf of the Company in connection with the
transactions contemplated hereby contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make the
statements contained herein and therein not misleading. There is no fact
peculiar to the Company or any of its subsidiaries which the Company has not
disclosed to Purchaser in writing which materially affects adversely or, so far
as the Company can now reasonably foresee, will materially affect adversely the
properties, business, or condition (financial or otherwise) or contracts of the
Company and its subsidiaries taken as a whole or the ability of the Company to
perform this Agreement, or its obligations in respect of the Shares.
3.8 Governmental Consents, Etc. The Company is not
required to obtain any consent, approval, or authorization of, or to make any
declaration or filing with, any governmental authority as a condition to or in
connection with the valid execution, delivery, and performance of this
Agreement and the valid offer, issue, sale or delivery of the Shares, or the
performance by the Company of its obligations in respect thereof, except for
the filing of (i) a Supplemental Listing Application with the New York Stock
Exchange and (ii) a notification under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act") (and any extension
thereof), and any filings required pursuant to state and federal securities
laws which will be timely made after the Closing hereunder.
3.9 Status of Shares. The Shares being issued on the
date hereof have been duly authorized by all necessary corporate action on the
part of the Company (no consent or approval of stockholders being required by
law, the Certificate of Incorporation or the By-laws of the Company or
otherwise), and such Shares, upon Closing, will be validly issued, fully paid
and nonassessable.
3.10 Offering of Shares. The offer, issuance, and sale by
the Company to the Purchaser of the Shares are exempt from the registration and
prospectus delivery requirements of the Securities Act of 1933, as amended (the
"Securities Act") and have been, or will be as of Closing, registered or
qualified (or are, or will be as of the Closing, exempt from registration and
qualification) under the registration, permit, or qualification requirements of
all applicable state blue sky and securities laws.
4
<PAGE> 6
3.11 Brokers or Finders. No agent, broker, investment
banker, or other firm or person, including any of the foregoing that is an
affiliate of the Company is or will be entitled to any broker's fees or any
other commission or similar fee from the Company in connection with any of the
transactions contemplated by this Agreement.
4. Representations and Warranties of the Purchaser. The
Purchaser represents and warrants as of the date hereof as follows:
4.1 Organization and Qualification. Purchaser is a
societe anonyme duly organized, validly existing and in good standing under the
laws of France.
4.2 Due Authorization. The Purchaser has all right,
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by the Purchaser and the consummation by the Purchaser of the transactions
contemplated hereby have been duly authorized by all necessary action on behalf
of the Purchaser. This Agreement has been duly executed and delivered by the
Purchaser and constitutes a valid and binding agreement of the Purchaser
enforceable in accordance with its terms, except that (i) such enforcement may
be subject to bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights, and (ii)
the remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.
4.3 Conflicting Agreements and Other Matters. Neither
the execution and delivery of this Agreement nor the performance by the
Purchaser of its obligations hereunder will conflict with, result in a breach
of the terms, conditions, or provisions of, constitute a default under, result
in the creation of any mortgage, security interest, encumbrance, lien, or
charge of any kind upon any of the properties or assets of the Purchaser
pursuant to, or require any consent, approval, or other action by or any notice
to or filing with any court or administrative or governmental body pursuant to,
the organizational documents or agreements of the Purchaser or any agreement,
instrument, order, judgment, decree, statute, law, rule, or regulation by which
the Purchaser is bound, except for (i) notification filing under the HSR Act,
and (ii) filings after the Closing under Sections 13(d) and 16(a) of the
Securities Exchange Act of 1934, as amended.
4.4 Acquisition for Investment; Source of Funds. (a) The
Purchaser is acquiring the Shares being purchased by it for its own account for
the purpose of investment and not with a view to or for sale in connection with
any distribution thereof, and the Purchaser has no present intention or plan to
effect any distribution of the Shares.
(b) The Purchaser will acquire the Shares for its own
account for the purpose of investment and not in conjunction with any person,
directly or indirectly, and not with a view to exercising control over the
Company, or merging or otherwise combining the Company with any other person or
effecting any change in the corporate structure of the Company or the manner in
which the Company conducts its business.
5
<PAGE> 7
4.5 Brokers or Finders. No agent, broker, investment
banker, or other firm or person, including any of the foregoing that is an
affiliate of the Purchaser, is or will be entitled to any broker's fees or any
other commission or similar fee from the Purchaser in connection with any of
the transactions contemplated by this Agreement.
4.6 Accredited Investor. The Purchaser is an "accredited
investor" within the meaning of Rule 501 promulgated under the Securities Act.
5. Miscellaneous.
5.1 Applicability of Provisions of Securities Purchase
Agreement. Except as expressly set forth in this Agreement, all agreements,
covenants, undertakings, provisions, stipulations, and promises contained in
that certain Securities Purchase Agreement (the "Securities Purchase
Agreement") by and between the parties hereto, dated June 23, 1994 (including
the documents set forth in the exhibits thereto) and the Stockholders Agreement
shall be applicable to the purchase of the Shares by the Purchaser. Except as
provided by this Agreement, or unless the context or use indicates another or
different meaning or intent, defined words and terms used in this Agreement
shall have the same meaning as in the Securities Purchase Agreement and the
Stockholders Agreement.
5.2 Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to
be invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such which may be hereafter declared invalid, void or
unenforceable.
5.3 Counterparts. This Agreement may be executed in one
or more counterparts, all of which shall be considered one and the same
agreement, and shall become effective when one or more of the counterparts have
been signed by each party and delivered to the other parties, it being
understood that all parties need not sign the same counterpart.
5.4 Notices. All notices, consents, requests,
instructions, approvals and other communications provided for herein shall be
validly given, if in writing and delivered personally, by telecopy or sent by
registered mail, postage prepaid, if to:
The Company:
Corrections Corporation of America
102 Woodmont Boulevard, Suite 800
Nashville, Tennessee 37205
Attention: Doctor R. Crants
6
<PAGE> 8
With a copy to:
Stokes & Bartholomew, P.A.
424 Church Street, Suite 2800
Nashville, Tennessee 37219
Attention: Elizabeth E. Moore, Esq.
Purchaser:
Sodexho S.A.
3 avenue Newton
78180 Montigny-le-Bretonneux
FRANCE
Attention: Bernard Carton
With a copy to:
Ropes & Gray
One International Place
Boston, Massachusetts 02110
Attention: Howard K. Fuguet, Esq.
or to such other address as any party may, from time to time, designate in a
written notice given in a like manner.
5.5 Amendments. This Agreement may not be waived,
changed, modified, or discharged orally, but only by an agreement in writing
signed by the party or parties against whom enforcement of any waiver, change,
modification or discharge is sought or by parties with the right to consent to
such waiver, change, modification or discharge on behalf of such party.
5.6 Cooperation. The Purchaser and the Company agree to
take, or cause to be taken, all such further or other actions as shall
reasonably be necessary to make effective and consummate the transactions
contemplated by this Agreement.
5.9 Successors and Assigns. All covenants and agreements
contained herein shall bind and inure to the benefit of the parties hereto and
their respective successors and assigns.
5.10 Survival of Representations and Warranties. All
representations and warranties contained herein or made in writing by any party
in connection herewith other than those contained in Section 3.9 hereof shall
survive the execution and delivery of this Agreement and shall terminate upon
the issuance and delivery of the Shares. The representations contained in
Section 3.9 hereof shall expire upon the expiration of the applicable statute
of limitations.
5.11 Delivery of Legal Opinion. At the Closing, the
Company shall deliver the legal opinion of its counsel, Stokes & Bartholomew,
P.A. in form acceptable to the Purchaser.
7
<PAGE> 9
5.12 Transfer of Shares. (a) The Purchaser understands
and agrees that Shares have not been registered under the Securities Act of
1933, as amended (the "Securities Act") or the securities laws of any state and
that they may be sold or otherwise disposed of only in one or more transactions
registered under the Securities Act and, where applicable, such laws or as to
which an exemption from the registration requirements of the Securities Act
and, where applicable, such laws are available. The Purchaser and the Company
agree that (i) the Shares shall be subject to and entitled to the benefits of
the terms and conditions of that certain Registration Rights Agreement dated
June 23, 1994 by and between the Purchaser and the Company (the "Registration
Rights Agreement"), (ii) the Shares are Registrable Securities as defined in
the Registration Rights Agreement, and (iii) the Shares shall be entitled to
the registration rights granted to the former shareholders of TransCor America,
Inc. and/or Concept Incorporated. The Purchaser acknowledges that, except as
provided in the Registration Rights Agreement, the Purchaser has no right to
require the Company to register the Shares. The Purchase understands and
agrees that each certificate representing the Shares shall bear the following
legends:
"THE TRANSFER OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE IS RESTRICTED BY AN AGREEMENT ON FILE AT THE
OFFICES OF THE CORPORATION."
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE
SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE
DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS
OR AN APPLICABLE EXEMPTION TO THE REGISTRATION REQUIREMENTS OF
SUCH ACT OR SUCH LAWS."
5.13 Governing Law. This Agreement shall be governed by
and construed and enforced in accordance with the laws of the State of
Delaware. The Company and the Purchaser each hereby irrevocably submit to the
jurisdiction of said Court and agree that neither will sue in connection with
any matter covered under this Agreement in any other court. The English
language version of all documents related to the transactions contemplated
hereby will govern.
5.14 Publicity. Each of the parties hereto agrees that it
will make no statement regarding the transactions contemplated hereby without
mutual consent. Notwithstanding the foregoing, each of the parties hereto may,
in documents required to be filed by it with the SEC or other regulatory
bodies, make such statements with respect to the transactions contemplated
hereby as each may be advised is legally necessary upon advice of its counsel.
5.15 Expenses. Except as otherwise provided herein, each
of the parties shall be responsible for their own expenses relating to the
transactions contemplated hereby.
8
<PAGE> 10
IN WITNESS WHEREOF, the Purchaser and the Company have caused
this Agreement to be duly executed and delivered, all as of the day
and year first above written.
SODEXHO S.A.
By:
--------------------------
Its:
--------------------------
CORRECTIONS CORPORATION OF AMERICA
By:
--------------------------
Its:
--------------------------
9
<PAGE> 1
EXHIBIT 10.145
AMENDMENT NO. 1
TO
SECURITIES PURCHASE AGREEMENT
THIS AMENDMENT NO. 1 TO SECURITIES PURCHASE AGREEMENT (this
"Amendment"), dated as of July 11, 1995, is entered into by and among Sodexho
S.A., a French corporation ("Purchaser") and Corrections Corporation of
America, a Delaware corporation (the "Corporation").
R E C I T A L S:
WHEREAS, the Corporation and the Purchaser are parties to that certain
Securities Purchase Agreement, dated as of June 23, 1994 (the "Agreement"); and
WHEREAS, the parties desire to amend the Agreement with regard to the
interest rate on the 8.75% Notes (as referred to therein) and the timing of the
purchase of such 8.75% Notes by the Purchaser on the terms and conditions set
forth herein.
A G R E E M E N T:
NOW, THEREFORE, in consideration of the foregoing and subject to the
terms and conditions herein contained, the parties hereto agree as follows:
SECTION 1. Definitions.
1.1. General. Initially capitalized terms used in this Amendment
shall have the meanings ascribed thereto in the Agreement, as amended hereby,
unless otherwise defined herein.
1.2. Floating Rate. Section 6 of the Agreement is hereby amended to
include the following definition of Floating Rate:
"Floating Rate" means the six (6) month London Interbank
Offered Rate (LIBOR) as reported each day in The Wall Street Journal
plus 135 basis points or 1.35%, calculated on a daily basis. The
Floating Rate Note shall bear interest at the Floating Rate from the
date such Floating Rate Note is issued to the date the principal
hereof is paid or made available for payment or upon conversion of
such principal portion of the Floating Rate Note in accordance
therewith. Interest on the Floating Rate Note shall be computed on
the daily principal balance at the Floating Rate. The Floating Rate
shall be calculated upon the issuance of such note and shall be
recalculated upon each Interest Payment Date (as defined in the
Floating Rate Note) for the following six-month period. In computing
interest on the Floating Rate Note, the date of issuance of such note
shall be included and the date of payment shall be excluded: provided
that if the note is repaid on the same day on which it is issued, one
day's interest shall be paid on the note."
<PAGE> 2
SECTION 2. Amendments to the Agreement.
2.1. Amendment to Terms. All references in the Agreement to the
8.75% Notes shall be deleted and such Notes shall hereinafter be referred to as
the "Floating Rate Notes".
2.2. Amendment of Section 1.8 of the Agreement. Section 1.8 of the
Agreement is hereby amended by deleting such Section in its entirety and
inserting in its place the following new Section 1.8.
"1.8. Right to Purchase Floating Rate Note. The Company has
authorized the grant to Purchaser of the right to purchase up to $20
million aggregate principal amount Floating Rate Convertible
Subordinated Notes, in the form of Exhibit E hereto (the "Floating
Rate Note", and together with the Shares, the 8.5% Note and the
Warrants, the "Securities"), on the terms and conditions set forth in
Section 2 hereto."
2.3. Amendment of Section 2 of the Agreement. Section 2 of the
Agreement is hereby amended by deleting such Section in its entirety and
inserting in its place the following new Section 2.
"2. Right to Purchase Securities.
2.1. Right to Purchase Floating Rate Notes. Subject to the
terms and conditions set forth below, at any time during the period
beginning September 30, 1995 and ending December 31, 1997, the
Purchaser will have the right to purchase up to $10 million aggregate
principal amount Floating Rate Notes convertible at the conversion
price of $27.30. Subject to the terms and conditions set forth below,
at any time during the period beginning February 15, 1996 and ending
December 31, 1997, the Purchaser will have the right to purchase up to
$10 million aggregate principal amount Floating Rate Notes convertible
at the conversion price of $27.30 (collectively, the "Rights").
The Floating Rate Notes shall be converted in no more than
three increments. All conversions of the Floating Rate Notes shall be
on such other terms and conditions as set forth in Exhibit D hereto.
(a) To exercise the Rights, the Purchaser shall deliver to
the Company (i) a notice of exercise duly executed by the Purchaser
specifying the aggregate principal amount of Floating Rate Notes to be
purchased (the "Notice of Exercise") and (ii) an amount equal to the
principal amount for all of the Floating Rate Notes as to which the
Rights are then being exercised (the "Exercise Price"). At the option
of the Purchaser, payment of the Exercise Price shall be made by (i)
wire transfer of funds to an account in a bank designated by the
Company for such purpose, or (ii) certified or official bank check
payable to the order of the Company, or (iii) by any combination of
such methods.
(b) Upon receipt of the required deliveries by the Purchaser
and satisfaction of the conditions set forth in Section 11 hereof, the
Company shall at
2
<PAGE> 3
a Subsequent Closing within five days after receipt of the Notice of
Exercise, cause to be issued and delivered to the Purchaser Floating
Rate Notes in an aggregate principal amount equal to that specified in
the Notice of Exercise. Such Floating Rate Notes shall be registered
in the name of the Purchaser.
(c) Purchaser may, prior to any Subsequent Closing, if the
conditions specified in Section 11 have not been fulfilled, in a
written notice to the Company, withdraw the Notice of Exercise and the
Company shall repay to the Purchaser the Exercise Price plus interest
at a rate of the Floating Rate for the period beginning on the date of
the Notice of Exercise and ending on the date of such repayment within
three days of the withdrawal of the Notice of Exercise.
2.2. Effectiveness of Exercise. Unless otherwise requested
by the Purchaser, the Rights shall be deemed to have been exercised
and the Floating Rate Notes shall be deemed to have been issued, and
the Purchaser shall be deemed to have become the holder of record of
the Floating Rate Notes for all purposes, as of the close of business
on the date the Notice of Exercise, together with payment of the
Exercise Price, is received by the Company."
SECTION 3. Effectiveness of this Amendment.
This Amendment shall become effective upon the execution and delivery
of this Amendment by the Purchaser and the Corporation.
SECTION 4. Representations and Warranties of the Corporation.
In order to induce the Purchaser to enter into this Amendment, the
Corporation hereby makes the following representations and warranties to the
Purchaser:
4.1. Corporate Power and Authorization. The Corporation has the
requisite corporate power and authority to execute, deliver and perform its
obligations under this Amendment.
4.2. No Conflict. Neither the execution and delivery by the
Corporation of this Amendment nor the consummation of the transactions
contemplated or required hereby nor compliance by the Corporation with the
terms, conditions and provisions hereof will conflict with or result in a
breach of any of the terms, conditions or provisions of the Certificate of
Incorporation or Bylaws of the Corporation or any law, regulation, order, writ,
injunction or decree of any court or governmental instrumentality or any
agreement or instrument to which the Corporation is a party or by which any of
its properties is bound, or constitute a default thereunder or result in the
creation or imposition of any lien.
4.3. Authorization; Governmental Approvals. The execution and
delivery by the Corporation of this Amendment and the consummation of the
transactions contemplated hereby (i) have been duly authorized by all necessary
corporate action on the part of the Corporation and (ii) do not and will not
require any authorization, consent, approval or license from or any
3
<PAGE> 4
registration, qualification, designation, declaration or filing with, any court
or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign.
4.4. Valid and Binding Effect. This Amendment has been duly and
validly executed and delivered by the Corporation and constitutes the legal,
valid and binding obligation of the Corporation, enforceable in accordance with
its terms.
4.5. Absence of Default. No event has occurred and is continuing or
will result from the consummation of the transactions contemplated by this
Amendment that would constitute an Event of Default under the Agreement.
SECTION 5. Miscellaneous.
5.1. Amendment to Agreement. The Agreement is hereby, and shall
henceforth be deemed to be, amended, modified and supplemented in accordance
with the provisions hereof, and the respective rights, duties and obligations
under the Agreement shall hereafter be determined, exercised and enforced under
the Agreement, as amended, subject in all respects to such amendments,
modifications, and supplements and all terms and conditions of this Amendment.
5.2. Ratification of the Agreement. Except as expressly set forth in
this Amendment, all agreements, covenants, undertakings, provisions,
stipulations, and promises contained in the Agreement and the Securities are
hereby ratified, readopted, approved, and confirmed and remain in full force
and effect.
5.3. No Implied Waiver. The execution, delivery and performance of
this Amendment shall not, except as expressly provided herein, constitute a
waiver or modification of any provision of, or operate as a waiver of any
right, power or remedy of the Purchaser under, the Agreement or prejudice any
right or remedy that the Purchaser may have or may have in the future under or
in connection with the Agreement or any instrument or agreement referred to
therein. The Corporation acknowledges and agrees that the representations and
warranties of the Corporation contained in the Agreement and in this Amendment
shall survive the execution and delivery of this Amendment and the
effectiveness hereof.
5.4. Governing Law. This Amendment shall be governed by, and
construed and enforced in accordance with, the laws of the State of Delaware.
The English language version of all documents relating to the transactions
contemplated hereby will govern.
5.5. Counterparts; Telecopy Execution. This Agreement may be
executed in two or more counterparts, each of which shall be deemed to be an
original, but all of which together shall constitute one and the same
instrument. Delivery of an executed counterpart of this Amendment by facsimile
shall be equally as effective as delivery of a manually executed counterpart.
Any party delivering an executed counterpart of this Amendment by facsimile
shall also deliver a manually executed counterpart, but the failure to deliver
a manually executed counterpart shall not affect the validity, enforceability,
and binding effect of this Amendment.
4
<PAGE> 5
IN WITNESS WHEREOF, the undersigned have caused this Amendment to be
executed by their duly authorized officers as of the date first written above.
SODEXHO S.A.
By:
------------------------------
Its:
------------------------------
CORRECTIONS CORPORATION OF AMERICA
By:
------------------------------
Its:
------------------------------
5
<PAGE> 1
EXHIBIT 10.146
AMENDED AND RESTATED LOAN AGREEMENT
DATED AS OF JULY 13, 1995
BETWEEN
CORRECTIONS CORPORATION OF AMERICA
AND
FIRST UNION NATIONAL BANK OF TENNESSEE
<PAGE> 2
AMENDED AND RESTATED LOAN AGREEMENT
Dated as of July 13, 1995
THIS AMENDED AND RESTATED LOAN AGREEMENT (the
"Agreement") is entered into by and between CORRECTIONS CORPORATION OF
AMERICA, a Delaware corporation with its principal offices at 102
Woodmont Boulevard, Suite 800, Nashville, Tennessee 37205 (the
"Borrower"), TRANSCOR AMERICA, INC., a Tennessee corporation, TECHNICAL
& BUSINESS INSTITUTE OF AMERICA, INC., a Michigan corporation, and
CONCEPT, INCORPORATED, a Delaware corporation (individually a "Guarantor"
and collectively, the "Guarantors"), and FIRST UNION NATIONAL BANK OF
TENNESSEE, a national banking association with offices located at 150
Fourth Avenue North, Nashville, Tennessee 37219 (the "Lender").
BACKGROUND
Borrower and Lender are currently parties to a certain
Amended and Restated Loan Agreement dated as of December 22, 1992,
between the Borrower and the Lender, as amended from time to time
(the "Loan Agreement"). The Loan Agreement provides for a line of
credit in favor of Borrower in an amount not to exceed $15,000,000
to be used for working capital and to provide for the issuance of
standby letters of credit. In addition, Lender has, from time to
time, entered into other agreements with the Borrower with respect to
specific loans from Lender to Borrower, including without limitation,
the Construction Loan and Security Agreement dated as of February 23,
1994, between Borrower and Lender related to the correctional facility
located in Florence, Pinal County, Arizona (the "Construction Loan
Agreement").
It is the intention of Lender and Borrower hereunder
to amend and restate the Loan Agreement to provide for an increase
in the working capital line of credit facility to $25,000,000 to
provide working capital for the Borrower and the Guarantors, to
adopt, eliminate, expand or otherwise modify various other provisions
contained in the Loan Agreement, and to provide such other terms and
conditions as are set forth herein. It is the intent of Borrower
and Lender that this Agreement shall supersede and replace, in all
respects, the Loan Agreement and the Construction Loan Agreement, and,
upon execution of this Agreement, the Loan Agreement and the
Construction Loan Agreement shall be of no further force and effect.
The funds available under the line of credit will
directly benefit the Guarantors, and, consequently, the Guarantors have
agreed to guarantee the repayment of the obligations of the Borrower
under this Agreement.
A G R E E M E N T
In consideration of the premises, and for other good
and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, Borrower and Lender hereby amend and restate the
Loan Agreement as follows:
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<PAGE> 3
ARTICLE 1
DEFINITIONS
Section 1.1. Definitions. For the purposes of this
Agreement:
"Affiliate" means, with respect to a person, any other
person (a) that directly or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common
control with, such given person, (b) that directly or indirectly
beneficially owns or holds ten percent (10%) or more of any class of
voting stock of such person, or (c) ten percent (10%) or more of
the voting stock of which is directly or indirectly beneficially owned
or held by such person. The term "control" means the possession,
directly or indirectly, of the power to direct or cause the
direction of the management and policies of a person, whether through
ownership of voting securities, by contract or otherwise.
"Agreement" means this Amended and Restated Loan
Agreement and all amendments, modifications and supplements thereto.
"Applicable Law" means all applicable provisions of
constitutions, statutes, rules, regulations and orders of all
governmental bodies and all orders and decrees of all courts,
agencies and arbitrators.
"Business Day" means any day other than a Saturday,
Sunday, or day on which banks in Nashville, Tennessee, are authorized
to close.
"Cash Flow" means the sum of net income after taxes,
plus depreciation, plus amortization, plus interest expense, measured on
a rolling four (4) quarter basis.
"Collateral" means and includes all of the Borrower's
and each Guarantor's right, title and interest in and to the
following, wherever located in the United States of America, and
whether now or hereafter existing or now owned or hereafter acquired
or arising:
(a) all accounts receivable, contract rights, general
intangibles, equity participations, or other rights
or interests of Borrower and/or the Subsidiaries
arising from the operations of all of the
Facilities, excluding only:
(1) Laredo Processing Center, Laredo,
TX;
(2) Houston Processing Center, Houston,
TX;
(3) Shelby Training Center, Memphis,
TN;
(4) Leavenworth Detention Facility,
Leavenworth, KS; and
(5) Bay County Jail Annex Facility,
Panama City, FL.
(b) all equipment, including, without limitation, all
of Borrower's and the Guarantors' furniture,
fixtures, machinery, parts, accessories,
improvements, replacements and substitutions with
respect thereto, which are owned by
-2-
<PAGE> 4
Borrower and/or the Guarantors, both presently
existing and acquired in the future, excluding
facilities which are managed by the Borrower or
an Affiliate, but which are not owned by the
Borrower or a Guarantor.
(c) all real and personal property and improvements
comprising the Bay County, Florida Annex Facility
(the "Bay County Facility"), together with title
insurance, in form and substance acceptable to
the Lender and such other documents or
instruments as are customary for commercial real
estate loans of the magnitude and question.
Notwithstanding the foregoing, the deed of trust
and other security interests required hereunder
with respect to the Bay County Facility shall
not be required to be delivered so long as
prohibited by (1) that certain Loan Agreement
dated as of November 1, 1986 between Bay County,
Florida and the Borrower or (2) that certain Bay
County, Florida Detention Facilities contract
dated September 3, 1985, between Bay County and
the Borrower, as supplemented;
(d) Deeds of Trust of record in Book 3, page 6797,
Clerk's Office for Cibola County, New Mexico,
encumbering the real property and improvements
comprising the New Mexico Women's Correctional
Facility located in Grants, New Mexico (the
"Grants Deed of Trust");
(e) Deed of Trust of record in Book 265, page
3922, Clerk's Office for Torrence County, New
Mexico, encumbering the real property and
improvements comprising the Torrence County
Detention Center located in Estancia, New Mexico
(the "Estancia Deed of Trust");
(f) Deeds of Trust of record in Book 1987, page
67, Clerk's Office for Pinal County, Arizona,
encumbering the real property and improvements
comprising the correctional facility located in
Florence, Arizona (the "Florence Arizona Deed of
Trust");
(g) all of the Borrower's equipment, furniture,
fixtures, machinery, parts, accessories,
improvements, and replacements and substitutions
with respect thereto, which are located at the
Borrower's corporate headquarters in Nashville,
Tennessee;
(h) an assignment of the Borrower's right to receive
payment from Hamilton County, Tennessee (the
"County") of the agreed-upon value of the
capital improvements with respect to the Work
House Facility in Chattanooga, Hamilton County,
Tennessee, pursuant to that certain Corrections
Facilities Agreement by and among the Borrower,
the County and Dalton Roberts, County Executive
of the County, dated September 20, 1984; and
(i) all collateral securing the obligations of
Borrower to Lender, as described or referred to
in the Loan Agreement dated as of June 21,
1990, by and between Lender and Borrower,
covering the West Tennessee Detention Center
located in Mason, Tennessee.
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<PAGE> 5
"Current Maturing Long Term Debt" means all
indebtedness of the Borrower, including capitalized lease obligations,
which shall become due within 365 days from the date on which it
is measured.
"Debt Service Coverage Ratio" means Cash Flow divided
by the sum of Current Maturing Long Term Debt plus interest expense,
measured quarterly on a rolling four (4) quarter basis.
"Default" means any of the events or occurrences
specified in Section 11.1 hereof provided that any requirement for
notice or lapse of time or any other condition has been satisfied.
"Effective Date" means the later of:
(a) the date of this Agreement; or
(b) the date on which all of the conditions set
forth in Article 4 shall have been first fulfilled.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as from time to time amended and in effect.
"Eurodollar Interest Period" means, with respect to a
Eurodollar Loan, a period of 1, 2 or 3 months commencing on a
Business Day selected by Borrower, pursuant to this Agreement. Such
Eurodollar Interest Period shall end on the day in the last calendar
month of such period chosen by Borrower which corresponds numerically
to the beginning day of such Eurodollar Interest Period, provided,
however, that if there is no such numerically corresponding day in
such month, such Eurodollar Interest Period shall end on the last
Business Day of such month. If the Eurodollar Interest Period would
otherwise end on a day which is not a Business Day, such Eurodollar
Interest Period shall end on the next succeeding Business Day,
provided, however, that if said next succeeding Business Day falls in
a new month, such Eurodollar Interest Period shall end on the
immediately preceding Business Day. Borrower may not elect any
Eurodollar Interest Period that ends later than the Loan Termination
Date. Interest shall accrue from and including the first day of a
Eurodollar Interest Period to, but excluding the last day of such
Eurodollar Interest Period.
"Eurodollar Loan" means any Loan which bears interest
based on the LIBOR Rate.
"Facilities" means the correctional facilities operated
by the Borrower and/or the Subsidiaries in the United States and
listed on Schedule 1 attached hereto, together with any additional
facilities acquired by Borrower or any Subsidiary during the term of
this Agreement.
"Financing Statements" mean the Uniform Commercial Code
financing statements executed and delivered by the Borrower to the
Lender, naming the Lender as secured party and the Borrower, or the
Guarantors, as debtor, in connection with this Agreement.
"Floating Rate Loan" means any Loan which bears
interest based on the Prime Rate.
-4-
<PAGE> 6
"Governmental Approvals" mean all authorizations,
consents, approvals, licenses and exemptions of, registrations and
filings with, and reports to, all governmental bodies, whether
federal, state or local, and all agencies thereof.
"Guaranty", "Guaranteed" or to "Guarantee" shall mean
and include
(a) a Guaranty (other than by endorsement of
negotiable instruments for collection in the
ordinary course of business), directly or
indirectly, in any manner, of any part or all
of an obligation; and
(b) an agreement, direct or indirect, contingent or
otherwise, and whether or not constituting a
guaranty, the practical effect of which is to
assure the payment or performance (or payment of
damages in the event of nonperformance) of any
part or all of an obligation of another person
whether by
(1) the purchase of securities or obligations;
(2) the purchase, sale or lease (as lessee or
lessor) of property or the purchase or
sale of services primarily for the purpose
of enabling the obligor with respect to
such obligation to make any payment or
performance (or payment of damages in the
event of nonperformance) of or on account
of any part or all of such obligation, or
to assure the owner of such obligation
against loss;
(3) the supplying of funds to or in any
other manner investing in the obligor with
respect to such obligation, or indemnifying
or holding harmless, in any way, the
obligor against any part or all of such
obligation; or
(4) repayment of amounts drawn down by
beneficiaries of standby letters of credit.
"Guaranty Agreements" means the Guaranty and Suretyship
Agreements of even date herewith executed by the Guarantors in favor
of the Lender.
"Guaranty and Reimbursement Agreement" means the
Guaranty and Reimbursement Agreement of even date herewith executed by
the Borrower in favor of First Union National Bank of North
Carolina, an Affiliate of the Lender ("FUNBNC").
"Indebtedness" means
(a) all items (except items of capital stock,
Preferred Stock, additional paid-in capital or
retained earnings) which in accordance with
generally accepted accounting principles would be
included in determining total liabilities as
shown on the liability side of a balance sheet
at the date as of which Indebtedness is to be
determined;
(b) capitalized lease obligations;
-5-
<PAGE> 7
(c) all obligations which have been Guaranteed,
including, but not limited to, all obligations
consisting of recourse liability with respect to
accounts receivable sold or otherwise disposed of;
and
(d) the Loan.
"Internal Revenue Code" means the Internal Revenue Code
of 1986, as amended.
"LIBOR Rate" means, with respect to any Eurodollar
Loan, the interest rate per annum (rounded upward, if necessary, to
the next higher 1/100 of 1%), for deposits in United States dollars
approximately equal in the principal amount to such Eurodollar Loan
and with a maturity comparable to the Eurodollar Interest Period
chosen by Borrower (30, 60 or 90 day), which appears on the
Telerate Page 3750 at approximately 11:00 a.m., London time, two (2)
London business days prior to the date of commencement of such
Eurodollar Interest Period, as determined by Lender, as such rate is
adjusted in accordance with Lender's standard practice for reserves and
other requirements.
"Lien" means:
(a) any mortgage, deed to secure debt, deed of
trust, lien, pledge, charge, lease constituting a
capitalized lease obligation, conditional sale or
other title retention agreement, or other security
interest, security title or encumbrance of any
kind in respect of any property of the Borrower,
or upon the income or profits therefrom;
(b) any arrangement, express or implied, under which
any property of the Borrower is transferred,
sequestered or otherwise identified for the
purpose of subjecting the same to the payment of
Indebtedness or performance of any other
obligation in priority to the payment of the
general, unsecured creditors of the Borrower;
(c) any Indebtedness which is unpaid more than 30
days after the same shall have become due and
payable and which, if unpaid, might by law
(including but not limited to bankruptcy and
insolvency laws), or otherwise, be given any
priority whatsoever over general unsecured
creditors of the Borrower; and
(d) the filing of, or any agreement to give, any
financing statement under the Uniform Commercial
Code or its equivalent in any jurisdiction.
"Loan" or "Loans" means all amounts due the Lender
under the Working Capital Facility.
"Materially Adverse Effect" means a materially adverse
effect upon a person's business, assets, liabilities, financial
condition, results of operations or business prospects.
"Note" means the amended and restated promissory note
of the Borrower, substantially in the form of Exhibit A hereto,
payable to the order of the Lender and evidencing the Loan, as
amended and supplemented from time to time, and any replacement
thereof or substitution therefor.
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"PBGC" means the Pension Benefit Guaranty Corporation
and any successor agency.
"Permitted Liens" means:
(a) Liens securing taxes, assessments and other
governmental charges or levies (excluding any Lien
imposed pursuant to any of the provisions of
ERISA) or the claims of materialmen, mechanics,
carriers, warehousemen or landlords for labor,
materials, supplies or rentals incurred in the
ordinary course of business, but in the case of
warehousemen or landlords, only if such Liens
are junior to the Security Interest in any of
the Collateral;
(b) Liens consisting of deposits or pledges made in
the ordinary course of business in connection
with, or to secure payment of, obligations under
workmen's compensation, unemployment insurance or
similar legislation;
(c) Liens constituting encumbrances in the nature of
zoning restrictions, easements, and rights or
restrictions of record on the use of real
property of the Borrower, which in the sole
judgment of the Lender does not materially
detract from the value of such real property or
impair the use of the Borrower's real property
in the business of the Borrower;
(d) Purchase Money Liens on property other than
Inventory and liens created in connection with
the leasing of personal property by the
Borrower;
(e) Liens in favor of the Lender; and
(f) Liens listed on Schedule 5.1(g) attached hereto.
"Plan" means employee benefit plan maintained for
employees of the Borrower that is covered by Title IV of ERISA,
including such plans as may be established after the Agreement Date.
"Preceding Event" means an event which with the
giving of notice or lapse of time or both would constitute a Default
under the provisions of Section 11.1 hereof.
"Prime Rate" means at any time the rate of interest
publicly announced from time to time by the Lender as Lender's
"prime" rate as in effect at such time, and is not necessarily the
lowest or best rate charged by Lender.
"Prior Loan Documents" means the Loan Agreement and
all documents and instruments executed and delivered in connection with
the Loan Agreement, and all amendments to the foregoing prior to the
date of this Agreement.
"Purchase Money Lien" means a Lien securing
(a) Indebtedness created to secure the payment of
all or any part of the purchase price of any
property other than inventory;
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<PAGE> 9
(b) any Indebtedness incurred at the time of or
within 10 days prior to or after the acquisition
of any property other than inventory for the
purpose of financing all or any part of the
purchase price thereof; and
(c) any renewals, extensions or refinancings thereof,
but not any increases in the principal amounts
thereof outstanding at the time; but only if
such Lien shall be incurred after the date of
this Agreement and shall at all times be
confined solely to the property the purchase
price of which was financed through the
incurrence of such Indebtedness.
"Reimbursement Agreements" means agreements entered into
between the Borrower and the Lender governing the Borrower's
obligations to repay the Lender for draws on standby letters of
credit, if any.
"Reportable Event" has the meaning set forth in
Section 4043(b) of ERISA.
"Secured Obligations" mean, in each case whether now
in existence or hereafter arising,
(a) the principal of, and interest on, the Loan;
(b) all of the Borrower's obligations to the Lender
under Reimbursement Agreements;
(c) all indebtedness, liabilities, obligations,
covenants and duties of the Borrower to the
Lender (or to an Affiliate of Lender which
issues letters of credit or otherwise extends
credit to Borrower), of every kind, nature and
description, direct or indirect, absolute or
contingent, now or hereafter existing, due or
not due, contractual or tortious, liquidated or
unliquidated, and whether or not evidenced by any
note, and whether or not for the payment of
money under or in respect of this Agreement, the
Note, a letter of credit or any of the
Security Documents, and shall specifically include,
without limitation, the obligations described in
Schedule 2 attached hereto; and
(d) all of the Guarantor's obligations to the Lender
under the Guaranty Agreements.
"Security Documents" means each of the following:
(a) the Financing Statements;
(b) The Guaranty Agreements;
(c) each other writing executed and delivered by the
Borrower securing the Secured Obligations; and
(d) any Reimbursement Agreement.
"Security Interest" means the Liens of the Lender on
and in the Collateral.
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"Senior Debt" means senior funded obligations,
including, without limitation, obligations evidenced by outstanding
letters of credit issued by Lender under the terms of this
Agreement.
"Subordinated Debt" means (i) the existing Indebtedness
described in Schedule 3 attached hereto, which, pursuant to its terms,
is subordinated to the Secured Obligations, and (ii) additional
Indebtedness incurred by Borrower after the date hereof with the
consent of the Lender, which pursuant to its terms, is subordinated
to the Secured Obligations.
"Subsidiary" or "Subsidiaries" means the subsidiaries of
Borrower listed in Schedule 4 attached hereto, and all other
subsidiaries formed or acquired hereafter with the consent of the
Lender, if any.
"Termination Date" means
(a) May 31, 1997, and is the date upon which the
Loan shall be payable in full without demand, or
(b) the date of the occurrence of any Default;
provided, however, that this Agreement and the obligations hereunder
may be renewed for additional one- year periods only if such renewal
shall be granted by the Lender, in its sole and absolute discretion,
on or before May 31 of the year immediately preceding the
Termination Date or any extension of the Termination Date as provided
herein, unless this Agreement is otherwise terminated by the
occurrence of a Default.
"Termination Event" means
(a) a Reportable Event; or
(b) the filing of a notice of intent to terminate
a Plan or the treatment of a Plan amendment as
a termination under Section 4041 of ERISA; or
(c) the institution of proceedings to terminate a
Plan by the PBGC under Section 4042 of ERISA,
or the appointment of a trustee to administer
any Plan.
"Unfunded Vested Accrued Benefits" means, with respect
to any Plan at any time, the amount (if any) by which
(a) the present value of all vested nonforfeitable
benefits under such Plan exceeds
(b) the fair market value of all Plan assets
allocable to such benefits;
all determined as of the then most recent valuation date for such
Plan.
"Working Capital Facility" means the loan facility
described in Section 2.1 hereof.
Section 1.2. General. All terms of an accounting
nature not specifically defined herein shall have the meaning ascribed
thereto by generally accepted accounting principles.
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Except as otherwise defined herein, the terms accounts, chattel paper,
contract rights, documents, equipment, instruments, general intangibles
and inventory, shall have the meanings given those terms in the
Uniform Commercial Code. Unless otherwise specified, a reference in
this Agreement to a particular section or subsection is a reference
to that section or subsection of this Agreement. Wherever from the
context it appears appropriate, each term stated in either the
singular and plural shall include the singular and plural, and
pronouns stated in the masculine, feminine or neuter gender shall
include the masculine, the feminine and the neuter.
ARTICLE 2
THE FACILITY
Section 2.1. Working Capital Facility. Upon the
terms and subject to the conditions of this Agreement, and in
reliance upon the representations and warranties made herein, the
Lender agrees to make advances to the Borrower from time to time, as
requested by the Borrower in accordance with the terms and conditions
hereof, up to the aggregate principal amount of $25,000,000. The
purpose of the Working Capital Facility and all advances made
hereunder shall be to (a) provide for the on-going working capital
requirements of the Borrower and the Subsidiaries and for other
general corporate purposes, and (b) permit the issuance of letters of
credit on behalf of the Borrower and the Subsidiaries. It is
expressly understood and agreed that the Lender shall make advances
hereunder only if no Default exists or is continuing under this
Agreement. During such time that a Preceding Event exists and is
continuing, the Lender shall continue to make advances pursuant to
such conditions or limitations as the Lender, in its sole discretion,
shall determine. The principal amount of any advance which is repaid
may be reborrowed by the Borrower in accordance with the terms
hereof.
Section 2.2. Manner of Borrowing. Advances under
the Working Capital Facility shall be made in increments of $100,000
upon written notice to the Lender not less than three (3) Business
Days prior to the intended disbursement date.
(a) The Borrower shall give the Lender irrevocable
notice (a "Borrowing Notice") not later than 1:00
p.m. Nashville time three (3) Business Days
prior to any requested disbursement. Each
Borrowing Notice shall be written and may be
made by telecopier, telex or cable in addition
to the means set forth for giving notice in
Section 12.1(b). Each Borrowing Notice shall
specify the requested date of such requested
disbursement, the aggregate amount of such
disbursement, the type of Loan (Floating Rate
Loan or Eurodollar Loan), and if a Eurodollar
Loan, the designated Eurodollar Interest Period.
Disbursement of the proceeds of each advance
hereunder shall be made by credit to an account
of the Borrower maintained with the Lender or by
wire transfer, bank check, or other instrument
to such other account or person as may be
agreed upon by the Borrower and the Lender from
time to time.
(b) The Borrower shall have the right at any time,
on prior irrevocable written or telefaxed notice
to the Lender, not later than 10:00 a.m.,
Nashville time, to convert any Floating Rate Loan
into a Eurodollar Loan, to convert a Eurodollar
Loan into a Floating Rate Loan, or to continue
any Eurodollar Loan for a subsequent Eurodollar
Interest Period (specifying in each case the
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<PAGE> 12
Eurodollar Interest Period to be applicable
thereto), subject in each case to the following:
(1) No Eurodollar Loan shall be converted or
prepaid at any time other than at the end
of the Eurodollar Interest Period
applicable thereto;
(2) Each conversion shall be effected by
applying the proceeds of the new Eurodollar
or Floating Rate Loan, as the case may
be, to the Loan (or portion thereof) being
converted;
(3) The number of Eurodollar Loans outstanding
at any one time shall not exceed five
(5).
Each notice pursuant to this subparagraph shall be
irrevocable and shall refer to this Agreement and specify (i) the
identity and principal amount of the particular Loan that the
Borrower requests to be converted or continued, (ii) if such notice
requests conversion, the date of conversion (which shall be a Business
Day), and (iii) if a Loan is to be converted to a Eurodollar Loan,
or a Eurodollar Loan is to be continued, the Eurodollar Interest
Period with respect thereto. In the event that the Borrower shall
not give notice to continue any Eurodollar Loan for a subsequent
period, such Loan (unless repaid) shall automatically be converted into
a Floating Rate Loan. If the Borrower shall fail to specify in the
Borrowing Notice the type of borrowing, or, in the case of a
Eurodollar Loan, the applicable Eurodollar Interest Period, the Borrower
will be deemed to have requested a Floating Rate Loan. If Lender
reasonably believes that any failure by Borrower to specify the type
of borrowing or the applicable Eurodollar Interest Period shall have
resulted from failure of communications equipment or clerical error,
then prior to funding any such borrowing, the Lender shall use
reasonable efforts to obtain confirmation from Borrower of the contents
of such Borrowing Notice; however, in the absence of confirmation by
Borrower, which specifies the type of borrowing and the applicable
Eurodollar Interest Period, the Borrower will be deemed to have
requested a Floating Rate Loan. Notwithstanding anything to the
contrary contained above, if an Event of Default shall have occurred
and be continuing, no Eurodollar Loan may be continued, and no
Floating Rate Loan may be converted into a Eurodollar Loan.
Section 2.3. Repayment of Working Capital Facility.
The Working Capital Facility shall be immediately due and payable and
shall be repaid in lawful money of the United States of America in
immediately available funds as follows:
(a) Upon the Termination Date; or
(b) In accordance with the provisions of Section
11.2 hereof.
Section 2.4. Note. The obligation of the Borrower
to repay the Loan under the Working Capital Facility shall be
evidenced by, and be repayable in accordance with the terms of the
Note payable to the order of the Lender. The Note shall be dated
the Effective Date and be duly and validly executed and delivered by
the Borrower.
Section 2.5. Standby Letters of Credit. As part of
the Working Capital Facility and upon the terms and subject to the
conditions of this Agreement, and in reliance upon the representations
and warranties made herein, the Lender agrees to issue from time to
time, prior to the Termination Date, standby letters of credit
pursuant to the Bank's standard letter of credit
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application agreement and Reimbursement Agreement, a copy of which is
attached hereto as Exhibit B; provided, however, that (1) the
aggregate face amount of all such letters of credit shall not exceed
$12,500,000; (2) the duration of any such letter of credit shall not
exceed one (1) year and in no event shall extend beyond the
Termination Date; (3) there shall exist no Event of Default
hereunder; (4) the Lender may assign to an Affiliate of Bank its
obligation to issue letters of credit hereunder without the Borrower's
consent; (5) standby letters of credit shall be secured by the
Collateral and shall otherwise be subject to this Agreement and the
Security Documents; and (6) the aggregate face amount of all such
letters of credit, together with the aggregate amount outstanding
under the Loan, shall not exceed 25,000,000. Upon the issuance of a
standby letter of credit hereunder, the face amount thereof shall
immediately reduce availability for advances under the Working Capital
Facility by the amount thereof. In the event any standby letter of
credit issued pursuant hereto is drawn upon, the amount of all sums
advanced by the Lender, together with all fees, costs and expenses
in connection therewith, shall become an obligation under the Working
Capital Facility and shall be evidenced by the Note.
Section 2.6. Reimbursement Obligation. The Borrower
hereby unconditionally agrees to reimburse the Lender for the total
amount of the sums paid by the Lender in connection with the
issuance of any standby letters of credit or any additional or
further liability that may accrue against the Lender in connection
with the same, whether as a result of a draft or demand for
payment submitted thereunder, or otherwise. Any such amounts which
are not reimbursed to the Lender on demand may, at the Lender's
option and in the Lender's sole discretion, be debited at any time
against the Loan under this Agreement and shall be treated for all
purposes and shall have the same force and effect as if the same
has been cash advanced by the Lender to the Borrower pursuant to
Section 2.1 of this Agreement, subject to all the terms and
conditions of this Agreement. Notwithstanding the foregoing, the
Lender may, in its sole discretion, require the Borrower to enter
into a Reimbursement Agreement with respect to one or more standby
letters of credit.
Section 2.7. Letter of Credit Fee. As consideration
for issuing each letter of credit hereunder, the Borrower shall pay
to the Lender a fee in the amount of one percent (1%) per annum
of the face amount of each letter of credit. Payment of the letter
of credit fee shall be a condition precedent to the Lender's
obligation to issue the letter of credit.
Section 2.8. Unused Balance Fee. As consideration
for the cost of reserving and making available the Working Capital
Facility, the Borrower shall pay to the Lender a fee in the amount
of one-quarter of one percent (.25%) per annum on the average unused
balance of the Working Capital Facility. Such fee shall be due and
payable quarterly, in arrears, on the first day of each calendar
quarter, commencing originally on October 1, 1995.
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<PAGE> 14
ARTICLE 3
GENERAL LOAN PROVISIONS
Section 3.1. Interest.
(a) The Borrower shall pay interest quarterly in
arrears on the first day of each quarter
commencing originally on October 1, 1995,
provided, however, that interest due on a
Eurodollar Loan shall be due and payable at the
end of each Eurodollar Interest Period. Interest
shall be calculated on the unpaid principal
amount of the Loan for each day from the day
the Loan was made until the Loan is due
(whether at the stated maturity date, by reason
of acceleration or otherwise) at a floating rate
per annum equal to:
(1) For a Floating Rate Loan, at an annual
rate equal to the Prime Rate, said rate
to change contemporaneously with any change
in the Prime Rate.
(2) For a Eurodollar Loan, at a rate equal
to the applicable LIBOR Rate plus 200
basis points (2%) per annum.
The interest for Floating Rate Loans and Eurodollar
Loans shall be computed on the basis of a 360-day
year, counting the actual number of days elapsed.
(b) If the Borrower shall fail to pay when due
(whether at the stated maturity date, by reason
of acceleration or otherwise) all or any portion
of the unpaid principal amount of the Loan, the
interest rate on each such unpaid amount for
each day from the date it was so due until
paid in full shall be equal to the Prime Rate
plus five percent (5%) per annum, until the
Loan or portion thereof, as appropriate, is paid
in full.
(c) Nothing contained in this Agreement or the Note
shall be deemed to establish or require the
payment of a rate of interest in excess of the
maximum rate permitted by any Applicable Law.
In the event that any rate of interest required
under this Agreement or the Note exceeds the
maximum rate permitted by any such Applicable
Law, such rate shall automatically be reduced to
the maximum rate permitted by such law and any
excess amount collected shall be refunded or
credited to principal.
Section 3.2. Manner of Payment.
Each payment (including prepayments) by the Borrower of
the principal of or interest on the Loan or of any other amounts
payable to the Lender under this Agreement or the Note, shall be
paid in immediately available funds and the Lender shall credit such
payment on the date of receipt by the Lender in Nashville, Tennessee.
Any payments by the Borrower shall be made without application of any
setoff, counterclaim or deduction whatsoever.
Section 3.3. Prepayment. The Borrower may, at its
option, prepay the principal amount of the Loan outstanding hereunder
at any time, in whole or in part (but all partial
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<PAGE> 15
prepayments shall be in a principal amount not less than $100,000 or
an integral multiple thereof), upon giving the Lender at least three
(3) Business Days' prior notice of the aggregate principal amount to
be prepaid. In the event of a partial prepayment of principal,
accrued interest to the date of prepayment of the amount so prepaid
shall continue to be payable as provided in the Note, notwithstanding
such prepayment of principal. All accrued interest shall be paid
immediately in the event that the prepayment discharges the principal
obligation under the Note. Notwithstanding the foregoing, a Eurodollar
Loan may be prepaid only at the end of a Eurodollar Interest
Period.
Section 3.4. General. If any payment under this
Agreement or the Note shall be specified to be made upon a day
which is not a Business Day, it shall be made on the next
succeeding day which is a Business Day and such extension of time
shall in such case be included in computing interest, if any, in
accordance with such payment.
Section 3.5. Alternate Rate of Interest. In the
event, and on such occasion, that on the date of commencement of any
Eurodollar Interest Period for a Eurodollar Loan, Lender shall have
reasonably determined:
(a) That dollar deposits in the amount of the
requested principal amount of such Eurodollar Loan
are not generally available to Lender in the
London Interbank Market;
(b) That the rate at which such dollar deposits are
being offered will not adequately and fairly
reflect the cost to Lender of making or
maintaining such Eurodollar Loan during such
Eurodollar Interest Period; or
(c) That reasonable means do not exist for
ascertaining the LIBOR Rate generally, Lender
shall, as soon as practicable thereafter, given
written or telephonic notice of such determination
to the Borrower. In the event of any such
determination, any request by the Borrower for a
Eurodollar Loan shall, until the circumstances
giving rise to such notice no longer exist, be
deemed to be a request for a Floating Rate
Loan. Each determination by the Lender hereunder
shall be conclusive absent manifest error.
ARTICLE 4
CONDITIONS PRECEDENT
Section 4.1. Conditions Precedent. Notwithstanding
any other provision of this Agreement, advances under the Working
Capital Facility shall not be made until the fulfillment of each of
the following conditions:
(a) The Lender shall have received each of the
following documents, all of which shall be
satisfactory in form and substance to the Lender
and its counsel:
(1) certified copies of the certificate of
incorporation, and by-laws of the Borrower
and the Subsidiaries as in effect on the
Effective Date;
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<PAGE> 16
(2) certified copies of all corporate action,
including stockholder approval, if necessary,
taken by the Borrower and the Guarantors
to authorize the execution, delivery and
performance of this Agreement, the Note
and the Security Documents, and a
certificate of incumbency with respect to
the officers of the Borrower and the
Guarantors;
(3) a certificate evidencing the good standing
of the Borrower and the Subsidiaries in
each jurisdiction in which the same is
required, such certificates to be dated no
earlier than thirty (30) days prior to
the Effective Date;
(4) a signed opinion of Stokes & Bartholomew,
counsel for the Borrower, opining as to
such matters in connection with this
Agreement as the Lender may reasonably
request, and such other opinions of other
counsel as Lender or its counsel may
reasonably request;
(5) Financing Statements, or amendments thereto,
naming the Borrower and/or the Guarantors
as debtor and the Lender as secured party
duly executed and delivered by the Borrower
and evidence satisfactory to the Lender as
to the filing of such statements in each
jurisdiction and each filing office where
such filing may be necessary or
appropriate to perfect the Security
Interest;
(6) to the extent deemed necessary by Lender,
amendments to the Estancia Deed of Trust,
the Grants Deed of Trust, and the Central
Arizona Deed of Trust, reflecting the terms
of this Agreement, together with an
opinion of counsel acceptable to the Lender
with respect to the validity, binding
effect and enforceability of said Amended
Real Property Deed of Trust;
(7) a certified copy of the Borrower's
casualty insurance policy or policies
certifying that such insurance is in full
force and effect and will not be
terminated without ten (10) days advance
written notice to the Lender, together with
a loss payee endorsement on each such
policy naming Lender as loss payee on such
form as the Lender shall approve in
advance;
(8) a certificate of compliance by the Chief
Executive Officer of the Borrower stating
that, to the best of his knowledge and
based on an examination sufficient to
enable him to make an informed statement:
(i) all of the representations and
warranties made or deemed to be made
under this Agreement are true and
correct as of the Effective Date;
(ii) no Default or Preceding Event exists;
(9) all Schedules required pursuant to Section
5.1 hereof; and
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<PAGE> 17
(10) such other certificates, documents and
instruments as the Lender may reasonably
request, including, without limitation,
evidence reasonably satisfactory to the
Lender that all of the conditions of this
Article 4 have been satisfied.
(b) No Event of Default shall have occurred and be
continuing under the Prior Loan Documents.
(c) This Agreement, the Note and the Security
Documents shall have been duly executed and
delivered.
(d) No action, proceeding, investigation, regulation
or legislation shall have been instituted,
threatened or proposed before any court,
governmental agency or legislative body to enjoin,
restrain, or prohibit, or to obtain substantial
damages in respect of, or which is related to
or arises out of this Agreement or the
consummation of the transactions contemplated
hereby, or which, in the Lender's sole
discretion, would make it inadvisable to
consummate the transactions contemplated by this
Agreement.
(e) There shall have been no material adverse change
in the financial condition, business operations or
business affairs of the Borrower.
Section 4.2. Subsequent Advances. At the time of
the making of each advance or issuing each standby letter of credit
under the Working Capital Facility:
(a) the Borrower shall be deemed to represent and
warrant to the Lender that the Borrower is at
such time in full compliance with the covenants
and agreements herein, and no Default or
Preceding Event exists at such time;
(b) the corporate actions of the Borrower referred
to in Section 4.1(a)(2) shall remain in full
force and effect; and
(c) the Lender may, without waiving either condition,
consider the conditions specified in Section
4.2(a) and (b) fulfilled and a representation by
the Borrower to such effect made, if no written
notice to the contrary is received by the
Lender prior to the making of the advance or
issuing of the standby letter of credit.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BORROWER
Section 5.1. Representations and Warranties. The
Borrower and the Guarantors represent and warrant to the Lender that
as of the Effective Date and giving effect to the transactions
contemplated herein:
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<PAGE> 18
(a) Organization; Power; Qualification.
(1) The Borrower is a corporation, duly
organized, validly existing and in good
standing under the laws of its
jurisdiction of incorporation, has the
power and authority to own its properties
and to carry on its business as now being
and thereafter proposed to be conducted
and is duly qualified and authorized to do
business as a foreign corporation in
Tennessee and in each other jurisdiction in
which the character of its properties or
the nature of its business requires such
qualification or authorization except (i)
Transcor America, Inc. is in the process
of qualifying to transact business in
certain states as necessary, which process
will be completed within 120 days from
the date hereof, and (ii) where the
failure of the Borrower to qualify would
not have a Materially Adverse Effect on
the Borrower.
(2) Each of the Subsidiaries is a corporation,
duly organized, validly existing and in
good standing under the laws of the
jurisdiction of its incorporation, has the
power and authority to own its properties
and to carry on its business as now being
and thereafter proposed to be conducted
and is duly qualified and authorized to do
business as a foreign corporation in
Tennessee and in each other jurisdiction in
which the character of its properties or
the nature of its business requires such
qualification or authorization except where
the failure of the Borrower to qualify
would not have a Materially Adverse Effect
on the Borrower.
(b) Subsidiaries and Capital Structure. Other than
the Subsidiaries, the Borrower has no
subsidiaries. The outstanding capital stock of
the Borrower has been duly and validly issued,
is fully paid and nonassessable.
(c) Authorization of Agreement, Note, Security
Documents. The Borrower, and each of the
Subsidiaries, has the right and power, and has
taken all necessary action to authorize, to
execute, deliver and perform this Agreement, the
Note, and the Security Documents in accordance
with their respective terms. This Agreement,
the Note and each of the Security Documents,
when executed and delivered in accordance with
this Agreement, will be legal, valid and binding
obligations of the Borrower, all enforceable in
accordance with their terms.
(d) Compliance of Agreement, Notes, Security Documents
with Laws, etc. The execution, delivery and
performance of this Agreement, the Note, and the
Security Documents in accordance with their
respective terms and the advances hereunder do
not and will not, by the passage of time, the
giving of notice or otherwise,
(1) require any Government Approval or violate
any Applicable Law relating to the
Borrower;
(2) conflict with, result in a breach of or
constitute a default under the certificate
of incorporation or bylaws of the
Borrower, any indenture, agreement or other
instrument to which the Borrower is a
party or by
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<PAGE> 19
which it or any of its property may be
bound or any Governmental Approval relating
to the Borrower, or
(3) result in or require the creation or
imposition of any Lien upon or with
respect to any property now owned or
hereafter acquired by the Borrower other
than the Security Interest.
(e) Business. Neither the Borrower nor any
Subsidiary owns or presently intends to acquire,
or is engaged in the business of extending
credit for the purpose of purchasing or carrying,
any "margin security" or "margin stock" as
defined in the rules and regulations of the
Board of Governors of the Federal Reserve System
(herein called "Margin Stock"). None of the
proceeds of the Loan hereunder will be used,
directly or indirectly, for the purpose of
purchasing or carrying any Margin Stock or for
the purpose of reducing or retiring any
indebtedness that was originally incurred to
purchase or carry Margin Stock or for any other
purpose that might constitute this transaction a
"purpose credit" within the meaning of the rules
and regulations. Neither the Borrower nor any
subsidiary has taken or will take any action
that might cause this Agreement or the Note to
violate any rule or regulation of the Board of
Governors of the Federal Reserve System or to
violate the Securities and Exchange Act of 1934,
nor will any proceeds of the Loan be used to
acquire any security in any transaction with is
subject to Section 13 or 14 of the Securities
Exchange Act of 1934.
(f) Compliance with Law; Governmental Approvals. The
Borrower and each of the Subsidiaries have all
Governmental Approvals required by any Applicable
Law that are material to the conduct of its
business, each of which is in full force and
effect, is final and not subject to review on
appeal and is not the subject of any pending
or, to the best of Borrower's knowledge,
threatened attack by direct or collateral
proceeding. The Borrower and each of the
Subsidiaries are in compliance with each
Governmental Approval, if any, and in compliance
with all other Applicable Laws relating to it,
including, without limitation, all federal and
state securities laws, except for noncompliances
which would not, singly or in the aggregate,
cause a Default or Preceding Event or have a
Materially Adverse Effect on the Borrower and in
respect of which adequate reserves have been
established on the books of the Borrower;
(g) Titles to Properties. Except as set forth in
Schedule 5.1(g) the Borrower and/or the
Subsidiaries have good, marketable and legal
title to, or a valid leasehold interest in, its
real properties and valid and legal title to
all personal property and assets; all its such
personal property and assets are in good
condition, fit for their intended purposes.
(h) Liens. Except for tangible personal property
used in connection with the Winn Correctional
Center and the Metropolitan Nashville and
Davidson County Facility,none of the Collateral
is, as of the Effective Date, subject to any
Lien, except Permitted Liens, that is superior to
the Security Interest created herein. Except
with respect to Permitted Liens, no financing
statement under the Uniform Commercial Code which
names the Borrower
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<PAGE> 20
or a Subsidiary as debtor and which lists the
Collateral as collateral (other than the Financing
Statements) and which has not been terminated
has been filed in any State or other
jurisdiction, and neither the Borrower nor any
Subsidiary has signed any such financing statement
or any security agreement authorizing any secured
party thereunder to file any such financing
statement.
(i) Indebtedness . The Borrower, and each of the
Subsidiaries, have performed and is in compliance
with all of the terms of all Indebtedness and
all instruments and agreements (including
Guaranties) relating thereto, and no default or
event which with the giving of notice or lapse
of time or both would constitute a default,
exists as of the Agreement Date with respect to
any such Indebtedness.
(j) Litigation. There are no actions, suits or
proceedings pending (nor, to the knowledge of the
Borrower or the Subsidiaries, are there any
actions, suits or proceedings threatened, nor is
there any basis therefor) against or in any
other way relating adversely to or affecting the
Borrower or the Subsidiaries, or any of its
property or by any governmental body except
actions, suits or proceedings of the character
normally incident to the kind of business
conducted by the Borrower or the Subsidiaries,
which if adversely determined would not singly
or in the aggregate have a Materially Adverse
Effect on the Borrower or the Subsidiaries, and
there are no strikes or walkouts in progress
relating to any labor contracts to which the
Borrower or the Subsidiaries is a party.
(k) Patents; Trademarks. The Borrower, and/or the
Subsidiaries, own or possess all patents, patent
rights or licenses, patent applications,
trademarks, trademark rights, trade styles, trade
names, trade name rights, service marks, service
mark rights, copyrights and rights with respect
to the foregoing which are required to conduct
its business as now and presently planned to be
conducted without conflict with the rights of
others. Except as set forth on Schedule
5.1(k), the Borrower possesses good and
indefeasible title to and ownership of all
trademarks, trade systems, trade names, service
marks, licenses, patents, patent applications, and
copyrights as set forth on Schedule 5.1(k) which
are currently used and intended to be used in
normal business operations, and none of the
foregoing assets is the subject of any pending
or threatened claim or challenge.
(l) Tax Returns and Payments. All federal, state
and other tax returns of the Borrower required
by law to be filed have been duly filed, and
all federal, state and other taxes, assessments
and other governmental charges or levies upon
the Borrower and its property, income, profits
and assets which are due and payable have been
paid, except any such nonpayment which is at
the time permitted under Section 8.5. The
charges, accruals and reserves on the books of
the Borrower in respect of federal and state
taxes for all fiscal years and portions thereof
since its organization are, in the judgment of
the Borrower, adequate, and the Borrower knows of
no reason to anticipate any additional
assessments for any of such years which, singly
or in the aggregate, might have a Materially
Adverse Effect on the Borrower.
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<PAGE> 21
(m) Financial Statements. The Borrower has furnished
to the Lender copies of the (i) audited
consolidated statements of income and cash flows
of the Borrower for the 12-month period ended
December 31, 1994, and unaudited consolidated
statements of income and cash flow for the month
ending March 31, 1995. Each such financial
statement is complete and correct, and presents
fairly in accordance with generally accepted
accounting principles the Borrower's financial
condition as of the date of the statement or
for the period covered (except that the
unaudited financial statement shall be subject to
the normal year-end audit adjustments). Except
as disclosed or reflected in such financial
statements as at the Effective Date, and except
as disclosed in writing to the Lender prior to
the Effective Date, neither the Borrower nor any
of its Subsidiaries had any material liabilities,
contingent or otherwise, and neither the Borrower
nor any of its Subsidiaries had any material
unrealized or anticipated losses.
(n) Liabilities. Except for liabilities incurred in
the ordinary course of business or otherwise
described in the financial statements disclosed
to the Lender, neither the Borrower nor any
Subsidiary, individually or in the aggregate, has
any material liabilities, claims or assessments,
direct or indirect, absolute or contingent.
(o) Leases. Schedule 5.1(o) contains a complete and
correct listing of all (i) capitalized lease
obligations and (ii) operating leases in
effect as of the Agreement Date which call for
total annual lease payments in excess of
$100,000. The Borrower and/or the Subsidiaries
have performed and is in compliance with all the
terms of such capitalized lease obligations and
operating leases and no default or event which
with the giving of notice or lapse of time or
both would constitute a default exists as of the
Agreement Date with respect to any such
capitalized lease obligation or operating lease.
(p) ERISA. Except as set forth on Schedule 5.1(p),
neither the Borrower nor any Subsidiaries has any
Plans. Each Plan is in compliance with ERISA
in all material respects. No material liability
to the PBGC or to a Multiemployer Plan has
been, or is expected by the Borrower to be,
incurred by the Borrower or any of its
Subsidiaries.
(q) Absence of Defaults. Neither the Borrower nor
any Subsidiary is in default under its
certificate of incorporation or by-laws and no
event has occurred which has not been remedied,
cured or waived,
(1) which constitutes a Default or Preceding
Event; or
(2) which constitutes, or which with the
passage of time or giving of notice or
both would constitute, a default by the
Borrower or any Subsidiary
under any agreement (other than this Agreement)
or judgment, decree or order to which the
Borrower or any Subsidiary is a party or by
which the Borrower or any Subsidiary or any of
the respective properties of the
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<PAGE> 22
Borrower or a Subsidiary may be bound, and
which event would have a Materially Adverse
Effect upon the Borrower or any Subsidiary.
(r) Accuracy and Completeness of Information. All
written information, reports and other papers and
data produced by or on behalf of the Borrower
and the Subsidiaries and furnished to the Lender
were, at the time the same were so furnished,
complete and correct in all material respects, to
the extent necessary to give the recipient a
true and accurate knowledge of the subject
matter. No fact is known to the Borrower nor
to a Subsidiary which has had, or may in the
future have (so far as the Borrower can
foresee), a Materially Adverse Effect upon the
Borrower or the Subsidiaries which has not been
set forth in such information, reports or other
papers or data, or otherwise disclosed in
writing to the Lender prior to the date of this
Agreement. No document furnished or written
statement made to the Lender in connection with
the negotiation, preparation or execution of this
Agreement, the Note or any of the Security
Documents contains or will contain any untrue
statement of a fact material to the
creditworthiness of the Borrower or omits or
will omit to state a material fact necessary in
order to make the statement contained therein not
misleading.
(s) Solvency. In each case after giving effect to
the Indebtedness represented by the Loan and the
standby letters of credit, and the transactions
contemplated by this Agreement, the Borrower and
each of the Subsidiaries is solvent, having
assets of a fair salable value which exceeds the
amount required to pay its debts. The Borrower
and each of the Subsidiaries is able to and
anticipates that it will be able to meet its
debts as they mature and has adequate capital
to conduct the business in which it is or
proposes to be engaged.
(t) Casualties; Loss, etc.. Neither the business
nor the assets of Borrower or any Subsidiary has
been materially and adversely affected as a
result of any fire, explosion, earthquake, flood,
drought, windstorm, accident, strike, or other
labor disturbance, embargo, requisition or taking
of property or cancellation of contracts, permits
or concessions by any domestic or foreign
government or any agency thereof, riot, activities
of armed forces, or acts of God, or of any
public enemy.
(u) Environmental Laws, Etc. Neither Borrower nor
any Subsidiary is in violation of any federal,
state or local environmental laws, rules or
regulations, nor has the Borrower become aware of
any facts or circumstances that would cause it
to believe that any of the facilities managed by
it have violated or are violating any federal,
state or local environmental laws, rules or
regulations.
(v) Investment Company. Neither the Borrower nor
any Subsidiary in an "investment company" or a
company controlled by an "investment company"
within the meaning of the Investment Company Act
of 1940, as amended.
Section 5.2. Survival of Representations and
Warranties, etc. All representations and warranties set forth in this
Article 5, and all representations, warranties and statements
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<PAGE> 23
contained elsewhere in this Agreement or in any certificate, financial
statement, or other instrument, delivered by or on behalf of the
Borrower or the Subsidiaries pursuant to or in connection with this
Agreement, the Note or any of the Security Documents (including but
not limited to any such made in or in connection with any amendment
thereto) shall constitute representations and warranties made under
this Agreement and shall survive the execution hereof and the making
of any Loan or issuance of any standby letter of credit hereunder.
ARTICLE 6
SECURITY INTEREST
Section 6.1. Security Interest.
(a) To secure the payment, observance and performance
of the Secured Obligations, the Borrower, and
each of the Guarantors, hereby mortgages, pledges
and assigns all of the Collateral to the Lender
and grants to the Lender a continuing Security
Interest in, and a continuing Lien upon, all of
the Collateral. The Borrower and the Guarantors
acknowledge that the security interest and liens
in the Collateral are held by the Lender for
the benefit of the Lender and any Affiliate of
Lender which issues letters of credit or
otherwise extends credit to the Borrower under
the terms of this Agreement, including, without
limitation, First Union National Bank of North
Carolina, and upon the occurrence of an Event
of Default, to the extent proceeds are realized
from the disposition of the Collateral in
accordance with the terms of this Agreement, the
proceeds shall be applied by Lender to the
Secured Obligations, including, without limitation,
the obligations of the Borrower to FUNBNC under
the Guaranty and Reimbursement Agreement, in
accordance with the terms of this Agreement.
(b) As additional security for all of the Secured
Obligations, the Borrower and each of the
Guarantors, grants to the Lender a Security
Interest in, and assigns to the Lender all of
the Borrower's and each of the Guarantors'
right, title and interest in and to, any
deposits or other sums at any time credited by
or due from the Lender or the Lender's
Affiliates to the Borrower or the Guarantors
with the same rights therein as if the deposits
or other sums were credited by or due from the
Lender. The Borrower, and each of the
Guarantors, hereby authorizes the Lender's
Affiliates to pay or deliver to Lender, without
necessity on the Lender's part to resort to
other security or sources of reimbursement for
the Secured Obligations, at any time upon the
occurrence of any Default and without further
notice to the Borrower or the Guarantors (such
notice being expressly waived), any of the
aforesaid deposits (general or special, time or
demand, provisional or final) or other sums for
application of any Secured Obligation,
irrespective of whether any demand has been made
or whether such Secured Obligation is mature,
and the rights given the Lender hereunder are
cumulative with the Lender's other rights and
remedies, including other rights of set-off.
The Lender will promptly notify the Borrower of
its receipt of any such funds for application
to the Secured Obligations, but failure to do so
will not affect the validity or enforceability
thereof. The Lender may give notice of
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<PAGE> 24
the above grant of a Security Interest in and
assignment of the aforesaid deposits and other
sums, and authorization, to, and make any
suitable arrangements with, any such Affiliate of
the Lender for effectuation thereof, and the
Borrower hereby irrevocably appoints the Lender as
its attorney-in-fact to collect any and all such
deposits or other sums to the extent any such
payment is not made to the Lender by such
Affiliate or participant.
Section 6.2. Continued Priority of Security Interest.
(a) The Security Interest granted in Section 6.1
hereof shall at all times be valid, perfected
and enforceable against the Borrower, and each
of the Guarantors, and all third parties in
accordance with the terms of this Agreement, as
security for the Secured Obligations, and the
Collateral shall not at any time be subject to
any Liens that are prior to, on a parity with,
or junior to the Security Interest, other than
Permitted Liens.
(b) The Borrower shall, at its sole cost and
expense, take all action that may be necessary
or desirable, or that the Lender may request,
so as at all times to maintain the validity,
perfection, enforceability and rank of the
Security Interest in the Collateral in conformity
with the requirements of Section 6.2(a), or to
enable the Lender to exercise or enforce its
rights hereunder, including but not limited to:
(1) paying all taxes, assessments and other
claims lawfully levied or assessed on any
of the Collateral, except to the extent
that such taxes, assessments and other
claims constitute Permitted Liens;
(2) obtaining, after the date of this
Agreement, landlords', mortgagees' or
mechanics' releases, subordinations or
waivers; provided, that the failure to
obtain any of the foregoing shall not be
deemed a breach of this covenant so long
as the Lender is satisfied that the
Borrower utilized its best efforts in
connection therewith;
(3) executing and delivering financing
statements, pledges, designations, mortgages,
deeds to secure debt, deeds of trust,
security agreements, hypothecations, notices
and assignments in each case in form and
substance satisfactory to the Lender
relating to the creation, validity,
perfection, maintenance or continuation of
the Security Interest under the Uniform
Commercial Code or other Applicable Law.
(c) The Lender is hereby authorized to file one or
more financing or continuation statements or
amendments thereto without the signature of or
in the name of the Borrower and each of the
Guarantors for such purpose. The Lender will
give the Borrower notice of the filing of any
such statements or amendments, which notice shall
specify the locations where such statements or
amendments were filed. A carbon, photographic,
xerographic or other reproduction of this
Agreement or of any of the Security Documents or
of any financing statement filed in connection
with this Agreement is sufficient as a financing
statement.
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<PAGE> 25
ARTICLE 7
COLLATERAL COVENANTS
Until all the Secured Obligations have been paid in
full, unless the Lender shall otherwise consent in writing thereto:
Section 7.1. Ownership and Defense of Title.
(a) Except for Permitted Liens, the Borrower and the
Guarantors shall at all times be the sole owner
of each and every item of Collateral and shall
not create any lien on, or sell, lease,
exchange, assign, transfer, pledge, hypothecate,
grant a security interest or security title in
or otherwise dispose of, any of the Collateral
or any interest therein. The inclusion of
"proceeds" of the Collateral under the Security
Interest shall not be deemed a consent by the
Lender to any other sale or other disposition of
any part or all of the Collateral.
(b) The Borrower and each of the Guarantors shall
defend its title in and to, and the Security
Interest in, the Collateral against the claims
and demands of all persons.
Section 7.2. Insurance.
(a) The Borrower shall at all times cause insurance
to be maintained on the Collateral and on all
other buildings, property, and equipment against
loss or damage by fire, theft, burglary,
pilferage, loss in transit and such other
hazards as the Lender shall reasonably specify,
in amounts and under policies issued by the
Borrower's present insurers or other insurers
acceptable to the Lender. All premiums on such
insurance shall be paid (or caused to be paid)
by the Borrower and, unless heretofore delivered,
copies of the policies shall be delivered to
the Lender. The Borrower will not use or
permit the Collateral, or other buildings,
property, or equipment to be used unlawfully or
in such a way that the use causes the
Collateral, or other buildings, property, or
equipment to be excluded from coverage.
(b) All insurance policies required under Section 7.2
shall contain clauses in the form submitted to
the Borrower by the Lender or in other form
and substance satisfactory to the Lender, naming
the Lender, as loss payee and providing
(1) that all proceeds thereunder shall be
payable to the Lender;
(2) that no such insurance shall be affected
by any act or neglect of the insured or
owner of the property described in such
policy; and
(3) that such policy and any loss payee
clause may not be cancelled, amended or
terminated unless at least ten days' prior
written notice is given to the Lender.
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<PAGE> 26
Section 7.3. Location of Offices; Records. The
Borrower will not change the location of its chief executive office
or its books and records relating to the Collateral or change its
name, its identity or corporate structure without giving the Lender 30
days' prior written notice thereof. The Borrower will at all times
keep complete and accurate records of all Collateral.
ARTICLE 8
AFFIRMATIVE COVENANTS
Until all the Secured Obligations have been paid in
full, unless the Lender shall otherwise consent in writing thereto,
the Borrower will:
Section 8.1. Preservation of Corporate Existence and
Similar Matters. Preserve and maintain its corporate existence,
rights, franchises, licenses and privileges in the jurisdiction of its
incorporation and qualify and remain qualified as a foreign
corporation and authorized to do business in each jurisdiction in
which the character of its properties or the nature of its business
requires such qualification or authorization.
Section 8.2. Compliance with Applicable Law, Etc.
(a) Comply with all Applicable Laws relating to the
Borrower.
(b) Maintain all Government Approvals material to the
conduct of the Borrower's and/or the Subsidiaries'
business.
(c) Upon request by Bank, Borrower shall provide to
Bank copies of any Governmental Approval required
to be obtained by Borrower by Applicable Law.
Section 8.3. Maintenance of Property. In addition
to, and not in derogation of, the requirements of Section 7.1 and of
any of the Security Documents:
(a) protect and preserve all properties material to
the normal operation of its business, including
copyrights, patents, trade names and trademarks,
and maintain in good repair, working order and
condition all tangible properties material to the
normal operation of its business;
(b) maintain all physical property material to normal
operation in good and workable condition in all
material respects, with reasonable allowance for
wear and tear, and exercise proper custody over
all such property; and
(c) from time to time make or cause to be made
all needed and appropriate repairs, renewals,
replacements and additions to such properties
material to the normal operation of its business,
so that the business carried on in connection
therewith may be properly and advantageously
conducted at all times.
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<PAGE> 27
Section 8.4. Insurance. Maintain, in addition to
that required by Section 7.2 or any of the Security Documents,
insurance with responsible insurance companies against such risks and
in such amounts as is customarily maintained by similar businesses or
as may be required by Applicable Law, including, without limitation,
workers' compensation, business interruption and fire and casualty
insurance and, in addition to the foregoing, general liability
(including, if appropriate, errors and omissions) insurance in an
amount not less than $15,000,000, and from time to time deliver to
the Lender upon its request a detailed list of all insurance then in
effect, stating the names of the insurance companies, the amounts and
rates of the insurance, the dates of the expiration thereof and the
properties and risks covered thereby.
Section 8.5. Filing of Returns and Payment of Taxes and Claims.
(a) File all tax returns when due and pay or
discharge when due all taxes, assessments and
governmental charges or levies imposed upon it
or upon its income or profits or upon any
properties belonging to it; and
(b) Pay or discharge when due all lawful claims of
materialmen, mechanics, carriers, warehousemen and
landlords for labor, materials, supplies and
rentals which, if unpaid, might become a Lien on
any properties of the Borrower; except that this
Section 8.5 shall not require the payment or
discharge of any such tax, assessment, charge,
levy or claim which is being contested in good
faith by appropriate proceedings and for which
adequate reserves have been established on the
appropriate books.
Section 8.6. Accounting Methods and Financial Records.
Maintain a system of accounting, and keep such books, records and
accounts (which shall be true and complete), as may be required or
as may be necessary to permit the preparation of financial statements
in accordance with generally accepted accounting principles consistently
applied.
Section 8.7. Visits and Inspections. During normal
business hours of the Borrower, permit representatives, agents, officers
or employees of the Lender at any time to
(a) visit and inspect the Collateral and properties
of the Borrower and the Subsidiaries;
(b) inspect, review, audit and make extracts from
its relevant books, files, correspondence, computer
information and records including but not limited
to management letters prepared by independent
accountants; and
(c) discuss with its principal officers, and, upon
one (1) day prior notice to the Borrower, its
independent accountants, its business, assets,
liabilities, financial condition, results of
operations and business prospects. The Borrower
will deliver to the Lender any instrument
necessary for it to obtain records from any
service bureau maintaining records on behalf of
the Borrower or the Subsidiaries.
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<PAGE> 28
Section 8.8. Use of Proceeds.
(a) Use the proceeds of all advances made hereunder
only for working capital and general business
purposes, and for issuance of letters of credit
in accordance with the terms of this Agreement;
and
(b) Not use any part of the proceeds to purchase
or carry, or to reduce or retire or refinance
any credit incurred to purchase or carry, any
margin stock (within the meaning of Regulation G
of the Board of Governors of the Federal
Reserve System) or for any other purpose which
would involve a violation of such Regulation G
or Regulation U or X of such Board of
Governors, or for any other purpose prohibited by
law or by the terms and conditions of this
Agreement.
Section 8.9. Further Assurances. Promptly cure any
defects in this Agreement, the Note or the Security Documents at its
expense if resulting from any act or failure to act by the
Borrower, the Subsidiaries or any employee or officer thereof
including, without limitation, the perfection of any Liens in favor of
the Lender. The Borrower, at its expense, will promptly execute and
deliver to the Lender all such other and further documents, agreements
and instrument in compliance with or accomplishment of the covenants
and agreements of the Borrower set forth herein, in the Note or in
the Security Documents, and will take such other actions necessary to
further evidence or more fully describe any Collateral, or to correct
any omissions or to state more fully the obligations set forth in
any of the foregoing, or to perfect, protect or preserve any Liens
created pursuant to the foregoing, or to make such other recordings
or filings or to obtain such consents as may be necessary or
appropriate in connection with this Agreement, the Note or the
Security Documents.
Section 8.10. Management Employment Contracts. Enter
into and/or maintain an employment agreement with Doctor R. Crants as
shall be reasonably satisfactory to the Lender.
ARTICLE 9
INFORMATION
Until all the Secured Obligations have been paid in
full, unless the Lender shall otherwise consent in writing thereto,
the Borrower shall furnish to the Lender:
Section 9.1. Quarterly Financial Statements. As soon
as available and in any event, within 45 days following the end of
each fiscal quarter, the consolidated and consolidating balance sheet
of the Borrower as at the end of such quarter, the related
statement of income of the Borrower for such quarter, and a statement
of cash flow for such quarter, all setting forth in comparative form
the figures for the corresponding periods of the previous fiscal year,
all of which shall be certified by the president or chief financial
officer of the Borrower to be, in his opinion, complete and correct
and to present fairly, in accordance with generally accepted
accounting principles for the presentation of interim financial
statements consistently applied throughout the period involved, subject
to audit and year-end adjustments, the financial position of the
Borrower as at its date and the operations of the Borrower for the
period then ended.
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<PAGE> 29
Section 9.2. Audited Year-End Statements. As soon
as available, and in any event within 90 days after the end of each
fiscal year of the Borrower, the consolidated (together with internally
prepared consolidating statements) and consolidating balance sheet of
the Borrower as at the end of such fiscal year and the related
statements of income, retained earnings and changes in financial
position of the Borrower for such fiscal year, and in each case
setting forth in comparative form the figures as at the end of and
for the previous fiscal year, certified by independent certified
public accountants acceptable to the Lender and whose certificates
shall be in scope and substance satisfactory to the Lender and who
shall have authorized the Borrower to deliver such financial
statements and certifications thereof to the Lender pursuant to this
Agreement.
Section 9.3. Quarterly Reports. As soon as
available, and in any event within forty- five (45) days following
the end of each fiscal quarter,
(a) an accounts receivable aging report, in form and
substance acceptable to Lender;
(b) a quarterly occupancy report setting forth the
occupancy levels for the Facilities, in form and
substance acceptable to Lender.
Section 9.4. Officer Certificate. At the time the
financial statements are furnished pursuant to Sections 9.1 and 9.2, a
certificate of the Borrower's president or chief financial officer
(a) stating that a review of the activities of the
Borrower has been made under his supervision with
a view toward determining whether the Borrower,
and each of the Guarantors, have fulfilled all
of its obligations under this Agreement, the
Note, and the Security Documents;
(b) stating that the Borrower, and each of the
Guarantors, have fulfilled their obligations under
this Agreement, the Note and the Security
Documents, and that all representations made in
this Agreement continue to be true and correct,
and that no Default or Preceding Event exists,
or, if the foregoing is not the case,
specifying the nature of any change or specifying
such Default or Preceding Event and its nature,
when it occurred, whether it is continuing, and
the steps being taken by the Borrower with
respect to such event or failure;
(c) having attached the calculations, prepared by the
Borrower, required to establish whether or not
the Borrower is in compliance with the covenants
contained in Sections 10.1 and 10.2, as at the
date of such certificate;
(d) to the extent requested from time to time by
the Lender, specifically affirming compliance by
the Borrower, and each of the Guarantors, with
any of its representations or obligations under
this Agreement, the Note, and the Security
Documents; and
(e) containing or accompanied by such financial or
other details, information and material as the
Lender may reasonably request to evidence such
compliance.
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Section 9.5. Audit Reports. Upon the receipt of
any report submitted to the Borrower or any Subsidiary by independent
certified public accountants in connection with any annual, interim or
special audit made by them of the books of the Borrower or any
Subsidiary, the Borrower shall furnish a copy of any such report to
the Lender.
Section 9.6. Copies of Other Reports.
(a) Upon request of Bank, copies of all independent
public accountant management letters and reports
to the Audit Committee of the Borrower.
(b) As soon as practicable, copies of all financial
statements and reports as the Borrower shall send
to its stockholders and of all registration
statements and all regular or periodic reports
which the Borrower shall file, with the
Securities and Exchange Commission or any
successor commission.
(c) Copies of any amendments reflecting any changes
in Governmental Approvals which may have a
Materially Adverse Effect on the Borrower or the
Subsidiaries.
(d) From time to time and promptly upon each
request, such data, certificates, reports,
statements, documents or further information
regarding the business, assets, liabilities,
financial condition, results of operations or
business prospects of the Borrower as the Lender
may request and that the Borrower has or
without unreasonable expense can obtain. The
rights of the Lender under this Section 9.6(d)
are in addition to and not in derogation of
its rights under any other provision of this
Agreement or any of the Security Documents.
(e) Upon request by the Lender, following Lender's
receipt of evidence of a violation or potential
violation of applicable environment laws, evidence
of continuing compliance with all federal, state
and local environmental laws applying to the
properties or operations of the Borrower and the
Subsidiaries.
Section 9.7. Notice of Litigation, Default and Other
Matters. Prompt notice of:
(a) to the extent the Borrower is aware of the
same, the commencement of all proceedings and
investigations by or before any governmental or
nongovernmental body and all actions and
proceedings in any court or before any
arbitrator against or in any other way relating
adversely to, or adversely affecting, the
Borrower, a Subsidiary or any of the property,
assets or businesses of the Borrower or the
Subsidiaries, which might singly or in the
aggregate, have a Materially Adverse Effect on
the Borrower or the Subsidiaries;
(b) any amendment of the certificate of incorporation
or by-laws of the Borrower or any Subsidiary;
(c) any change in the business, assets, liabilities,
financial condition, results of operations or
business prospects of the Borrower or any
Subsidiary which has had or may have any
Materially Adverse Effect on the Borrower or any
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Subsidiary and any change in the officers or
board of directors of the Borrower; and
(d) any Default or Preceding Event.
Section 9.8. Notice of Issuance of Stock. Upon the
issuance of additional shares of stock in the Borrower, the Borrower
shall promptly disclose to the Lender in writing the number of shares
issued, the price therefor, and such other information as the Lender
may from time to time request.
Section 9.9. Sources and Uses of Funds. Upon
request of Lender, Borrower shall provide Lender, on a semi-annual
basis, with a sources and uses of funds statement, in form and
substance acceptable to Lender.
Section 9.10. Accuracy of Information. All written
information, reports, statements and other papers and data furnished to
the Lender, whether pursuant to this Article 9 or any other provision
of this Agreement, or any of the Security Documents, shall be, at
the time the same is so furnished, complete and correct in all
material respects to the extent necessary to give the Lender true and
accurate knowledge of the subject matter.
ARTICLE 10
NEGATIVE COVENANTS
Until all the Secured Obligations have been paid in
full, unless the Lender shall otherwise consent in writing thereto,
neither the Borrower nor any Subsidiary shall directly or indirectly:
Section 10.1. Financial Ratios. Permit:
(a) the Borrower's Debt Service Coverage Ratio to be
less than 1.75 to 1, measured quarterly on a
rolling four (4) quarters basis;
(b) the ratio of Senior Debt to Cash Flow to be
greater than 2.75 to 1, measured quarterly.
Section 10.2. Debts, Guaranties and Other Obligations.
Incur, create, assume or in any manner be or become liable in
respect of any Indebtedness (including obligations for the payment of
rent); Guarantee or otherwise in any way become or be responsible
for obligations of any other person, direct or contingent, whether by
agreement to purchase the indebtedness of any other person, agreement
for the furnishing of funds to any other person through the purchase
or lease of goods, supplies or services, or by way of stock
purchase, capital contribution, advance or loan, for the purpose of
paying or discharging the indebtedness of any other person, or
otherwise, except that the foregoing restrictions shall not apply to:
(a) the Secured Obligations to the Lender pursuant
to this Agreement;
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(b) liabilities, direct or contingent, of the
Borrower existing on the date of this Agreement
and set forth in Schedule 10.2(b) attached
hereto, and including and all renewals and
extensions thereof (but not increases thereof);
(c) liabilities in relation to leases and lease
agreements to the extent permitted by Section
10.8 hereof;
(d) endorsements of negotiable or similar instruments
for collection or deposit in the ordinary court
of business;
(e) trade payables or similar obligations from time
to time incurred in the ordinary course of
business, other than for borrowed money; and
(f) taxes, assessments or other governmental charges
that are not yet due or are being contested in
good faith by appropriate action initiated in a
timely fashion and diligently conducted and, with
respect to such charges exceeding $100,000, if
adequate reserves shall have been made therefor.
Section 10.3. Liens. Create, incur, assume or
permit to exist any Lien on any of its properties or assets (now
owned or hereafter acquired), except:
(a) Liens securing the payment of any Indebtedness
to the Lender;
(b) Liens for taxes, assessments, or other
governmental charges not yet due or which are
being contested in good faith by appropriate
action promptly initiated, diligently conducted and
adequately bonded;
(c) Liens of landlords, vendors, carriers,
warehousemen, mechanics, laborers and materialmen
arising by law in the ordinary course of
business for sums not yet due or being contested
in good faith by appropriate action promptly
initiated and diligently pursued;
(d) Liens existing on property owned by Borrower or
a Subsidiary and described in Schedule 5.1(g)
attached hereto, and including all renewals and
extensions thereof (but not increases thereof);
(e) pledges or deposits made in the ordinary court
of business in connection with workers'
compensation, unemployment insurance, social
security and other like laws; and
(f) inchoate Liens arising under ERISA to secure the
contingent liability of Borrower.
Section 10.4. Investments, Loans and Advances. Make
or permit to remain outstanding any loans or advances to or
investments in any person, except that:
(a) the Borrower may acquire and own stock,
obligations or securities received in settlement
of debts owing to the Borrower, if the debts
in question were created in the ordinary course
of business;
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(b) the Borrower may endorse negotiable instruments
for collection in the ordinary course of
business;
(c) except for the existing investments described in
Schedule 10.4(c) attached hereto, the Borrower may
invest, loan or otherwise contribute singly or
in the aggregate and for the term of this
Agreement not more than One Million Dollars
($1,000,000) in, to, or on behalf of its
Subsidiaries on or after the date hereof; and
(d) the Borrower may continue to make available to
Doctor R. Crants a line of credit in a
principal amount not to exceed $300,000.
Section 10.5. Dividends, Distributions and Redemptions.
Declare or pay any dividend, purchase, redeem or otherwise acquire for
value any of its stock now or hereafter outstanding, or the stock of
a Subsidiary, as the case may be, return any capital to its
stockholders, or make any distribution of its assets to its
stockholders as such. Notwithstanding the foregoing, the Borrower may
purchase or acquire its capital stock in connection with Borrower's
(i) "Flexible Stock Option Plan," adopted May 26, 1988," (ii) "Stock
Option Plan," dated January 23, 1985, (iii) "Non Qualified Stock
Option Plan," dated January 16, 1986, (iv) "1991 Flexible Stock
Option Plan," dated April 12, 1991, or (v) "1995 Stock Incentive
Plan" dated May 26, 1995.
Section 10.6. Sales and Leasebacks. Enter into any
arrangement, directly or indirectly, with any person whereby the
Borrower or any Subsidiary shall sell or transfer any property,
whether now owned or hereafter acquired, and whereby the Borrower or
any Subsidiary shall then or thereafter rent or lease as lessees such
property or any part thereof or other property which the Borrower or
any Subsidiary intends to use for substantially the same purpose or
purposes as the property sold or transferred.
Section 10.7. Nature of Business. Permit any
material change to be made in the scope or character of its business
as carried on at the date hereof or alter or change the corporate
name of the Borrower or any Guarantor.
Section 10.8. Limitation of Leases. Create, incur,
assume or suffer to exist any obligation for the payment of rent or
hire of property of any kind whatsoever, whether real or personal,
under leases or lease agreements that would cause the aggregate
amount of all additional payments made by Borrower pursuant to such
new leases or lease agreements to exceed $250,000 per year.
Section 10.9. Mergers, Etc.. Divest itself of a
controlling interest in any person or merge or consolidate with or
sell, assign, lease or otherwise, dispose of all or substantially all
of its properties whether now owned or hereafter acquired (whether in
one transaction or in a series of transactions) to, any person, or
permit any person to do so; transfer, sell, assign, pledge or
hypothecate, directly or indirectly, any of the capital stock of any
Subsidiary or more than twenty-five percent (25%) of the currently
issued and outstanding capital stock of Borrower, or issue or sell
any capital stock for less than fair market value or issue from
authorized but unissued stock or treasury stock an amount which would
cause the total number of shares then outstanding to be more than
one hundred twenty-five percent (125%) of such amount as of the date
hereof.
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Section 10.10. Use of Working Capital Facility.
Permit the proceeds of the Working Capital Facility to be used for
any purpose other than those specified herein.
Section 10.11. Sale or Discount of Receivables.
Except to minimize losses on bona fide debts previously contracted,
discount, or sell with recourse, or sell for less than the greater
of the face or market value thereof, any of its notes receivable or
accounts receivable.
Section 10.12. Prepayments of Other Indebtedness.
Prepay any Indebtedness (excluding trade payables) to any person,
except that the foregoing restriction shall not apply to the Note or
other Indebtedness to the Lender.
Section 10.13. Certain Transactions. Except as set
forth in Schedule 10.13 attached hereto, enter into, directly or
indirectly, any lease, contract, agreement or other transaction with
any Affiliate on terms that are less favorable than those that might
be obtained at the time in question from persons who are not
Affiliates, or enter into, directly or indirectly, any contract,
agreement, or other transaction with any director or officer of the
Borrower or any Subsidiary, or any relative or Affiliates thereof,
other than on fair and reasonable terms.
Section 10.14. Subsidiaries. Allow the creation or
existence of any subsidiaries other than the Subsidiaries, or allow
all or any part of the capital stock of any Subsidiary to be
transferred, sold, pledged or hypothecated in part or in whole, or
to become subject to any Lien.
Section 10.15. Foreign Involvement. Become materially
involved in any non-United States of America situated activity except
for the current activities described in Schedule 10.15 attached hereto.
Section 10.16. Operate Without Qualification.
Undertake to own, operate or conclude any agreement to own or operate
a correctional facility in any state until it shall have qualified
as a foreign corporation to do business in such state.
Section 10.17. Management Agreement. Enter into
agreements with third parties to perform the functions of senior
management.
Section 10.18. Change in Fiscal Year. Change the
fiscal year of the Borrower.
Section 10.19. Capital Expenditures. Make capital
expenditures for acquisition or construction of a new prison facility.
ARTICLE 11
DEFAULT
Section 11.1. Default. Each of the following shall
constitute a Default, whatever the reason for such event and whether
it shall be voluntary or involuntary or be effected by operation of
law or pursuant to any judgment or order of any court or any
order, rule or regulation of any governmental or nongovernmental body:
(a) Default in Payment. The Borrower shall fail to
make any payment of
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principal of, or interest on, the Note when and
as due (whether at the stated maturity date, by
reason of acceleration or otherwise).
(b) Misrepresentation. Any representation or warranty
made or deemed to be made by the Borrower or
any Guarantor under this Agreement or any
Security Document, or any amendment hereto or
thereto, shall at any time prove to have been
incorrect or misleading in any material respect
when made.
(c) Default in Performance. The Borrower or any
Guarantor shall fail to perform or observe any
term, covenant, condition or agreement contained
in this Agreement (other than one a failure in
the performance or observance of which is dealt
with specifically elsewhere in this Section 11.1)
and such failure shall continue for a period of
ten (10) business days after (i) written notice
thereof has been given to the Borrower by the
Lender, or (ii) the date such failure otherwise
becomes known to the Borrower.
(d) Security Documents. Any default under the
Security Documents or any Reimbursement Agreement
shall occur or the Borrower or any Guarantor
shall default in the performance or observance of
any term, covenant, condition or agreement
contained in, or the payment of any other sum
covenanted to be paid by the Borrower or any
Guarantor under, any Security Document or
Reimbursement Agreement.
(e) Cross-Defaults. The Borrower shall have
defaulted in the payment when due, or in the
performance or observance, of any obligation or
condition of any note, contract, lease or other
agreement or undertaking (other than one of the
Security Documents) with any person.
(f) Voluntary Bankruptcy Proceeding. The Borrower or
any Guarantor shall
(1) commence a voluntary case under the
federal bankruptcy laws (as now or
hereafter in effect);
(2) file a petition seeking to take advantage
of any other laws, domestic or foreign,
relating to bankruptcy, insolvency,
reorganization, winding up or composition
for adjustment of debts;
(3) consent to or fail to contest in a
timely and appropriate manner any petition
filed against it in an involuntary case
under such bankruptcy laws or other laws;
(4) apply for or consent to, or fail to
contest in a timely and appropriate manner,
the appointment of, or the taking of
possession by, a receiver, custodian,
trustee, or liquidator of itself or of a
substantial part of its property, domestic
or foreign;
(5) admit in writing its inability to pay its
debts as they become due;
(6) make a general assignment for the benefit
of creditors; or
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(7) take any formal corporate action for the
purpose of effecting any of the foregoing.
(g) Involuntary Bankruptcy Proceeding. A case or
other proceeding shall be commenced against the
Borrower or any Guarantor in any court of
competent jurisdiction seeking
(1) relief under the federal bankruptcy laws
(as now or hereafter in effect) or under
any other laws, domestic or foreign,
relating to bankruptcy, insolvency,
reorganization, winding up or adjustment of
debts;
(2) the appointment of a trustee, receiver,
custodian, liquidator or the like of the
Borrower or any Guarantor or of all or
any substantial part of the assets,
domestic or foreign, of the Borrower or
any Guarantor; and such case or proceeding
shall continue undismissed or unstayed for
a period of 60 consecutive calendar days,
or an order granting the relief requested
in such case or proceeding against the
Borrower or any Guarantor (including, but
not limited to, an order for relief under
such federal bankruptcy laws) shall be
entered.
(h) Litigation. Except for good faith disputes
regarding the interpretation of this Agreement or
any other document, instrument or certificate
delivered in connection with this Agreement, the
Borrower, a Guarantor, or any Affiliate shall
challenge or contest in any action, suit or
proceeding in any court or before any arbitrator
or governmental body the validity or
enforceability of this Agreement, the Note or
any Security Document or the perfection or
priority of the Security Interest or any Lien
granted to the Lender under any Security
Document.
(i) Judgment. A judgment or order for the payment
of money shall be entered against the Borrower
by any court which exceeds $100,000 in amount
and such judgment order shall continue
undischarged or unstayed for thirty (30) days.
(j) Breach of Other Agreements. The Borrower shall
breach any material term or condition of any
other agreement to which the Borrower is a
party and the party other than the Borrower
thereto shall resort to any remedy under such
agreement or otherwise available at law or equity
which could have a Material Adverse Affect upon
the business or financial condition of the
Borrower.
(k) ERISA.
(1) Any Termination Event with respect to a
Plan shall occur that results in an
Unfunded Vested Accrued Benefit; or
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(2) any Plan shall incur an "accumulated
funding deficiency" (as defined in Section
412 of the Code or Section 302 of ERISA)
for which a waiver has not been obtained
in accordance with the applicable
provisions of the Code and ERISA; or
(3) the Borrower is in "default" (as defined
in Section 4219(c)(5) of ERISA) with
respect to payments to a multi-employer
Plan resulting from the Borrower's complete
or partial withdrawal (as described in
Section 4203 or 4205 of ERISA) from such
plan.
(l) Standby Letter of Credit. Any demand or claim
shall be made for payment or honor by the
holder thereof with respect to any standby
letter of credit issued pursuant to this
Agreement and such demand or claim is not
withdrawn and all advances made pursuant thereto,
together with interest thereon, are not repaid
to the Lender within thirty (30) days of such
demand or claim.
(m) Discontinuance of Business. The Borrower shall
discontinue or otherwise materially reduce its
usual and customary business activities.
Section 11.2. Remedies.
(a) Automatic Acceleration and Termination of
Facility. Upon the occurrence of a Default
specified in Section 11.1(f), (g) or (h), (1)
the principal of and the interest on the Working
Capital Facility and the Note at the time
outstanding, and all other amounts owed to the
Lender under this Agreement, the Note, any
Reimbursement Agreements, or any of the Security
Documents, shall thereupon become due and payable
without presentment, demand, protest, or other
notice of any kind, all of which are expressly
waived, anything in this Agreement, the Note,
any Reimbursement Agreements, or any of the
Security Documents to the contrary notwithstanding;
and (2) the Working Capital Facility and the
right of the Borrower to request borrowings or
standby letters of credit hereunder shall
immediately terminate.
(b) Other Remedies. If a Default shall have
occurred, and during the continuance of any
Default, the Lender, in its sole and absolute
discretion, and without implied limitation, may do
any or all of the following:
(1) declare the principal of and interest on
the Note at the time outstanding, and all
other amounts owed to the Lender under
this Agreement, or any of the Security
Documents, to be forthwith due and
payable, whereupon the same shall
immediately become due and payable without
presentment, demand, protest or other notice
of any kind, all of which are expressly
waived, anything in this Agreement, the
Note or the Security Documents to the
contrary notwithstanding;
(2) declare all amounts that may be owed to
the Lender under any Reimbursement Agreement
to be due and payable and require such
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<PAGE> 38
amount to be paid to Lender as security
against any draw or draws pursuant to any
standby letter of credit;
(3) terminate the Working Capital Facility and
any other right of the Borrower to request
borrowings hereunder;
(4) notify, or request the Borrower to notify,
in writing or otherwise, any account debtor
or obligor with respect to any one or
more accounts receivable to make payment to
the Lender or its agent or designee, at
such address as may be specified by the
Lender (if, notwithstanding the giving of
any notice, any account debtor or other
such obligor shall make payments to the
Borrower, the Borrower shall hold all such
payments it receives in trust for the
Lender, without commingling the same with
other funds or property of, or held by,
the Borrower, and shall deliver the same
to the Lender or its agent or designee
immediately upon receipt by the Borrower
in the identical form received, together
with any necessary endorsements);
(5) settle or adjust disputes and claims
directly with account debtors and other
obligors on accounts receivable for amounts
and on terms which the Lender considers
advisable and in all such cases only the
net amounts received by the Lender in
payment of such amounts, after deductions
of costs and attorneys' fees shall
constitute Collateral (the Borrower shall
have no further right to make any such
settlements or adjustments or to accept
any returns of goods);
(6) exercise any and all of its rights under
any and all of the Security Documents;
(7) apply any cash Collateral to the payment
of the Secured Obligations in any order in
which the Lender may elect or use such
cash in connection with the exercise of
any of its other rights hereunder or
under any of the Security Documents;
(8) exercise all of the rights and remedies
of a secured party under the Uniform
Commercial Code and under any other
Applicable Law, including, without
limitation, the right without notice except
as specified below and with or without
taking the possession thereof, to sell the
Collateral or any part thereof in one or
more parcels at public or private sale,
at any location chosen by the Lender, for
cash, on credit or for future delivery,
and at such price or prices and upon such
other terms as the Lender may deem
commercially reasonable. (The Borrower
agrees that, to the extent notice of sale
shall be required by law, at least ten
days' notice to the Borrower of the time
and place of any public sale or the time
after which any private sale is to be
made shall constitute reasonable
notification. The Lender shall not be
obligated to make any sale of Collateral
regardless of notice of sale having been
given. The Lender may adjourn any public
or private sale from time to time by
announcement at the time and place fixed
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therefor, and such sale may, without
further notice, be made at the time and
place to which it was adjourned).
Section 11.3. Application of Proceeds. All proceeds
from each sale of, or other realization upon, all or any part of
the Collateral following a Default shall be applied or paid over as
follows:
(a) First: to the payment of all costs and
expenses incurred in connection with such sale or
other realization, including attorneys' fees;
(b) Second: to the payment of the Secured
Obligations (with the Borrower remaining liable
for any deficiency) in any order which the
Lender may elect; and
(c) Third: the balance (if any) of such proceeds
shall be paid to the Borrower, subject to any
duty imposed by law or otherwise to whomsoever
will be entitled thereto.
The Borrower shall remain liable and will pay, on demand, any
deficiency remaining in respect of the Secured Obligations, together
with interest thereon at a rate per annum equal to the highest rate
then payable hereunder on such Secured Obligations, which interest
shall constitute part of the Secured Obligations.
Section 11.4. Power of Attorney. In addition to
the authorizations granted to the Lender under any other provision of
this Agreement or any of the Security Documents, upon and after a
Default, the Borrower hereby irrevocably designates and appoints the
Lender (and all persons designated by the Lender from time to time)
as the Borrower's true and lawful attorney and agent in fact, and
the Lender, or any agent of the Lender, may, without notice to the
Borrower, and at such time or times as the Lender or any such agent
in its sole discretion may determine, in the name of the Borrower
or the Lender, exercise all of the Borrower's rights and remedies
with respect to the collection of accounts receivable, prepare, file
and sign the name of the Borrower on any notice of Lien, assignment
or satisfaction of Lien, or similar document in connection with any
of the Collateral, and endorse the name of the Borrower upon any
chattel paper, document, instrument, notice, freight bill, bill of
lading or similar document or agreement relating to any other
Collateral.
Section 11.5. Miscellaneous Provisions Concerning
Remedies.
(a) Rights Cumulative. The rights and remedies of
the Lender under this Agreement, the Note, any
Reimbursement Agreement and each of the Security
Documents shall be cumulative and not exclusive
of any rights or remedies which it would
otherwise have. In exercising its rights and
remedies the Lender may be selective, and no
failure or delay by the Lender in exercising
any right shall operate as a waiver of it, nor
shall any single or partial exercise of any
power or right preclude its other or further
exercise or the exercise of any other power or
right.
(b) Waiver of Marshalling. The Borrower hereby
waives any right to require any marshalling of
assets and any similar right.
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ARTICLE 12
MISCELLANEOUS
Section 12.1. Notices.
(a) Method of Communication. Except as specifically
provided in this Agreement or in any of the
Security Documents, all notices and the
communications hereunder and thereunder shall be
in writing or by telephone, subsequently
confirmed in writing. Notices in writing shall
be delivered personally or sent by certified or
registered mail postage prepaid or by telegraph
or telex and shall be deemed received, in the
case of personal delivery, when delivered, in
the case of mailing, on the third day after
mailing, in the case of telegraph, on the day
after delivery to the telegraph office and in
the case of telex, upon transmittal.
(b) Addresses for Notices. Notices to any party
shall be sent to it at the following addresses,
or any other address of which all the other
parties are notified in writing:
If to the Borrower: Corrections
Corporation of America 102
Woodmont Boulevard Suite
800 Nashville, Tennessee
37205 Attention:
Attention: Darrell K. Massengale,
Chief Financial Officer
With a copy to: Robert R. Campbell,
Jr., Esq. Stokes &
Bartholomew 424 Church
Street, Suite 2800
Nashville, Tennessee 37219
If to the Lender: First Union National Bank
of Tennessee 333 Union
Street Nashville, Tennessee
37219
Attention: Brent Turner, Vice
President
With a copy to: Kim A. Brown, Esq.
Sherrard & Roe, P.L.C.
424 Church Street, Suite
2000 Nashville, Tennessee
37219
Section 12.2. Expenses. The Borrower will pay all
reasonable out-of-pocket expenses of the Lender in connection with the
preparation, execution and delivery of this Agreement, the Note, each
of the Security Documents, and any other documents or instruments
whenever the same shall be executed and delivered, including
appraisers' fees, search fees, recording fees, taxes, title insurance
premiums and the fees and disbursements of the law firm of Sherrard
& Roe, counsel for the Lender and of each local counsel retained by
the Lender.
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Section 12.3. Setoff. In addition to any rights
now or hereafter granted under Applicable Law upon and after the
occurrence of any Default, the Lender is hereby authorized by the
Borrower at any time and from time to time, without notice, to set
off and to apply any and all amounts in any and all payroll
accounts of the Borrower maintained with the Lender or any Affiliate
of the Lender, against and on account of the Secured Obligations
irrespective or whether or not
(a) the Lender shall have made any demand under
this Agreement, the Note, any Reimbursement
Agreement or any of the Security Documents; or
(b) the Lender shall have declared any or all of
the Secured Obligations to be due and payable as
permitted by Section 11.2 and although such
Secured Obligations shall be contingent or
unmatured.
Section 12.4. Accounting Matters. All financial and
accounting calculations, measurements and computations made for any
purpose relating to this Agreement, including without limitation all
computations utilized by the Borrower in complying with any covenant
contained herein, shall, unless there is an express written direction
by the Lender to the contrary, be performed in accordance with
generally accepted accounting principles consistently applied.
Section 12.5. Assignment. All the provisions of
this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns, except
that the Borrower may not assign, delegate, or otherwise transfer any
of its rights or duties under this Agreement.
Section 12.6. Amendments. Any term, covenant,
agreement or condition of this Agreement, the Note or any of the
Security Documents may be amended or waived, and any departure
therefrom may be consented to, if, but only if, such amendment,
waiver or consent is in writing and is signed by the Lender and, in
the case of any amendment, also by the Borrower, and in such event,
the failure to observe, perform or discharge any such term, covenant,
agreement or condition (whether such amendment is executed or such
waiver or consent is given before or after such failure) shall not
be construed as a breach of such term, covenant, agreement or
condition or as a Default or Preceding Event. Unless otherwise
specified in such waiver or consent, a waiver or consent given
hereunder shall be effective only in the instance and for the
specific purpose for which given.
Section 12.7. Performance of Borrower's Duties.
(a) The Borrower's obligations under this Agreement,
the Term Note, the Revolving Credit Note and
each of the Security Documents shall be
performed by the Borrower at its sole cost and
expense.
(b) If the Borrower shall fail to do any act or
thing which it has covenanted to do under this
Agreement or any of the Security Documents, the
Lender may (but shall not be obligated to) do
the same or cause it to be done either in the
name of the Lender or in the name and on
behalf of the Borrower and the Borrower hereby
irrevocably authorizes the Lender so to act.
-40-
<PAGE> 42
Section 12.8. Indemnification. The Borrower agrees
to indemnify and hold the Lender harmless from and against all losses
(including reasonable attorneys' fees) suffered by the Lender in
connection with:
(a) the exercise by the Lender of any right or
remedy granted to it under this Agreement, the
Note, any Reimbursement Agreement or any of the
Security Documents;
(b) any claim, and the prosecution or defense
thereof, arising out of or in any way connected
with this Agreement, the Note, any Reimbursement
Agreement or any of the Security Documents;
(c) the collection or enforcement of the Secured
Obligations; and
(d) any claim, demand, action, proceeding, liability,
penalty or assessment relating to or arising from
a violation or alleged violation of any federal,
state or local environmental law, rule, regulation
or order;
provided that the Borrower shall not be obligated to so indemnify
and hold harmless the Lender for any such loss resulting from the
willful misconduct or gross negligence of the Borrower.
Section 12.9. All Powers Coupled with Interest. All
powers of attorney and other authorizations granted to the Lender and
any persons designated by the Lender pursuant to any provisions of
this Agreement, any Reimbursement Agreement or any of the Security
Documents shall be deemed coupled with an interest and shall be
irrevocable so long as any of the Secured Obligations remain unpaid
or unsatisfied.
Section 12.10. Survival. Notwithstanding any
termination of this Agreement,
(a) until all Secured Obligations have been paid in
full or otherwise satisfied, the Lender shall
retain its Security Interest and shall retain
all rights under this Agreement, any Reimbursement
Agreement and each of the Security Documents
with respect to such Collateral as fully as
though this Agreement had not been terminated;
and
(b) the indemnities to which the Lender is entitled
under the provisions of this Article 12 and any
other provision of this Agreement, any
Reimbursement Agreement and the Security Documents
shall continue in full force and effect and
shall protect the Lender against events arising
after such termination as well as before.
Section 12.11. Titles and Captions. The Table of
Contents and the titles and captions of Articles, Sections and
subsections in this Agreement are for convenience only, and neither
limit nor amplify the provisions of this Agreement.
Section 12.12. Severability of Provisions. Any
provision of this Agreement which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective only
to the extent of such prohibition or unenforceability without
invalidating the remainder of such provision or the remaining
provisions hereof or affecting the validity or enforceability of such
provision in any other jurisdiction.
-41-
<PAGE> 43
Section 12.13. Governing Law; Jurisdiction. This
Agreement, the Note and Security Documents shall be construed in
accordance with and governed by the law of the State of Tennessee;
except that the enforceability of any mortgage or deed of trust with
respect to real property Collateral located outside the State of
Tennessee shall be governed by the laws of the jurisdiction where
such real property is located. The Borrower agrees that this
Agreement, the Note and the Security Documents were the subject of
negotiations that occurred in Tennessee between the Borrower and the
Lender and may be enforced by an action filed in the United States
District Court for the Middle District of Tennessee, or in any court
of record in the City of Nashville, Tennessee, and the Borrower
hereby submits to the jurisdiction of the State of Tennessee for all
purposes in connection with this Agreement.
Section 12.14. 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 shall be
deemed to be an original and shall be binding upon all parties,
their successors and assigns upon execution by all parties, and all
of which taken together shall constitute one and the same agreement.
Section 12.15. Capital Adequacy Regulation. If the
Lender shall determine that any Regulation adopted or effective after
the date hereof regarding capital adequacy, or any change therein, or
any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with
the interpretation or administration thereof, or any request or
directive regarding capital adequacy (whether or not having the force
of law) of any such authority, central bank or comparable agency, has
or would have the effect of reducing the rate of return on capital
of the Lender as a consequence of the Lender's obligations under
this Agreement, to a level below that which the Lender could have
achieved but for such adoption or change (taking into consideration
its policies with respect to capital adequacy) by an amount deemed
by the Lender to be material, then from time to time, within fifteen
(15) days after demand by the Lender, the Borrower shall compensate
the Lender for such reduction, including any amount or amounts equal
to any taxes on the overall net income of the Lender payable with
respect to the amount of payments required to be made pursuant to
this subsection. The Lender will promptly notify the Borrower of
any event of which it has knowledge, occurring after the date hereof,
which will entitle the Lender to compensation pursuant to this
subsection, and the Lender will designate a different applicable
lending office if such designation will avoid the need for, or reduce
the amount of, such compensation and will not, in the judgment of
the Lender, be otherwise disadvantageous to it. If the Lender shall
claim compensation under this provision, it shall furnish a certificate
to the Borrower setting forth the additional amount or amounts to be
paid to it hereunder, which shall be conclusive in the absence of
manifest error. In determining such amount, the Lender may use any
reasonable averaging and attribution methods.
Section 12.16. Amended and Restated Loan Agreement.
This Agreement, the Note and Security Documents executed pursuant
hereto are intended to amend and restate the Loan Agreement and the
Construction Loan Agreement. The Borrower and the Lender hereby
agree that the Loan Agreement is herewith fully incorporated into this
Agreement, the Note and the Security Documents, respectively, and that
the Loan Agreement and the Construction Loan Agreement shall, from
the date hereof, be of no further independent force and effect.
-42-
<PAGE> 44
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be executed by their duly authorized officers in
several counterparts all as of the day and year first written above.
<TABLE>
<S> <C>
GUARANTORS: BORROWER:
TRANSCOR AMERICA, INC. CORRECTIONS CORPORATION
OF AMERICA
BY: BY:
----------------------------------- -------------------------------
Darrell K. Massengale Darrell K. Massengale
Secretary Chief Financial Officer
TECHNICAL & BUSINESS INSTITUTE
OF AMERICA, INC. LENDER:
FIRST UNION NATIONAL BANK
BY: OF TENNESSEE
-----------------------------------
Darrell K. Massengale
Secretary
CONCEPT, INCORPORATED BY:
----------------------------------
BY: Brent Turner, Vice President
----------------------------------
Darrell K. Massengale
Secretary
</TABLE>
-43-
<PAGE> 45
SCHEDULE 2
Secured Obligations
(a) Indebtedness evidenced by a $13,260,000.01 Amended
and Restated Construction Loan Note dated as of July 13, 1995,
executed by Corrections Corporation of America ("CCA") and payable to
First Union National Bank of Tennessee, together with all renewals,
extensions and modifications thereof.
(b) The obligations of CCA under the terms of a
Guaranty and Reimbursement Agreement dated as of July 13, 1995,
executed by CCA in favor of First Union National Bank of North
Carolina ("FUNBNC"), delivered in connection with the $34,346,301
Irrevocable Letter of Credit No. S054438 issued by FUNBNC, at the
request of CCA, in favor of Liberty Bank and Trust Company of
Oklahoma City, National Association, in connection with the Holdenville
bond issue.
<PAGE> 46
SCHEDULE 3
Subordinated Indebtedness
(a) the Borrower's $7,000,000 aggregate principal amount
8.5% Convertible Subordinated Notes originally due
November 7, 1999,
(b) the Borrower's $7,500,000 aggregate principal amount
Convertible, Extended Subordinated Notes originally due
September 30, 1998.
<PAGE> 47
SCHEDULE 5.1(k)
PATENTS; TRADEMARKS
None
<PAGE> 48
SCHEDULE 5.1(o)
LEASES
Office Rental Agreement:
Approximately 21,000 square feet for two floors of office
space at 102 Woodmont Boulevard, Nashville, Tennessee 37205.
Rental commitment is approximately $420,000 per year.
<PAGE> 49
SCHEDULE 5.1(p)
ERISA
The Amended and Restated Corrections Corporation of
America Employee Savings and Stock Ownership Plan.
Transcor 401(k) Plan (to be terminated).
Concept 401(k) Plan (to be terminated).
<PAGE> 50
SCHEDULE 10.4(c)
Existing Investments
(a) Borrower's investment in Corrections Corporation of
Australia Pty, Ltd.
(b) Borrower's investment in CCA (UK) Limited.
(c) Borrower's investment in UK Detention Services
Limited.
(d) Borrower's investment in United-Concept, Inc.
(anticipated to be completed post-closing).
<PAGE> 51
SCHEDULE 10.13
Affiliate Transactions
None
<PAGE> 52
SCHEDULE 10.15
Foreign Activities
(a) Activities of existing Subsidiaries and Affiliates
(as shown on Schedule 4 hereof);
(b) Activities in connection with Borrower's agreements
with Sodhexo, S.A.
<PAGE> 53
FIRST AMENDMENT TO AMENDED
AND RESTATED LOAN AGREEMENT
This First Amendment dated as of September 28, 1995, by
and between Corrections Corporation of America, a Delaware corporation
(the "Borrower"), Transcor America, Inc., a Tennessee corporation,
Technical & Business Institute of America, Inc., a Michigan
corporation, and Concept, Incorporated, a Delaware corporation
(individually, a "Guarantor", and collectively, the "Guarantors"), and
First Union National Bank of Tennessee, a national banking association
(the "Lender"),
W I T N E S S E T H:
WHEREAS, pursuant to the terms of an Amended and Restated
Loan Agreement dated as of July 13, 1995, by and between the
Borrower, the Guarantors and the Lender (as amended from time to
time, the "Loan Agreement"), the Lender committed to loan to the
Borrower amounts not to exceed $25,000,000; and,
WHEREAS, Borrower has contracted to acquire the Eden
Correctional Facility located in Concho, County, Texas (the "Eden
Facility"); and,
WHEREAS, Borrower has requested that Lender advance certain
funds to the Borrower to provide bridge financing for the acquisition
of the Eden Facility, on a short-term basis, pending closing of
permanent bond financing for the Eden Facility; and,
WHEREAS, the current availability of the Borrower under the
Working Capital Facility does not provide enough funds to permit the
Borrower to fund the acquisition of the Eden Facility; and,
WHEREAS, Borrower has requested that Lender loan to the
Borrower additional funds in the amount of $3,000,000, which, when
combined with certain funds to be advanced under the Working Capital
Facility, will provide the Borrower with funds necessary to acquire
the Eden Facility; and,
WHEREAS, the Lender has agreed to advance the additional
$3,000,000 requested by the Borrower, subject to the terms and
conditions set forth herein,
NOW, THEREFORE, in consideration of the foregoing premises,
and other good and valuable consideration, the receipt and legal
sufficiency of which are hereby acknowledged, the Borrower, the
Guarantors and the Lender hereby agree to amend and modify the Loan
Agreement, as follows:
1. Definitions. Capitalized terms not otherwise defined
herein shall have the meaning ascribed to such terms in the Loan
Agreement.
2. $3,000,000 Loan. The Lender hereby agrees to loan to
the Borrower an additional $3,000,000 (the "$3,000,000 Overadvance"),
the proceeds of which are to be used by the Borrower to finance the
acquisition of the Eden Facility. The $3,000,000 Overadvance shall
be evidenced by a Promissory Note dated as of September 28, 1995, in
the original principal amount of $3,000,000, executed
-1-
<PAGE> 54
by the Borrower and payable to the Lender, such Note to be in
substantially the form attached hereto as Exhibit A (such Note,
together with any renewals, modifications and extensions thereof, being
referred to as the "$3,000,000 Note).
3. Financial Ratios. Section 10.1(b) of the Loan
Agreement is hereby deleted and replaced with the following:
(b) the ratio of Senior Debt to Cash Flow to be
greater than (i) 3 to 1 from the date hereof through
November 30, 1995, and (ii) 2.75 to 1 thereafter, such
ratio to be measured quarterly.
4. Secured Obligations. The definition of "Secured
Obligations" shall include all obligations described in the Loan
Agreement, together with the indebtedness evidenced by the $3,000,000
Note, it being the intention of the parties that the Collateral shall
secure the Secured Obligations, including, without limitation, the
indebtedness evidenced by the $3,000,000 Note.
5. Default. Failure to pay the $3,000,000 Note in
accordance with its terms shall be deemed to be a Default under the
terms of the Loan Agreement.
6. Guarantors. The Guarantors have entered into this
First Amendment for purposes of acknowledging the $3,000,000 Loan and
to confirm that the obligations of the Borrower guaranteed by the
Guarantors under the terms of the Guaranty Agreements shall include,
without limitation, all obligations of the Borrower with respect to
the $3,000,000 Loan. Accordingly, this First Amendment shall be
deemed to amend the Guaranty Agreements, as the context requires, to
confirm that the Secured Obligations (as defined in the Guaranty
Agreements) shall include, without limitation, the obligations of the
Borrower with respect to the $3,000,000 Loan.
7. Commitment Fee. As compensation to the Lender for
funding the $3,000,000 Loan, Borrower shall pay to Lender,
simultaneously with the execution of this First Amendment, a
commitment fee of $7,500. Such fee shall be deemed earned by Lender
upon execution of this First Amendment.
8. Restatement of Loan Agreement. The Borrower and the
Guarantors hereby restate and ratify all of the representations,
warranties, terms and covenants contained in the Loan Agreement, as
of the date hereof, and hereby confirm that the representations,
warranties, terms and conditions contained in the Loan Agreement, as
amended hereby, remain in full force and effect.
(Remainder of Page Intentionally Left Blank)
-2-
<PAGE> 55
IN WITNESS WHEREOF, the parties hereto have executed
this First Amendment as of the day and date first above
written.
GUARANTORS: BORROWER:
TRANSCOR AMERICA, INC. CORRECTIONS CORPORATION
OF AMERICA
BY: BY:
----------------------- ---------------------
Darrell K. Massengale Darrell K. Massengale
Secretary Chief Financial Officer
TECHNICAL & BUSINESS INSTITUTE
OF AMERICA, INC. LENDER:
FIRST UNION NATIONAL BANK
BY: OF TENNESSEE
-----------------------
Darrell K. Massengale
Secretary
CONCEPT, INCORPORATED BY:
-------------------
TITLE:
--------------------
BY:
-----------------------
Darrell K. Massengale
Secretary
-3-
<PAGE> 1
EXHIBIT 10.147
[FIRST UNION LETTERHEAD]
July ____, 1995
LETTER OF CREDIT NO. S054438
Liberty Bank and Trust Company of Oklahoma City,
National Association
100 N. Broadway
Oklahoma City, Oklahoma 73102
Attention: Corporate Trust Department
Ladies and Gentlemen:
At the request and on the instructions of the Holdenville Industrial
Authority, an Oklahoma public trust (the "Issuer"), we hereby establish in your
favor, as Trustee under the Bond Indenture dated as of June 1, 1995 (the
"Indenture"), between the Issuer and you pursuant to which $33,700,000 in
aggregate principal amount of the Issuer's Correctional Facility Revenue Bonds,
Series 1995 (the "Bonds") are being issued, this Irrevocable Letter of Credit
No. S054438 in the initial amount of $34,346,301 (hereinafter, as reduced and
reinstated from time to time in accordance with the provisions hereof, the
"Stated Amount") of which (i) an amount not exceeding $33,700,000 (as reduced
and reinstated from time to time in accordance with the terms hereof, the
"Principal Amount Available"), may be drawn upon with respect to payment of the
unpaid principal amount or the portion of Purchase Price corresponding to
principal of the Bonds, and (ii) an amount not exceeding $646,301 (as reduced
and reinstated from time to time in accordance with the terms hereof, the
"Interest Amount Available") may be drawn upon with respect to payment of up to
fifty (50) days' interest accrued on the portion of Purchase Price
corresponding to interest accrued on the Bonds on or prior to their stated
maturity date, at an assumed rate of 14% per annum. This Letter of Credit is
effective immediately and expires as of the close of business at our
Presentation Office (as defined herein) on July 13, 1996 (as such date may be
extended from time to time as hereinafter described, the "Stated Termination
Date") or earlier as hereinafter provided, or unless otherwise renewed or
extended. All drawings under this Letter of Credit will be paid with our own
funds.
We hereby irrevocably authorize you to draw on us, in an aggregate
amount not to exceed the Stated Amount and in accordance with the terms and
conditions and subject to the reductions in amount as hereinafter set forth,
(1) in a single drawing (subject to the provisions contained herein with
respect to reinstatement of the Interest Amount Available) by your draft drawn
on us at sight, presented for
<PAGE> 2
July _____, 1995
Page 2
payment on a day on which banks in the State of North Carolina are open for the
transaction of business of the nature required pursuant to the Indenture (a
"Business Day") and referring therein to the number of this Letter of Credit,
and accompanied by your written and completed certificate signed by an
Authorized Officer in the form of Annex A attached hereto (such draft
accompanied by such certificate being your "Interest Draft"), an amount not
exceeding the Interest Amount Available on the date of such drawing; (2) in one
or more drawings by one or more of your drafts drawn on us at sight, presented
for payment on a Business Day and referring therein to the number of this
Letter of Credit, and accompanied by your written completed certificate signed
by an Authorized Officer in the form of Annex B attached hereto (any such draft
accompanied by such certificate being your "Tender Draft"), an aggregate amount
not exceeding the Stated Amount on the date of such drawing; (3) in one or more
drawings by one or more of your drafts drawn on us at sight, presented for
payment on a Business Day and referring therein to the number of this Letter of
Credit, and accompanied by your written and completed certificate signed by an
Authorized Officer in the form of Annex C attached hereto (any such draft
accompanied by such certificate being your "Partial Redemption Draft"), an
aggregate amount not exceeding the Stated Amount on the date of such drawing;
(4) in a single drawing by your draft drawn on us at sight presented for
payment on a Business Day and referring therein to the number of this Letter of
Credit, and accompanied by your written and completed certificate signed by an
Authorized Officer in the form of Annex D hereto (any such draft accompanied by
such certificate being your "Conversion Draft"), an amount not exceeding the
Stated Amount on the date of such drawing; and (5) in a single drawing by your
draft drawing on us at sight, presented for payment on a Business Day and
referring therein to the number of this Letter of Credit, and accompanied by
your written and completed certificate signed by an Authorized Officer in the
form of Annex E attached hereto (such draft accompanied by such certificate
being your "Final Draft"), an amount not exceeding the Stated Amount on the
date of such drawing.
In addition (i) if you shall not have received, within ten (10)
calendar days after any payment in respect of an Interest Draft, written notice
from us that an Event of Default under the Reimbursement and Credit Agreement
dated as of June 1, 1995 (as amended) between the Issuer and us has occurred
and is continuing, the Interest Amount Available shall be reinstated
automatically, as of the close of business on such tenth (10th) calendar day
(unless the Interest Amount Available previously has been reinstated with
respect to such Interest Draft), by the amount of such Interest Draft, and (ii)
upon the release by us of any Escrow Bonds, the Interest Amount Available shall
be reinstated automatically by the amount of the Interest Draft made by paying
the portion of the Purchase Price corresponding to interest on such Escrow
Bonds (unless the Interest Amount Available previously has been reinstated with
respect to such Interest Draft); provided, however, that in no event shall the
Interest Amount Available be reinstated to an amount in excess of 50 days'
interest on the sum of the then applicable Principal Amount Available plus the
aggregate principal amount of any Escrow Bonds. The provisions of this
paragraph providing for the reinstatement of your right to draw on us by your
Interest Draft in a succeeding single drawing shall be applicable to each
successive drawing by your Interest Draft under clause (1) of the immediately
preceding paragraph so long as this Letter of Credit shall not have terminated
as set forth below.
<PAGE> 3
July _____, 1995
Page 3
Upon our honoring any Tender Draft presented by you hereunder, the
Stated Amount under this Letter of Credit shall be automatically reduced by the
amount drawn under such Tender Draft, the Principal Amount Available to be
drawn hereunder by you shall be automatically reduced by an amount equal to the
principal component of such Tender Draft and the Interest Amount Available to
be drawn hereunder by you shall be automatically reduced by an amount equal to
the amount of the interest component of such Tender Draft.
Upon our honoring any Partial Redemption Draft presented by you
hereunder, the Stated Amount under this Letter of Credit shall be automatically
and permanently reduced by the amount drawn under any such Partial Redemption
Draft, the Principal Amount Available to be drawn hereunder by you shall be
automatically and permanently reduced by an amount equal to the principal
component of such Partial Redemption Draft honored by us hereunder and the
Interest Stated Amount to be drawn hereunder by you shall be automatically and
permanently reduced by an amount equal to the amount of the interest which
would accrue on an amount of principal equal to the principal component of such
Partial Redemption Draft for fifty (50) days at an assumed rate of fourteen
(14%) per annum.
Upon our honoring any Conversion Draft presented by you hereunder, the
Stated Amount under this Letter of Credit shall be automatically and
permanently reduced by the amount drawn under any such Conversion Draft, the
Principal Amount Available to be drawn hereunder by you shall be automatically
and permanently reduced by an amount equal to the principal component of such
Conversion Draft honored by us hereunder, and the Interest Amount Available to
be drawn hereunder by you shall be automatically and permanently reduced by an
amount equal to the amount of the interest component of any such Conversion
Draft honored by us hereunder.
The Stated Amount, the Principal Amount Available and the Interest
Amount Available drawn under this Letter of Credit with respect to any Tender
Draft shall be reinstated as provided in this paragraph to the extent, but only
to the extent, that we are reimbursed by or on behalf of the Issuer in
immediately available funds delivered to us at the Presentation Office on or
before 3:00 p.m. (Charlotte, North Carolina time) on a Business Day for any
amount drawn in respect of principal and interest under any Tender Draft. If
we receive such reimbursement by or on behalf of the Issuer, all in strict
conformity with the terms and conditions of this Letter of Credit, after 3:00
p.m. (Charlotte, North Carolina time) on a Business Day prior to the
termination hereof, such reimbursement will be honored as stated above as if
received on the next succeeding Business Day. Any amount received by us from
or on behalf of the Issuer in reimbursement of amounts drawn hereunder by a
Tender Draft shall, if accompanied by your completed certificate signed by you
in the form of Annex F attached hereto, be applied to the extent of the amount
received by us and indicated therein to reimburse us for amounts drawn
hereunder by your Tender Drafts, and we will confirm to you the amount of the
Principal Amount Available and the Interest Amount Available reinstated by such
reimbursement by delivering to you the executed and completed acknowledgment
accompanying the form of Annex F delivered by you in connection with such
reimbursement. The Stated Amount, the Principal Amount Available and the
Interest Amount Available shall be reinstated only in compliance with the
provisions of this paragraph.
<PAGE> 4
July _____, 1995
Page 4
Each draft and certificate presented hereunder shall be dated the date
of presentation and each such draft and certificate shall be presented at our
office located at Two First Union Center, T-7, Charlotte, North Carolina
28288-0742, Attention: International Operations, or at any other office which
may be designated by us by written notice delivered to you at least three (3)
Business Days prior to the date on which interest is payable on the Bonds (the
"Presentation Office"), and shall be presented on a Business Day. If we
receive any of your drafts and certificates at such office, all in strict
conformity with the terms and conditions of this Letter of Credit, not later
than 11:30 a.m. (Charlotte, North Carolina time) on a Business Day on or prior
to the termination of this Letter of Credit, we will honor the same by
initiating the wire funds by 2:30 p.m. (Charlotte, North Carolina time) on the
same day in accordance with your payment instructions, or on such other
Business Day as you may direct. If we receive any of your drafts and
certificates at such office, all in strict conformity with the terms and
conditions of this Letter of Credit, after 11:30 a.m. (Charlotte, North
Carolina time) on a business day prior to termination of this Letter of Credit,
we will honor the same on the next succeeding Business Day by initiating the
wiring of funds by 2:30 p.m. (Charlotte, North Carolina time) in accordance
with your payment instructions, or on such other Business Day as you may
direct. If requested by you, payment under this Letter of Credit may be made
by wire transfer of Federal Reserve Bank of Richmond funds in your account in a
bank on the Federal Reserve wire system or by deposit of same-day funds into a
designated account that you maintain with us.
Upon the earliest of (i) our honoring of your Final Draft presented
hereunder, (ii) the fifth (5th) day following the date on which we receive a
certificate signed by an Authorized Officer stating that the interest rate on
the Bonds has been converted to a fixed interest rate, (iii) receipt of a
certificate signed by an Authorized Officer stating that you have accepted a
Substitute Letter of Credit (as defined in the Indenture), (iv) receipt of a
certificate signed by an Authorized Officer stating that no Bonds remain
Outstanding (as defined in the Indenture), or (v) the Stated Termination Date
hereof, this Letter of Credit shall automatically terminate and be delivered to
us for cancellation.
This Letter of Credit applies only to the payment of principal or the
portion of Purchase Price of the Bonds corresponding to principal, and up to 50
days' interest accruing on the Bonds computed at a rate of 14% per annum, from
the date of issuance of this Letter of Credit through the date of termination
of this Letter of Credit computed on the basis of actual days elapsed in a 365
or 366 day year, as the case may be, and does not apply to any interest that
may accrue thereon or any principal, premium or other amounts that may be
payable with respect to the Bonds subsequent to the expiration of this Letter
of Credit.
This Letter of Credit is transferable only in its entirety to any
transferee whom you certify to us has succeeded you as Trustee under the
Indenture, and may be successively transferred. Transfer of the Stated Amount
under this Letter of Credit to such transferee shall be effected by the
presentation to us of this Letter of Credit accompanied by a certificate in the
form of Annex G attached hereto and payment of the transfer commission referred
to therein. Upon such presentation, we shall forthwith transfer the same to
your transferee or, if so requested by your transferee, issue a letter of
credit to your transferee with provisions therein consistent with this Letter
of Credit.
<PAGE> 5
July _____, 1995
Page 5
As used herein (i) "Authorized Officer" shall mean any person signing
as one of your Vice Presidents, Assistant Vice Presidents, Trust Officers or
Assistant Trust Officers and (ii) all other capitalized terms used herein and
not otherwise defined shall have the respective meanings assigned to such terms
in the above-mentioned Indenture.
This Letter of Credit sets forth in full our undertaking, and such
undertaking shall not in any way be modified, amended, amplified or limited by
reference to any document, instrument or agreement referred to herein
(including, without limitation, the Bonds), except only the certificate(s)
referred to herein; and any such reference shall not be deemed to incorporate
herein by reference any documents, instrument or agreement except for such
certificate(s).
Except as otherwise provided herein, this Letter of Credit shall be
governed by and construed in accordance with the Uniform Customs and Practice
for Documentary Credits (1993 revisions), International Chamber of Commerce
Publication No. 500 (the "UCP") and, to the extent not inconsistent therewith,
the laws of the State of Tennessee. Communications with respect to this Letter
of Credit, other than presentations of drafts and certificates hereunder, shall
be in writing and should be addressed to us at Two First Union Center, T-7,
Charlotte, NC, 28288-0742, Attention: International Operations, and shall
specifically refer to the number of this Letter of Credit.
Sincerely,
FIRST UNION NATIONAL BANK
NORTH CAROLINA
By:
-------------------------------
Name:
------------------------------
Title:
-----------------------------
<PAGE> 6
ANNEX A
[Form of Certificate for Interest Draft]
CERTIFICATE FOR DRAWING IN CONNECTION WITH THE PAYMENT
OF UP TO 50 DAYS' INTEREST
IRREVOCABLE LETTER OF CREDIT NO. S054438
The undersigned, a duly authorized officer of the undersigned Trustee
hereby certifies to First Union National Bank of North Carolina (the "Bank"),
with reference to Irrevocable Letter of Credit No. S054438 (the "Letter of
Credit; the terms defined therein and not otherwise defined herein being used
herein as therein defined) issued by the Bank in favor of the Trustee, as
follows:
(1) The Trustee is the Trustee under the Indenture for
the holders of the Bonds.
(2) The Trustee is making a drawing under the Letter of
Credit with respect to a payment of interest on the Bonds, which
payment is due and payable on a regular interest payment date under
the terms of the Bonds. On the record date for such Interest Payment
Date, none of such Bonds for which interest is drawn pursuant to the
draft were held of record by the Issuer, or by the Bank, or its
designee, as pledgee of the Issuer.
(3) [The Interest Draft accompanying this Certificate is
the first Interest Draft presented by the Trustee under the Letter of
Credit.] [The Interest Draft last presented by the Trustee under the
Letter of Credit was honored and paid by the Bank on _______________,
_______, and the Trustee has not received a notice within ten days of
presentation of such Interest Draft from the Bank that an Event of
Default has occurred under the Indenture.
(4) The amount of the Interest Draft accompanying this
Certificate is $___________. It was computed in compliance with the
terms and conditions of the Bonds and the Indenture and does not
exceed the Interest Amount Available to be drawn by the Trustee under
the Letter of Credit.
(5) Upon receipt by the undersigned of the amount
demanded hereby, (a) the undersigned will apply the same directly to
the payment when due of the interest amount owing on account of the
Bonds pursuant to the Indenture, (b) no portion of said amount shall
be applied by the undersigned for any other purpose, and (c) no
portion of said amount shall be commingled with other funds held by
the undersigned.
- ----------------------------------
* To be used in the Certificate relating to the first Interest Draft
only.
- 1 -
<PAGE> 7
IN WITNESS WHEREOF, the Trustee has executed and delivered this
Certificate as of the _____ day of ___________________________, 19___.
LIBERTY BANK AND TRUST COMPANY
OF OKLAHOMA CITY, NATIONAL
ASSOCIATION, as Trustee
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
-2-
<PAGE> 8
ANNEX C
[Form of Certificate for Partial Redemption Draft]
CERTIFICATE FOR DRAWING IN CONNECTION WITH THE PAYMENT
OF PRINCIPAL AND UP TO 50 DAYS' INTEREST UPON
PARTIAL REDEMPTION
IRREVOCABLE LETTER OF CREDIT NO. S054438
The undersigned, a duly authorized officer of the undersigned Trustee
hereby certifies to First Union National Bank of North Carolina (the "Bank"),
with reference to Irrevocable Letter of Credit No. S054438 (the "Letter of
Credit; the terms defined therein and not otherwise defined herein being used
herein as therein defined) issued by the Bank in favor of the Trustee, as
follows:
(1) The Trustee is the Trustee under the Indenture for
the holders of the Bonds.
(2) The Trustee is making a drawing under the Letter of
Credit with respect to a payment, upon redemption of less than all of
the Bonds which are Outstanding (as defined in the Indenture), of the
unpaid principal amount of, and up to 50 days' accrued and unpaid
interest on, the Bonds to be redeemed pursuant to the Indenture (other
than Bonds presently held of record by the Issuer, or by the Bank, or
its designee, as pledgee of the Issuer).
(3) The amount of the Partial Redemption Draft
accompanying this Certificate is $______________ and is equal to the
sum of (i) $____________ being drawn in respect of the payment of
unpaid principal of Bonds (other than Bonds presently held of record
by the Issuer, or by the Bank, or its designee, as pledgee of the
Issuer) to be redeemed, which amount does not exceed the Principal
Amount Available under the Letter of Credit and (ii) $____________
being drawn in respect of the payment of _____ days' [not to exceed 50
days'] accrued and unpaid interest on such Bonds, which amount does
not exceed the Interest Amount Available under the Letter of Credit.
(4) The amount of the Partial Redemption Draft
accompanying this Certificate was computed in accordance with the
terms and conditions of the Bonds and the Indenture and does not
exceed the Amount Available under the Letter of Credit.
(5) This Certificate and the Partial Redemption Draft it
accompanies are dated, and are being presented to the Bank on, the
date on which the unpaid principal amount of, and accrued and unpaid
interest on, Bonds to be redeemed are due and payable under the
Indenture upon redemption of less than all of the Bonds which are
Outstanding (as defined in the Indenture).
(6) Upon receipt by the undersigned of the amount
demanded hereby, (a) the undersigned will apply the same directly to
the payment when due of the principal amount of and accrued and unpaid
interest on the Bonds pursuant to the Indenture, (b) no portion of
said
-1-
<PAGE> 9
amount shall be applied by the undersigned for any other purpose, and
(c) no portion of said amount shall be commingled with other funds
held by the undersigned.
The Trustee acknowledges that, pursuant to the terms of the Letter of
Credit, upon the Bank's honoring of the Partial Redemption Draft accompanying
this Certificate, (i) the Amount Available under the Letter of Credit shall be
permanently reduced by the aggregate amount of such Partial Redemption Draft,
(ii) the Principal Amount Available under the Letter of Credit shall be
permanently reduced by an amount equal to the amount of the principal component
of such draft set forth in paragraph 3 above, and (iii) the Interest Amount
Available under the Letter of Credit shall be permanently reduced by
$_____________, which is equal to an amount of interest which would accrue on
an amount of principal equal to the principal component set forth in paragraph
3 above for a period of fifty (50) days at a maximum rate of fourteen percent
(14%) per annum.
IN WITNESS WHEREOF, the Trustee has executed and delivered this
Certificate as of the _____ day of ___________________________, 19___.
LIBERTY BANK AND TRUST COMPANY
OF OKLAHOMA CITY, NATIONAL
ASSOCIATION, as Trustee
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
-2-
<PAGE> 10
ANNEX D
[Form of Certificate for Conversion Draft]
CERTIFICATE FOR DRAWING IN CONNECTION WITH THE PAYMENT
OF PRINCIPAL PLUS ACCRUED INTEREST
UPON A MANDATORY PURCHASE
(CONVERSION TO A FIXED INTEREST RATE)
IRREVOCABLE LETTER OF CREDIT NO. S054438
The undersigned, a duly authorized officer of the undersigned Trustee
hereby certifies to First Union National Bank of North Carolina (the "Bank"),
with reference to Irrevocable Letter of Credit No. S054438 (the "Letter of
Credit; the terms defined therein and not otherwise defined herein being used
herein as therein defined) issued by the Bank in favor of the Trustee, as
follows:
(1) The Trustee is the Trustee under the Indenture for
the holders of the Bonds.
(2) The Trustee is making a drawing under the Letter of
Credit with respect to a payment, upon a mandatory tender for purchase
pursuant to Section _____ of the Indenture (conversion to a Fixed
Interest Rate within the meaning of the Indenture) of all or less than
all of the Bonds which are Outstanding (as defined in the Indenture),
of the unpaid principal amount of, and up to 50 days' accrued and
unpaid interest on, the Bonds to be so purchased (other than Bonds
presently held of record by the Issuer, or the Bank, or its designee,
as pledgee of the Issuer), which payment is due on the date on which
this Certificate and the Conversion Draft it accompanies are being
presented to the Bank.
(3) The amount of the Conversion Draft accompanying this
Certificate is $______________ and is equal to the sum of (i)
$____________ being drawn in respect of the payment of unpaid
principal of Bonds (other than Bonds presently held of record by the
Issuer or by the Bank, or its designee, as pledgee of the Issuer) to
be purchased, which amount does not exceed the Principal Amount
Available under the Letter of Credit and (ii) $____________ being
drawn in respect of the payment of _____ days' [not to exceed 50
days'] accrued and unpaid interest on such Bonds, which amount does
not exceed the Interest Amount Available under the Letter of Credit.
(4) The amount of the Conversion Draft accompanying this
Certificate was computed in compliance with the terms and conditions
of the Bonds and the Indenture and does not exceed the Amount
Available under the Letter of Credit.
(5) Upon receipt by the undersigned of the amount
demanded hereby, (a) the undersigned will apply the same directly to
the payment when due of the principal amount of, and interest accrued
and unpaid on, the Bonds pursuant to the Indenture, (b) no portion of
said amount shall be applied by the undersigned for any other purpose,
and (c) no portion of said amount shall be commingled with other funds
held by the undersigned.
-1-
<PAGE> 11
(6) The Trustee acknowledges that the Trustee shall,
pursuant to the Indenture, credit to the account of the Bank or its
designee maintained by the Trustee, a principal amount of Bonds equal
to the principal amount of the Conversion Draft accompanying this
Certificate as promptly as practicable, and in any event within five
(5) Business Days after presentation of the Conversion Draft
accompanying this Certificate.
IN WITNESS WHEREOF, the Trustee has executed and delivered this
Certificate as of the _____ day of ___________________________, 19___.
LIBERTY BANK AND TRUST COMPANY
OF OKLAHOMA CITY, NATIONAL
ASSOCIATION, as Trustee
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
-2-
<PAGE> 12
ANNEX E
[Form of Certificate for Final Draft]
CERTIFICATE FOR DRAWING IN CONNECTION WITH THE PAYMENT
OF PRINCIPAL PLUS ACCRUED INTEREST, UPON STATED
OR ACCELERATED MATURITY OR OPTIONAL OR MANDATORY
REDEMPTION AS A WHOLE
IRREVOCABLE LETTER OF CREDIT NO. S054438
The undersigned, a duly authorized officer of the undersigned Trustee
hereby certifies to First Union National Bank of North Carolina (the "Bank"),
with reference to Irrevocable Letter of Credit No. S054438 (the "Letter of
Credit"; the terms defined therein and not otherwise defined herein being used
as therein defined) issued by the Bank in favor of the Trustee, as follows:
(1) The Trustee is the Trustee under the Indenture for
the holders of the Bonds.
(2) The Trustee is making a drawing under the Letter of
Credit with respect to a payment, either at stated maturity, upon
acceleration, or as a result of a redemption as a whole pursuant to
the Indenture, of the unpaid principal amount of and up to 50 days'
accrued and unpaid interest on, all of the Bonds which are
"Outstanding" within the meaning of the Indenture (other than Bonds
presently held of record by the Issuer, or by the Bank, or its
designee, as pledgee of the Issuer).
(3) The amount of the Final Draft accompanying this
Certificate is $_______ and is equal to the sum of (i) $________ being
drawn in respect of the payment of unpaid principal of Bonds (other
than Bonds presently held of record by the Issuer or by the Bank, or
its designee, as pledgee of the Issuer), which amount does not exceed
the Principal Amount Available under the Letter of Credit, and (ii)
$________ being drawn in respect of the payment of _______ days' [not
to exceed 50 days'] accrued and unpaid interest on such Bonds, which
amount does not exceed the Interest Amount Available under the Letter
of Credit.
(4) The amount of the Final Draft accompanying this
Certificate was computed in compliance with the terms and conditions
of the Bonds and the Indenture and does not exceed the Amount
Available under the Letter of Credit.
(5) Upon receipt by the undersigned of the amount
demanded hereby, (a) the undersigned will apply the same directly to
the payment when due of the principal amount and accrued and unpaid
interest thereon owing on account of the Bonds pursuant to the
Indenture, (b) no portion of said amount shall be applied by the
undersigned for any other purpose and (c) no portion of said amount
shall be commingled with other funds held by the undersigned.
-1-
<PAGE> 13
IN WITNESS WHEREOF, the Trustee has executed and delivered
this Certificate as of the ____ day of ______________, 19___.
LIBERTY BANK AND TRUST COMPANY
OF OKLAHOMA CITY, NATIONAL
ASSOCIATION, as Trustee
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
- 2 -
<PAGE> 14
ANNEX F
[Form of Reinstatement Certificate For Tender Draft]
CERTIFICATE FOR THE REINSTATEMENT OF AMOUNTS AVAILABLE
UNDER IRREVOCABLE LETTER OF CREDIT NO. S054438
The undersigned, a duly authorized officer of the undersigned Trustee
hereby certifies to First Union National Bank of North Carolina (the "Bank"),
with reference to Irrevocable Letter of Credit No. S054438 (the "Letter of
Credit"; the terms defined therein and not otherwise defined herein being used
herein as therein defined) issued by the Bank in favor of the Trustee, as
follows:
(1) The Trustee is the Trustee under the Indenture for
the holders of the Bonds.
(2) The amount of $________ paid to you today by or on
behalf of the Issuer is a payment made to reimburse you, pursuant to
Section _____ of the Letter of Credit and Reimbursement Agreement
dated as of __________ (as amended or supplemented, the "Reimbursement
Agreement") between the Issuer and the Bank, for amounts drawn under
the Letter of Credit by Tender Drafts. The Trustee hereby requests
that you reinstate the Letter of Credit upon receipt of such payment
in an amount equal to the amount of payment so received.
(3) Of the amount referred to in paragraph (2), $________
represents the aggregate principal amount of Bonds resold or to be
sold on behalf of the Issuer.
(4) Of the amount referred to in paragraph (2), $________
represents accrued and unpaid interest on the Bonds.
IN WITNESS WHEREOF, the Trustee has executed and delivered this
Certificate as of the ____ day of __________, 19____.
LIBERTY BANK AND TRUST COMPANY
OF OKLAHOMA CITY, NATIONAL
ASSOCIATION, as Trustee
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
-1-
<PAGE> 15
[attached to Annex F]
ACKNOWLEDGMENT
The Bank hereby confirms to the Trustee that the Principal Amount
Available under the Letter of Credit has been reinstated by the amount $_______
and the Interest Amount Available under the Letter of Credit has been
reinstated by the amount of $_________.
This ____ day of ___________, 19___.
FIRST UNION NATIONAL BANK OF
NORTH CAROLINA
By:
-------------------------------
Name:
Title:
-2-
<PAGE> 16
ANNEX G
[Form of Transfer Certificate]
INSTRUCTION TO TRANSFER
First Union National Bank of
North Carolina
Two First Union Center
Charlotte, North Carolina 28288-0742
Attention: International Operations
Re: Your Irrevocable Letter of Credit No. S054438
Ladies and Gentlemen:
For value received, the undersigned beneficiary (the "Transferor")
hereby irrevocably transfers to:
-------------------------
[Name of Transferee]
-------------------------
[Address]
(the "Transferee") all rights of the Transferor with respect to the
above-referenced Letter of Credit, including the right to draw under said
Letter of Credit in the Amount Available. Said Transferee has succeeded the
Transferor as Trustee under that certain Bond Indenture dated as of
____________ by and between _______________, ______________________ as initial
Trustee thereunder and ___________________ (as amended or supplemented, the
"Indenture"), and has complied with the provisions of the Indenture.
By virtue of this transfer, the Transferee shall have the sole
rights as beneficiary of said Letter of Credit, including sole rights relating
to any past or future amendments thereof, whether increases or extensions or
otherwise. All amendments are to be advised directly to the Transferee without
necessity of any consent of or notice to the Transferor.
By its signature below, the Transferee acknowledges that it has
duly succeeded the Transferor as Trustee pursuant to the Trust Indenture.
- 1 -
<PAGE> 17
The advice of such Letter of Credit is returned herewith,
along with a transfer fee of $_________________, and we ask you to
endorse the transfer on the reverse side thereof and to forward it
directly to the Transferee with your customary notice of transfer.
Very truly yours,
LIBERTY BANK AND TRUST COMPANY
OF OKLAHOMA CITY, NATIONAL
ASSOCIATION, as Trustee
By:
----------------------------------------
[insert name and title of authorized officer]
(CORPORATE SEAL)
Acknowledged by:
- --------------------------------------
[Insert name of Transferee]
By: -------------------------
[insert name and title of
authorized officer]
(CORPORATE SEAL)
- 2 -
<PAGE> 1
EXHIBIT 10.148
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (the "Agreement") is entered into this 17th
day of July, 1995, by and between CONCEPT INCORPORATED, a Delaware corporation
("Concept"), and LANDMARK ORGANIZATION SOUTHWEST, INC., a Delaware corporation
("Southwest").
RECITALS:
A. Southwest owns a .2% general partnership interest and a 49.5%
limited partnership interest in United Concept Limited Partnership, an Arizona
limited partnership (the "Partnership") (the "Southwest Interests"). The
Partnership owns and operates a correctional facility near Eloy, Arizona
pursuant to Contract No. J200c-151 between the Partnership and the United
States Department of Justice, Federal Bureau of Prisons, Office of Procurement
& Property, on behalf of the BOP and the United States Immigration and
Naturalization Service.
B. Southwest and certain others granted to Concept an option (the
"Option") to purchase approximately 49.995% of the interests in the
Partnership, including the Southwest Interests (collectively, the "Partnership
Interests"). The terms and conditions of the Option are set forth in that
certain Option Agreement, dated October 10, 1994, by and among Concept, Mark
Schultz, a resident of Texas, and certain other partners (the "Option
Agreement"). Concept has notified Southwest that it intends to exercise the
Option as contemplated by the Option Agreement.
C. Pursuant to Concept's exercise of the Option and pursuant to
Sections 10.2, 10.3 and 11.3 of the Agreement of Limited Partnership of the
Partnership, Concept desires to purchase, and Southwest desires to sell, the
Southwest Interests on the terms and conditions set forth herein.
NOW, THEREFORE, the parties agree as follows:
1. Purchase of Southwest Interests. Southwest hereby agrees to
sell and assign all of the Southwest Interests to Concept at the Closing and
agrees to execute such assignments and other instruments of conveyance as may
be reasonably requested by Concept in order to effectuate the transfer of the
Southwest Interests.
2. Payment of Purchase Price. Concept agrees to pay to Southwest
the sum of five million two hundred eighteen thousand five hundred dollars
($5,218,500.00) in full and complete payment for the Southwest Interests (the
"Purchase Price"), such Purchase Price to be paid by wire transfer at the
Closing or at such date as agreed to by the parties hereto.
3. Assumption of Liabilities. From and after the Closing,
Concept shall be responsible for any and all debts of the Partnership,
including, without limitation payments in connection with the Indenture
Collateralized Notes payable to First Chicago, secured by an Indenture
Agreement by and between the Partnership and First Chicago dated November 15,
1993, and all collateral agreements thereto. Concept hereby indemnifies
Landmark Organization,
<PAGE> 2
Inc. from and against any and all loss, damage, costs, expenses, and
obligations incurred by Landmark Organization, Inc. in connection therewith.
4. Closing. The closing of the transactions contemplated hereby
shall take place and be effective for all purposes at 10:00 a.m. local time, on
July 7, 1995 at the offices of Concept or at such other time and place as the
parties hereto mutually agree (the "Closing").
5. Southwest's Representations. Southwest hereby represents and
warrants to Concept as follows:
(a) Authority. Southwest has full power and authority to
execute, deliver, enter into, and perform this Agreement and all agreements,
instruments, and documents contemplated hereby and to carry out the
transactions contemplated hereby and thereby. This Agreement is a valid and
binding obligation of Southwest, enforceable against it in accordance with its
terms, subject to the limitations imposed by bankruptcy, insolvency,
moratorium, or similar laws or provisions of general application, and to the
availability of equitable remedies.
(b) Ownership. Southwest represents that (i) Southwest
is the sole owner of, and has good and marketable title to, the Southwest
Interests, free and clear of any liens, claims, charges, restrictions, security
interests, equities, proxies, pledges or encumbrances of any kind, (ii)
Southwest has full right, power, authority and capacity to sell and transfer
the Southwest Interests, and (iii) as of the Closing Date and upon receipt of
the Purchase Price, Southwest has no claims of any kind against Concept or the
Partnership.
(c) No Contravention. Neither the execution and delivery
of this Agreement nor the carrying out of the transactions contemplated hereby
or thereby, will in any respect result in any violation of or be in conflict
with any term of any agreement or instrument to which Southwest is a party or
by which it is bound, or of any law or governmental order, rule, or regulation
which is applicable to Southwest or will result in the creation or imposition
of any security interest, mortgage, lien, encumbrance, or charge upon any of
the properties or assets of Southwest. No consents or approvals of any persons
or entities, governmental or otherwise, are required which have not been
obtained with respect to the execution and delivery of this Agreement or the
transfer of the Southwest Interests and the carrying out of the transactions
contemplated hereby on the part of Southwest.
(d) Litigation. There are no claims, actions, suits,
proceedings, investigations or penalty pending or threatened by or against, or
otherwise affecting the Southwest Interests at law or in equity or before or by
any federal, state, municipal or other governmental department, commission,
board, agency, instrumentality or authority. Southwest does not know or has no
reason to know of any basis for any such claim, action, suit, proceeding or
investigation.
(e) Related Party Transactions. All transactions between
Southwest and its affiliates on the one hand and the Partnership and its
affiliates on the other hand prior to the date hereof were conducted at arm's
length and at fair value.
2
<PAGE> 3
(f) Professional Fees. Southwest has not done anything
to cause or incur any liability or obligation of Southwest for investment
banking, brokerage, finders, agents or other fees, commissions, expenses or
charges in connection with the negotiation, preparation, execution or
performance of this Agreement or the consummation of the transactions
contemplated hereby, and Southwest does not know of any claim by anyone for
such a fee, commission, expense or charge.
(g) Recitals. The Recitals are true and correct in all
material respects.
6. Conditions to Closing. (a) The obligations of Southwest to
consummate the transactions contemplated by this Agreement are subject to the
conditions that Concept shall have complied with all covenants and agreements
and satisfied all conditions on its part to be performed or satisfied prior to
Closing and, if the Closing shall be other than on the date hereof, Southwest
may request a certificate to that effect executed on behalf of Concept.
(b) The obligations of Concept to consummate the
transactions contemplated by this Agreement are subject to the conditions (i)
that the representations and warranties set forth in Section 5 are true and
correct on and as of the date hereof and shall be true and correct on and as of
the date of Closing, if later than the date hereof; (ii) that Southwest shall
have complied with all covenants and agreements and satisfied all conditions on
its part to be performed or satisfied prior to Closing; (iii) that Concept
shall have completed to its satisfaction a due diligence review of the
Partnership, (iv) that Concept shall have acquired, or shall acquire
simultaneously with the Southwest Interests, the remaining Partnership
Interests and (v) that Concept shall have received all required consents for
the purchase of the Southwest Interests. If the Closing shall be other than on
the date hereof, Concept may request a certificate signed by Southwest to the
effect that one or more of the foregoing conditions have been satisfied.
7. General Indemnification. Southwest hereby agrees to indemnify
and hold harmless Concept from, against, and in respect of any and all loss or
damage to Concept resulting, in whole or in part, from any breach of the
representations and warranties by Southwest contained in this Agreement, or any
misstatement or omission of fact, or failure to state the facts necessary to
make those statements made not misleading, in or pursuant to this Agreement,
and any liability or obligation arising out of any actions, suits,
proceedings, claims, demands, and judgments, (including court costs and legal
and accounting fees) incident to any of the foregoing.
8. Tax Indemnification. Concept hereby agrees to indemnify and
hold harmless Mark Schultz from, against and in respect of any federal income
tax liability attributable to taxable income of the Partnership allocated to
Mark Schultz in excess of the aggregate amount of $718,000 for taxable years
1994 and 1995. Any reimbursement made pursuant to the preceding sentence shall
be payable at the maximum individual tax rate.
9. Notices. All notices and other communications required or
permitted hereunder shall be in writing and shall be deemed given if delivered
personally or mailed by registered or certified mail (return receipt requested)
to the parties at the following addresses (or at such other
3
<PAGE> 4
address for a party as shall be specified by like notice; provided that notices
of a change of address shall be effective only upon receipt thereof):
(a) If to Concept to:
Concept Incorporated
102 Woodmont Boulevard
Suite 800
Nashville, TN 37205
ATTN: Doctor R. Crants
With a copy to:
Stokes & Bartholomew, P.A.
424 Church Street
Suite 2800
Nashville, TN 37219
ATTN: Elizabeth E. Moore, Esq.
(b) If to Southwest to:
Landmark Organization Southwest, Inc.
1301 Capital of Texas Highway South, #B320
Austin, Texas 78746
ATTN: Mark Schultz
With a copy to:
W. Lee Choate
Post Office Box 23
Austin, Texas 78767
10. Waivers and Consents. The parties hereto acknowledge and
agree that any notices or consents required by the Partnership Agreement to be
given to the parties hereto or their respective affiliates are hereby waived.
11. Survival. All representations, warranties, covenants and
agreements of Southwest contained in this Agreement and in any documents
delivered pursuant hereto or otherwise in connection herewith shall survive the
execution hereof and the closing of the transactions contemplated hereby.
12. Expenses. All fees and expenses incurred by Southwest,
including without limitation, legal fees and expenses, in connection with this
Agreement will be borne by Southwest
4
<PAGE> 5
and all fees and expenses incurred by Concept, including, without limitation,
legal fees and expenses, in connection with this Agreement will be borne by
Concept.
13. Cooperation. Each party hereto agrees after the date hereof
to execute any and all further documents and writings and perform such other
reasonable actions which may be or become necessary or expedient to effectuate
and carry out the intent of this Agreement and the transactions contemplated
hereby.
14. Governing Law. This Agreement shall be governed by the laws
of the State of Tennessee (regardless of the laws that might otherwise govern
under applicable Tennessee principles of conflicts of law).
15. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Purchase Agreement
as of the date first set forth above.
CONCEPT INCORPORATED
By:
-----------------------------------------------------------
Its:
-----------------------------------------------------------
LANDMARK ORGANIZATION SOUTHWEST, INC.
By:
-----------------------------------------------------------
Its:
-----------------------------------------------------------
5
<PAGE> 1
EXHIBIT 10.149
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (the "Agreement") is entered into this 17th
day of July, 1995, by and between CONCEPT INCORPORATED, a Delaware corporation
("Concept"), and U.C. ELOY, INC., a Delaware corporation ("U.C. Eloy").
RECITALS:
A. U.C. Eloy owns a .2% general partnership interest and a 49.5%
limited partnership interest in United Concept Limited Partnership, an Arizona
limited partnership (the "Partnership") (the "U.C. Eloy Interests"). The
Partnership owns and operates a correctional facility near Eloy, Arizona
pursuant to Contract No. J200c-151 between the Partnership and the United
States Department of Justice, Federal Bureau of Prisons, Office of Procurement
& Property, on behalf of the BOP and the United States Immigration and
Naturalization Service.
B. U.C. Eloy and certain others granted to Concept an option (the
"Option") to purchase approximately 49.995% of the interests in the
Partnership, including the U.C. Eloy Interests (collectively, the "Partnership
Interests"). The terms and conditions of the Option are set forth in that
certain Option Agreement, dated October 10, 1994, by and among Concept, Mark
Schultz, a resident of Texas, and certain other partners (the "Option
Agreement"). Concept has notified U.C. Eloy that it intends to exercise the
Option as contemplated by the Option Agreement.
C. Pursuant to Concept's exercise of the Option and pursuant to
Sections 10.2, 10.3 and 11.3 of the Agreement of Limited Partnership of the
Partnership, Concept desires to purchase, and U.C. Eloy desires to sell, the
U.C. Eloy Interests on the terms and conditions set forth herein.
NOW, THEREFORE, the parties agree as follows:
1. Purchase of U.C. Eloy Interests. U.C. Eloy hereby agrees to
sell and assign all of the U.C. Eloy Interests to Concept at the Closing and
agrees to execute such assignments and other instruments of conveyance as may
be reasonably requested by Concept in order to effectuate the transfer of the
U.C. Eloy Interests.
2. Payment of Purchase Price. Concept agrees to pay to U.C. Eloy
the sum of five million two hundred eighteen thousand five hundred dollars
($5,218,500.00) in full and complete payment for the U.C. Eloy Interests (the
"Purchase Price"), such Purchase Price to be paid by wire transfer at the
Closing or at such date as agreed to by the parties hereto.
3. Assumption of Liabilities. From and after the Closing,
Concept shall be responsible for any and all debts of the Partnership,
including, without limitation payments in connection with the Indenture
Collateralized Notes payable to First Chicago, secured by an Indenture
Agreement by and between the Partnership and First Chicago dated November 15,
1993, and all collateral agreements thereto. Concept hereby indemnifies U.C.
Eloy from and
<PAGE> 2
against any and all loss, damage, costs, expenses, and obligations incurred by
U.C. Eloy in connection therewith.
4. Closing. The closing of the transactions contemplated hereby
shall take place and be effective for all purposes at 10:00 a.m. local time, on
July 7, 1995 at the offices of Concept or at such other time and place as the
parties hereto mutually agree (the "Closing").
5. U.C. Eloy's Representations. U.C. Eloy hereby represents and
warrants to Concept as follows:
(a) Authority. U.C. Eloy has full power and authority to
execute, deliver, enter into, and perform this Agreement and all agreements,
instruments, and documents contemplated hereby and to carry out the
transactions contemplated hereby and thereby. This Agreement is a valid and
binding obligation of U.C. Eloy, enforceable against it in accordance with its
terms, subject to the limitations imposed by bankruptcy, insolvency,
moratorium, or similar laws or provisions of general application, and to the
availability of equitable remedies.
(b) Ownership. U.C. Eloy represents that (i) U.C. Eloy
is the sole owner of, and has good and marketable title to, the U.C. Eloy
Interests, free and clear of any liens, claims, charges, restrictions, security
interests, equities, proxies, pledges or encumbrances of any kind, (ii) U.C.
Eloy has full right, power, authority and capacity to sell and transfer the
U.C. Eloy Interests, and (iii) as of the Closing Date and upon receipt of the
Purchase Price, U.C. Eloy has no claims of any kind against Concept or the
Partnership.
(c) No Contravention. Neither the execution and delivery
of this Agreement nor the carrying out of the transactions contemplated hereby
or thereby, will in any respect result in any violation of or be in conflict
with any term of any agreement or instrument to which U.C. U.C. Eloy is a party
or by which it is bound, or of any law or governmental order, rule, or
regulation which is applicable to U.C. Eloy or will result in the creation or
imposition of any security interest, mortgage, lien, encumbrance, or charge
upon any of the properties or assets of U.C. Eloy. No consents or approvals of
any persons or entities, governmental or otherwise, are required which have not
been obtained with respect to the execution and delivery of this Agreement or
the transfer of the U.C. Eloy Interests and the carrying out of the
transactions contemplated hereby on the part of U.C. Eloy.
(d) Litigation. There are no claims, actions, suits,
proceedings, investigations or penalty pending or threatened by or against, or
otherwise affecting the U.C. Eloy Interests at law or in equity or before or by
any federal, state, municipal or other governmental department, commission,
board, agency, instrumentality or authority. U.C. Eloy does not know or has no
reason to know of any basis for any such claim, action, suit, proceeding or
investigation.
(e) Related Party Transactions. All transactions between
U.C. Eloy and its affiliates on the one hand and the Partnership and its
affiliates on the other hand prior to the date hereof were conducted at arm's
length and at fair value.
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<PAGE> 3
(f) Professional Fees. U.C. Eloy has not done anything
to cause or incur any liability or obligation of U.C. Eloy for investment
banking, brokerage, finders, agents or other fees, commissions, expenses or
charges in connection with the negotiation, preparation, execution or
performance of this Agreement or the consummation of the transactions
contemplated hereby, and U.C. Eloy does not know of any claim by anyone for
such a fee, commission, expense or charge.
(g) Recitals. The Recitals are true and correct in all
material respects.
6. Conditions to Closing. (a) The obligations of U.C. Eloy to
consummate the transactions contemplated by this Agreement are subject to the
conditions that Concept shall have complied with all covenants and agreements
and satisfied all conditions on its part to be performed or satisfied prior to
Closing and, if the Closing shall be other than on the date hereof, U.C. Eloy
may request a certificate to that effect executed on behalf of Concept.
(b) The obligations of Concept to consummate the
transactions contemplated by this Agreement are subject to the conditions (i)
that the representations and warranties set forth in Section 5 are true and
correct on and as of the date hereof and shall be true and correct on and as of
the date of Closing, if later than the date hereof; (ii) that U.C. Eloy shall
have complied with all covenants and agreements and satisfied all conditions on
its part to be performed or satisfied prior to Closing; (iii) that Concept
shall have completed to its satisfaction a due diligence review of the
Partnership, (iv) that Concept shall have acquired, or shall acquire
simultaneously with the U.C. Eloy Interests, the remaining Partnership
Interests and (v) that Concept shall have received all required consents for
the purchase of the U.C. Eloy Interests. If the Closing shall be other than on
the date hereof, Concept may request a certificate signed by U.C. Eloy to the
effect that one or more of the foregoing conditions have been satisfied.
7. General Indemnification. U.C. Eloy hereby agrees to indemnify
and hold harmless Concept from, against, and in respect of any and all loss or
damage to Concept resulting, in whole or in part, from any breach of the
representations and warranties by U.C. Eloy contained in this Agreement, or any
misstatement or omission of fact, or failure to state the facts necessary to
make those statements made not misleading, in or pursuant to this Agreement,
and any liability or obligation arising out of any actions, suits,
proceedings, claims, demands, and judgments, (including court costs and legal
and accounting fees) incident to any of the foregoing.
8. Tax Indemnification. Concept hereby agrees to indemnify and
hold harmless Mark Schultz from, against and in respect of any federal income
tax liability attributable to taxable income of the Partnership allocated to
Mark Schultz in excess of the aggregate amount of $718,000 for taxable years
1994 and 1995. Any reimbursement made pursuant to the preceding sentence shall
be payable at the maximum individual tax rate.
9. Notices. All notices and other communications required or
permitted hereunder shall be in writing and shall be deemed given if delivered
personally or mailed by registered or certified mail (return receipt requested)
to the parties at the following addresses (or at such other
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<PAGE> 4
address for a party as shall be specified by like notice; provided that notices
of a change of address shall be effective only upon receipt thereof):
(a) If to Concept to:
Concept Incorporated
102 Woodmont Boulevard
Suite 800
Nashville, TN 37205
ATTN: Doctor R. Crants
With a copy to:
Stokes & Bartholomew, P.A.
424 Church Street
Suite 2800
Nashville, TN 37219
ATTN: Elizabeth E. Moore, Esq.
(b) If to U.C. Eloy to:
U.C. Eloy, Inc.
1301 Capital of Texas Highway South, #B320
Austin, Texas 78746
ATTN: Mark Schultz
With a copy to:
W. Lee Choate
Post Office Box 23
Austin, Texas 78767
10. Waivers and Consents. The parties hereto acknowledge and
agree that any notices or consents required by the Partnership Agreement to be
given to the parties hereto or their respective affiliates are hereby waived.
11. Survival. All representations, warranties, covenants and
agreements of U.C. Eloy contained in this Agreement and in any documents
delivered pursuant hereto or otherwise in connection herewith shall survive the
execution hereof and the closing of the transactions contemplated hereby.
12. Expenses. All fees and expenses incurred by U.C. Eloy,
including without limitation, legal fees and expenses, in connection with this
Agreement will be borne by U.C. Eloy
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<PAGE> 5
and all fees and expenses incurred by Concept, including, without limitation,
legal fees and expenses, in connection with this Agreement will be borne by
Concept.
13. Cooperation. Each party hereto agrees after the date hereof
to execute any and all further documents and writings and perform such other
reasonable actions which may be or become necessary or expedient to effectuate
and carry out the intent of this Agreement and the transactions contemplated
hereby.
14. Governing Law. This Agreement shall be governed by the laws
of the State of Tennessee (regardless of the laws that might otherwise govern
under applicable Tennessee principles of conflicts of law).
15. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Purchase Agreement
as of the date first set forth above.
CONCEPT INCORPORATED
By:
--------------------------------------
Its:
-------------------------------------
U.C. ELOY, INC.
By:
--------------------------------------
Its:
-------------------------------------
5
<PAGE> 1
EXHIBIT 10.151
SHAREHOLDERS' AGREEMENT
This Shareholders' Agreement (the "Agreement"), dated as of October
17, 1995, is by and among Corrections Corporation of Australia Pty. Ltd., a
Queensland, Australia corporation (the "Corporation"), Corrections Corporation
of America, a Delaware corporation ("CCA") and Sodexho S.A., a French societe
anonyme ("Sodexho") (CCA and Sodexho are sometimes referred to herein
collectively as the "Shareholders").
W I T N E S S E T H:
WHEREAS, CCA owns 22,500 class "C" shares in the capital of the
Corporation, representing in the aggregate one hundred percent (100%) of the
issued and outstanding class "C" shares of the Corporation;
WHEREAS, Sodexho owns 22,500 Class "C" Shares in the Capital of the
Corporation which Shares are held in accordance with Section 3.02(a)(ii) of the
Stock Purchase Agreement as amended on October 17, 1995 (the "Stock Purchase
Agreement"); and
WHEREAS, the parties believe it is in the best interest of the
Corporation and its Shareholders to restrict Transfers of shares of capital of
the Corporation, and desire to set forth the terms and conditions regarding any
Transfers of class "C" shares and to set forth their agreements with respect to
certain other matters.
NOW, THEREFORE, in consideration of the premises and the mutual
promises, covenants, representations, warranties, and conditions contained in
this Agreement, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Corporation and the
Shareholders hereby agree as follows:
1. Definitions.
The following words and terms when used in this Agreement shall have
the meanings set forth below.
(a) "Affiliate" means any person or entity that, directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, the person or entity specified.
(b) "Holder" or "Holders" means one or more Holders of Class
"C" Shares in the Capital of the Corporation, whether legal or beneficial
Holders, or parties to this Agreement or who are otherwise bound by its terms.
(c) "Shares" means all Class "C" Shares in the capital of the
Corporation held by the Holders and all other securities of the Corporation or
any successor of the Corporation which (i) may be issued in exchange for or in
respect of such Shares (whether by way of stock split,
<PAGE> 2
stock dividend, combination, reclassification, share exchange, reorganization,
exchange, conversion, or any other means), or (ii) may be hereafter acquired by
any Holder or during the term of this Agreement.
(d) "Transfer", "Transferred", or "Transferring" means any
sale, assignment, transfer, conveyance, pledge, hypothecation, mortgage,
encumbrance, gift, or other disposition of any Shares or any interest therein,
whether direct or indirect, or any attempted sale, assignment, transfer,
conveyance, pledge, hypothecation, mortgage, encumbrance, or other disposition
of such Shares or interest, including, without limitation, any commitment or
executory contract relating to the foregoing which is not expressly subject to
this Agreement.
2. Conditions to Transfer.
No Holder shall Transfer all or any part of its Shares, except
expressly in accordance with the terms and conditions of this Agreement.
3. Right of First Refusal on Dispositions by Shareholders. No
Shareholder shall directly or indirectly Transfer any or all Shares owned by it
to a third party unless (a) such Shareholder shall have received a bona-fide
arm's length offer to purchase such Shares from such third party, and (b) the
Shareholder first submits a written offer (the "Offer") to the other
Shareholder (the "Remaining Shareholder") identifying the third party to whom
such Shares are proposed to be sold and the terms of the proposed sale and
offering the opportunity to purchase such Shares on terms and conditions,
including price, not less favorable to the Remaining Shareholder or its
designee than those on which the Shareholder proposes to sell such Shares to
any other purchaser.
The Remaining Shareholder shall act upon the Offer as soon as
practicable after receipt thereof, and in any event within 20 days after
receipt thereof. In the event that the Remaining Shareholder or its designee
shall elect to purchase all or a part of the Shares covered by the Offer, the
Remaining Shareholder shall communicate in writing such election to purchase to
the Shareholder who submitted the Offer, which communication shall be delivered
to such Shareholder as set forth in Section 16 hereof and shall, when taken in
conjunction with the Offer, be deemed to constitute a valid, legally binding
and enforceable agreement for the sale and purchase of the Shares covered
thereby.
In the event that the Remaining Shareholder or its designee does not
purchase all of the Shares offered by such Shareholder pursuant to the Offer,
the unpurchased portion of such Shares may be sold by such Shareholder at any
time within ninety (90) days after receipt of the Offer by the Remaining
Shareholder. Any such sale shall be to the person originally named in the
Offer as the proposed purchaser or transferee and shall be at not less than the
price and upon other terms and conditions, if any, not more favorable to such
purchaser than those specified in the Offer. Any Shares proposed to be sold
after such ninety (90) day period, to a different
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<PAGE> 3
purchaser or at a lower price or otherwise on more favorable terms shall be
subject to the requirements of a prior offer to the Remaining Shareholder
pursuant to this Section 3.
If the purchase price specified in the Offer includes any property
other than cash, such purchase price shall be deemed to be the amount of any
cash included in the purchase price plus the value (as determined in good faith
by the Corporation's regular investment banking firm) of such other property
included in such price. If the Remaining Shareholder exercises its right of
first refusal hereunder, the closing of the purchase of the Shares with respect
to which such right has been exercised shall take place within thirty (30)
calendar days (or if approval of such purchase by the Corporation's
shareholders is required by law or pursuant to any stock exchange rule or
policy, within ninety (90) calendar days) after the Remaining Shareholder gives
notice of such exercise. Upon exercise of its right of first refusal, the
Remaining Shareholder shall be legally obligated to consummate the purchase
contemplated thereby and shall use its best efforts to secure all approvals
required in connection therewith.
4. Right to Participate in Transfers.
(a) If at any time any Remaining Shareholder receives an
Offer pursuant to Section 3 hereof and does not elect to exercise the right of
first refusal granted in Section 3 with respect to such Offer, such Remaining
Shareholder may elect to Transfer a Pro Rata Share, as hereinafter defined, of
the securities described in such Offer. As used in this Section 4, "Pro Rata
Share" means the product of the number of Shares in the Offer and a fraction
(i) the numerator of which is the number of Shares held by such Remaining
Shareholder, and (ii) the denominator of which is the sum of the number of
Shares held by all Remaining Shareholders who choose to exercise the rights
granted in this Section 4, plus the number of Shares held by the Holder making
the Offer.
(b) Each Remaining Shareholder wishing so to participate in
any Transfer under this Section 4 shall notify the Holder making the Offer in
writing of such intention as soon as practicable after such Remaining
Shareholder's receipt of the Offer pursuant to Section 3, and in any event
within thirty (30) days after the date of the Offer. Such notification shall
be delivered or mailed to such Holder in accordance with Section 15 below.
(c) The Holder and each Remaining Shareholder participating
in the proposed Transfer pursuant to this Section 4 shall Transfer to the
proposed transferee (the "Proposed Transferee") (and any Remaining Shareholders
exercising rights of first refusal pursuant to Section 3 hereof) all, or, at
the option of the Proposed Transferee (or any such Remaining Shareholder) any
part of Shares in the Offer (the "Offered Shares") proposed to be Transferred
at not less than the price and upon other terms and conditions, if any, not
more favorable to the Proposed Transferee (or any such Remaining Shareholder)
than those in the Offer provided by the Holder under Section 3 hereof;
provided, however, that any purchase or other acquisition of less than all of
such Offered Shares by the Proposed Transferee (and any Remaining Shareholders
exercising rights of first refusal pursuant to Section 3 hereof) shall be made
from the Holder and each participating Remaining Shareholder pro rata based
upon the relative amount of the Offered
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<PAGE> 4
Shares that the Holder and such participating Remaining Shareholder is
otherwise entitled to Transfer pursuant to Section 4(a).
(d) The Remaining Shareholders' right to participate in a
Transfer pursuant to this Section 4 shall not apply with respect to Transfers
of Shares to the Corporation.
5. Right of First Refusal to Purchase New Securities.
(a) The Corporation shall, prior to any issuance by the
Corporation of any of its securities (other than debt securities with no equity
feature), offer to each Holder owning at least ten percent (10%) of the issued
and outstanding class "C" shares of the Corporation by written notice the
right, for a period of thirty (30) days, to purchase its Pro Rata Amount, as
hereinafter defined, of such securities for cash at a per share amount equal to
the per share price or other consideration for which such securities (the "New
Securities") are to be issued. For purposes of this Section 5, "Pro Rata
Amount" means the product of the New Securities to be issued and a fraction (i)
the numerator of which is the number of Shares held by such Holder as of the
date of the New Securities Notice, as hereinafter defined, and (ii) the
denominator of which is the aggregate number of Shares held on such date by all
Holders of Shares. The first refusal rights of the Holders pursuant to this
Section 5 shall not apply to securities issued (i) as a stock dividend or upon
any subdivision of Shares, provided that the securities issued are limited to
additional Shares, or (ii) pursuant to the exercise of options to purchase
shares of capital stock granted to employees of the Corporation, not to exceed
in the aggregate ten percent (10%) of capital shares outstanding (appropriately
adjusted in each case to reflect stock splits, stock dividends, share
exchanges, combinations of shares, and the like with respect to the Shares).
The Corporation's written notice to the Shareholders (the "New Securities
Notice") shall describe in reasonable detail the securities proposed to be
issued by the Corporation and specify the number, price, and the terms of
payment, and shall be deemed to be dated the date it is given to the
Shareholders in accordance with Section 16 hereof.
(b) Each Shareholder may accept the Corporation's offer as to
the full number of New Securities offered to it in the New Securities Notice or
as to any lesser number, by written notice thereof ("Notice of Acceptance")
given by it to the Corporation prior to the expiration of the aforesaid thirty
(30) day period. A Shareholder who accepts such offer as to any portion of its
Pro Rata Amount of the New Securities shall be referred to herein as a
Participating Shareholder. If any Participating Shareholder shall subscribe
for less than his Pro Rata Amount of the New Securities, the other
Participating Shareholders shall be entitled to purchase the balance of that
Participating Shareholder's Pro Rata Amount of the New Securities in the same
proportion in which they were entitled to purchase the New Securities pursuant
to Section 5(a). Within five (5) days following the expiration of the
aforesaid thirty (30) day period, the Corporation shall notify each
Participating Shareholder of the amount of New Securities which each
Participating Shareholder may purchase pursuant to the foregoing provision and
each Participating Shareholder shall then have fifteen (15) days from the
receipt of such notice to indicate such additional amount of New Securities, if
any, that such Participating Shareholder wishes to purchase. Promptly
thereafter, the Corporation shall sell and each Participating
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<PAGE> 5
Shareholder shall buy, upon the terms specified, the number of New Securities
agreed to be purchased by each Participating Shareholder.
(c) The Corporation shall be free at any time prior to one
hundred twenty (120) days after the date of its New Securities Notice to the
Shareholder, to offer and sell to any third party or parties the number of such
New Securities not agreed by the Shareholder to be purchased by them (the
"Refused Securities"), at a price and on payment terms no less favorable to the
Corporation than those specified in such New Securities Notice to the
Shareholders. However, if such third party sale or sales are not consummated
within such one hundred twenty (120) day period, the Corporation shall not sell
such New Securities as shall not have been purchased within such period without
again complying with this Section 5.
(d) In the event the Corporation shall propose to sell less
than all the Refused Securities (any such sale to be in the manner and on the
terms specified in this Section 5), the Shareholders may, at their sole option
and in their sole discretion, reduce the number of, or other units of
calculation of the amount of, the New Securities specified in their respective
Notices of Acceptance to an amount which shall be not less than the product of:
(i) the ratio of the amount of New Securities in respect of which Notices of
Acceptance were delivered to the Corporation to the total amount of New
Securities specified in the New Securities Notice multiplied by (ii) the total
amount of New Securities proposed to be actually sold by the Corporation
(calculated without regard to this provision). In the event that the
Shareholders so elect to reduce the number or amount of New Securities
specified in their respective Notices of Acceptance, the number or amount of
New Securities by which such New Securities specified in the Notices of
Acceptance are reduced shall not be sold or otherwise disposed of until they
have again been offered to the Purchasers in accordance with this Section 5.
6. Permitted Transfers. Anything herein to the contrary
notwithstanding, the provisions of Sections 2,3,4 and 5 shall not apply to any
Transfer by a Shareholder to any Affiliate of such Shareholder. In the event
of any such Transfer, the transferee of the Shares shall be bound by the terms
and conditions of this Agreement, and shall, as a condition of such transfer,
the transferee shall execute and deliver to the other Shareholder and the
Corporation a written agreement to that effect.
7. Call Option.
(a) In the case of an Event of Default (as described below)
by a Shareholder, the other Shareholder (the "Nondefaulting Shareholder") shall
be granted the option to purchase the Shares held by the other Shareholder at a
fair value price (the "Fair Price"), but in no case shall the Fair Price be
less than the book value of such interest, to be determined by the
Corporation's independent accountants (the "Accountant"). The costs of such
Accountant shall be paid by the Corporation. Such option shall be exercisable
for a period of 15 days following the delivery of the valuation report by the
Accountant.
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<PAGE> 6
(b) If the Non-Defaulting Shareholder has not exercised its
option pursuant to Section 7(a), then the other Shareholder shall be granted
the same option which will thereafter be exercisable from the 16th day until
the 30th day after the delivery of the valuation report by the Accountant.
(c) If after the 30th day following the delivery of the
valuation report by the Accountant neither of the Shareholders has exercised
its option pursuant to Sections 7(a) and (b) hereof, then the Non-Defaulting
Shareholder shall have a new option to purchase the other Shareholder's
interest in the Corporation at a price equal to 90% of the Fair Price. Such
option shall be exercisable for a period of seven days.
(d) If the Non-Defaulting Shareholder has not exercised its
option pursuant to Section 7(c), then the other Shareholder shall have the same
option which will thereafter be exercisable from the 38th day until the 45th
day after the delivery of the valuation report by the Accountant.
(e) The foregoing procedure shall be applied with successive
seven-day options granted to the Non- Defaulting Shareholder and the other
Shareholder at a price that shall be reduced by 10% of the Fair Price
determined by the Accountant at the expiration of each party's option to
purchase at the Fair Price, as so reduced, until any Shareholder decides to
exercise its option.
(f) For purposes of this Section 7, an Event of Default shall
include:
(i) a material default by either Shareholder in
the observance or performance of any of the
terms of this Agreement which default remains
uncured for a period of sixty (60) days after
receipt of reasonable notice thereof by the
Defaulting Shareholder;
(ii) a "change in control" of either Shareholder
resulting in control by any person or
corporation who is a competitor of the
Shareholders. For purposes of this paragraph
"change in control" shall mean (a) the
acquisition of fifty-one percent (51%) or
more of the voting capital stock of such
Shareholder or (b) the ability to control the
Board of Directors of such Shareholder; or
(iii) a Shareholder shall file a petition seeking
reorganization or relief under any applicable
bankruptcy law or consents to the filing of
any such petition or to the appointment of a
receiver, liquidator, assignee, trustee,
sequestrator (or other similar official) for
it or a substantial part of its property.
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8. Requirement of Prior Consent of the Treasurer. Where the
intended transfer of any Shares of the Corporation by a party (whether a party
to this Agreement or a third party) under the provisions of this Agreement
requires the consent of the Treasurer of the Commonwealth of Australia ("The
Treasurer") then such transfer shall be subject to such consent and
notwithstanding anything else contained in this Agreement:
(a) any offer made to or by any such party to purchase or
acquire shares in the Corporation shall be deemed to be subject to that party
obtaining the consent of The Treasurer;
(b) any notice of election, acceptance or agreement by any
such party to purchase or acquire the Shares shall be subject to a condition
precedent to that party obtaining the consent of The Treasurer;
(c) any period of time set out in this Agreement, by which
any such party must purchase or pay for such Shares shall be deemed to be
extended until 5 days after the consent of The Treasurer has been obtained or
refused (or the acquisition prohibited);
(d) the provisions of this Agreement shall be read and
construed subject to the provisions of this Section.
9. Deadlock.
(a) In the event all of the Sodexho designees to the board of
directors of the Corporation (the "Board of Directors"), as a group, or all of
the CCA designees to the Board of Directors, as a group, fail to consent to any
material matter considered by the Board of Directors, the vote of any other
member of the Board of Directors who is not considered a CCA designee or a
Sodexho designee pursuant to Section 13 hereof shall not be counted in such
vote. In the event (i) such disagreement between the Sodexho designees and the
CCA designees referred to in the preceding sentence remains unresolved for a
period of thirty (30) days after the date of such meeting; or (ii) two
successive meetings of the Board of Directors (each of which is called pursuant
to at least 14 days' prior notice to occur at a reasonable time and place)
either fail to occur or are not attended by a majority of the members of the
Board of Directors (each of the matters referred to in clauses (i) or (ii)
above being hereinafter referred to as a "Deadlock"), either Shareholder may
send to the other Shareholder a written notice identifying the Deadlock and
invoking the following procedures (the "Deadlock Notice").
(b) In any case of a Deadlock under Section 9(a), each of the
Shareholders shall within 10 days of a Deadlock Notice covering such Deadlock
cause its members of the Board of Directors to prepare and circulate to the
other Shareholders and the Board of Directors a memorandum setting out its
position on the matter in dispute and its reason for adopting such position and
each such memorandum shall be considered by each Shareholder who shall
respectively use their reasonable endeavors in good faith to resolve such
dispute. Any resolution of the matter by the Shareholders pursuant to this
Section 9(b) shall be a final and binding determination of the matter.
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<PAGE> 8
(c) In the event (x) a Deadlock arises under Section
9(a)(ii), or if no resolution has occurred in accordance with the provisions of
Section 9(b) within 30 days after delivery of the memorandum mentioned therein;
and (y) if any such Deadlock shall prevent the Board of Directors from
continuing to achieve its business purposes or its ability to honor its
contractual commitments in any material respect, either of the Shareholders may
by notice in writing to the Corporation cause the interests of the Shareholders
in the Corporation to be transferred according to the procedure described in
Section 7 above.
(d) In no circumstances shall a Shareholder create an
"artificial Deadlock" in order to invoke the provisions of this Section 9. For
the purposes of this provision an "artificial Deadlock" shall be a Deadlock
caused (other than in circumstances where the interests of the Shareholder
conflicts with the interests of the Corporation) by a Shareholder or its
appointees on the Board of Directors voting against a series of related issues
or proposals in any case where the passage or approval of the same is required
to enable the Corporation to carry on its business properly and efficiently.
(e) The provisions of this Article 9 shall also apply in the
event the Shareholders fail to agree to any material matter considered by the
Shareholders and (i) such disagreement remains unresolved for a period of
thirty (30) days after the date of such meeting; or (ii) two successive
meetings of the Shareholders (each of which is called pursuant to at least 14
days prior notice to occur at a reasonable time and place) either fail to occur
or are not attended by a majority of the Shareholders.
10. Non-Competition.
(a) The Shareholders agree that, except as otherwise provided
herein, they will conduct all of their business with respect to the Prison
Management Business in the countries of Australia, New Zealand and Papua, New
Guinea (the "Australian Zone") exclusively with each other. For purposes of
this Section 10, Prison Management Business means the (i) design, construction,
financing and "full management" of detention or correctional facilities with or
without custodial services and/or (ii) the transportation of prisoners; it
being understood that Sodexho may continue to provide food service, laundry,
housekeeping, maintenance, etc. outside of the Corporation and that the
provisions of such services by Sodexho at a rate of less than $10.00 (U.S.) per
inmate per day (as such amount may be increased by the Board from time to time)
shall not constitute "full management" and shall not constitute the Prison
Management Business. In order to give effect to this decision, the
Shareholders agree that unless unanimously approved by the Board of Directors
in writing or except as otherwise permitted pursuant to this Agreement:
(i) neither Shareholders nor any of their
respective Affiliates will compete with the
Corporation in the Prison Management Business
in the Australian Zone.
8
<PAGE> 9
(ii) any third-party approach towards either
Shareholder in relation to a Project (as
defined herein) in the Australian Zone,
whether in its individual capacity or as a
Shareholder shall be immediately introduced
to the Corporation. For purposes of this
Section 10, a Project means any opportunity
related to the Prison Management Business in
the Australian Zone such as requests (with
respect to a particular facility) for
proposals and bids to governmental agencies
and consulting agencies with respect to the
Prison Management Business.
(iii) neither Shareholders nor any of their
respective Affiliates, shall alone or jointly
with others acquire any material interest
(more than 10%) in any company which is a
competitor of the Corporation in the Prison
Management Business in the Australian Zone
(other than competitors for which the
revenues related to the prison management
business constitute less than 10% of the
total revenues for such competitors).
(b) The Shareholders agree that in the event of a breach of
the provisions contained in Section 10(a) hereof, in addition to any other
remedies available to any Shareholder in breach of any such provision shall pay
to the other Shareholder an amount equal to one year's annual revenues
generated by the Prison Management Business which is the subject of such
breach.
(c) If any of the restrictions set forth in Section 10(a)
should for any reason be declared invalid by a court of competent jurisdiction,
the validity or enforcement of the remainder of such restrictions and covenants
shall not thereby be adversely affected. If any provision of Section 10 shall
be adjudicated to be invalid or unenforceable, such provision shall be deemed
deleted, but only to the operation of such provision in the particular
jurisdiction in which such adjudication was made; provided, that to the extent
any such provision may be made valid and enforceable, in such jurisdiction by
limitations on the scope of the activities, geographical area or time period
covered, such provision shall be deemed limited to the extent, and only to that
extent, necessary to make such provision enforceable to the fullest extent
permissible under the laws and public policies applied in such jurisdiction.
11. Confidentiality.
(a) The Shareholders agree at all times during the term of
this Agreement to hold in confidence and keep secret and inviolate all of the
Corporation's confidential and proprietary information, including, without
limitation, the Corporation's budgets, financial statements, development plans,
and the information related thereto, and all unpublished matters relating to
the business, property, trade secrets, proprietary rights, intellectual
property, accounts, books, records, customers, and contracts of the Corporation
which it may know or hereafter come to know; provided, however, that no such
information, whether deemed confidential by the
9
<PAGE> 10
Corporation or not, shall be subject to the terms of this Section 11 if it is
part of the public domain, through no fault of the Shareholder.
(b) Each of the Shareholders covenant that the
information described in 11(a) will be kept confidential by such Shareholder,
the entities controlled by such Shareholder and the directors, employees, and
representatives of any of them, using the same standard of care in safeguarding
such information as such Shareholder employs in protecting its own proprietary
information which it desires not to disseminate or publish and that such
information shall only be used by the Shareholder in connection with the
business of the Corporation.
(c) No Shareholder shall at any time take, or cause to be
taken any action, and shall not make, or cause to be made, any omission, which
would be inconsistent with or impair in any way the rights of the Corporation
in the information described in Section 11(a) above. The Shareholders
acknowledge and agree that any unauthorized disclosure or use of the
information described in Section 11(a) above would cause the Corporation
irreparable injury or loss. Accordingly, each Shareholder acknowledges and
agrees that in the event of a breach, or threatened breach, by any of them of
any provisions of this Section 11, the Corporation shall be entitled to an
injunction restraining such Shareholder from the disclosure or unauthorized use
of any such information.
12. Specific Performance.
The Shareholders and the Corporation expressly agree that the
Shareholders and the Corporation will be irreparably harmed and/or injured if
this Agreement is not specifically enforced. Upon a breach or threatened
breach of the terms, covenants, and/or conditions of this Agreement by any of
the Shareholders or the Corporation, the other Shareholders and the Corporation
shall, in addition to all other remedies, each be entitled to a temporary or
permanent injunction, without showing any actual harm, injury, or damage to
such other Shareholders or the Corporation, and/or a decree for specific
performance, in accordance with the provisions of this Agreement.
13. Board of Directors. The Shareholders acknowledge and agree
that each Shareholder shall be entitled to an equal number of nominees to the
Board of Directors, and the Corporation's General Manager, who is currently
Terry Lawson shall be a member of the Corporation's Board of Directors but
shall not be considered a nominee of either Shareholder. Each Shareholder
agrees (i) that in all elections of directors during the term of this
Agreement, such Shareholder shall vote all Shares owned by it for the nominees
of the other Shareholders, and (ii) that any change in the number of directors
shall require the unanimous written consent of all Shareholders.
14. Amendment to Articles of Association, etc. The Shareholders
acknowledge and agree that the affirmative vote of seventy-five percent (75%)
of the Holders of the Shares shall be required for (i) an amendment to the
Corporation's Articles of Association, (ii) the issuance by the Corporation of
any additional class "C" shares or other securities convertible into capital
10
<PAGE> 11
shares of the Corporation, or (iii) any merger or combination of the
Corporation with or into any other entity.
15. Term. Unless otherwise specified, this Agreement, and the
respective rights and obligations of the parties hereto, shall continue and be
effective for so long as the parties hereto are shareholders in the
Corporation; provided, however, that Section 13 hereof shall terminate on the
tenth anniversary of the date hereof, unless extended by the mutual agreement
of the parties hereto.
16. Notices.
(a) Any notices required or permitted to be sent hereunder
shall be mailed, certified mail, return receipt requested, postage prepaid, or
delivered by overnight courier service, or by facsimile transmission in the
case of non-U.S. residents, to the following addresses, or such other addresses
as shall be given by notice delivered hereunder, and shall be deemed to have
been given three days after mailing, if mailed, or one business day.
If to the Corporation, to:
Corrections Corporation of Australia Pty Ltd.
Level 4
39 Sherwood Road
Toowong, Queensland 4066
Australia
Attn: Terry Lawson
With a copy to:
Lees Marshall & Warnick, Solicitors
Level 3 Banking Annexe
Central Plaza One
345 Queen Street
Brisbane QLD 4000
Australia
Attn: Malcolm Marshall, Esq.
11
<PAGE> 12
If to CCA, to:
Corrections Corporation of America
102 Woodmont Boulevard, Suite 800
Nashville, Tennessee 37205
Attn: Doctor R. Crants
With a copy to:
Elizabeth E. Moore, Esq.
Stokes & Bartholomew, P.A.
424 Church Street, Suite 2800
Nashville, Tennessee 37219
If to Sodexho:
Sodexho S.A.
3, avenue Newton
78180 Montigny-le-Bretonneux
FRANCE
Attn: Jean-Pierre Cuny
With a copy to:
Ropes & Gray
One International Place
Boston, MA 02110
Attn: Jane Goldstein, Esq.
(b) Copies of any notices given, or required to be given to
or by, any Shareholder under this Agreement shall also be furnished to the
Corporation in accordance with the provisions of this Section 16.
17. Legend.
Each certificate evidencing any of the Shares shall bear a
legend substantially as follows:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
CERTAIN RESTRICTIONS ON TRANSFER AND MAY NOT BE SOLD,
EXCHANGED, TRANSFERRED, ASSIGNED, PLEDGED, HYPOTHECATED, OR
OTHERWISE DISPOSED OF, EXCEPT IN ACCORDANCE WITH AND SUBJECT
TO ALL THE TERMS AND CONDITIONS OF THAT CERTAIN SHAREHOLDERS'
AGREEMENT, DATED OCTOBER 17, 1995, AMONG
12
<PAGE> 13
THE CORPORATION AND ITS SHAREHOLDERS, A COPY OF WHICH THE
CORPORATION WILL FURNISH TO THE HOLDER OF THIS CERTIFICATE
WITHOUT CHARGE UPON REQUEST IN WRITING.
18. Entire Agreement and Amendments.
This Agreement constitutes the entire agreement of the parties
with respect to the subject matter hereof and neither this Agreement nor any
provision hereof may be waived, modified, amended, or terminated except by a
written agreement signed by the parties hereto and in accordance with the terms
of the Articles of Association, as amended.
19. Acknowledgement of Holder. The parties hereto acknowledge and
agree that the 22,500 Class "C" Shares held by CCA in accordance with the Stock
Purchase Agreement shall be regarded by both parties as being held by Sodexho.
20. Governing Law.
This Agreement shall be governed by and be interpreted under
the laws of Queensland without regard to the conflicts of law principles
thereof. Each party hereby irrevocably submits to the non-exclusive
jurisdiction of any state or federal court located in Queensland over any
action or proceeding to enforce any right under this Agreement. The parties
further acknowledge that irrevocable damage would occur in the event that any
of the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. Accordingly, the parties shall be
entitled to an injunction to prevent breaches of the provisions of this
Agreement and to enforce specifically the terms and provisions hereof in any
court in Queensland. This being in addition to any other remedy to which they
may be entitled at law or equity.
21. Successors and Assigns.
This Agreement shall be binding upon the heirs, personal
representatives, executors, administrators, successors, and assigns of the
parties.
22. Waivers.
No waiver of any breach or default hereunder shall be
considered valid unless in writing, and no such waiver shall be deemed a waiver
of any subsequent breach or default of the same or similar nature.
23. Severability.
If any provision of this Agreement shall be held to be
illegal, invalid or unenforceable, such illegality, invalidity or
unenforceability shall attach only to such provision and shall not in any
manner affect or render illegal, invalid or unenforceable any other provision
13
<PAGE> 14
of this Agreement, and this Agreement shall be carried out as if any such
illegal, invalid, or unenforceable provision were not contained herein.
24. Descriptive Headings.
Descriptive headings are for convenience only and are not
deemed to be part of this Agreement.
25. Counterparts.
This Agreement may be executed in two (2) or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
This Agreement was executed as of the date first set forth above.
CORRECTIONS CORPORATION OF
AUSTRALIA PTY. LTD.
By:
------------------------------
Title:
---------------------------
CORRECTIONS CORPORATION OF
AMERICA
By:
------------------------------
Title:
---------------------------
SODEXHO S.A.
By:
------------------------------
Title:
---------------------------
14
<PAGE> 1
EXHIBIT 10.152
FIRST AMENDMENT TO STOCK PURCHASE AGREEMENT
BY AND BETWEEN
CORRECTIONS CORPORATION OF AMERICA
AND
SODEXHO S.A.
DATED AS OF OCTOBER ______, 1995
<PAGE> 2
FIRST AMENDMENT TO STOCK PURCHASE AGREEMENT
THIS FIRST AMENDMENT TO STOCK PURCHASE AGREEMENT (the "AMENDMENT") is
made and entered into this ____ day of October, 1995, by and between
CORRECTIONS CORPORATION OF AMERICA, a Delaware corporation having its principal
place of business in Nashville, Tennessee (the "SELLER"), and SODEXHO S.A., a
French corporation, having its principal place of business in France (the
"BUYER").
WHEREAS, Buyer and Seller are parties to that certain Stock Purchase
Agreement dated as of June 9, 1995 (the "AGREEMENT"), pursuant to which Seller
agreed to sell to Buyer and Buyer agreed to purchase from Seller, shares
representing fifty percent (50%) of the issued shares of Corrections
Corporation of Australia Pty. Ltd. A.C.N. 010 921 641, a Queensland company
(the "COMPANY"), upon the terms and conditions set forth therein; and
WHEREAS, Seller and Buyer desire to amend the Agreement on the terms
and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual promises covenants and
agreements herein contained, the parties agree as follows:
SECTION 1. Definitions. Initially capitalized terms used in
this Amendment shall have the meanings ascribed thereto in the Agreement, as
amended hereby, unless otherwise defined herein.
SECTION 2. Amendments to the Agreement.
2.1. Amendment to Article I. Article I of the Agreement is hereby
amended to read in its entirety as follows:
ARTICLE I
PURCHASE AND SALE OF SHARES
1.01. Transfer of Shares. Subject to all of the terms and
conditions of this Agreement, at the Closing, Seller hereby agrees to
sell, transfer and convey to Buyer, and Buyer agrees to purchase and
acquire from Seller, 22,500 "C" class shares in the capital of the
Company, which shares collectively constitute fifty percent (50%) of
the issued shares in the capital of the Company (the foregoing shares
of the Company are hereinafter collectively referred to as the
"Shares"). Seller shall transfer the Shares free and clear of all
liens, claims, charges, restrictions, security interests, equities,
proxies, pledges and encumbrances of any kind, except that Seller
shall retain title to the Shares and shall hold the Shares as provided
in Section 3.02(a)(ii) hereof.
<PAGE> 3
2.2. Amendment to Article III. Article III of the
Agreement is hereby amended to read in its entirety as follows:
ARTICLE III
CLOSING; OBLIGATIONS OF THE PARTIES
3.01. Closing Date. Subject to the provisions of Section
7.06 and Section 8.05, the closing (the "Closing") shall take place
and be effective for all purposes at 10:00 a.m., local time, on
October ___, 1995 at the offices of Seller or at such other time and
place as the parties hereto mutually agree (the "Closing Date").
3.02. Obligations of the Parties at the Closing.
(a) At the Closing, the events set out in clauses (i)
through (iv) shall occur:
(i) Buyer shall pay the consideration as specified in
Section 2.01.
(ii) Upon and after receipt of the consideration pursuant
to (i) above, and without any additional action by Seller or Buyer,
Seller shall for the time being remain the record holder of and retain
legal title to the Shares, and Buyer, as purchaser, shall become
beneficial owner of the Shares with all of the rights, including the
right to receive dividends, and obligations of any holder of class "C"
shares in the Company as set forth in the Articles of Association, as
amended, and as a shareholder under the Shareholders Agreement by and
between the Buyer and Seller of even date herewith (the "Shareholders
Agreement"). Seller shall execute in favor of Buyer or Buyer's
designee an irrevocable proxy in form and substance mutually agreeable
to both parties (the "Irrevocable Proxy"). Seller shall not
thereafter sell, transfer or convey the Shares, and Buyer shall not
thereafter sell, transfer or convey its beneficial interest in the
Shares, except in accordance with the terms of this Agreement and the
terms of the Shareholders Agreement described in Section 7.05 of this
Agreement and the Articles of Association, as amended.
(iii) Seller shall cause a meeting of the Directors of the
Company to be convened and shall procure that at the meeting:
(A) approval of the transactions contemplated by
this Agreement;
(B) at the request of Buyer, the appointment as
directors of the Corporation two (2) persons nominated by Buyer.
(b) In the event all required approvals described in this
Agreement are obtained on or before October ___, 1998, then the events
set out in clauses (i) through (iii) shall occur within thirty (30)
days of receipt of such approvals:
2
<PAGE> 4
(i) Seller shall deliver to Buyer, or to such person as
Buyer may direct, without additional consideration the share
certificate issued by the Company for the Shares together with an
executed instrument of transfer in registrable form (except for the
payment of any applicable stamp duty) for the Shares in favor of the
Buyer or its nominee (as transferee) from the registered holder of the
Shares (as transferor).
(ii) Seller shall deliver to the Buyer any waiver, consent
or other document which the Buyer may require to obtain a good title
to the Shares registered in the name of the Buyer or its nominee,
including any Power of Attorney under which any document required to
be delivered under this Agreement has been executed.
(iii) Seller shall cause a meeting of the Directors of the
Company to be convened and shall procure that at the meeting approval
of the transfer of the Shares to the Buyer or its nominee and, subject
to the payment of stamp duty, direct the entries in the Company's
share register be made, the existing share certificate for the Shares
be canceled and a new certificate in the name of the Buyer be issued.
Seller shall also cause the Articles of Association to be amended to
incorporate the provisions of the Shareholders Agreement.
(c) If (A) all required approvals described in this
Agreement are not obtained on or before October , 1998, or (B)
----
otherwise at Buyer's option on or before October , 1997, the events
----
set out in clauses (i) through (iii) shall occur on or before October
, 1998 in the case of (A) above or October , 1997, in the case
--- ---
of (B) above:
(i) Seller or its designee, which designee may be Doctor
R. Crants, subject to Seller's rights under the Shareholders Agreement
and the receipt of government approvals described in Section 7.06 of
the Agreement, shall pay to Buyer by bank cheque, bank wire transfer
or such other method as may be mutually agreed upon by the parties a
sum equal to the Purchase Price plus interest thereon at a rate equal
to the six month LIBOR rate less any cash distributions received by
Buyer as a result of Buyer's beneficial ownership of the Shares.
(ii) Upon and after payment of such consideration, and
without any additional action by Seller or Buyer, Seller shall cease
to hold the Shares for the benefit of Buyer, and Seller or its
designee, as the case may be, shall thereafter hold the Shares for its
own account and the Irrevocable Proxy executed herewith shall
terminate.
(iii) The Shareholders Agreement described in Section 7.05
of this Agreement shall automatically terminate.
(iv) The persons nominated by Buyer to serve as directors
pursuant to subparagraph (a)(iii) of this section shall resign as
directors.
3
<PAGE> 5
(d) Each party by written notice to the other may waive
compliance by such other party with the requirements of this Section
3.02.
2.3. Amendment to Article 4.02. Article 4.02 of the Agreement is
hereby amended to read in its entirety as follows:
4.02. Ownership of Shares: Validity and Enforceability. Seller
represents and warrants that (i) Seller is the legal and beneficial
owner of the Shares, free and clear of all liens, claims, charges,
restrictions, security interests, equities, proxies, pledges or
encumbrances of any kind; (ii) Seller has the full right, power,
authority and capacity to sell and transfer the respective Shares
owned by such Seller; (iii) by virtue of the transfer of the Shares to
Buyer, pursuant to Section 3.02, Buyer will obtain full title to such
Shares, free and clear of all liens, claims, charges, restrictions,
security interests, equities, proxies, pledges, or encumbrances of any
kind. This Agreement constitutes a legal, valid and binding agreement
of the Seller, enforceable against Seller in accordance with its
terms.
SECTION 3. Effectiveness of this Amendment. This Amendment
shall become effective upon the execution and delivery of this Amendment by the
Buyer and the Seller.
SECTION 4. Indemnification. Seller agrees to defend, indemnify
and hold harmless Buyer, its directors, officers, employees, affiliates and
agents, and shall reimburse Buyer for, from and against any Loss resulting from
this Amendment or any actions contemplated thereby.
SECTION 5. Miscellaneous.
5.1. Amendment to Agreement. The Agreement is hereby, and shall
henceforth be deemed to be, amended, modified and supplemented in accordance
with the provisions hereof, and the respective rights, duties and obligations
under the Agreement shall hereafter be determined, exercised and enforced under
the Agreement, as amended, subject in all respects to such amendments,
modifications, and supplements and all terms and conditions of this Amendment
and the Articles of Association, as amended.
5.2. Ratification of the Agreement. Except as expressly set forth in
this Amendment, all agreements, covenants, undertakings, provisions,
stipulations, and promises contained in the Agreement are hereby ratified,
readopted, approved, and confirmed and remain in full force and effect.
5.3. No Implied Waiver. The execution, delivery and performance of
this Amendment shall not, except as expressly provided herein, constitute a
waiver or modification of any provision of, or operate as a waiver of any
right, power or remedy of the parties under, the Agreement or prejudice any
right or remedy that either party may have or may have in the future under or
in connection with the Agreement or any
4
<PAGE> 6
instrument or agreement referred to therein. The parties hereto acknowledge
and agree that the representations and warranties of the parties contained in
the Agreement shall survive the execution and delivery of this Amendment and
the effectiveness hereof.
5.4. Governing Law. This Amendment shall be governed by and be
interpreted under the laws of Queensland without regard to the conflicts of law
principles thereof. Each party hereby irrevocably submits to the non-exclusive
jurisdiction of any state or federal court located in Queensland over any
action or proceeding to enforce any right under this Amendment. The parties
further acknowledge that irrevocable damage would occur in the event that any
of the provisions of this Amendment were not performed in accordance with their
specific terms or were otherwise breached. Accordingly, the parties shall be
entitled to an injunction to prevent breaches of the provisions of this
Amendment and to enforce specifically the terms and provisions hereof in any
court in Queensland. This being in addition to any other remedy to which they
may be entitled at law or equity.
5.5. Counterparts; Telecopy Execution. This Amendment may be
executed in two or more counterparts, each of which shall be deemed to be an
original, but all of which together shall constitute one and the same
instrument. Delivery of an executed counterpart of this Amendment by facsimile
shall be equally as effective as delivery of a manually executed counterpart.
Any party delivering an executed counterpart of this Amendment by facsimile
shall also deliver a manually executed counterpart, but the failure to deliver
a manually executed counterpart shall not affect the validity, enforceability,
and binding effect of this Amendment.
IN WITNESS WHEREOF, the undersigned have caused this Amendment to be
executed by their duly authorized officers as of the date first written above.
SODEXHO S.A.
By:
-----------------------------------
Its:
-----------------------------------
5
<PAGE> 7
CORRECTIONS CORPORATION OF
AMERICA
By:
---------------------------------
Its:
--------------------------------
6
<PAGE> 1
EXHIBIT 10.153
FIRST AMENDMENT TO
AMENDED AND RESTATED
CORRECTIONS CORPORATION OF AMERICA
1989 STOCK BONUS PLAN
This INDENTURE is made this 3rd day of November, 1995 by Corrections
Corporation of America, a corporation duly organized and existing under the
laws of the state of Delaware (the "Company").
W I T N E S S E T H:
WHEREAS, the Company has adopted the Amended and Restated Corrections
Corporation of America 1989 Stock Bonus Plan (the "1989 Plan") pursuant to
which certain stock options were authorized to be granted;
WHEREAS, the Company now wishes to amend the terms of the 1989 Plan to
decrease the number of shares of common stock that may be issued thereunder;
and
WHEREAS, the Board of Directors of the Company have duly approved and
authorized the amendment of the 1989 Plan as embodied herein.
NOW, THEREFORE, effective on the day and year first set forth above,
the Company does hereby amend the 1989 Plan as follows:
1.
Section 3 of the 1989 Plan shall be deleted in its entirety and the
following substituted in lieu thereof:
"Section 3. Common Stock Subject to the Plan. The capital stock to
be issued under the Plan will be shares of Common Stock. The Common
Stock to be issued under the Plan may be unissued shares of Common
Stock or shares of Common Stock held in treasury. The total number of
shares of Common Stock that may be issued under the Plan shall not
exceed in the aggregate 200,000 shares. The Company is not obligated
to issue Bonus Shares if such issuance would, in the opinion of
counsel for the Company, violate the Securities Act of 1933, as
amended, or any other applicable statute or regulation then in
effect."
2.
Except as specifically amended hereby, the 1989 Plan shall remain in
full force and effect as prior to this amendment.
<PAGE> 2
IN WITNESS WHEREOF, the Company caused this amendment to be executed
on the day and year first above written.
CORRECTIONS CORPORATION OF
AMERICA
a Delaware corporation
By:
------------------------------------
Title:
---------------------------------
ATTEST:
------------------------
Secretary
2
<PAGE> 1
EXHIBIT 10.154
[FIRST UNION LETTERHEAD]
December 15, 1995
LETTER OF CREDIT NO. S062573
Bank One, Texas, N.A.
910 Travis, 6th Floor
Houston, TX 77002
Attn: Corporate Trust Department
Ladies and Gentlemen:
At the request and on the instructions of the Taylor Detention Center
Corporation, a Texas non-profit corporation (the "Issuer"), we hereby establish
in your favor, as Trustee under the Trust Indenture dated as of December 15,
1995 (the "Indenture"), between the Issuer and you pursuant to which
$24,545,000 in aggregate principal amount of the Issuer's Taxable Detention
Center Revenue Bonds, Series 1995 (the "Bonds") are being issued, this
Irrevocable Letter of Credit No. S062573 in the amount of $24,998,915.00 (the
"Initial Stated Amount"), and, as from time to time, reduced and reinstated as
hereinafter provided, the "Amount Available"; of which (i) subject to the
provisions below reducing amounts available hereunder, $24,545,000 (as from
time to time reduced and reinstated as hereinafter provided, the "Principal
Amount Available"), shall be available for the payment of principal or the
portion of Purchase Price corresponding to principal of the Bonds, and (ii)
subject to the provisions below reducing amounts available hereunder, $453,915
(as from time to time reduced and reinstated as hereinafter provided, the
"Interest Amount Available") shall be available for the payment of up to
forty-five (45) days' interest or the portion of Purchase Price corresponding
to interest on the Bonds, at an assumed rate of fifteen percent (15%) per
annum. Subject to such aggregate limits and to the conditions set forth
herein, funds may be drawn upon hereunder (i) with respect to payment of the
unpaid principal amount or the portion of Purchase Price corresponding to the
principal of the Bonds, and (ii) with respect to payment of up to forty-five
(45) days' interest accrued and payable or the portion of Purchase Price
corresponding to interest accrued on the Bonds on or prior to their stated
maturity date. This Letter of Credit is effective immediately and expires as
of the close of business at our Presentation Office (as defined herein) on June
15, 1997 (as such date may be extended from time to time as hereinafter
described, the "Stated Termination Date") or earlier as hereinafter provided,
or unless otherwise renewed or extended. All drawings under this Letter of
Credit will be paid with our own funds.
<PAGE> 2
March 28, 1996
Page 2
We hereby irrevocably authorize you to draw on us, in an aggregate
amount not to exceed the Amount Available and in accordance with the terms and
conditions and subject to the reductions in amount as hereinafter set forth,
(1) in a single drawing (subject to the provisions contained in the next
following paragraph) by your draft drawn on us at sight, presented for payment
on a day on which banks in the State of North Carolina are open for the
transaction of business of the nature required pursuant to the Indenture (a
"Business Day") and referring therein to the number of this Letter of Credit,
and accompanied by your written and completed certificate signed by an
Authorized Officer in the form of Annex A attached hereto (such draft
accompanied by such certificate being your "Interest Draft"), an amount not
exceeding the Interest Amount Available on the date of such drawing; (2) in one
or more drawings by one or more of your drafts drawn on us at sight, presented
for payment on a Business Day and referring therein to the number of this
Letter of Credit, and accompanied by your written completed certificate signed
by an Authorized Officer in the form of Annex B attached hereto (any such draft
accompanied by such certificate being your "Tender Draft"), an aggregate amount
not exceeding the Amount Available on the date of such drawing; (3) in one or
more drawings by one or more of your drafts drawn on us at sight, presented for
payment on a Business Day and referring therein to the number of this Letter of
Credit, and accompanied by your written and completed certificate signed by an
Authorized Officer in the form of Annex C attached hereto (any such draft
accompanied by such certificate being your "Partial Redemption Draft"), an
aggregate amount not exceeding the Amount Available on the date of such
drawing; (4) in a single drawing by your draft drawn on us at sight presented
for payment on a Business Day and referring therein to the number of this
Letter of Credit, and accompanied by your written and completed certificate
signed by an Authorized Officer in the form of Annex D hereto (any such draft
accompanied by such certificate being your "Conversion Draft"), an amount not
exceeding the Amount Available on the date of such drawing; and (5) in a single
drawing by your draft drawing on us at sight, presented for payment on a
Business Day and referring therein to the number of this Letter of Credit, and
accompanied by your written and completed certificate signed by an Authorized
Officer in the form of Annex E attached hereto (such draft accompanied by such
certificate being your "Final Draft"), an amount not exceeding the Amount
Available on the date of such drawing.
If you shall draw on us by an Interest Draft, and you shall not have
received from us, within ten (10) calendar days from the date of our payment in
respect of such drawing, written notice to the effect that we have not been
reimbursed for such drawing and that the interest portion of the Letter of
Credit will not be reinstated, then (x) your right to draw on us in a single
drawing by your Interest Draft under clause (1) of the immediately preceding
paragraph shall be automatically reinstated, and (y) effective as of the
eleventh (11th) calendar day from the date of our payment in respect of such
drawing, you shall again be authorized to draw on us by your Interest Draft, in
accordance with said clause (1). The provisions of this paragraph providing
for the reinstatement of your right to draw on us by your Interest Draft in a
succeeding single drawing shall be applicable to each successive drawing by
your Interest Draft under clause (1) of the immediately preceding paragraph so
long as this Letter of Credit shall not have terminated as set forth below.
<PAGE> 3
March 28, 1996
Page 3
Upon our honoring any Tender Draft presented by you hereunder, the
Amount Available under this Letter of Credit shall be automatically reduced by
the amount drawn under such Tender Draft, the Principal Amount Available to be
drawn hereunder by you shall be automatically reduced by an amount equal to the
principal component of such Tender Draft and the Interest Amount Available to
be drawn hereunder by you shall be automatically reduced by an amount equal to
the amount of the interest component of such Tender Draft.
Upon our honoring any Partial Redemption Draft presented by you
hereunder, the Amount Available under this Letter of Credit shall be
automatically and permanently reduced by the amount drawn under any such
Partial Redemption Draft, the Principal Amount Available to be drawn hereunder
by you shall be automatically and permanently reduced by an amount equal to the
principal component of such Partial Redemption Draft honored by us hereunder
and the Interest Amount Available to be drawn hereunder by you shall be
automatically and permanently reduced by an amount equal to the amount of the
interest which would accrue on an amount of principal equal to the principal
component of such Partial Redemption Draft for forty-five (45) days at an
assumed rate of fifteen percent (15%) per annum.
Upon our honoring any Conversion Draft presented by you hereunder, the
Amount Available under this Letter of Credit shall be automatically and
permanently reduced by the amount drawn under any such Conversion Draft, the
Principal Amount Available to be drawn hereunder by you shall be automatically
and permanently reduced by an amount equal to the principal component of such
Conversion Draft honored by us hereunder, and the Interest Amount Available to
be drawn hereunder by you shall be automatically and permanently reduced by an
amount equal to the amount of the interest component of any such Conversion
Draft honored by us hereunder.
The Amount Available, the Principal Amount Available and the Interest
Amount Available drawn under this Letter of Credit with respect to any Tender
Draft shall be reinstated as provided in this paragraph to the extent, but only
to the extent, that we are reimbursed by or on behalf of the Issuer in
immediately available funds delivered to us at the Presentation Office on or
before 3:00 p.m. (Charlotte, North Carolina time) on a Business Day for any
amount drawn in respect of principal and interest under any Tender Draft. If
we receive such reimbursement by or on behalf of the Issuer, all in substantial
conformity with the terms and conditions of this Letter of Credit, after 3:00
p.m. (Charlotte, North Carolina time) on a Business Day prior to the
termination hereof, such reimbursement will be honored as stated above as if
received on the next succeeding Business Day. Any amount received by us from
or on behalf of the Issuer in reimbursement of amounts drawn hereunder by a
Tender Draft shall, if accompanied by your completed certificate signed by you
in the form of Annex F attached hereto, be applied to the extent of the amount
received by us and indicated therein to reimburse us for amounts drawn
hereunder by your Tender Drafts, and we will confirm to you the amount of the
Principal Amount Available and the Interest Amount Available reinstated by such
reimbursement by delivering to you the executed and completed acknowledgment
accompanying the form of Annex F delivered by you in connection with such
reimbursement. The Amount Available, the Principal Amount Available and the
Interest Amount Available shall be reinstated only in compliance with the
provisions of this paragraph.
<PAGE> 4
March 28, 1996
Page 4
Each draft and certificate presented hereunder shall be dated the date
of presentation and each such draft and certificate shall be presented at our
office located at Two First Union Center, T-7, Charlotte, North Carolina
28288- 0742, Attention: International Operations, or at any other office which
may be designated by us by written notice delivered to you at least three (3)
Business Days prior to the date on which interest is payable on the Bonds (the
"Presentation Office"), and shall be presented on a Business Day. If we
receive any of your drafts and certificates at such office, all in strict
conformity with the terms and conditions of this Letter of Credit, not later
than 11:00 a.m. (Charlotte, North Carolina time) on a Business Day on or prior
to the termination of this Letter of Credit, we will honor the same by
initiating the wire funds by 2:30 p.m. (Charlotte, North Carolina time) on the
same day in accordance with your payment instructions, or on such other
Business Day as you may direct. If we receive any of your drafts and
certificates at such office, all in strict conformity with the terms and
conditions of this Letter of Credit, after 11:00 a.m. (Charlotte, North
Carolina time) on a business day prior to termination of this Letter of Credit,
we will honor the same on the next succeeding Business Day by initiating the
wiring of funds by 2:30 p.m. (Charlotte, North Carolina time) in accordance
with your payment instructions, or on such other Business Day as you may
direct. If requested by you, payment under this Letter of Credit may be made
by wire transfer of Federal Reserve Bank of Richmond funds in your account in a
bank on the Federal Reserve wire system or by deposit of same-day funds into a
designated account that you maintain with us.
In connection with the presentation of any Tender Draft or Conversion
Draft, Bonds in aggregate principal amount equal to the principal amount of
such Tender Draft or Conversion Draft shall be delivered to the Bank or its
designee as promptly as practicable, and in any event, within five (5) business
days after such presentation, registered in the name of the Issuer, pledged to
the Bank, pursuant to the Pledge Agreement. With respect to any Tender Draft,
the Bank agrees that it shall not release any Bonds pledged to it until the
Trustee shall have received the Bank's executed acknowledgment accompanying the
form of Annex F attached hereto, notifying the Trustee that the Letter of
Credit has been reinstated so that the Amount Available as so reinstated shall
equal or exceed the aggregate principal and forty- five (45) days' interest
calculated at an assumed rate of fifteen percent (15%) per annum on all Bonds
for which drawings are available hereunder, after giving effect to such
release.
Upon the earliest of (i) our honoring of your Final Draft presented
hereunder, (ii) the second (2nd) day following the date on which we receive a
certificate signed by an Authorized Officer stating that the interest rate on
the Bonds has been converted to a fixed interest rate, (iii) the date on which
we receive a certificate signed by an Authorized Officer stating that you have
accepted an Alternate Letter of Credit (as defined in the Indenture) which is
effective the date of such certificate, or (iv) the Stated Termination Date,
this Letter of Credit shall automatically terminate and be delivered to us for
cancellation.
This Letter of Credit applies only to the payment of principal or the
portion of Purchase Price of the Bonds corresponding to principal, and up to
forty-five (45) days' interest accruing on the Bonds computed at a rate of
fifteen percent (15%) per annum, from the date of issuance of this Letter of
Credit
<PAGE> 5
March 28, 1996
Page 5
through the date of termination of this Letter of Credit computed on the basis
of actual days elapsed in a 365 or 366 day year, as the case may be, and does
not apply to any interest that may accrue thereon or any principal, premium or
other amounts that may be payable with respect to the Bonds subsequent to the
expiration of this Letter of Credit.
This Letter of Credit is transferable only in its entirety to any
transferee whom you certify to us has succeeded you as Trustee under the
Indenture, and may be successively transferred. Transfer of the Amount
Available under this Letter of Credit to such transferee shall be effected by
the presentation to us of this Letter of Credit accompanied by a certificate in
the form of Annex G attached hereto and payment of the transfer commission
referred to therein. Upon such presentation, we shall forthwith transfer the
same to your transferee or, if so requested by your transferee, issue a letter
of credit to your transferee with provisions therein consistent with this
Letter of Credit.
As used herein (i) "Authorized Officer" shall mean any person signing
as one of your Vice Presidents, Assistant Vice Presidents, Trust Officers or
Assistant Trust Officers and (ii) all other capitalized terms used herein and
not otherwise defined shall have the respective meanings assigned to such terms
in the Indenture.
This Letter of Credit sets forth in full our undertaking, and such
undertaking shall not in any way be modified, amended, amplified or limited by
reference to any document, instrument or agreement referred to herein
(including, without limitation, the Bonds), except only the certificate(s)
referred to herein; and any such reference shall not be deemed to incorporate
herein by reference any documents, instrument or agreement except for such
certificate(s).
Except as otherwise provided herein, this Letter of Credit shall be
governed by and construed in accordance with the Uniform Customs and Practice
for Documentary Credits (1993 revisions), International Chamber of Commerce
Publication No. 500 (the "UCP") and, to the extent not inconsistent therewith,
the laws of the State of Tennessee. Communications with respect to this Letter
of Credit, other than presentations of drafts and certificates hereunder, shall
be in writing and should be addressed
<PAGE> 6
March 28, 1996
Page 6
to us at Two First Union Center, T-7, Charlotte, NC, 28288-0742, Attention:
International Operations, and shall specifically refer to the number of this
Letter of Credit.
Sincerely,
FIRST UNION NATIONAL BANK
NORTH CAROLINA
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
<PAGE> 7
ANNEX A
[Form of Certificate for Interest Draft]
CERTIFICATE FOR DRAWING IN CONNECTION WITH THE PAYMENT
OF UP TO 45 DAYS' INTEREST
IRREVOCABLE LETTER OF CREDIT NO. S062573
The undersigned, a duly authorized officer of the undersigned Trustee
hereby certifies to First Union National Bank of North Carolina (the "Bank"),
with reference to Irrevocable Letter of Credit No. S062573 (the "Letter of
Credit; the terms defined therein and not otherwise defined herein being used
herein as therein defined) issued by the Bank in favor of the Trustee, as
follows:
(1) The Trustee is the Trustee under the Indenture for
the holders of the Bonds.
(2) The Trustee is making a drawing under the Letter of
Credit with respect to payment of interest on the Bonds, which payment
is due and payable on a regular interest payment date under the terms
of the Bonds. On the record date for such Interest Payment Date, none
of such Bonds for which interest is drawn pursuant to the draft were
held of record by the Issuer, or by the Bank, or its designee, as
pledgee of the Issuer.
(3) [The Interest Draft accompanying this Certificate is
the first Interest Draft presented by the Trustee under the Letter of
Credit.]
* OR [The Interest Draft last
presented by the Trustee under the Letter of Credit was honored and
paid by the Bank on , , and the Trustee has
------------------ -------
not received a notice within ten days of presentation of such Interest
Draft from the Bank that an Event of Default has occurred under the
Indenture.]
(4) The amount of the Interest Draft accompanying this
Certificate is $ . It was computed in compliance with the
-----------
terms and conditions the Bonds and the Indenture and does not exceed
the Interest Amount Available to be drawn by the Trustee under the
Letter of Credit.
(5) Upon receipt by the undersigned of the amount
demanded hereby, (a) the undersigned will apply the same directly to
the payment when due of the interest amount owing on account of the
Bonds pursuant to the Indenture, (b) no portion of said amount shall
be applied by the undersigned for any other purpose, and (c) no
portion of said amount shall be commingled with other funds held by
the undersigned.
__________________________________
* To be used in the Certificate relating to the first Interest Draft
only.
1
<PAGE> 8
IN WITNESS WHEREOF, the Trustee has executed and delivered this
Certificate as of the day of , 19 .
----- --------------------------- ---
BANK ONE, TEXAS, N.A., TRUSTEE
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
2
<PAGE> 9
ANNEX B
[Form of Certificate for Tender Draft]
CERTIFICATE FOR DRAWING IN CONNECTION WITH THE PAYMENT
OF PRINCIPAL PURCHASE PRICE AND PORTION OF PURCHASE PRICE
CORRESPONDING TO INTEREST OF BONDS TENDERED
IRREVOCABLE LETTER OF CREDIT NO. S062573
The undersigned, a duly authorized officer of the undersigned Trustee
hereby certifies to First Union National Bank of North Carolina (the "Bank"),
with reference to Irrevocable Letter of Credit No. S062573 (the "Letter of
Credit; the terms defined therein and not otherwise defined herein being used
herein as therein defined) issued by the Bank in favor of the Trustee, as
follows:
(1) The Trustee is the Trustee under the Indenture for
the holders of the Bonds.
(2) The Trustee is making a drawing under the Letter of
Credit with respect to a payment, upon a tender of all or less than
all of the Bonds, which are Outstanding (as defined in the Indenture),
of the unpaid principal amount of the Bonds and accrued interest
thereon to be purchased as a result of such tender pursuant to the
terms of the Indenture (other than Bonds, presently held of record by
the Issuer, or by the Bank, or its designee, as pledgee of the Issuer)
which payment is due on the date on which this Certificate and the
Tender Draft it accompanies are being presented to the Bank.
(3) The amount of the Tender Draft accompanying this
Certificate is equal to the sum of (i) $ being drawn in
--------------
respect of the payment of unpaid principal of Bonds (other than Bonds
presently held of record by the Issuer or by the Bank, or its
designee, as pledgee of the Issuer) to be purchased as a result of a
tender, which amount does not exceed the Principal Amount Available
under the Letter of Credit, and (ii) $ being drawn in
-----------
respect of the payment of days' [not to exceed 45 days']
------------
accrued and unpaid interest on such Bonds constituting a portion of
the purchase price of such Bonds being purchased as a result of a
tender, which amount does not exceed the Interest Amount Available
under the Letter of Credit.
(4) The Trustee acknowledges that the Trustee shall,
pursuant to the Indenture, credit the account of the Bank or its
designee, a principal amount of Bonds equal to the principal amount of
the Tender Draft accompanying this Certificate as promptly as
practicable, and in any event within five (5) Business Days after
presentation of the Tender Draft accompanying this Certificate.
1
<PAGE> 10
(5) The Trustee hereby authorizes and instructs
the Bank to pay the Tender Draft in the amount of $
----------
to the Tender Agent on behalf of the Trustee via the following
wiring instructions:
----------------------------
----------------------------
----------------------------
----------------------------
(6) Upon receipt by the Tender Agent of the amount
demanded hereby, (a) the Tender Agent will apply the same directly to
the payment when due of the purchase price of Bonds tendered pursuant
to the Indenture and the Tender Agent Agreement, (b) no portion of
said amount shall be applied by the Tender Agent for any other
purpose, and (c) no portion of said amount shall be commingled with
other funds held by the Tender Agent.
(7) The amount of the Tender Draft accompanying this
Certificate was computed by the Trustee in compliance with the terms
and conditions of the Bonds and the Indenture and does not exceed the
Amount Available under the Letter of Credit.
The Trustee acknowledges that, pursuant to the terms of the Letter of
Credit, upon the Bank's honoring of the Tender Draft accompanying this
Certificate, (i) the Amount Available under the Letter of Credit shall be
automatically reduced by the aggregate amount of such Tender Draft, (ii) the
Principal Amount Available under the Letter of Credit shall be automatically
reduced by an amount equal to the amount of the principal component of such
draft set forth in paragraph 3 above, and (iii) the Interest Amount Available
under the Letter of Credit shall be automatically reduced by an amount equal to
the amount of the interest component of such draft set forth in paragraph 3
above, each subject to reinstatement as set forth in the Letter of Credit.
IN WITNESS WHEREOF, the Trustee has executed and delivered this
Certificate as of the day of , 19 .
----- --------------------------- ---
BANK ONE, TEXAS, N.A., TRUSTEE
By:
---------------------------------------
Name:
------------------------------------
Title:
------------------------------------
2
<PAGE> 11
ANNEX C
[Form of Certificate for Partial Redemption Draft]
CERTIFICATE FOR DRAWING IN CONNECTION WITH THE PAYMENT
OF PRINCIPAL AND UP TO 45 DAYS' INTEREST UPON
PARTIAL REDEMPTION
IRREVOCABLE LETTER OF CREDIT NO. S062573
The undersigned, a duly authorized officer of the undersigned Trustee
hereby certifies to First Union National Bank of North Carolina (the "Bank"),
with reference to Irrevocable Letter of Credit No. S062573 (the "Letter of
Credit; the terms defined therein and not otherwise defined herein being used
herein as therein defined) issued by the Bank in favor of the Trustee, as
follows:
(1) The Trustee is the Trustee under the Indenture for
the holders of the Bonds.
(2) The Trustee is making a drawing under the Letter of
Credit with respect to a payment, upon redemption of less than all of
the Bonds which are Outstanding (as defined in the Indenture), of the
unpaid principal amount of, and up to 45 days' accrued and unpaid
interest on, the Bonds to be redeemed pursuant to the Indenture (other
than Bonds presently held of record by the Issuer, or by the Bank, or
its designee, as pledgee of the Issuer).
(3) The amount of the Partial Redemption Draft
accompanying this Certificate is $ and is equal to the
--------------
sum of (i) $ being drawn in respect of the payment of
------------
unpaid principal of Bonds (other than Bonds presently held of record
by the Issuer, or by the Bank, or its designee, as pledgee of the
Issuer) to be redeemed, which amount does not exceed the Principal
Amount Available under the Letter of Credit and (ii) $
------------
being drawn in respect of the payment of days' [not to exceed 45
-----
days'] accrued and unpaid interest on such Bonds, which amount does
not exceed the Interest Amount Available under the Letter of Credit.
(4) The amount of the Partial Redemption Draft
accompanying this Certificate was computed in accordance with the
terms and conditions of the Bonds and the Indenture and does not
exceed the Amount Available under the Letter of Credit.
(5) This Certificate and the Partial Redemption Draft it
accompanies are dated, and are being presented to the Bank on, the
date on which the unpaid principal amount of, and accrued and unpaid
interest on, Bonds to be redeemed are due and payable under the
Indenture upon redemption of less than all of the Bonds which are
Outstanding (as defined in the Indenture).
(6) Upon receipt by the undersigned of the amount
demanded hereby, (a) the undersigned will apply the same directly to
the payment when due of the principal amount of and accrued and unpaid
interest on the Bonds pursuant to the Indenture, (b) no portion of
said amount shall be applied by the undersigned for any other purpose,
and (c) no portion of said amount shall
1
<PAGE> 12
be commingled with other funds held by the undersigned.
The Trustee acknowledges that, pursuant to the terms of the Letter of
Credit, upon the Bank's honoring of the Partial Redemption Draft accompanying
this Certificate, (i) the Amount Available under the Letter of Credit shall be
permanently reduced by the aggregate amount of such Partial Redemption Draft,
(ii) the Principal Amount Available under the Letter of Credit shall be
permanently reduced by an amount equal to the amount of the principal component
of such draft set forth in paragraph 3 above, and (iii) the Interest Amount
Available under the Letter of Credit shall be permanently reduced by
$ , which is equal to an amount of interest which would accrue on
-------------
an amount of principal equal to the principal component set forth in paragraph
3 above for a period of forty-five (45) days at a maximum rate of fifteen
percent (15%) per annum.
IN WITNESS WHEREOF, the Trustee has executed and delivered this
Certificate as of the day of , 19 .
----- --------------------------- ---
BANK ONE, TEXAS, N.A., TRUSTEE
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
2
<PAGE> 13
ANNEX D
[Form of Certificate for Conversion Draft]
CERTIFICATE FOR DRAWING IN CONNECTION WITH THE PAYMENT
OF PRINCIPAL PLUS ACCRUED INTEREST
UPON A MANDATORY PURCHASE
(CONVERSION TO A FIXED INTEREST RATE)
IRREVOCABLE LETTER OF CREDIT NO. S062573
The undersigned, a duly authorized officer of the undersigned Trustee
hereby certifies to First Union National Bank of North Carolina (the "Bank"),
with reference to Irrevocable Letter of Credit No. S062573 (the "Letter of
Credit; the terms defined therein and not otherwise defined herein being used
herein as therein defined) issued by the Bank in favor of the Trustee, as
follows:
(1) The Trustee is the Trustee under the Indenture for
the holders of the Bonds.
(2) The Trustee is making a drawing under the Letter of
Credit with respect to a payment, upon a mandatory tender for purchase
pursuant to Section of the Indenture (conversion to a Fixed
-----
Interest Rate within the meaning of the Indenture) of all or less than
all of the Bonds which are Outstanding (as defined in the Indenture),
of the unpaid principal amount of, and up to 45 days' accrued and
unpaid interest on, the Bonds to be so purchased (other than Bonds
presently held of record by the Issuer, or the Bank, or its designee,
as pledgee of the Issuer), which payment is due on the date on which
this Certificate and the Conversion Draft it accompanies are being
presented to the Bank.
(3) The amount of the Conversion Draft accompanying this
Certificate is $ and is equal to the sum of (i)
--------------
$ being drawn in respect of the payment of unpaid
------------
principal of Bonds (other than Bonds presently held of record by the
Issuer or by the Bank, or its designee, as pledgee of the Issuer) to
be purchased, which amount does not exceed the Principal Amount
Available under the Letter of Credit and (ii) $ being
------------
drawn in respect of the payment of days' [not to exceed 45
-----
days'] accrued and unpaid interest on such Bonds, which amount does
not exceed the Interest Amount Available under the Letter of Credit.
(4) The amount of the Conversion Draft accompanying this
Certificate was computed in compliance with the terms and conditions
of the Bonds and the Indenture and does not exceed the Amount
Available under the Letter of Credit.
(5) Upon receipt by the undersigned of the amount
demanded hereby, (a) the undersigned will apply the same directly to
the payment when due of the principal amount of, and interest accrued
and unpaid on, the Bonds pursuant to the Indenture, (b) no portion of
said amount shall be applied by the undersigned for any other purpose,
and (c) no portion of said amount shall be commingled with other funds
held by the undersigned.
1
<PAGE> 14
(6) The Trustee acknowledges that the Trustee shall,
pursuant to the Indenture, credit to the account of the Bank or its
designee, a principal amount of Bonds equal to the principal amount of
the Conversion Draft accompanying this Certificate as promptly as
practicable, and in any event within five (5) Business Days after
presentation of the Conversion Draft accompanying this Certificate.
IN WITNESS WHEREOF, the Trustee has executed and delivered this
Certificate as of the day of , 19 .
----- --------------------------- ---
BANK ONE, TEXAS, N.A., TRUSTEE
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
2
<PAGE> 15
ANNEX E
[Form of Certificate for Final Draft]
CERTIFICATE FOR DRAWING IN CONNECTION WITH THE PAYMENT
OF PRINCIPAL PLUS ACCRUED INTEREST, UPON STATED
OR ACCELERATED MATURITY OR OPTIONAL OR MANDATORY
REDEMPTION AS A WHOLE
IRREVOCABLE LETTER OF CREDIT NO. S062573
The undersigned, a duly authorized officer of the undersigned Trustee
hereby certifies to First Union National Bank of North Carolina (the "Bank"),
with reference to Irrevocable Letter of Credit No. S062573 (the "Letter of
Credit"; the terms defined therein and not otherwise defined herein being used
as therein defined) issued by the Bank in favor of the Trustee, as follows:
(1) The Trustee is the Trustee under the Indenture for
the holders of the Bonds.
(2) The Trustee is making a drawing under the Letter of
Credit with respect to a payment, either at stated maturity, upon
acceleration, or as a result of a redemption as a whole pursuant to
the Indenture, of the unpaid principal amount of and up to 45 days'
accrued and unpaid interest on, all of the Bonds which are
"Outstanding" within the meaning of the Indenture (other than Bonds
presently held of record by the Issuer, or by the Bank, or its
designee, as pledgee of the Issuer).
(3) The amount of the Final Draft accompanying this
Certificate is $ and is equal to the sum of (i) $ being
------- --------
drawn in respect of the payment of unpaid principal of Bonds (other
than Bonds presently held of record by the Issuer or by the Bank, or
its designee, as pledgee of the Issuer), which amount does not exceed
the Principal Amount Available under the Letter of Credit, and (ii)
$ being drawn in respect of the payment of days' not
-------- -------
to exceed 45 days' accrued and unpaid interest on such Bonds, which
amount does not exceed the Interest Amount Available under the Letter
of Credit.
(4) The amount of the Final Draft accompanying this
Certificate was computed in compliance with the terms and conditions
of the Bonds and the Indenture and does not exceed the Amount
Available under the Letter of Credit.
(5) Upon receipt by the undersigned of the amount
demanded hereby, (a) the undersigned will apply the same directly to
the payment when due of the principal amount and accrued and unpaid
interest thereon owing on account of the Bonds pursuant to the
Indenture, (b) no portion of said amount shall be applied by the
undersigned for any other purpose and (c) no portion of said amount
shall be commingled with other funds held by the undersigned.
1
<PAGE> 16
IN WITNESS WHEREOF, the Trustee has executed and delivered
this Certificate as of the day of , 19 .
---- -------------- ---
BANK ONE, TEXAS, N.A., TRUSTEE
By:
------------------------------------
Name:
----------------------------------
Title:
--------------------------------
2
<PAGE> 17
ANNEX F
[Form of Reinstatement Certificate For Tender Draft]
CERTIFICATE FOR THE REINSTATEMENT OF AMOUNTS AVAILABLE
UNDER IRREVOCABLE LETTER OF CREDIT NO. S062573
The undersigned, a duly authorized officer of the undersigned Trustee
hereby certifies to First Union National Bank of North Carolina (the "Bank"),
with reference to Irrevocable Letter of Credit No. S062573 (the "Letter of
Credit"; the terms defined therein and not otherwise defined herein being used
herein as therein defined) issued by the Bank in favor of the Trustee, as
follows:
(1) The Trustee is the Trustee under the Indenture for
the holders of the Bonds.
(2) The amount of $ paid to you today by or on
--------
behalf of the Issuer is a payment made to reimburse you, pursuant to
Section of the Letter of Credit and Reimbursement Agreement
-----
dated as of (as amended or supplemented, the "Reimbursement
----------
Agreement") between the Issuer and the Bank, for amounts drawn under
the Letter of Credit by Tender Drafts. The Trustee hereby requests
that you reinstate the Letter of Credit upon receipt of such payment
in an amount equal to the amount of payment so received.
(3) Of the amount referred to in paragraph (2), $
---------
represents the aggregate principal amount of Bonds resold or to be
sold on behalf of the Issuer.
(4) Of the amount referred to in paragraph (2), $
--------
represents accrued and unpaid interest on the Bonds.
IN WITNESS WHEREOF, the Trustee has executed and delivered this
Certificate as of the day of , 19 .
---- ---------- ----
BANK ONE, TEXAS, N.A., TRUSTEE
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
1
<PAGE> 18
[attached to Annex F]
ACKNOWLEDGMENT
The Bank hereby confirms to the Trustee that the Principal Amount
Available under the Letter of Credit has been reinstated by the amount $
-------
and the Interest Amount Available under the Letter of Credit has been
reinstated by the amount of $ .
---------
This day of , 19 .
---- ----------- ---
FIRST UNION NATIONAL BANK OF
NORTH CAROLINA
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
2
<PAGE> 19
ANNEX G
[Form of Transfer Certificate]
INSTRUCTION TO TRANSFER
First Union National Bank of
North Carolina
Two First Union Center
Charlotte, North Carolina 28288-0742
Attention: International Operations
Re: Your Irrevocable Letter of Credit No. S062573
Ladies and Gentlemen:
For value received, the undersigned beneficiary (the "Transferor")
hereby irrevocably transfers to:
-------------------------
[Name of Transferee]
-------------------------
[Address]
(the "Transferee") all rights of the Transferor with respect to the
above-referenced Letter of Credit, including the right to draw under said
Letter of Credit in the Amount Available. Said Transferee has succeeded the
Transferor as Trustee under that certain Trust Indenture dated as of December
15, 1995 by and between Bank One, Texas, N.A., as initial Trustee thereunder
and Taylor Detention Center Corporation, as Issuer (as amended or supplemented,
the "Indenture"), and has complied with the provisions of the Indenture.
By virtue of this transfer, the Transferee shall have the sole
rights as beneficiary of said Letter of Credit, including sole rights relating
to any past or future amendments thereof, whether increases or extensions or
otherwise. All amendments are to be advised directly to the Transferee without
necessity of any consent of or notice to the Transferor.
By its signature below, the Transferee acknowledges that it has
duly succeeded the Transferor as Trustee pursuant to the Trust Indenture.
The advice of such Letter of Credit is returned herewith,
along with a transfer fee of $1,000,
1
<PAGE> 20
and we ask you to endorse the transfer on the reverse side thereof and to
forward it directly to the Transferee with your customary notice of transfer.
Very truly yours,
-------------------------------------
By:
-----------------------------------
[insert name and title of
authorized officer]
(CORPORATE SEAL)
Acknowledged by:
- --------------------------------------------
[Insert name of Transferee]
By:
----------------------------------
[insert name and title of
authorized officer]
(CORPORATE SEAL)
2
<PAGE> 1
EXHIBIT 10.155
================================================================================
CORRECTIONS CORPORATION OF AMERICA
======================================
NOTE PURCHASE AGREEMENT
======================================
7.5% Convertible, Subordinated Notes
due February 28, 2002
($30,000,000)
Dated as of February 29, 1996
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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<S> <C> <C>
1. Authorization of Issue of the Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Sale and Purchase of the Notes; Closing Date; Conditions for Closing . . . . . . . . . . . . . . . . . . . . 1
2.1 Sale and Purchase of the Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.2 Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.3 Conditions for Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.4 Waiver of Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3. Definitions; Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.2 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.3 Changes in Accounting Principles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4. Representations and Warranties of the Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.1 Organization and Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.2 Due Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.3 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.4 SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.5 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.6 Actions Pending; Compliance with Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.7 Title to Properties; Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.8 Governmental Consents, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.9 Holding Corporation Act and Investment Corporation Act Status . . . . . . . . . . . . . . . . . . . 14
4.10 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.11 Conflicting Agreements and Charter Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.12 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.13 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.14 Status of Conversion Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.15 Registration Under Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.16 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.17 Possession of Franchises, Licenses, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.18 Environmental and Other Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.19 Offering of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.20 Brokers or Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.21 Offering of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.22 Regulations G, T, U, and X . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5. Representations and Warranties of Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.1 Due Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C>
5.2 Conflicting Agreements and Other Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.3 Acquisition for Investment; Source of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.4 Brokers or Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.5 Accredited Investor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6. Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.1 Financial Statements and Other Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.2 Inspection of Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.3 Use of Proceeds; Regulations G, T, U, and X. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.4 Consolidated Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.5 Consolidated Fixed Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.6 Consolidated Senior Funded Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.7 Attendance at Board Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.8 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.9 Maintenance of Properties; Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.10 Performance of Government Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.11 Notice to Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.12 Waiver of Stay, Extension, or Usury Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.13 Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.14 Amendments or Waivers of Certain Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.15 Limitation on Issuance of Other Subordinated Indebtedness Senior to the Notes . . . . . . . . . . . 24
6.16 Limitation on Subsidiary Funded Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7. Events Of Default; Remedies Therefor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.2 Acceleration of Maturities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
8. Agreements of Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.1 Transfer of the Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.2 No General Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.3 No Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.4 Transfer Restrictions; Legends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.5 Restrictions on Conversion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.6 Further Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
9. Nondisclosure of Confidential Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.1 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.2 Survival of Covenants, Representations, and Warranties . . . . . . . . . . . . . . . . . . . . . . . 30
10.3 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.4 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.5 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
</TABLE>
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<TABLE>
<CAPTION>
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10.6 Descriptive Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.7 Satisfaction Requirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.8 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
10.9 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
10.10 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
10.11 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
10.12 Execution in Counterparts; Telecopy Execution . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
10.13 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
10.14 Consent to Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
10.15 Enforcement of Judgments; Service of Process; Jury Trial Waiver . . . . . . . . . . . . . . . . . . 33
10.16 No Limitation on Service or Suit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
10.17 Direct Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
</TABLE>
LIST OF EXHIBITS
Exhibit L - 1 Legal Opinion
Exhibit N - 1 Form of Subordinated Note
Exhibit R - 1 Registration Rights Agreement
LIST OF SCHEDULES
Schedule 4.3 Subsidiaries
Schedule 4.6 Pending Actions
Schedule 4.11 Conflicts
Schedule 4.12 Options/Warrants
Schedule 10.17 Purchaser's Schedule
-iii-
<PAGE> 5
This NOTE PURCHASE AGREEMENT (this "Agreement"), dated as of
February 29, 1996, between PMI MEZZANINE FUND, L.P., a Delaware limited
partnership ("PMI"), and CORRECTIONS CORPORATION OF AMERICA, a Delaware
corporation (the "Corporation").
WHEREAS, the Corporation has duly authorized the issuance of
convertible, subordinated notes in the aggregate principal amount of
$30,000,000 that are to be convertible into shares of the Corporation's common
stock;
WHEREAS, Purchaser wishes to purchase the convertible,
subordinated notes from the Corporation, and the Corporation wishes to sell
such convertible, subordinated notes to Purchaser; and
WHEREAS, Purchaser and the Corporation are entering into this
Agreement to provide for such purchase and sale and to establish various rights
and obligations in connection therewith.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants herein set forth, the parties hereto agree as follows:
1. AUTHORIZATION OF ISSUE OF THE NOTES. The Corporation has duly
authorized the issuance of convertible, subordinated notes (the "Notes") in the
aggregate principal amount of $30,000,000, to be dated the date of issuance
thereof, to bear interest on the unpaid balance thereof from the date thereof
quarterly at the Coupon Rate and, upon the occurrence of a Triggering Event and
until the date on which such Triggering Event is cured or waived or until the
date that is ninety (90) days from the initial occurrence of Triggering Event,
whichever is later, at the Triggering Event Rate, until the principal thereof
shall become due and payable. The indebtedness evidenced by the Notes shall be
convertible into shares of the Corporation's common stock, $1.00 par value,
upon such terms and at a conversion rate as set forth in the Notes. The Notes
shall be substantially in the form attached hereto as Exhibit N-1 and shall be
issued to Purchaser on the Closing Date.
2. SALE AND PURCHASE OF THE NOTES; CLOSING DATE; CONDITIONS FOR CLOSING.
2.1 Sale and Purchase of the Notes. Subject to the terms
and conditions of this Agreement, Purchaser agrees to purchase, and the
Corporation agrees to sell and issue to Purchaser, on the Closing Date, the
Notes for an aggregate purchase price of Thirty Million Dollars ($30,000,000).
2.2 Closing Date. The closing of the sale and purchase
of the Notes shall take place at the offices of Brobeck, Phleger & Harrison
LLP, 550 South Hope Street, Los Angeles, California 90071, counsel to
Purchaser, at 10:00 a.m., local time, on February 29, 1996 or at such other
time, date, or place as the Corporation and Purchaser shall
<PAGE> 6
mutually agree (which time, date, and place are referred to in this Agreement
as the "Closing Date").
2.3 Conditions for Closing. Purchaser's obligation to
purchase the Notes on the Closing Date shall be subject to the performance by
the Corporation of its agreements hereunder that by the terms hereof are to be
performed at or prior to the time of delivery of the Notes and to the following
further conditions precedent:
(i) Closing Date. The Closing Date shall
occur on or before February 29, 1996;
(ii) Closing Certificate. Purchaser shall have
received a certificate dated the Closing Date, signed by the President
or a Vice President of the Corporation, to the effect that: (i) the
representations and warranties of the Corporation set forth in
Sections 4.1 through 4.22 are true and correct in all material
respects on and with respect to the Closing Date; (ii) the Corporation
has performed all of its obligations hereunder that are to be
performed on or prior to the Closing Date; and (iii) no Unmatured
Event of Default or Event of Default has occurred and is continuing;
(iii) Legality. The Notes shall qualify as a
legal investment for Purchaser under the laws and regulations of each
jurisdiction to which Purchaser is subject (without reference to any
so-called "basket" provision which permits the making of an investment
without restrictions to the character of the particular investment
being made) and the purchase of and payment for the Notes shall not be
prohibited by any applicable law or governmental regulation.
(iv) Satisfactory Proceedings. All corporate
proceedings taken in connection with the transactions contemplated by
this Agreement, and all documents necessary to the consummation
thereof, shall be satisfactory in form and substance to Purchaser and
special counsel to Purchaser, and Purchaser shall have received a copy
(executed or certified as may be appropriate) of all documents or
corporate proceedings taken in connection with the consummation of
said transactions, including the following:
a. Certified copies of the
Certificate of Incorporation and By-laws of the Corporation;
b. Certified copies of resolutions
of the Board of Directors of the Corporation authorizing the
execution, delivery, and performance of the Transaction
Documents, and any other documents provided for in this
Agreement; and
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<PAGE> 7
c. A certificate of the Secretary of
the Corporation certifying the names of the officer or
officers of the Corporation authorized to sign the Transaction
Documents and any other documents provided for in this
Agreement, together with a sample of the true signature of
each such officer;
(v) Legal Opinion. Purchaser shall have
received from Stokes & Bartholomew, counsel to the Corporation, an
opinion letter dated the Closing Date, in form and substance
satisfactory to Purchaser and its counsel, and covering the matters
set forth in Exhibit L-1 hereto;
(vi) Issuance of the Notes. The Corporation
shall have executed and delivered the Notes to Purchaser or its
nominee;
(vii) Registration Rights Agreement. The
Corporation and Purchaser shall have entered into a registration
rights agreement in the form of Exhibit R-1 hereto (the "Registration
Rights Agreement");
(viii) Arrangement Fee. The Corporation shall
pay to Purchaser an arrangement fee of $450,000 (net of $225,000
previously paid to Purchaser) by wire transfer of immediately
available funds;
(ix) No Material Adverse Change. No material
adverse change in the business, condition, or operations (financial or
otherwise) of the Corporation and its Subsidiaries taken as a whole
from that set forth in the balance sheet as of September 30, 1995,
included in the SEC Reports, other than changes disclosed to Purchaser
in writing prior to the execution and delivery by Purchaser of this
Agreement, shall have occurred;
(x) Approvals and Consents. The Corporation
shall have duly received all authorizations, consents, approvals,
licenses, franchises, permits, and certificates by or of all federal,
state, and local governmental authorities necessary for the issuance
of the Notes;
(xi) Payment of Legal Fees. The Corporation
shall have reimbursed Purchaser in full for the fees and expenses of
its counsel, Brobeck, Phleger & Harrison LLP, incurred in connection
with the preparation, negotiation, and execution of the Transaction
Documents, and any other documents executed in connection herewith;
(xii) Representations and Warranties. The
representations and warranties of the Corporation contained in this
Agreement shall be true and correct in all respects on and as of the
Closing Date, as though made on and as of such date
-3-
<PAGE> 8
(except to the extent that such representations and warranties relate
solely to an earlier date);
(xiii) Events of Default. No Unmatured Event of
Default or Event of Default shall have occurred and be continuing on
the Closing Date, nor shall either result from the purchase and sale
of the Notes; and
(xiv) VCOC Letter. The Corporation shall have
executed and delivered to Purchaser a counterpart of the VCOC Letter.
2.4 Waiver of Conditions. If, on the Closing Date, the
Corporation fails to deliver the Notes to Purchaser or if any of the other
conditions specified in Section 2.3 have not been satisfied, Purchaser shall be
relieved of all further obligations under this Agreement. Without limiting the
foregoing, if the conditions specified in Section 2.3 have not been satisfied,
Purchaser may waive compliance by the Corporation with any such condition to
such extent as it may in its sole discretion determine. Nothing in this
Section 2.4 shall operate to relieve the Corporation of any of its obligations
hereunder or to waive any of Purchaser's rights against the Corporation
occasioned by any such breach.
3. DEFINITIONS; CONSTRUCTION.
3.1 Definitions. For purposes of this Agreement,
the following terms shall have the following meanings:
"Affiliate" has the meaning set forth in Rule 12b-2 under the
Exchange Act (as in effect on the date of this Agreement), it being understood
that any limited partner of a partnership shall not be an Affiliate of such
partnership solely by virtue of its status as such a limited partner.
"Agreement" shall have the meaning ascribed thereto in the
preamble.
"Business Day" means each Monday, Tuesday, Wednesday,
Thursday, or Friday that is not a day on which banking institutions in Los
Angeles, California are authorized or obligated by law or executive order to
close.
"Capital Lease" means as to any Person any lease or rental of
real or personal property that, under generally accepted accounting principles,
is or will be required to be capitalized on the balance sheet of such Person.
"Capital Lease Obligation" means any rental obligation in
respect of a Capital Lease taken at the amount thereof accounted for as
indebtedness (net of interest expense) in accordance with generally accepted
accounting principles.
"Closing Date" shall have the meaning ascribed thereto in Section 2.2 hereof.
-4-
<PAGE> 9
"Code" means the Internal Revenue Code of 1986, or any
successor statute thereto, as the same may be amended from time to time.
"Commission" means the United States Securities and Exchange Commission.
"Common Stock" means the common stock of the Corporation, par
value $l.00 per share.
"Concept" means Concept Incorporated, a Delaware corporation.
"Concept Acquisition" means the acquisition by the Corporation
of Concept pursuant to the terms and conditions of the Concept Share Exchange
Agreement.
"Concept Acquired Indebtedness" means Funded Debt of Concept
existing immediately prior to the consummation of the Concept Acquisition;
provided, however, that the foregoing shall not include the United Concept
Partnership Funded Debt.
"Concept Share Exchange Agreement" means a share exchange
agreement, containing such terms and conditions reasonably acceptable to
Purchaser, involving the exchange of shares between the Corporation and the
stockholders of Concept.
"Confidential Information" shall have the meaning ascribed
thereto in Section 9.1 hereof.
"Consolidated Fixed Charge Coverage" means at the end of any
fiscal quarter the quotient of (a) twice the Consolidated Operating Cash Flow
for such fiscal quarter and the immediately preceding fiscal quarter, divided
by (b) Consolidated Fixed Charges for the next succeeding four fiscal quarters.
"Consolidated Fixed Charges" means, for any period, the sum of
Consolidated Rentals and Consolidated Interest Expense for such period. In the
event that Consolidated Fixed Charges are to be determined for any future
period or periods and any component of Consolidated Rentals or Consolidated
Interest Expense may fluctuate or is determined on the basis of a rate or
criterion that may fluctuate during such period, Consolidated Rentals or
Consolidated Interest Expense, as the case may be, shall be calculated assuming
that such amount, rate, or criterion in effect on the date such calculation is
made shall be in effect throughout such period.
"Consolidated Interest Expense" means, for any period, total
interest, whether paid or accrued (including that attributable to Capital
Leases), of the Corporation and the Restricted Subsidiaries on a consolidated
basis, including all amounts payable on the First Mortgage Notes and all
commissions, discounts, and other fees and charges owed with respect to letters
of credit and banker's acceptance financing and net costs under interest
-5-
<PAGE> 10
rate exchange or cap agreements providing interest rate protection, all as
determined in conformity with generally accepted accounting principles.
"Consolidated Net Income" means, for any period, the net
earnings (or losses) of the Corporation and the Restricted Subsidiaries, on a
consolidated basis, for such period taken as a single accounting period
determined in conformity with generally accepted accounting principles
consistently applied, but excluding:
a. any gain that under generally accepted accounting
principles consistently applied would be properly classified
as an extraordinary gain;
b. any gain arising from a sale of capital assets that
is not made in the ordinary course of business of the
Corporation or its Restricted Subsidiaries;
c. any gain arising from any write-up of assets;
d. the proceeds of any life insurance policy;
e. earnings of any Person substantially all of the
assets of that have been acquired in any manner (whether
through merger or otherwise) to the extent that such earnings
were realized prior to the date of such acquisition; and
f. earnings of any Person to which substantially all the
assets of the Corporation shall have been sold or transferred,
into which the Corporation shall have been merged, or with
which the Corporation shall have been consolidated, to the
extent that such earnings were realized prior to the date of
such transfer, merger, or consolidation.
All losses (including any loss that, under generally accepted accounting
principles consistently applied, would be properly classified as an
extraordinary loss) shall be included in determining such net earnings (or
losses).
"Consolidated Net Worth" means, as of the time of any
determination thereof, the excess of (a) the sum of (i) the par value (or value
stated on the books of the Corporation) of the capital stock of all classes of
the Corporation, plus (or minus in the case of surplus deficit) (ii) the amount
of consolidated surplus, whether capital or earned, of the Corporation and the
Restricted Subsidiaries, plus (iii) the face amount of the Subordinated Funded
Debt, over (b) the amount of all treasury stock; all determined on a
consolidated basis for the Corporation and the Restricted Subsidiaries in
accordance with generally accepted accounting principles consistent with those
followed in the preparation of the financial statements referred to in Section
4.5, including the making of appropriate deductions for minority interests, if
any, in the Restricted Subsidiaries.
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"Consolidated Operating Cash Flow" means for any period,
without duplication, (a) Consolidated Net Income plus (b) to the extent
deducted in computing Consolidated Net Income, depreciation and amortization
and other similar non-cash charges, accrued income tax expense, and interest
expense of the Corporation and the Restricted Subsidiaries for such period.
"Consolidated Rentals" means, for any period, all amounts
payable by the Corporation and any Restricted Subsidiary as lessee or sublessee
relating to Operating Leases.
"Consolidated Senior Funded Debt" means all Funded Debt other
than Subordinated Funded Debt.
"Consolidated Total Capitalization" means, as of the time of
any determination thereof, the sum of Consolidated Senior Funded Debt and
Consolidated Net Worth.
"Conversion Shares" means the shares of Common Stock issuable
upon conversion of the indebtedness evidenced by the Notes.
"Convertible Notes" means the Corporation's (a) $7,000,000
aggregate principal amount 8.5% Convertible Subordinated Notes due November 7,
1999, (b) $7,500,000 aggregate principal amount 8.5% Convertible, Extended,
Subordinated Notes due on September 30, 1998 or, if extended, on various dates,
the latest of which is September 30, 2000, (c) option to purchase the Floating
Rate Notes, and (d) the Floating Rate Notes when issued.
"Corporation" shall have the meaning ascribed thereto in the
preamble to this Agreement and shall include the Corporation's permitted
successors and assigns.
"Coupon Rate" means seven and one-half percent (7.5%) per annum.
"Eloy Facility" means the Bureau of Prisons facility that is
located in Eloy, Arizona and owned by United Concept Partnership.
"ERISA" means the Employee Retirement Income Security Act of 1974.
"Event of Default" shall have the meaning set forth in Section 7.1.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
Reference to a particular section of the Exchange Act shall include reference
to the comparable section, if any, of any successor federal statute.
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"Federal Government Contract" means a contract between the
Corporation and the federal government of the United States of America or any
subdivision or agency thereof.
"Floating Rate Notes" shall have the meaning set forth in the
Sodexho Agreement.
"Foreign Government Contract" means a contract between the
Corporation and any foreign (other nation) government or any subdivision or
agency thereof.
"First Mortgage Note Purchase Agreement" means the Note
Purchase Agreement dated as of December 6, 1990, as amended, between the
Corporation and the purchasers of the First Mortgage Notes listed therein.
"First Mortgage Notes" means the Corporation's $20,000,000
aggregate principal amount of 11.08% first mortgage notes due November 30, 2000
issued pursuant to the First Mortgage Note Purchase Agreement.
"Funded Debt" means and includes without duplication (a) any
obligation payable more than one year from the date of the creation thereof
(including the current portion of Funded Debt), that under generally accepted
accounting principles is shown on the balance sheet as a liability (including
obligations under Capital Leases and excluding reserves for deferred income
taxes and other reserves to the extent that such reserves do not constitute an
obligation), (b) guarantees, endorsements (other than endorsements of
negotiable instruments for collection in the ordinary course of business), and
other contingent liabilities (whether direct or indirect) in connection with
the obligations, stock, or dividends of any Person, including obligations under
contracts to supply funds to or in any other manner invest in any Person, (c)
obligations under any contract to purchase, sell, or lease (as lessee or
lessor) property or to purchase or sell services, primarily for the purpose of
enabling a Person to make payment of obligations or to assure the holder of
such obligations against loss including obligations under any contract for the
purchase of materials, supplies, or other property or services if such contract
(or any related document) requires that payment for such materials, supplies,
or other property or services shall be made regardless of whether delivery of
such materials, supplies, or other property or services is ever made or
tendered, (d) obligations under any contract to pay or purchase obligations of
a Person, or to advance or supply funds for the payment or purchase of such
obligations, and (e) any agreement to assure a creditor of a Person against
loss. For all purposes of this Agreement (other than for purposes of
calculating United Concept Partnership Funded Debt), all United Concept
Partnership Funded Debt shall be deemed to constitute "Funded Debt."
"Government Contract" means any Federal Government Contract,
Foreign Government Contract, or any State Government Contract.
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"indemnified party" shall have the meaning ascribed thereto in
Section 10.1 hereof.
"indemnifying party" shall have the meaning ascribed thereto
in Section 10.1 hereof.
"Margin Stock" shall have the meaning given such term in
Regulation G (12 CFR part 207) of the Board of Governors of the Federal Reserve
System.
"Notes" shall have the meaning ascribed thereto in Section 1
hereof.
"Operating Lease" means any lease of real, personal, or mixed
property that is not a Capital Lease.
"Permitted Businesses" means the design, construction,
ownership, start up, management, or operation of detention and correctional
facilities, and the operation of services involving the transportation and
extradition of prisoners, together with associated consulting and educational
services.
"Person" means any individual, partnership, joint venture,
corporation, trust, unincorporated organization, government, or department or
agency of a government.
"PMI" shall have the meaning ascribed thereto in the preamble
to this Agreement.
"Purchaser" shall mean PMI and shall include PMI's permitted
successors and assigns.
"Registration Rights Agreement" shall have the meaning
ascribed thereto in Section 2.3(vii) hereof.
"Representative" shall have the meaning ascribed thereto in
Section 7.1 hereof.
"Restricted Subsidiary" means a Subsidiary of the Corporation
that is (a) organized under the laws of any state of the United States of
America and at least 80% of the total combined voting power of all classes of
Voting Stock shall at the time as of which any determination is being made, be
owned by the Corporation either directly or through any Restricted Subsidiary,
(b) engaged in a Permitted Business, and (c) whose assets and operations are
located within the United States of America.
"Security" or "Securities" means the Notes or the Conversion
Shares.
"SEC Reports" shall have the meaning ascribed thereto in Section 4.4 hereof.
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"Securities Act" means the Securities Act of 1933.
"Senior Indebtedness" shall have the meaning ascribed to such
term in the Notes.
"Sodexho Agreement" means that certain Securities Purchase
Agreement, dated as of June 23, 1994, between Sodexho S.A., a French
corporation, or its designee and the Corporation, as amended by that certain
Amendment No. 1 to Securities Purchase Agreement, dated as of July 11, 1995.
"State Government Contract" means a contract between the
Corporation or any of its Subsidiaries and the government of any state, county,
or municipality or any political subdivision or agency thereof.
"Subordinated Funded Debt" means the indebtedness of the
Corporation evidenced by the Convertible Notes and the Notes.
"Subsidiary" means any corporation, partnership, or other
entity of which a majority of the total combined voting power of all classes of
Voting Stock at the time as of which any determination is being made, is owned
by a Person either directly, through one or more Subsidiaries, or both.
"Transaction Documents" means this Agreement, the Notes, the
Registration Rights Agreement, and the VCOC Letter.
"Transfer" shall have the meaning ascribed thereto in Section 8.4 hereof.
"Triggering Event" means the occurrence of any Unmatured Event
of Default of Event of Default described in clauses (i), (ii), and (iv) through
(x), inclusive, of Section 7.1. For purposes of determining the period during
which the Triggering Event Rate shall be in effect, a Triggering Event shall
not be deemed to have occurred until the date on which Purchaser shall have
given notice of the occurrence thereof to the Corporation.
"Triggering Event Rate" means nine and one-half percent (9.5%) per annum.
"UCI" means United Concept, Inc., a Delaware corporation, one
hundred percent (100%) of the issued and outstanding common stock of which is
owned by Concept.
"United Concept Partnership" means United Concept Limited
Partnership, a Delaware limited partnership of which UCI is the managing
general partner.
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"United Concept Partnership Funded Debt" means (a) the
approximately $30,000,000 of indebtedness of United Concept Partnership that is
secured by a first mortgage lien upon the Eloy Facility, and (b) any and all
other indebtedness of United Concept Partnership that constitutes Funded Debt
(without giving effect to the last sentence of such definition).
"Unmatured Event of Default" shall mean any event or
condition, the occurrence of which would, with the lapse of time or the giving
of notice, or both, constitute an Event of Default.
"VCOC Letter" means a letter agreement between the Corporation
and Purchaser that meets the Venture Capital Operating Company requirements and
that is in form and substance satisfactory to Purchaser.
"Voting Stock" means, when used with respect to any Person,
any shares of stock or other ownership interests of such Person having general
voting power under ordinary circumstances to elect a majority of the board of
directors of such Person (irrespective of whether at the time stock or
ownership interests of any other class or classes shall have or might have
voting power by reason of the happening of any contingency).
3.2 Construction. Unless the context of this
Agreement clearly requires otherwise, references to the plural include the
singular and to the singular include the plural, the part includes the whole,
the terms "include" and "including" are not limiting, and the term "or" has,
except where otherwise indicated, the inclusive meaning represented by the
phrase "and/or". The words "hereof," "herein," "hereby," "hereunder" and
similar terms in this Agreement refer to this Agreement as a whole and not to
any particular provision of this Agreement. Section, subsection, clause,
exhibit, and schedule references are to this Agreement unless otherwise
specified. Any reference herein to the Transaction Documents includes any and
all alterations, amendments, changes, extensions, modifications, renewals, or
supplements thereto or thereof, as applicable.
3.3 Changes in Accounting Principles. If any changes in
accounting principles from those in effect at the time of preparation of the
financial statements referred to in Section 4.5 are hereafter occasioned by the
promulgation of rules, regulations, pronouncements, and opinions by or required
by the Financial Accounting Standards Board or the American Institute of
Certified Public Accountants (or successors thereto or organizations with
similar functions) result in a change in the method of calculation of financial
covenants, standards, or terms found in this Agreement or there is any change
in the Corporation's fiscal quarters or fiscal year, the parties hereto agree
to enter into negotiations to amend this Agreement so as to equitably reflect
such changes with the desired result that the criteria for evaluating the
financial condition of the Corporation shall be the same after such changes as
if such changes had not been made.
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4. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION. The
Corporation represents and warrants to Purchaser, as of the date hereof and as
of the Closing Date, that:
4.1 Organization and Qualification. Each of
the Corporation and its Subsidiaries is a corporation duly organized
and existing in good standing under the laws of the jurisdiction in
which it is incorporated and has the power to own its respective
property and to carry on its respective business as now being
conducted. Each of the Corporation and its Subsidiaries is duly
qualified as a foreign corporation to do business and in good standing
in every jurisdiction in which the nature of the respective business
conducted or property owned by it makes such qualification necessary
and where the failure so to qualify would have a material adverse
effect on the business or financial position of the Corporation and
its Subsidiaries taken as a whole.
4.2 Due Authorization. The execution and
delivery of this Agreement, the Registration Rights Agreement, and the
other Transaction Documents, and the issuance and sale of the Notes
and the Conversion Shares by the Corporation and compliance by the
Corporation with all the provisions of the Transaction Documents and
the Conversion Shares (i) are within the corporate power and authority
of the Corporation; (ii) do not require the approval or consent of any
stockholders of the Corporation; and (iii) have been authorized by all
requisite corporate proceedings on the part of the Corporation. The
Transaction Documents have been duly executed and delivered by the
Corporation and constitute valid and binding agreements of the
Corporation enforceable in accordance with their respective terms,
except that (i) such enforcement may be subject to bankruptcy,
insolvency, reorganization, moratorium, or other similar laws now or
hereafter in effect relating to creditors rights, and (ii) the remedy
of specific performance and injunctive and other form of equitable
relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought. The
Corporation has furnished to Purchaser true and correct copies of the
Corporation's current Certificate of Incorporation and By-laws.
4.3 Subsidiaries. The Subsidiaries of the
Corporation, together with their jurisdiction of incorporation, are
set forth on Schedule 4.3 hereto.
4.4 SEC Reports. The Corporation has filed
all proxy statements, reports, and other documents required to be
filed by it under the Exchange Act and the Corporation has furnished
Purchaser copies of its Annual Report on Form 10-K for the fiscal year
ended December 31, 1994, and all proxy statements and reports under
the Exchange Act filed by the Corporation after such date, each as
filed with the Commission (collectively, the "SEC Reports"). Each SEC
Report was in substantial compliance with the requirements of its
respective report form and did not, on the date of filing, contain any
untrue statement of a
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<PAGE> 17
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
4.5 Financial Statements. The financial
statements (including any related schedules or notes) included in the
SEC Reports have been prepared in accordance with generally accepted
accounting principles consistently followed (except as indicated in
the notes thereto) throughout the periods involved and fairly present
the consolidated financial condition, results of operations, and
changes in stockholders' equity of the Corporation and its
Subsidiaries as of the dates thereof and for the periods ended on such
dates (in each case subject, as to interim statements, to changes
resulting from year-end adjustments (none of which will be material in
amount or effect)), and the Corporation has no material liabilities,
contingent or otherwise, not reflected in the balance sheet as of
September 30, 1995 included in the SEC Reports or otherwise referred
to in the SEC Reports or otherwise disclosed to Purchaser in writing
prior to the execution by Purchaser of this Agreement, other than any
such liabilities incurred in the ordinary course of business since
September 30, 1995. There has been no material adverse change in the
business, condition, or operations (financial or otherwise) of the
Corporation and its Subsidiaries taken as a whole from that set forth
in the balance sheet as of September 30, 1995 included in the SEC
Reports, other than changes disclosed or referred to in the SEC
Reports, or otherwise disclosed to Purchaser in writing prior to the
execution by Purchaser of this Agreement.
4.6 Actions Pending; Compliance with Law.
Except as disclosed on Schedule 4.6 hereto, there is no action, suit,
criminal investigation, or proceeding pending or, to the knowledge of
the Corporation, threatened by any public official or governmental
authority, against the Corporation or any of its Subsidiaries or any
of their respective properties or assets by or before any court,
arbitrator, or governmental body, department, commission, board,
bureau, agency, or instrumentality, which questions the validity of
the Transaction Documents or the Conversion Shares or any action taken
or to be taken pursuant hereto or thereto, or, except as set forth in
the SEC Reports, that are reasonably likely to result in any material
adverse change in the business or financial condition of the
Corporation, and neither the Corporation nor any of its Subsidiaries
is in default in any material respect with respect to any judgment,
order, writ, injunction, decree, or award, and, except as disclosed in
the SEC Reports, the businesses of the Corporation and its
Subsidiaries are in compliance in all material respects with
applicable federal, state, local, and foreign governmental laws and
regulations and all Government Contracts, all to the extent necessary
to avoid any material adverse effect on the business, properties, or
condition (financial or otherwise) of the Corporation and its
Subsidiaries, taken as a whole.
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<PAGE> 18
4.7 Title to Properties; Insurance. The
Corporation and its Subsidiaries have good and valid title to their
respective properties and assets, free of all liens and encumbrances
other than those referred to in the financial statements of the
Corporation (or the notes thereto) for the quarter ended September 30,
1995, included in the SEC Reports, except in each case for such
defects in title and such other liens and encumbrances that are
otherwise disclosed or referred to in the SEC Reports or that do not
in the aggregate materially detract from the value to the Corporation
of the properties and assets of the Corporation and its Subsidiaries
taken as a whole. The Corporation and its Subsidiaries maintain
insurance in such amounts (to the extent available in the public
market), including self-insurance, retainage, and deductible
arrangements, and of such a character as the Corporation believes is
reasonable for companies engaged in the same or similar business.
4.8 Governmental Consents, Etc. The
Corporation is not required to obtain any consent, approval, or
authorization of, or to make any declaration or filing with, any
governmental authority as a condition to or in connection with the
valid execution, delivery, and performance of the Transaction
Documents and the valid offer, issue, sale, or delivery of the Notes
or the Conversion Shares, or the performance by the Corporation of its
obligations in respect thereof, except for any filings required to
effect any registration pursuant to the Registration Rights Agreement,
and filings required pursuant to state and federal securities laws
that will be timely made after the Closing Date.
4.9 Holding Corporation Act and Investment
Corporation Act Status. The Corporation is not a "holding company" or
a "public utility company" as such terms are defined in the Public
Utility Holding Corporation Act of 1935. The Corporation is not an
"investment company," or a company "controlled" by an "investment
company," within the meaning of the Investment Corporation Act of
1940.
4.10 Taxes. The Corporation and its
Subsidiaries have filed or caused to be filed all income tax returns
that are required to be filed and have paid or caused to be paid all
taxes as shown on said returns and on all assessments received by it
to the extent that such taxes have become due, except taxes the
validity or amount of which is being contested in good faith by
appropriate proceedings and with respect to which adequate reserves
have been set aside. The federal income tax returns of the
Corporation and its Subsidiaries have been examined and reported on by
the Internal Revenue Service (or closed by applicable statutes) and
all tax liabilities including additional assessments have been
satisfied for all fiscal years prior to and including the fiscal year
ended December 31, 1991. The Corporation and its Subsidiaries have
paid or caused to be paid, or have established reserves that the
Corporation reasonably believes to be adequate in all material
respects, for all federal income tax liabilities and state income tax
liabilities applicable to the Corporation and its Subsidiaries for all
fiscal years that have not
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<PAGE> 19
been examined and reported on by the taxing authorities (or closed by
applicable statutes).
4.11 Conflicting Agreements and Charter
Provisions. Neither the Corporation nor its Subsidiaries is a party
to any contract or agreement or subject to any charter or other
corporate restriction that materially and adversely affects its
business, property, or assets or financial condition. Except as set
forth on Schedule 4.11 attached hereto, neither the execution and
delivery of the Transaction Documents nor the issuance of the
Conversion Shares nor fulfillment of or compliance with the terms and
provisions hereof or thereof or the prepayment of the Notes as
contemplated hereby and by the Notes, and the conversion of the
indebtedness evidenced by the Notes into the Conversion Shares as
contemplated hereby and by the Notes will conflict with or result in a
breach of the terms, conditions, or provisions of, or give rise to a
right of termination under, or constitute a default under, or result
in any violation of, the Certificate of Incorporation or By-laws of
the Corporation or any mortgage, agreement, instrument, order,
judgment, decree, statute, law, rule, or regulations to which the
Corporation or any of its Subsidiaries or any of their respective
properties is subject. Neither the Corporation nor any of its
Subsidiaries is in default under any outstanding indenture or other
debt instrument or with respect to the payment of the principal of or
interest on any outstanding obligations for borrowed money, or is in
default under any of their respective contracts or agreements, or
under any instrument by which the Corporation or any of its
Subsidiaries is bound, in each case that materially and adversely
affects the business, operations, or financial condition of the
Corporation and its Subsidiaries, taken as a whole.
4.12 Capitalization. The authorized capital
stock of the Corporation consists of (i) 50,000,000 shares of Common
Stock, of which, as of the date hereof, 33,069,252 shares are
outstanding and 50,475 shares are held in its treasury; and (ii)
1,000,000 shares of preferred stock, $1.00 par value, of which, as of
the date hereof, no shares are outstanding; all of such outstanding
shares have been validly issued and are fully paid and nonassessable.
Except as set forth on Schedule 4.12 hereto, no shares of Common Stock
of the Corporation are entitled to preemptive rights. Except for the
options and warrants listed on Schedule 4.12 hereto and except for the
Convertible Notes, there are no outstanding options, warrants, scrip,
rights to subscribe to, calls, or commitments of any character
whatsoever relating to, or securities or rights convertible into,
shares of any capital stock of the Corporation, or contracts,
commitments, understandings, or arrangements by which the Corporation
is or may become bound to issue additional shares of its capital
stock. Since September 30, 1995, the Corporation has not changed the
amount of its authorized capital stock or subdivided or otherwise
changed any shares of any class of its capital stock, whether by way
of reclassification, recapitalization, stock split, or otherwise, or
issued or reissued, or agreed to issue or reissue, any of its capital
stock, except as disclosed in this Section
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4.12 and has not since such date declared or paid any dividend in cash
or stock or made any other distribution of assets to its stockholders.
4.13 Disclosure. Neither this Agreement nor
the SEC Reports nor the financial statements included in the SEC
Reports nor any certificate or written disclosure statement referred
to herein and furnished to Purchaser by or on behalf of the
Corporation in connection with the transactions contemplated hereby
contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained
herein and therein not misleading. There is no fact peculiar to the
Corporation or any of its Subsidiaries that the Corporation has not
disclosed to Purchaser in writing that materially affects adversely
or, so far as the Corporation can now reasonably foresee, will
materially affect adversely the properties, business, or condition
(financial or otherwise) of the Corporation and its Subsidiaries,
taken as a whole, or the ability of the Corporation to perform this
Agreement, the Notes, the Registration Rights Agreement, or its
obligations in respect of the Conversion Shares.
4.14 Status of Conversion Shares. The
Conversion Shares have been duly authorized by all necessary corporate
action on the part of the Corporation (no consent or approval of
stockholders being required by law, the Certificate of Incorporation
or the By-laws of the Corporation, or otherwise), and such shares of
Common Stock have been validly reserved for issuance, and upon
issuance, will be validly issued and outstanding, fully paid, and
nonassessable.
4.15 Registration Under Exchange Act. The
Conversion Shares will not be registered as a class pursuant to
Section 12 of the Exchange Act and such registration is not required
except as otherwise required by the provisions of the Registration
Rights Agreement.
4.16 ERISA. No accumulated funding deficiency
(as defined in Section 302 of ERISA and Section 412 of the Code),
irrespective of whether waived, exists with respect to any Plan (as
defined below) (other than a Multiemployer Plan (as defined below)).
No liability to the Pension Benefit Guaranty Corporation has been
incurred with respect to any Plan (other than a Multiemployer Plan) by
the Corporation or any of its Subsidiaries that is or would be
materially adverse to the Corporation and its Subsidiaries, taken as a
whole. Neither the Corporation nor any of its Subsidiaries has
incurred any withdrawal liability under Title IV of ERISA with respect
to any Multiemployer Plan that is or would be materially adverse to
the Corporation and its Subsidiaries, taken as a whole. The execution
and delivery of this Agreement and the Registration Rights Agreement
and the issuance and sale of the Notes and the conversion of the
indebtedness evidenced by the Notes into the Conversion Shares will
not involve any transaction that is subject to the prohibitions of
Section 406 of ERISA or in connection with which a tax could be
imposed pursuant to Section 4975 of the Code.
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The representation by the Corporation in the immediately preceding
sentence is made in reliance upon and subject to the accuracy of
Purchaser's representation in Section 5.3 as to the source of the
funds to be used to pay the purchase price of the Conversion Shares.
As used in this Section 4.16, the term "Plan" shall mean an "employee
pension benefit plan" (as defined in Section 3(2) of ERISA) that is or
has been established or maintained, or to which contributions are or
have been made, by the Corporation or by any trade or business,
irrespective of whether incorporated, that, together with the
Corporation, is under common control, as described in Section 414(b)
or (c) of the Code, and the term "Multiemployer Plan" shall mean any
Plan that is a "multiemployer plan" (as such term is defined in
Section 4001 (a) (3) of ERISA).
4.17 Possession of Franchises, Licenses, Etc.
The Corporation and its Subsidiaries possess all franchises,
certificates, licenses, permits, and other authorizations from
governmental or political subdivisions or regulatory authorities and
all patents, trademarks, service marks, trade names, copyrights,
licenses, and other rights, free from burdensome restrictions, that
are necessary in any material respect to the Corporation and its
Subsidiaries, taken as a whole for the ownership, maintenance, and
operation of their respective properties and assets, and neither the
Corporation nor any of its Subsidiaries is in violation of any thereof
in any material respect.
4.18 Environmental and Other Regulations. The
Corporation and its Subsidiaries are in compliance in all material
respects with all laws and regulations, including those relating to
environmental control, equal employment opportunity, and employee
safety, in all jurisdictions in which the Corporation and its
Subsidiaries are presently doing business and where the failure to
effect such compliance would have a material adverse effect on the
business, operations, or financial condition of the Corporation and
its Subsidiaries, taken as a whole.
4.19 Offering of Securities. Neither the
Corporation nor any Person acting on its behalf has offered the
Securities or any similar securities of the Corporation for sale to,
solicited any offers to buy the Securities or any similar securities
of the Corporation from, or otherwise approached or negotiated with
respect to the Corporation with any Person other than Purchaser and a
limited number of other "accredited investors" (as defined in Rule
501(a) under the Securities Act). Neither the Corporation nor any
Person acting on its behalf has taken or will take any action
(including any offering of any securities of the Corporation under
circumstances that would require the integration of such offering with
the offering of the Securities under the Securities Act and the rules
and regulations of the Commission thereunder) that might subject the
offering, issuance, or sale of the Securities to the registration
requirements of Section 5 of the Securities Act.
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4.20 Brokers or Finders. No agent, broker,
investment banker, or other firm or Person is or will be entitled to
any broker's fee or any other commission or similar fee as a result of
the activities of the Corporation or its Subsidiaries, agents, or
employees undertaken in connection with any of the transactions
contemplated by this Agreement or the Registration Rights Agreement.
4.21 Offering of Notes. Neither the
Corporation nor, to the best knowledge of the Corporation, any person
authorized to act on behalf of the Corporation has taken or will take
any action that would subject the issuance or sale of the Notes to the
provisions of Section 5 of the Securities Act or violate the
provisions of any securities, "blue sky", or similar law of any
applicable jurisdiction.
4.22 Regulations G, T, U, and X. Neither the
Corporation nor any of its Subsidiaries owns or has any present
intention of acquiring any Margin Stock. Neither the Corporation, any
of its Subsidiaries, nor any agent acting on its behalf has taken take
any action that might cause this Agreement to violate Regulations G,
T, U, or X or any other regulation of the Board of Governors of the
Federal Reserve System or to violate the Exchange Act.
5. REPRESENTATIONS AND WARRANTIES OF PURCHASER.
Purchaser represents and warrants to the Corporation, as of the date hereof and
as of the Closing Date, as follows:
5.1 Due Authorization. Purchaser has all
right, power, and authority to enter into the Transaction Documents to
which it is a party and to consummate the transactions contemplated
hereby and thereby. The execution and delivery by Purchaser of the
Transaction Documents to which it is a party and the consummation by
Purchaser of the transactions contemplated hereby and thereby have
been duly authorized by all necessary corporate action on behalf of
Purchaser. The Transaction Documents to which Purchaser is a party
have been duly executed and delivered by Purchaser and constitute
valid and binding agreements of Purchaser enforceable in accordance
with their terms, except that (i) such enforcement may be subject to
bankruptcy, insolvency, reorganization, moratorium, or other similar
laws now or hereafter in effect relating to creditors' rights, and
(ii) the remedy of specific performance and injunctive and other forms
of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be
brought.
5.2 Conflicting Agreements and Other Matters.
Neither the execution and delivery of the Transaction Documents to
which Purchaser is a party nor the performance by Purchaser of its
obligations hereunder or thereunder will conflict with, result in a
breach of the terms, conditions, or provisions of, constitute a
default under, result in the creation of any mortgage, security
interest,
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encumbrance, lien, or charge of any kind upon any of the properties or
assets of Purchaser pursuant to, or require any consent, approval, or
other action by or any notice to or filing with any court or
administrative or governmental body pursuant to the organizational
documents or agreements of Purchaser or any agreement, instrument,
order, judgment, decree, statute, law, rule, or regulation by which
Purchaser is bound, except, possibly, for filings after the Closing
Date, as applicable, under Section 13(d) of the Exchange Act.
5.3 Acquisition for Investment; Source of
Funds. PMI is acquiring the Notes (and its rights with respect to the
Conversion Shares) for its own account for the purpose of investment
and not with a view to or for sale in connection with any distribution
thereof, and PMI has no present intention or plan to effect any
distribution of the Conversion Shares. No portion of the funds to be
used by PMI to purchase the Notes, as of the Closing Date, are "plan
assets," within the meaning of 29 CFR Section 2510.3-101, of an
"employee benefit plan," as defined in Section 3(3) of ERISA, subject
to Part 4 of Title I of ERISA, or a "plan," as defined in Section
4975(e)(1) of the Code, subject to Section 4975 of the Code.
5.4 Brokers or Finders. No agent, broker,
investment banker, or other firm or Person is or will be entitled to
any broker's fee or any other commission or similar fee as a result of
the activities of Purchaser or its Subsidiaries, agents, or employees
undertaken in connection with any of the transactions contemplated by
this Agreement or the Registration Rights Agreement.
5.5 Accredited Investor. Purchaser is an
"accredited investor" within the meaning of Regulation D under the
Securities Act.
6. COVENANTS.
The Corporation covenants that so long as any amount due or to
become due under the Notes or this Agreement remains unpaid:
6.1 Financial Statements and Other Reports.
(i) it will, as soon as practicable
and in any event within 45 days after the end of each quarterly period
(other than the last quarterly period) in each fiscal year, furnish to
Purchaser statements of consolidated net income and cash flows and a
statement of changes in consolidated stockholders equity of the
Corporation and its Subsidiaries for the period from the beginning of
the then current fiscal year to the end of such quarterly period, and
a consolidated balance sheet of the Corporation and its Subsidiaries
as of the end of such quarterly period, setting forth in each case in
comparative form figures for the corresponding period or date in the
preceding fiscal year, all in reasonable detail and certified by an
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authorized financial officer of the Corporation, subject to changes
resulting from year-end adjustments; provided, however, that delivery
pursuant to clause (iii) below of a copy of the Quarterly Report on
Form 10-Q of the Corporation for such quarterly period filed with the
Commission shall be deemed to satisfy the requirements of this clause
(i);
(ii) it will, as soon as practicable
and in any event within 90 days after the end of each fiscal year,
furnish to Purchaser statements of consolidated net income and cash
flows and a statement of changes in consolidated stockholders' equity
of the Corporation and its Subsidiaries for such year, and a
consolidated balance sheet of the Corporation and its Subsidiaries as
of the end of such year, setting forth in each case in comparative
form the corresponding figures from the preceding fiscal year, all in
reasonable detail and examined and reported on by independent public
accountants of recognized standing selected by the Corporation;
provided, however, that delivery pursuant to clause (iii) below of a
copy of the Annual Report on Form 10-K of the Corporation for such
fiscal year filed with the Commission shall be deemed to satisfy the
requirements of this clause (ii);
(iii) it will, promptly upon transmission
thereof, furnish to Purchaser copies of all financial statements,
proxy statements, notices, and reports as it shall send to its
stockholders and copies of all registration statements (without
exhibits), other than registration statements relating to employee
benefit or dividend reinvestment plans, and all regular and periodic
reports as it shall file with the Commission; and
(iv) it will, with reasonable promptness,
furnish to Purchaser such other financial and other data of the
Corporation and its Subsidiaries as Purchaser may request, including
operating financial information for each facility owned or operated by
the Corporation or any of its Subsidiaries.
Together with each delivery of financial statements
required by clauses (i) and (ii) above, the Corporation will deliver
to Purchaser a certificate of an authorized financial officer of the
Corporation regarding compliance by the Corporation with the covenants
set forth in Sections 6.4., 6.5, and 6.6. At such other time or times
that the Corporation delivers a compliance certificate to any other
holder of Funded Debt, the Corporation will deliver such certificate,
and any supporting detail, to Purchaser.
6.2 Inspection of Property. The Corporation
will permit representatives of Purchaser to visit and inspect, at
Purchaser's expense, any of the properties of the Corporation and its
Subsidiaries, to examine the corporate books and make copies or
extracts therefrom and to discuss the affairs, finances, and accounts
of the Corporation and its Subsidiaries with the principal officers of
the
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Corporation, all at such reasonable times, upon reasonable notice, and
as often as Purchaser may reasonably request; provided, however, that
the foregoing shall be subject to compliance with reasonable safety
requirements and shall not require the Corporation or any of its
Subsidiaries to permit any inspection that, in the reasonable judgment
of the Corporation, would result in the violation of any statute or
regulation with respect to confidentiality or security. Purchaser
agrees that the information received pursuant to this Section 6.2 or
Section 6.1(iv) is subject to Section 9 hereof.
6.3 Use of Proceeds; Regulations G, T, U, and
X. All of the proceeds of the sale of the Notes will be used by the
Corporation for general corporate purposes. None of such proceeds
will be used, directly or indirectly, for the purpose of purchasing or
carrying any Margin Stock or for the purpose of reducing or retiring
any indebtedness that was originally incurred to purchase or carry
Margin Stock or for any other purpose that might constitute this
transaction a "purpose credit" within the meaning of Regulations G, T,
U, or X.
6.4 Consolidated Net Worth. The Corporation
will not permit Consolidated Net Worth at any time to be less than the
sum of (a) Ninety-Five Million Dollars ($95,000,000) at December 31,
1995, plus (b) an amount during each fiscal quarter thereafter equal
to the sum of (i) the amount of Consolidated Net Worth required
hereunder for the immediately preceding fiscal quarter, plus (ii) if
positive, fifty percent (50%) of Consolidated Net Income for such
immediately preceding fiscal quarter.
6.5 Consolidated Fixed Charges.
a. The Corporation shall not permit
Consolidated Fixed Charge Coverage to be less than (i) 2.00 as at the
end of any fiscal quarter occurring in 1996, (ii) 2.25 as at the end
of any fiscal quarter occurring in 1997, and (iii) 2.50 as at the end
of any fiscal quarter occurring thereafter.
b. The Corporation will not, and
will not permit any Restricted Subsidiary to, incur, assume, or suffer
to exist any obligation under Operating Leases or under any
transaction giving rise to Consolidated Interest Expense after the
Closing Date unless, after giving effect on a pro forma basis to such
obligation or transaction, the Corporation will be in compliance with
Section 6.5(a) (calculated as at the end of the most recently
completed fiscal quarter).
6.6 Consolidated Senior Funded Debt. The
Corporation will not permit Consolidated Senior Funded Debt to exceed
eighty percent (80%) of Consolidated Total Capitalization.
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6.7 Attendance at Board Meeting. The designee
of Purchaser (such individual to be identified to the Corporation in a
writing signed by Purchaser) shall have the right to attend all
meetings of the Board of Directors of the Corporation in a nonvoting
observer capacity, to receive notice of such meetings, and to receive
the information provided by the Corporation to the Board of Directors.
The Corporation agrees to provide Purchaser with at least fifteen (15)
days prior written notice of any proposed meeting of the Board of
Directors of the Corporation. The reasonable out-of-pocket costs and
expenses of any such individual attending a Board of Directors meeting
of the Corporation shall be reimbursed by the Corporation.
6.8 Compliance with Laws. The Corporation at
all times will, and will cause each of its Subsidiaries to, observe
and comply in all material respects with all laws (including
environmental laws applicable to the Corporation and its
Subsidiaries), ordinances, orders, judgments, rules, regulations,
certifications,franchises, permits, licenses, directions, and
requirements of all governmental authorities that are now and may at
any time be applicable to the Corporation or its Subsidiaries, a
violation of which could reasonably be expected to have a material
adverse effect on the business, assets, operations, prospects, or
condition (financial or otherwise) of the Corporation and its
Subsidiaries, taken as a whole, except such thereof as shall be
contested in good faith and by appropriate proceedings promptly
instituted and diligently conducted by the Corporation or its
Subsidiaries, as the case may be, so long as adequate reserves or
other appropriate provisions as shall be required in accordance with
generally accepted accounting principles shall have been made
therefor.
6.9 Maintenance of Properties; Insurance. The
Corporation will maintain and will cause its Subsidiaries to maintain
in good repair, working order, and condition (normal wear and tear
excepted) all properties used or useful in the business of the
Corporation and its Subsidiaries and from time to time will make or
cause to be made all appropriate repairs, renewals, and replacements
thereof. The Corporation will maintain and will cause its
Subsidiaries to maintain in full force and effect, with financially
sound and reputable insurers acceptable to Purchaser, insurance
(subject to customary deductibles and retentions) with respect to its
properties and business and the properties and business of its
Subsidiaries against hazards, contingencies, loss, or damage of the
kinds customarily insured against by corporations of established
reputation or similar size engaged in the same or similar business and
similarly situated, of such types and in such amounts as are
customarily carried under similar circumstances by such other
corporations; provided, however, in no event shall the coverage and
amount of such insurance be less than the coverage and amount of
insurance in force on the Closing Date. Without limiting the
generality of the foregoing, the Corporation will maintain (i) public
liability insurance against claims for personal injury, death, or
property damage occurring upon, in, about, or in connection with the
use of any property owned, occupied, or
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controlled by the Corporation or any of its Subsidiaries in an amount
per occurrence of at least $10,000,000, (ii) workers' compensation and
business interruption insurance covering loss of rents and builders'
all risk insurance, and (iii) such other insurance for the Corporation
and its Subsidiaries as may be required by law.
6.10 Performance of Government Contracts. The
Corporation will and will cause each of its Subsidiaries to perform
each and every term and condition of the Government Contracts relating
to the facilities owned or operated by the Corporation or such
Subsidiary and will not, and will not permit any Subsidiary to consent
to any termination, cancellation, or material amendment, modification,
or supplement to any Government Contract relating to the facilities
owned or operated by the Corporation or any of its Subsidiaries which
termination, cancellation, amendment, modification, or supplement
could reasonably be expected to have a material adverse effect on the
business, assets, operations, prospects, or condition (financial or
otherwise) of the Corporation and its Subsidiaries, taken as a whole.
6.11 Notice to Purchaser. When any Unmatured
Event of Default or Event of Default has occurred, the Corporation
agrees to give written notice thereof to Purchaser within three (3)
days of the Corporation's discovery of such event.
6.12 Waiver of Stay, Extension, or Usury Laws.
The Corporation covenants (to the extent that it may lawfully do so)
that it will not at any time insist upon, plead, or in any manner
whatsoever claim or take the benefit or advantage of any stay or
extension law or any usury law or other law which would prohibit or
forgive the Corporation from paying all or any portion of the
principal of, or interest, or premium, if any, on the Notes as
contemplated herein, wherever enacted, now or at any time hereafter in
force, or which may affect the covenants or the performance of this
Agreement; and (to the extent that it may lawfully do so) the
Corporation hereby expressly waives all benefit or advantage of any
such law, and covenants that it will not hinder, delay, or impede the
execution of any power herein granted to the holders of the Notes, but
will suffer and permit the execution of every such power as though no
such law had been enacted.
6.13 Conduct of Business. The Corporation will
not, and will not permit any of its Subsidiaries to, engage in any
business other than the construction and management of prisons and
other correctional facilities for governmental agencies, the ownership
and operation of a proprietary school, the operation of services
involving the transportation and extradition of prisoners, and other
businesses or activities substantially similar or related thereto.
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<PAGE> 28
6.14 Amendments or Waivers of Certain
Documents. The Corporation will not agree to any material amendment,
modification, supplement to, or waiver of any agreement related to the
Convertible Notes that would increase the interest rates thereof,
shorten the average maturities thereof, or alter financial covenants
contained therein in a manner that could be expected to be materially
adverse to the interests of Purchaser.
6.15 Limitation on Issuance of Other
Subordinated Indebtedness Senior to the Notes. The Corporation will
not create, incur, assume, guarantee, or in any other manner become
liable with respect to any indebtedness that is subordinate in right
of payment to any Senior Indebtedness unless such indebtedness is also
pari passu with, or subordinate pursuant to provisions substantially
similar to those contained in the Notes, in right of payment to the
Notes.
6.16 Limitation on Subsidiary Funded Debt. The
Corporation shall not permit any of its Subsidiaries to incur, create,
assume, or guarantee any Funded Debt (which shall be deemed to include
preferred stock issued by a Subsidiary of the Corporation that is not
held by the Corporation), unless, after giving effect thereto, (a) the
total amount of Funded Debt of the Corporation's Subsidiaries does not
exceed 10% of Consolidated Total Capitalization, and (b) the
Corporation would be entitled to incur at least $1.00 of additional
Consolidated Senior Funded Debt under Section 6.6. The foregoing to
the contrary notwithstanding, Concept shall be entitled to be
obligated with respect to (and there shall be excluded from the above
calculation) the United Concept Partnership Funded Debt and the
Concept Acquired Indebtedness, so long as the aggregate amount of
Funded Debt of the Corporation incurred, assumed, or acquired in
connection with the Concept Acquisition (inclusive of the United
Concept Partnership Funded Debt and the Concept Acquired Indebtedness
does not exceed Forty Million Dollars ($40,000,000).
7. EVENTS OF DEFAULT; REMEDIES THEREFOR.
7.1 Events of Default. Any one or more of the
following shall constitute an "Event of Default":
(i) default in the payment of any interest due
under the Notes when it becomes due and payable, and continuance of
such default for a period of ten (10) days; or
(ii) default in the payment of the principal of
the Notes when due (whether at scheduled maturity, as a result of a
mandatory prepayment requirement, by acceleration, or otherwise); or
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<PAGE> 29
(iii) default under any bond, debenture, note,
or other evidence of indebtedness for money borrowed in excess of
$100,000 by the Corporation or any of its Subsidiaries, whether such
indebtedness now exists or shall hereafter be created, which default
(i) shall consist of a failure to pay such indebtedness at final
maturity and after the expiration of any applicable grace period, or
(ii) shall have resulted in such indebtedness (A) becoming or being
declared due and payable prior to the date on which it would otherwise
have become due and payable, without such acceleration having been
rescinded or annulled, or (B) having been discharged within a period
of ten (10) days after there shall have been given, by registered or
certified mail, to the Corporation or such Subsidiary, as applicable,
by any holder of such indebtedness a written notice specifying such
default and requiring the Corporation or such Subsidiary, as
applicable, to cause such indebtedness to be discharged; or
(iv) default shall occur in the observance or
performance of any covenant or agreement or any other provision of
this Agreement or the Notes that is not remedied within twenty (20)
days after receipt by the Corporation of written notice of such
default from Purchaser;
(v) any representation or warranty made by the
Corporation herein, or made by the Corporation in any statement or
certificate furnished by the Corporation in connection with the
consummation of the issuance and delivery of the Notes or thereafter
pursuant to the terms of this Agreement, is untrue in any material
respect as of the date of the issuance or making thereof; or
(vi) a final judgment or judgments entered by a
court of competent jurisdiction for the payment of money aggregating
in excess of $1,000,000 is or are outstanding against the Corporation
or any of its Subsidiaries and any one such judgment in excess of
$1,000,000 has, or such judgments aggregating in excess of $1,000,000
have remained unpaid, unvacated, unbonded, or unstayed by appeal or
otherwise for a period of thirty (30) days from the date of entry; or
(vii) a court or other governmental authority or
agency having jurisdiction in the premises shall enter a decree or
order (a) for the appointment of a receiver, liquidator, assignee,
trustee, sequestrator, or other similar official of the Corporation or
any Subsidiary of the Corporation or of a material portion of the
assets of either, or for the winding-up or liquidation of its affairs,
and such decree or order shall remain in force, undischarged and
unstayed for a period of more than thirty (30) days, or (b) for the
sequestration or attachment of any material portion of the assets of
the Corporation or any Subsidiary of the Corporation, without its
unconditional return to the possession of the Corporation or such
Subsidiary, or its unconditional release from such sequestration or
attachment, within thirty (30) days thereafter; or
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(viii) the Corporation or any Subsidiary of the
Corporation makes an assignment for the benefit of creditors, or the
Corporation or any Subsidiary of the Corporation applies for or
consents to the appointment of a custodian, liquidator, trustee, or
receiver for the Corporation or such Subsidiary or for a material
portion of the assets of either; or
(ix) the entry of a decree or order by a court
having jurisdiction in the premises adjudging the Corporation or any
of its Subsidiaries a bankrupt or insolvent, or approving as properly
filed a petition seeking reorganization, arrangement, adjustment, or
composition of or in respect of the Corporation under federal
bankruptcy law or any other applicable federal or state law, or
appointing a receiver, liquidator, assignee, trustee, sequestrator, or
other similar official for the Corporation or any of its Subsidiaries
or of any substantial part of its property, or ordering the winding up
or liquidation of its affairs, and the continuance of any such decree
or order unstayed and in effect for a period of sixty (60) consecutive
days or until an order for relief has been entered; or
(x) the institution by the Corporation or any
of its Subsidiaries of proceedings to be adjudicated a debtor or
insolvent, or the consent by it to the institution of bankruptcy or
insolvency proceedings against it, or the filing by it of a petition
or answer or consent seeking reorganization or relief under federal
bankruptcy law or any other applicable federal or state law or the
consent by it to the filing such petition or to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator, or similar
official for the Corporation or any of its Subsidiaries or of any
substantial part of its property, or the making by it of an assignment
for the benefit of creditors, or the admission by it in writing of its
inability to pay its debts generally as they become due, or the taking
of corporate action by the Corporation or any of its Subsidiaries in
furtherance of any such action.
7.2 Acceleration of Maturities. When any Event of
Default described in clauses (i) through (vi), inclusive, of Section
7.1 has occurred and is continuing, Purchaser may, by notice in
writing sent to the Corporation, declare the entire principal and all
interest accrued on the Notes to be, and the Notes shall thereupon
become, forthwith due and payable, without any presentment, demand,
protest, or other notice of any kind, all of which are hereby
expressly waived. When any Event of Default described in clauses
(vii) through (x), inclusive, of Section 7.1 has occurred, then the
Notes shall immediately become due and payable without presentment,
demand, protest, or notice of any kind. When any Event of Default
described in clause (iv) of Section 7.1 has occurred and is continuing
as a result of the Corporation's breach of its obligation to convert
the indebtedness evidenced by the Notes into Conversion Shares in
accordance with the terms and conditions of the Notes, Purchaser shall
be entitled to specific performance of such obligation of the
Corporation; it being expressly acknowledged and agreed by the
Corporation that no adequate remedy at law exists for any such breach
and that Purchaser will be
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irreparably harmed by any such breach by the Corporation. Upon the
Notes becoming due and payable as a result of any Event of Default as
aforesaid, the Corporation shall forthwith pay to Purchaser the entire
principal and interest accrued on the Notes. No course of dealing on
the part of Purchaser nor any delay or failure on the part of
Purchaser to exercise any right shall operate as a waiver of such
right or otherwise prejudice Purchaser's rights, powers, and remedies.
The Corporation further agrees, to the extent permitted by law, to pay
to Purchaser all costs and expenses (including attorneys' fees)
incurred by it in the collection of the Notes upon any default
hereunder or thereon (including such costs and expenses incurred in
connection with a workout or an insolvency or bankruptcy proceeding).
8. AGREEMENTS OF PURCHASER. Purchaser agrees with the
Corporation as follows:
8.1 Transfer of the Notes. Purchaser will not attempt to
sell, transfer, convey, exchange, or otherwise dispose of all or any
part of the Notes, except in accordance with applicable law.
8.2 No General Solicitation. Purchaser acknowledges and
agrees that it has not received nor is it aware of any general
solicitation or general advertising of the Notes, including any
advertisement, article, notice, or other communication published in
any newspaper, magazine, or similar media or broadcast over television
or radio, and that it was not invited to attend any seminar or meeting
by means of any such general solicitation or general advertising.
8.3 No Registration. Purchaser understands and agrees
that, neither the Notes nor, except as provided in the Registration
Rights Agreement, any Conversion Shares will be registered under the
Securities Act or any state securities law, that the Notes and
Conversion Shares may be required to be held until they are
subsequently registered under the Securities Act and any applicable
state securities law, or any corresponding provisions of succeeding
laws, unless an exemption from the registration requirements of such
laws is available, and that the Corporation is under no obligation to
register the Notes or, except as provided in the Registration Rights
Agreement, any Conversion Shares, for resale.
8.4 Transfer Restrictions; Legends. Purchaser
understands and agrees that the Notes and, when issued, the Conversion
Shares have not been registered under the Securities Act or the
securities laws of any state and that they may be sold or otherwise
disposed of only in one or more transactions registered under the
Securities Act and, where applicable, such laws unless an exemption
from the registration requirements of the Securities Act and, where
applicable, such laws is available. Purchaser acknowledges that,
except as provided in the Registration Rights Agreement, Purchaser has
no right to require the
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<PAGE> 32
Corporation to register the Conversion Shares. Purchaser understands
and agrees that each certificate representing Conversion Shares shall
bear the following legends:
"THE TRANSFER OF THE SECURITIES REPRESENTED BY
THIS CERTIFICATE IS RESTRICTED BY AN AGREEMENT ON
FILE AT THE OFFICES OF THE CORPORATION."
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT
BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT
AND APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE
EXEMPTION TO THE REGISTRATION REQUIREMENTS OF SUCH
ACT OR SUCH LAWS."
Purchaser will not, directly or indirectly, sell, transfer, pledge,
encumber, or otherwise dispose of (collectively, "Transfers") any
Conversion Shares except for (i) Transfers to any Affiliate of
Purchaser, (ii) Transfers to other institutional investors that are
not competitors of the Corporation in blocks of not less than 10,000
shares (or such lesser number as may then be outstanding), (iii)
Transfers pursuant to any bona fide tender or exchange offer to
acquire Voting Stock of the Corporation or pursuant to any merger,
consolidation, or other business combination of the Corporation with
any other Person; or (iv) the redemption of the Conversion Shares.
8.5 Restrictions on Conversion. Purchaser further
understands and agrees that any conversion of the indebtedness
evidenced by the Notes into Conversion Shares must comply with all
applicable securities laws, including the Securities Act and any
applicable state securities laws, as such laws exist on the date
hereof and on such future dates that the indebtedness evidenced by the
Notes, or any portion thereof, may be converted into Conversion
Shares.
8.6 Further Cooperation. Purchaser will do all acts and
things reasonably requested of it by the Corporation in connection
with any attempt by the Corporation to achieve compliance with federal
and state securities laws in connection with the offering and sale of
the Notes or the conversion of all or any portion of the indebtedness
evidenced by the Notes into Conversion Shares.
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9. NONDISCLOSURE OF CONFIDENTIAL INFORMATION.
9.1 Without the prior written consent of the Corporation,
any information relating to the Corporation provided to Purchaser in
connection with its acquisition of the Notes or the Conversion Shares
that is either confidential, proprietary, or otherwise not generally
available to the public (but excluding information Purchaser has
obtained independently from third-party sources without Purchaser's
knowledge that the source has violated any fiduciary or other duty not
to disclose such information (the "Confidential Information") will be
kept confidential by Purchaser and their directors, officers,
employees, agents, auditors, participants, transferees, assignees, and
representatives (collectively, "Representatives"), using the same
standard of care in safeguarding the Confidential Information as
Purchaser employs in protecting its own proprietary information that
Purchaser desires not to disseminate or publish. It is understood (a)
that such Representatives shall be informed by Purchaser of the
confidential nature of the Confidential Information, (b) that such
Representatives shall be bound by the provisions of this Section 9.1
as a condition of receiving the Confidential Information, and (c)
that, in any event, Purchaser shall be responsible for any breach of
Sections 9.1, 9.2, or 9.3 of this Agreement by any of its
Representatives (other than Purchaser's participants, transferees, or
assignees).
9.2 Without the prior consent of the Corporation, other
than as required by applicable law, Purchaser will not, and will
direct its Representatives not to disclose to any Person (other than
its Representatives) either the fact that the Confidential Information
has been made available to Purchaser or that Purchaser has inspected
any portion of the Confidential Information.
9.3 If Purchaser or its Representatives are requested or
required (by oral question, interrogatories, requests for information
or documents, subpoena, civil investigative demand, or similar
process) to disclose any Confidential Information, Purchaser will, as
soon as practicable, notify the Corporation of such request or
requirement so that the Corporation may seek an appropriate protective
order. If, in the absence of a protective order or the receipt of a
waiver hereunder, Purchaser or its Representatives are, in the opinion
of Purchaser's counsel, compelled to disclose the Confidential
Information or else stand liable for contempt or suffer other censure
or significant penalty, Purchaser, or its Representative, as the case
may be, may disclose only such of the Confidential Information to the
party compelling disclosure as is required by law. Purchaser shall
not be liable for the disclosure of Confidential Information pursuant
to the preceding sentence. Purchaser will exercise all reasonable
efforts to assist the Corporation in obtaining a protective order or
other reliable assurance that confidential treatment will be accorded
the Confidential Information.
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10. MISCELLANEOUS.
10.1 Indemnification. Each party (an "indemnifying
party") hereto agrees to indemnify and hold harmless the other parties
(an "indemnified party") against and in respect of any and all claims,
demands, losses, costs, expenses, obligations, liabilities, damages,
recoveries, and deficiencies, including reasonable attorneys' fees,
that such indemnified party and each of its officers and directors
shall incur or suffer, that arise, result from, or relate to any
breach of, or failure by such indemnifying party to perform, any of
its representations, warranties, covenants, or agreements set forth in
the Transaction Documents.
10.2 Survival of Covenants, Representations, and
Warranties. All covenants, representations, and warranties contained
herein and in any certificates delivered pursuant hereto in connection
with the transactions occurring on the Closing Date shall survive the
closing and the delivery of the Transaction Documents, regardless of
any investigation made by or on behalf of any party.
10.3 Successors and Assigns. This Agreement shall be
binding upon the Corporation and its successors and assigns and shall
inure to Purchaser's benefit and to the benefit of its successors and
assigns, including each successive holder or holders of the Notes or
any interest therein.
10.4 Notices. Unless otherwise provided in this
Agreement, all notices or demands by any party relating to this
Agreement or any other agreement entered into in connection herewith
shall be in writing and (except for financial statements and other
informational documents which may be sent by first-class mail, postage
prepaid) shall be personally delivered or sent by registered or
certified mail, postage prepaid, return receipt requested, or by
prepaid telex, telefacsimile, or telegram (with messenger delivery
specified) to the Corporation or to Purchaser, as the case may be, at
the addresses set forth below:
If to PMI, to: PMI MEZZANINE FUND, L.P.
610 Newport Center Drive, Suite 1100
Newport Beach, CA 92660
Attention: Mr. Robert Bartholomew
With a copy to: BROBECK, PHLEGER & HARRISON LLP
550 South Hope Street
Los Angeles, CA 90071
Attention: John Francis Hilson, Esq.
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<PAGE> 35
If to the Corporation, to: CORRECTIONS CORPORATION OF AMERICA
The CCA Building
102 Woodmont Boulevard
Nashville, Tennessee 37205
Attention: Doctor R. Crants, Jr.
With a copy to: STOKES & BARTHOLOMEW, P.A.
424 Church Street, Suite 2800
Nashville, Tennessee 37219
Attention: Elizabeth Enoch Moore, Esq.
The parties hereto may change the address at which they are to
receive notices hereunder, by notice in writing in the foregoing
manner given to the other. The failure of the Corporation or
Purchaser to send a copy of any notice to the individuals who are
shown above as being required to receive such copies shall not
invalidate or otherwise affect the validity of a notice that is
otherwise effectively given. All notices or demands sent in
accordance with this Section 10.4 shall be deemed received on the
earlier of the date of actual receipt or three (3) days after the
deposit thereof in the mail or the transmission thereof by
telefacsimile or other similar method as set forth above.
10.5 Expenses. In addition to the payments provided for
in Section 2.3(xi), the Corporation agrees to pay Purchaser for all
fees and all out-of-pocket expenses incurred by Purchaser arising in
connection with the Transaction Documents and the transactions hereby
and thereby contemplated, including the conversion of the indebtedness
evidenced by the Notes into Conversion Shares, all stamp and other
taxes payable (other than taxes based on income) with respect to the
issuance of the Conversion Shares, filing fees, reasonable fees and
expenses of counsel, and all such expenses incurred with respect to
the preparation, execution, delivery, or enforcement of any provision
of such agreement or instrument, or any amendment or waivers requested
by the Corporation (irrespective of whether the same become effective)
under or in respect of any such agreement, including costs and
expenses in any bankruptcy proceeding.
10.6 Descriptive Headings. The descriptive headings of
the various Sections or parts of this Agreement are for convenience
only and shall not affect the meaning or construction of any of the
provisions hereof.
10.7 Satisfaction Requirement. If any agreement,
certificate, or other writing, or any action taken or to be taken, is
by the terms of this Agreement required to be satisfactory to
Purchaser, the determination of such satisfaction shall be made by
Purchaser in its sole and exclusive judgment exercised reasonably and
in good faith.
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<PAGE> 36
10.8 Remedies. In case any one or more of the covenants
or agreements set forth in the Transaction Documents shall have been
breached by the Corporation or Purchaser, the Corporation or
Purchaser, as applicable, may proceed to protect and enforce its
rights either by suit in equity or by action at law, including an
action for damages as a result of any such breach or an action for
specific performance of any such covenant or agreement contained in
the Transaction Documents.
10.9 Entire Agreement. The Transaction Documents and the
other writings referred to herein or delivered pursuant hereto contain
the entire agreement among the parties with respect to the subject
matter hereof and supersede all prior and contemporaneous arrangements
or understandings with respect thereto.
10.10 Amendments. This Agreement may be amended, and the
observance of any term of this Agreement may be waived, with (and only
with) the written consent of the Corporation and Purchaser.
10.11 Severability. Should any part of this Agreement, for
any reason, be determined to be invalid or unenforceable, such
determination shall not affect the validity or enforceability of any
remaining portion, which remaining portion shall remain in full force
and effect as if this Agreement had been executed with the invalid or
unenforceable part hereof eliminated, and it is hereby declared the
intention of the parties hereto that they would have executed the
remaining portion of this Agreement without including therein any such
part which may, for any reason, be hereafter declared invalid or
unenforceable.
10.12 Execution in Counterparts; Telecopy Execution. This
Agreement may be executed in any number of counterparts and by
different parties on separate counterparts, each of which
counterparts, when so executed and delivered, shall be deemed to be an
original and all of which counterparts, taken together, shall
constitute but one and the same Agreement. This Agreement shall
become effective upon the execution of a counterpart hereof by each of
the parties hereto. Delivery of an executed counterpart of the
signature page(s) of this Agreement by telecopier shall be equally
effective as delivery of a manually executed counterpart. Any party
delivering an executed counterpart of the signature page(s) of this
Agreement by telecopier shall thereafter also promptly deliver a
manually executed counterpart, but the failure to deliver such
manually executed counterpart shall not affect the validity,
enforceability, and binding effect of this Agreement.
10.13 Governing Law. The Transaction Documents shall be
governed by, and construed and enforced in accordance with, the laws
of the State of New York.
10.14 Consent to Jurisdiction. The Corporation irrevocably
submits to the non-exclusive jurisdiction of any New York state or
federal court sitting in the City of New York, New York over any suit,
action, or proceeding arising out of or
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<PAGE> 37
relating to the Transaction Documents. To the fullest extent it may
effectively do so under applicable law, the Corporation irrevocably
waives and agrees not to assert, by way of motion, as a defense, or
otherwise, any claim that it is not subject to the jurisdiction of any
such court, any objection that it may now or hereafter have to the
laying of the venue of any such suit, action, or proceeding brought in
any such court, and any claim that any such suit, action, or
proceeding brought in any such court has been brought in an
inconvenient forum.
10.15 Enforcement of Judgments; Service of Process; Jury
Trial Waiver. The Corporation agrees, to the fullest extent it may
effectively do so under applicable law, that a judgment in any suit,
action, or proceeding of the nature referred to in Section 10.14
brought in any such court shall be conclusive and binding upon the
Corporation and may be enforced in the courts of the United States of
America or the State of New York (or any other court to the
jurisdiction of which the Corporation is or may be subject) by a suit
upon such judgment.
THE CORPORATION AGREES THAT SERVICE OF PROCESS SUFFICIENT FOR
PERSONAL JURISDICTION IN ANY ACTION, SUIT, OR PROCEEDING OF THE NATURE
REFERRED TO IN SECTION 10.14 MAY BE MADE BY REGISTERED OR CERTIFIED
MAIL TO THE CORPORATION'S ADDRESS SET FORTH IN SECTION 10.4.
EACH PARTY HERETO HEREBY EXPRESSLY WAIVES ITS RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THE TRANSACTION DOCUMENTS, OR ANY OTHER RELATED
DOCUMENT TO BE DELIVERED PURSUANT HERETO, OR ANY DEALINGS BETWEEN THEM
RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION AND THE CONTRACTUAL
RELATIONSHIP THAT IS BEING ESTABLISHED. THE SCOPE OF THIS WAIVER IS
INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE
FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS
TRANSACTION, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY
CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH PARTY
HERETO ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER
INTO A BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THIS
WAIVER IN ENTERING INTO THIS AGREEMENT, AND THAT EACH WILL CONTINUE TO
RELY ON THIS WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH PARTY
HERETO FURTHER WARRANTS AND REPRESENTS THAT EACH HAS REVIEWED THIS
WAIVER WITH ITS LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY
WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL. THIS WAIVER IS
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<PAGE> 38
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN
WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS, OR MODIFICATIONS TO THE TRANSACTION DOCUMENTS,
OR THE RELATED DOCUMENTS TO BE DELIVERED PURSUANT HERETO. IN THE
EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT
TO A TRIAL BY THE COURT.
10.16 No Limitation on Service or Suit. Nothing herein
shall affect the right of Purchaser to serve process in any manner
permitted by law, or limit any right that Purchaser may have to bring
proceedings against the Corporation in the courts of any jurisdiction
or to enforce in any lawful manner a judgment obtained in one
jurisdiction in any other jurisdiction.
10.17 Direct Payment. Anything in this Agreement or the
Notes to the contrary notwithstanding, the Corporation will punctually
pay when due the principal of the Notes, and any interest thereon,
without any presentment thereof, directly to Purchaser or to the
nominee of Purchaser at the address set forth in Schedule 10.17 or
such other address as Purchaser or Purchaser's nominee may from time
to time designate in writing to the Corporation, or, if a bank account
with a United States bank is designated for Purchaser or Purchaser's
nominee on Schedule 10.17 hereto or in any written notice to the
Corporation from Purchaser or Purchaser's nominee, the Corporation
will make such payments in immediately available funds to such bank
account, marked for attention as indicated. Purchaser agrees that in
the event that it shall sell or transfer any Notes, it will, prior to
the delivery of such Notes, make a notation thereon of all principal,
if any, prepaid on such Notes and will also note thereon the date to
which interest has been paid on such Notes. The Corporation agrees
that transferees of Notes shall be entitled to the benefits of this
Section 10.17 so long as any such transferee has made the same
agreements relating to the transferred Notes as Purchaser has made in
this Section 10.17. The Corporation shall be entitled to presume
conclusively that Purchaser or any subsequent noteholders remain the
holders of the Notes until such Notes shall have been presented to the
Corporation as evidence of the transfer of such Notes.
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<PAGE> 39
The execution hereof by the Corporation and PMI shall
constitute a contract between them for the uses and purposes hereinabove set
forth.
CORRECTIONS CORPORATION OF
AMERICA,
a Delaware corporation
By:
--------------------------------
Title:
-----------------------------
PMI MEZZANINE FUND, L.P.,
a Delaware limited partnership
By: Pacific Mezzanine Investors,
LLC,
a Delaware limited
liability company, its General
Partner
By:
--------------------------------
Title:
-----------------------------
-35-
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of
our reports included in this Annual Report on Form 10-K of Corrections
Corporation of America and Subsidiaries into the Company's previously filed
Registration Statement File Numbers 33-12503, 33-30825, 33-30826, 33-42068,
33-42614, 33-60590, 33-72496 and 33-61173.
/s/ Arthur Andersen LLP
-----------------------
Arthur Andersen LLP
Nashville, Tennessee
March 26, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 2,714
<SECURITIES> 0
<RECEIVABLES> 39,661
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 46,610
<PP&E> 137,019
<DEPRECIATION> 0
<TOTAL-ASSETS> 213,478
<CURRENT-LIABILITIES> 35,517
<BONDS> 74,865
0
0
<COMMON> 32,270
<OTHER-SE> 64,434
<TOTAL-LIABILITY-AND-EQUITY> 213,478
<SALES> 0
<TOTAL-REVENUES> 207,241
<CGS> 0
<TOTAL-COSTS> 179,626
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,952
<INCOME-PRETAX> 23,663
<INCOME-TAX> 9,330
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 14,333
<EPS-PRIMARY> .38
<EPS-DILUTED> .36
</TABLE>
