<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 20, 1998
REGISTRATION NO. 333-46681
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
AMENDMENT NO. 1
TO
FORM S-11
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
---------------------
CORRECTIONAL PROPERTIES TRUST
(Exact Name of Registrant as Specified in its Governing Instruments)
4200 WACKENHUT DRIVE
PALM BEACH GARDENS, FLORIDA 33410-4243
(561) 691-6644
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
MR. CHARLES R. JONES
4200 WACKENHUT DRIVE
PALM BEACH GARDENS, FLORIDA 33410-4243
(561) 691-6644
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent for Service)
---------------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
---------------------
WACKENHUT CORRECTIONS CORPORATION
(Exact Name of Co-Registrant as Specified in its Charter)
4200 WACKENHUT DRIVE
PALM BEACH GARDENS, FLORIDA 33410-4243
(561) 622-5656
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
JAMES P. ROWAN, ESQ.
4200 WACKENHUT DRIVE
PALM BEACH GARDENS, FLORIDA 33410-4243
(561) 622-5656
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent for Service)
---------------------
Copies of all communications to:
<TABLE>
<S> <C>
BRUCE I. MARCH, ESQ. STEVEN L. LICHTENFELD, ESQ.
AKERMAN, SENTERFITT & EIDSON, P.A. BATTLE FOWLER LLP
ONE SOUTHEAST THIRD AVENUE, 28TH FLOOR 75 EAST 55TH STREET
MIAMI, FLORIDA 33131-1704 NEW YORK, NEW YORK 10022
(305) 374-5600 (212) 856-7000
</TABLE>
---------------------
Approximate date of commencement of the proposed sale to the public: As soon
as practicable after the effective date of this Registration Statement.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
<TABLE>
<CAPTION>
=======================================================================================================================
PROPOSED PROPOSED
MAXIMUM MAXIMUM AMOUNT OF
TITLE OF SECURITIES AMOUNT BEING OFFERING PRICE AGGREGATE REGISTRATION
BEING REGISTERED REGISTERED(1) PER SHARE OFFERING PRICE(2) FEE
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Shares of Beneficial
Interest, par value $.001 per
share 7,130,000 shares $21.00 $149,730,000 $44,170.35(3)
=======================================================================================================================
</TABLE>
(1) Includes 930,000 shares which may be purchased by the underwriters solely to
cover over-allotments if any.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 under the Securities Act.
(3) Previously paid.
---------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
================================================================================
<PAGE> 2
EXPLANATORY NOTE
The sole purpose of this Amendment No. 1 to Registration Statement on Form
S-11 and Amendment No. 1 to Registration Statement on Form S-3 is to file
certain exhibits, as outlined in Item 36 hereto.
<PAGE> 3
ITEM 36. FINANCIAL STATEMENTS AND EXHIBITS
(b) Exhibits:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ------- -----------------------
<C> <C> <S>
1 -- Form of Underwriting Agreement**
2 -- Form of Agreement of Sale and Purchase between Wackenhut
Corrections Corporation and CPT Operating Partnership L.P.
3.1 -- Declaration of Trust of Correctional Properties Trust*
3.2 -- Form of Articles of Amendment and Restatement of Declaration
of Trust of Correctional Properties Trust
3.3 -- Bylaws of Correctional Properties Trust*
3.4 -- Form of Amended and Restated Bylaws of Correctional
Properties Trust
3.5 -- Specimen of certificate representing the Common Shares
4.1 -- Provisions defining the rights of shareholders are found in
the Form of Amended and Restated Declaration of Trust and
the Form of Amended and Restated Bylaws, respectively, of
Correctional Properties Trust (included as Exhibits 3.2 and
3.4 to the Registration Statement)
4.2 -- Commitment for Arrangement of Bank Credit Facility and
Financing with Summary of Terms and Conditions from
and and accepted by Correctional
Properties Trust**
5.1 -- Opinion of Verable, Baetjer and Howard, LLP., regarding the
validity of the Common Shares**
8.1 -- Form of Opinion of Akerman, Senterfitt & Eidson, P.A.,
regarding certain federal income tax matters
10.1 -- Agreement of Limited Partnership of CPT Operating Limited
Partnership L.P.
10.2 -- Form of Master Agreement to Lease between CPT Operating
Partnership L.P. and Wackenhut Corrections Corporation.
10.3 -- Form of Lease Agreement between CPT Operating Partnership
L.P. and Wackenhut Corrections Corporation
10.4 -- Form Right to Purchase Agreement between Wackenhut
Corrections Corporation and CPT Operating Partnership L.P.
10.5 -- Form of Option Agreement between Wackenhut Corrections
Corporation and CPT Operating Partnership L.P.
10.6 -- Form of Trustee and Officer Indemnification Agreement
between Correctional Properties Trust and its trustees and
officers
10.7 -- Form of Correctional Properties Trust 1998 Employee Share
Incentive Plan**
10.8 -- Form of Correctional Properties Trust Non-Employee Trustees'
Share Option Plan**
21 -- List of Subsidiaries of Correctional Properties Trust**
23.1 -- Consent of Verable, Baetjer and Howard, LLP. (included in
Exhibit 5.1)**
23.2 -- Form of Consent of Akerman, Senterfitt & Eidson, P.A.
(included in Exhibit 8.1)
23.3 -- Consent of Arthur Andersen LLP*
23.4 -- Consent of George R. Wackenhut to Become a Trustee*
23.5 -- Consent of Richard R. Wackenhut to Become a Trustee*
23.6 -- Consent of Anthony D. Travisono to Become a Trustee*
23.7 -- Consent of Clarence E. Anthony to Become a Trustee*
</TABLE>
II-1
<PAGE> 4
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ------- -----------------------
<C> <C> <S>
23.8 -- Consent of James D. Motta to Become a Trustee*
23.9 -- Consent of William M. Murphy to Become a Trustee*
23.10 -- Consent of Robert R. Veach, Jr. to Become a Trustee*
24 -- Powers of Attorney*
</TABLE>
- ---------------
* Previously filed
** To be filed by Amendment
II-2
<PAGE> 5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement on Form S-11 to be signed
on its behalf by the undersigned, thereunto duly approved, in the City of Palm
Beach Gardens, State of Florida, on the day of March 20, 1998.
CORRECTIONAL PROPERTIES TRUST
By: /s/ CHARLES R. JONES
------------------------------------
Charles R. Jones
President, Chief Executive Officer
and Trustee
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
* Chairman of the Board March 20, 1998
- -----------------------------------------------------
Dr. George C. Zoley
/s/ CHARLES R. JONES President and Chief Executive March 20, 1998
- ----------------------------------------------------- Officer and Trustee
Charles R. Jones (principal executive
officer)
* Vice President and Chief March 20, 1998
- ----------------------------------------------------- Financial Officer
Patrick T. Hogan (principal financial and
accounting officer)
*By: /s/ CHARLES R. JONES
----------------------------------------------
Charles R. Jones
Attorney-in-fact
</TABLE>
II-3
<PAGE> 6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Wackenhut Corrections Corporation certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form S-3 and has
duly caused this Registration Statement on Form S-3 to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Palm Beach
Gardens, State of Florida, on the 20th day of March, 1998.
WACKENHUT CORRECTIONS CORPORATION
By: /s/ JOHN G. O'ROURKE
------------------------------------
John G. O'Rourke
Senior Vice President -- Finance,
Treasurer and Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the 20th day of March, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
* Vice Chairman of the Board and Chief
- --------------------------------------------- Executive
George C. Zoley Officer (principal executive officer)
/s/ JOHN G. O'ROURKE Senior Vice President -- Finance, Treasurer
- --------------------------------------------- and Chief Financial Officer (principal
John G. O'Rourke financial officer)
* Controller, Chief Accounting Officer and
- --------------------------------------------- Assistant Treasurer (principal accounting
David N.T. Watson officer)
* Director
- ---------------------------------------------
George R. Wackenhut
* Director
- ---------------------------------------------
Richard R. Wackenhut
* Director
- ---------------------------------------------
Norman A. Carlson
* Director
- ---------------------------------------------
Benjamin R. Civiletti
* Director
- ---------------------------------------------
Manuel J. Justiz
</TABLE>
II-4
<PAGE> 7
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
* Director
- ---------------------------------------------
John F. Ruffle
*By: /s/ JOHN G. O'ROURKE
-----------------------------------------
John G. O'Rourke
Attorney-in-fact
</TABLE>
II-5
<PAGE> 8
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION OF EXHIBITS PAGE
- ------- ----------------------- ------------
<C> <C> <S> <C>
1 -- Form of Underwriting Agreement**............................
2 -- Form of Agreement of Sale and Purchase between Wackenhut
Corrections Corporation and CPT Operating Partnership L.P...
3.1 -- Declaration of Trust of Correctional Properties Trust*......
3.2 -- Form of Articles of Amendment and Restatement of Declaration
of Trust of Correctional Properties Trust...................
3.3 -- Bylaws of Correctional Properties Trust*....................
3.4 -- Form of Amended and Restated Bylaws of Correctional
Properties Trust............................................
3.5 -- Specimen of certificate representing the Common Shares......
4.1 -- Provisions defining the rights of shareholders are found in
the Form of Amended and Restated Declaration of Trust and
the Form of Amended and Restated Bylaws, respectively, of
Correctional Properties Trust (included as Exhibits 3.2 and
3.4 to the Registration Statement)..........................
4.2 -- Commitment for Arrangement of Bank Credit Facility and
Financing with Summary of Terms and Conditions from
and and accepted by Correctional Properties
Trust**.....................................................
5.1 -- Opinion of Verable, Baetjer and Howard, LLP., regarding the
validity of the Common Shares**.............................
8.1 -- Form of Opinion of Akerman, Senterfitt & Eidson, P.A.,
regarding certain federal income tax matters................
10.1 -- Agreement of Limited Partnership of Correctional Properties
Trust Operating Limited Partnership L.P.....................
10.2 -- Form of Master Agreement to Lease between CPT Operating
Partnership L.P. and Wackenhut Corrections Corporation......
10.3 -- Form of Lease Agreement between CPT Operating Partnership
L.P. and Wackenhut Corrections Corporation..................
10.4 -- Form Right to Purchase Agreement between Wackenhut
Corrections Corporation and CPT Operating Partnership L.P...
10.5 -- Form of Option Agreement between Wackenhut Corrections
Corporation and CPT Operating Partnership L.P...............
10.6 -- Form of Trustee and Officer Indemnification Agreement
between Correctional Properties Trust and its trustees and
officers....................................................
10.7 -- Form of Correctional Properties Trust 1998 Employee Share
Incentive Option Plan**.....................................
10.8 -- Form of Correctional Properties Trust Non-Employee Trustees'
Share Plan**................................................
21 -- List of Subsidiaries of Correctional Properties Trust**.....
23.1 -- Consent of Verable, Baetjer and Howard, LLP. (included in
Exhibit 5.1)**..............................................
23.2 -- Form of Consent of Akerman, Senterfitt & Eidson, P.A.
(included in Exhibit 8.1)...................................
23.3 -- Consent of Arthur Andersen LLP*.............................
23.4 -- Consent of George R. Wackenhut to Become a Trustee*.........
23.5 -- Consent of Richard R. Wackenhut to Become a Trustee*........
23.6 -- Consent of Anthony D. Travisono to Become a Trustee*........
</TABLE>
<PAGE> 9
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION OF EXHIBITS PAGE
- ------- ----------------------- ------------
<C> <C> <S> <C>
23.7 -- Consent of Clarence E. Anthony to Become a Trustee*.........
23.8 -- Consent of James D. Motta to Become a Trustee*..............
23.9 -- Consent of William M. Murphy to Become a Trustee*...........
23.10 -- Consent of Robert R. Veach, Jr. to Become a Trustee*........
24 -- Powers of Attorney*.........................................
</TABLE>
- ---------------
* Previously Filed
** To be filed by Amendment
<PAGE> 1
EXHIBIT 2
FORM OF
AGREEMENT OF SALE AND PURCHASE
BY AND BETWEEN
WACKENHUT CORRECTIONS CORPORATION,
A FLORIDA CORPORATION
("SELLER")
AND
CPT OPERATING PARTNERSHIP L.P.,
A DELAWARE LIMITED PARTNERSHIP
("PURCHASER")
___________________, 1998
<PAGE> 2
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I.
DEFINITIONS.........................................................................................1
ARTICLE II.
AGREEMENTS TO SELL, PURCHASE, LEASE AND OPTION AND
AGREEMENT REGARDING RIGHT TO PURCHASE...............................................................7
2.1 Agreement to Sell and Purchase.........................................................7
2.2 Agreement to Lease.....................................................................8
2.3 Agreement to Grant Option..............................................................8
2.4 Right to Purchase......................................................................8
ARTICLE III.
PURCHASE PRICE......................................................................................8
3.1 Payment of Purchase Price..............................................................8
ARTICLE IV.
ITEMS TO BE
FURNISHED TO PURCHASER BY SELLER....................................................................8
4.1 Due Diligence Materials................................................................8
4.2 Due Diligence Review...................................................................9
ARTICLE V.
REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS..............................................10
5.1 Representations and Warranties of Seller..............................................10
5.2 Covenants and Agreements of Seller....................................................15
5.3 Representations and Warranties of Purchaser...........................................16
ARTICLE VI.
CONDITIONS TO OBLIGATIONS..........................................................................17
6.1 Conditions to the Purchaser's Obligations.............................................17
6.2 Failure of Conditions to Purchaser's Obligations......................................18
6.3 Conditions to the Seller's Obligations................................................18
6.4 Failure of Conditions to Seller's Obligations.........................................19
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
ARTICLE VII.
PROVISIONS WITH RESPECT TO THE CLOSING.............................................................19
7.1 Seller's Closing Obligations..........................................................19
7.2 Purchaser's Closing Obligations.......................................................20
ARTICLE VIII.
EXPENSES OF CLOSING................................................................................21
8.1 Adjustments...........................................................................21
8.2 Closing Costs.........................................................................21
8.3 Commissions/Broker's Fees.............................................................21
ARTICLE IX.
DEFAULT AND REMEDIES...............................................................................22
9.1 Seller's Default; Purchaser's Remedies................................................22
9.2 Purchaser's Default; Seller's Remedies................................................22
ARTICLE X.
MISCELLANEOUS......................................................................................23
10.1 Casualty..............................................................................23
10.2 Condemnation..........................................................................23
10.3 Survival..............................................................................24
10.4 Right of Assignment...................................................................24
10.5 Notices...............................................................................24
10.6 Entire Agreement; Modifications.......................................................25
10.7 Applicable Law........................................................................25
10.8 Captions..............................................................................25
10.9 Binding Effect........................................................................25
10.10 Time is of the Essence................................................................26
10.11 Waiver of Conditions..................................................................26
10.12 Liability of General Partner of Purchaser.............................................26
LIST OF SCHEDULES AND EXHIBITS..........................................................................28
</TABLE>
ii
<PAGE> 4
AGREEMENT OF SALE AND PURCHASE
THIS AGREEMENT OF SALE AND PURCHASE (the "Agreement") is made and
entered into by and between WACKENHUT CORRECTIONS CORPORATION, a Florida
corporation (hereinafter referred to as "Seller"), and CPT OPERATING PARTNERSHIP
L.P., a Delaware limited partnership (hereinafter referred to as "Purchaser").
Seller and Purchaser are sometimes collectively referred to herein as the
"Parties" and each of the Parties is sometimes singularly referred to herein as
a "Party".
R E C I T A L S
A. Seller (or an affiliate of Seller) is the owner of the Property (as
hereinafter defined), consisting of certain real properties and improvements
thereon being more particularly described on Exhibits A-1 through A-8, attached
hereto and made a part hereof or has the right to acquire the Property through a
validly existing and enforceable purchase option between Seller and the current
owner of the Property; and,
B. Seller desires to sell and Purchaser desires to purchase the
Property, and simultaneously therewith, to enter into a lease transaction
pursuant to which Purchaser shall lease to Seller, and Seller shall lease from
Purchaser, the Property.
NOW, THEREFORE, in consideration of the sum of Ten Dollars ($10.00),
the mutual covenants and agreements contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Parties agree as follows:
ARTICLE I.
DEFINITIONS
As used herein (including any Exhibits attached hereto), the following
terms shall have the meanings indicated:
"Accreditations" shall mean any and all accreditations and/or
certifications from any non-governmental entities required in connection with
the current or contemplated operation of the Property.
"Applicable Notices" shall mean any reports, notices of violation, or
notices of compliance issued in connection with any Accreditations or Permits.
"Bill of Sale" shall mean a bill or bills of sale in substantially the
same form as Exhibit B, attached hereto, and sufficient to transfer to Purchaser
all Personal Property.
<PAGE> 5
"Business Agreements" shall mean any leases, contract rights, loan
agreements, mortgages, easements, covenants, restrictions or other agreements or
instruments affecting all or a portion of the Property, to the extent the same
are assignable by Seller, but specifically excluding all of Seller's Operating
and Service Agreements.
"Business Day(s)" shall mean calendar days other than Saturdays,
Sundays and legal holidays.
"Certificate of Non-Foreign Status" shall mean a certificate dated as
of the Closing Date, addressed to Purchaser and duly executed by Seller, in
substantially the same form as Exhibit C, attached hereto.
"Claim" shall mean any obligation, liability, lien, encumbrance, loss,
damage, cost, expense or claim, including, without limitation, any claim for
damage to property or injury to or death of any person or persons.
"Closing" shall mean the consummation of the sale and purchase provided
for herein, to be held at the offices of Akerman, Senterfitt & Eidson, P.A., One
SE Third Avenue, Miami, Florida, or such other place as the Parties may mutually
agree.
"Closing Certificate" shall mean a certificate in substantially the
same form as Exhibit D, attached hereto, wherein Seller and Purchaser,
respectively, shall represent that the representations and warranties of Seller
and Purchaser, respectively, contained in this Agreement are true and correct in
all material respects as of the Closing Date as if made on and as of the Closing
Date.
"Closing Date" shall mean the actual day on which the transaction
contemplated hereby is closed with the transfer of title to the Property. The
Parties agree that the closing date shall be __________________, 1998, or such
earlier or later date as shall be hereafter mutually agreed upon by the Parties.
"Deed" shall mean a deed in substantially the same form as Exhibit E,
attached hereto (as the same may be modified to comply with local law and
custom), executed by Seller, as grantor, in favor of Purchaser, as grantee,
conveying the Land and Improvements to Purchaser, subject only to the Permitted
Exceptions.
"Due Diligence Materials" shall mean the information to be provided by
Seller to Purchaser pursuant to the provisions of Section 4.1 hereof as
reflected in the documents, drawings and other written materials delivered by
Seller to Purchaser and described in the Index to Due Diligence Materials
attached hereto as Schedule II.
"Effective Date" shall mean the later of the two (2) dates on which
this Agreement is signed and all changes initialed by Seller and Purchaser, as
indicated by their signatures below; provided, that in the event only one Party
dates its signature, then the date of its signature shall be the Effective Date.
ii
<PAGE> 6
"Engineering Documents" shall mean all site plans, surveys, soil and
substrata studies, architectural drawings, plans and specifications, engineering
plans and studies, floor plans, landscape plans, Americans with Disabilities Act
compliance reports, environmental reports and studies, professional inspection
reports, construction and/or architect's reports or certificates, feasibility
studies, appraisals, and other similar plans and studies that relate to the Real
Property or the Personal Property, to the extent the same are assignable by
Seller.
"Exception Documents" shall mean true, correct and legible copies of
each document listed as an exception to title in the Title Commitment.
"Excluded Personal Property" shall mean all those items of tangible and
intangible personal property described on Exhibit F.
"Fixtures" shall mean all equipment, machinery, fixtures, and other
items of real and/or personal property, including all components thereof, now or
on the Closing Date located in, on or used in connection with, and permanently
affixed to or incorporated into, the Improvements, including, without
limitation, all furnaces, boilers, heaters, electrical equipment, electronic
security equipment, heating, plumbing, lighting, ventilating, refrigerating,
incineration, air and water pollution control, waste disposal, air-cooling and
air-conditioning systems and apparatus, sprinkler systems and fire and theft
protection equipment, and similar systems, all of which, to the greatest extent
permitted by law, are hereby deemed by the Parties to constitute real estate,
together with all replacements, modifications, alterations and additions
thereto, but specifically excluding all items included within the definition of
Personal Property and Excluded Personal Property.
"Hazardous Materials" shall mean any substance, including without
limitation, asbestos or any substance containing asbestos and deemed hazardous
under any Hazardous Materials Law, the group of organic compounds known as
polychlorinated biphenyls, petroleum products, flammable explosives, radioactive
materials, infectious wastes, biomedical and medical wastes, chemicals known to
cause cancer or reproductive toxicity, pollutants, effluents, contaminants,
emissions or related materials and any items included in the definition of
hazardous or toxic wastes, materials or substances under any Hazardous Materials
Law.
"Hazardous Materials Law" shall mean any local, state or federal law
relating to environmental conditions and industrial hygiene, including, without
limitation, the Resource Conservation and Recovery Act of 1976 ("RCRA"), the
Comprehensive Environmental Response, Compensation and Liability Act of 1980
("CERCLA"), as amended by the Superfund Amendments and Reauthorization Act of
1986 ("SARA"), the Hazardous Materials Transportation Act, the Federal Waste
Pollution Control Act, the Clean Air Act, the Clean Water Act, the Toxic
Substances Control Act, the Safe Drinking Water Act, and all similar federal,
state and local environmental statutes, ordinances and the regulations, orders,
or decrees now or hereafter promulgated thereunder.
"Improvements" shall mean all buildings, improvements, structures and
Fixtures now or on the Closing Date located on the Land, including, without
limitation, landscaping, parking lots and
iii
<PAGE> 7
structures, roads, drainage and all above ground and underground utility
structures, equipment systems and other so-called "infrastructure" improvements.
"Intangible Property" means all Permits, Business Agreements and other
intangible property or any interest therein now or on the Closing Date owned or
held by Seller in connection with the Real Property, including all water rights
and reservations, rights to use the trade name applicable to the Property (but
excluding the name "Wackenhut Corrections" or any derivative thereof), as set
forth on Exhibits A-1 through A-8 hereof, and zoning rights related to the Real
Property, or any part thereof, to the extent the same are assignable by Seller;
provided, however, "Intangible Property" shall not include the general corporate
trademarks, trade names (except as set forth above), service marks, logos or
insignia or the books and records of Seller, Seller's accounts receivable and
Seller's business and operating licenses for the facilities on the Real
Property.
"Land" means the real property more particularly described on Exhibits
A-1 through A-9, attached hereto and made a part hereof, together with all of
Seller's rights, titles, appurtenant interests, covenants, licenses, privileges
and benefits thereto belonging, and Seller's right, title and interest in and to
any easements, rights-of-way, rights of ingress or egress or other interests in,
on, or to any land, highway, street, road or avenue, open or proposed, in, on,
across, in front of, abutting or adjoining such real property including, without
limitation, any strips and gores adjacent to or lying between such real property
and any adjacent real property.
"Laws" means all federal, state and local laws, moratoria, initiatives,
referenda, ordinances, rules, regulations, standards, orders and other
governmental requirements, including, without limitation, those relating to the
environment, health and safety, disabled or handicapped persons.
"Lease" shall mean the Master Agreement to Lease and the Lease
Agreement in substantially the same form as Exhibit H, attached hereto and made
a part hereof, which shall be executed and delivered by Seller (or an affiliate
of Seller) and Purchaser at the Closing, and pursuant to the terms of which
Purchaser shall lease the Property to Seller (or an affiliate of Seller)
following the Closing.
"Material" and "materially" shall mean a condition, noncompliance,
defect or other fact which would: (a) cost, with respect to any individual
Property, in the aggregate, in excess of Five Hundred Thousand Dollars
($500,000.00) and, with respect to any single defect or fact, would cost, with
respect to any individual Property, in excess of Two Hundred Fifty Thousand
Dollars ($250,000.00), to correct or repair; or (b) in the aggregate, with
respect to any individual Property, result in a loss to Purchaser or a reduction
in the value of such Property in excess of Five Hundred Thousand Dollars
($500,000.00) and, with respect to any single defect or fact, would, with
respect to any individual Property, result in a loss to Purchaser or a reduction
in the value of such Property in excess of Two Hundred Fifty Thousand Dollars
($250,000.00).
"Option Agreements" shall mean the Option Agreement or Agreements, in
substantially the same form as Exhibit I, attached hereto and made a part
hereof, which shall be executed and
iv
<PAGE> 8
delivered by Seller and Purchaser at the Closing, and pursuant to which Seller
shall grant Purchaser the exclusive option to acquire the Option Properties.
"Option Properties" shall mean the real property described on Exhibits
A-10 through A-12, attached hereto and made a part hereof, and all other
property of Seller as more particularly set forth in the Option Agreements.
"Permits" shall mean all permits, licenses (but excluding Seller's
business and operating licenses), approvals, entitlements and other
governmental, quasi-governmental and nongovernmental authorizations including,
without limitation, certificates of use and occupancy, required in connection
with the ownership, planning, development, construction, use, operation or
maintenance of the Real Property, to the extent the same are assignable by
Seller. As used herein, "quasi-governmental" shall include the providers of all
utility services to the Real Property.
"Permitted Exceptions" shall mean those title exceptions which have
been approved in writing by Purchaser, or are deemed to have been approved by
Purchaser upon the expiration of the Review Period.
"Personal Property" shall mean all Intangible Property, Warranties, and
Engineering Documents, and all those items of tangible personal property
described on Exhibit J, attached hereto, other than the Fixtures and the
Excluded Personal Property, now or on the Closing Date owned by Seller and
located on or about the Land or Improvements or used in connection with the
operation thereof (specifically excluding personal property owned by employees
of Seller and personal property owned by inmates housed at the Real Property).
"Property" shall mean, collectively, the Land, the Improvements, the
Fixtures, and the Personal Property.
"Purchase Price" shall mean the sum of $_____________________________,
which is allocated to each individual Property, as set forth on Schedule I
attached to this Agreement.
"Real Property" shall mean the Land, the Improvements and the Fixtures.
"Review Period" means a period commencing on the Effective Date and
ending thirty (30) days from the date of Purchaser's receipt of the last of the
Due Diligence Materials; provided, should the Effective Date be less than thirty
(30) days prior to the Closing Date, the Review Period shall terminate on the
date which is five (5) days prior to the Closing Date.
"Right to Purchase Agreement" shall mean the Right to Purchase
Agreement in substantially the same form as Exhibit G attached hereto and made a
part hereof, which shall be executed and delivered by the Parties at the
Closing, and pursuant to the terms of which Seller shall grant Purchaser the
right to acquire certain property of Seller.
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<PAGE> 9
"Search Reports" shall mean reports of searches made of the Uniform
Commercial Code Records of the County in which the Property is located, and of
the office of the Secretary of State of the State in which the Property is
located and in the State in which the principal office of Seller is located,
which searches shall reflect that none of the Property is encumbered by liens or
security interests which will remain on the Property after the Closing. The
Search Reports shall be updated, at Seller's expense, at or within five (5) days
prior to Closing.
"Seller's Operating and Service Agreements" shall mean all management,
service and operating agreements and contracts entered into by Seller with
respect to the Property, including, but not limited to, agreements and contracts
to house inmates at the Property, food service and equipment agreements, inmate
pay telephone service agreements, medical and pharmaceutical service and supply
agreements, drug testing service agreements, public performance and licensing
agreements for motion picture video cassettes, inmate educational and
instructional service agreements, refuse service agreements, pest control
service agreements and machinery, equipment and uniform rental and service
agreements.
"Survey" shall mean a current "as-built" ALTA survey, certified to ALTA
requirements, prepared by an engineer or surveyor licensed in the State in which
the Land is located and reasonably acceptable to Purchaser, which shall: (a)
include a narrative legal description of the Land by metes and bounds (which
shall include a reference to the recorded plat, if any), and a computation of
the area comprising the Land in both acres and gross square feet (to the nearest
one-thousandth of said respective measurement); (b) accurately show the location
on the Land of all improvements (dimensions thereof at the ground surface level
and the distance therefrom to the facing exterior property lines of the Land),
building and set-back lines, parking spaces (including number of spaces),
fences, evidence of abandoned fences, ponds, creeks, streams, rivers, officially
designated 100-year flood plains and flood prone areas, canals, ditches,
easements, roads, rights-of-way and encroachments; (c) location of
encroachments, if any, upon adjoining property, or from adjoining property, upon
the Land; (d) state the zoning classification of the Land; (e) be certified as
of the date of the Survey to the Seller, the Purchaser, the Title Company, and
any third-party lender designated by Purchaser; (f) legibly identify any and all
recorded matters shown on said Survey by appropriate volume and page recording
references; (g) show the location and names of all adjoining streets and the
distance to the nearest streets intersecting the streets that adjoin the Land;
(h) be satisfactory to (and updated from time to time as may be required by) the
Title Company so as to permit it to delete the standard exception for survey
matters and replace it with an exception for the matters shown on the Survey;
and (i) include a written Surveyor's Certification in substantially the same
form as set forth on Exhibit K, attached hereto.
"Title Commitment" shall mean a current commitment or current
commitments issued by the Title Company to the Purchaser pursuant to the terms
of which the Title Company shall commit to issue the Title Policy to Purchaser
in accordance with the provisions of this Agreement, and reflecting all matters
which would be listed as exceptions to coverage on the Title Policy.
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<PAGE> 10
"Title Company" shall mean ____________ Title Insurance Corporation or
the national service office of another title insurance company licensed in each
state in which the Property is located selected by Seller and reasonably
satisfactory to Purchaser.
"Title Policy" shall mean an ALTA Extended Coverage Owner's Policy (or
policies) of Title Insurance (10/17/92 Form), or comparable state promulgated
policies, with liability in the aggregate amount of the Purchase Price, dated as
of the Closing Date, issued by the Title Company, insuring title to the fee
interest in the Real Property in Purchaser, subject only to the Permitted
Exceptions and to the standard printed exceptions included in the ALTA standard
form owner's extended coverage policy of title insurance including such other
endorsements requested by Purchaser, with the following modifications: (a) the
exception for survey matters shall be deleted and replaced by an exception for
the matters shown on the Survey; (b) the exception for ad valorem taxes shall
reflect only taxes for the current and subsequent years; (c) any exception as to
parties in possession shall be limited to rights of Seller in possession, as
lessee only, pursuant to the Lease; and (d) there shall be no general exception
for visible and apparent easements or roads and highways or similar items (with
any exception for visible and apparent easements or roads and highways or
similar items to be specifically referenced to and shown on the Survey and also
identified by applicable recording information).
"Warranties" shall mean all warranties and guaranties with respect to
the Real Property or Personal Property, whether express or implied, which Seller
now holds or under which Seller is the beneficiary, to the extent the same are
assignable by Seller.
ARTICLE II.
AGREEMENTS TO SELL, PURCHASE, LEASE AND OPTION AND
AGREEMENT REGARDING RIGHT TO PURCHASE
2.1 AGREEMENT TO SELL AND PURCHASE. On the Closing Date, provided
Purchaser shall not have terminated this Agreement pursuant to the provisions of
Section 4.2 hereof, Seller shall, or shall cause its affiliate or optionor to,
sell, convey, assign, transfer and deliver to Purchaser and Purchaser shall
purchase, acquire and accept from Seller, the Property, for the Purchase Price
and subject to the terms and conditions of this Agreement. Purchaser
acknowledges that Seller may elect to transfer some or all of the Property to
one or more affiliates of Seller prior to the Closing Date subject to the terms
and conditions of this Agreement. In such event, Seller shall cause such
affiliates to sell, convey, assign, transfer and deliver to Purchaser such
portion(s) of the Property as may be transferred to such affiliate(s). In the
event of any such transfers of some or all of the Property to any affiliate of
Seller, Seller shall not be relieved of any of its obligations or liability
hereunder. From and after the date of any such transfer, the term "Seller" as
used herein shall refer to both Wackenhut Corrections Corporation and the
recipient of such transfer collectively, and to each such party individually.
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<PAGE> 11
2.2 AGREEMENT TO LEASE. On the Closing Date, and subject to performance
by the Parties of the terms and provisions of this Agreement, Purchaser shall
lease to Seller and Seller shall lease from Purchaser, the Property at the
rental and upon the terms and conditions set forth in the Lease.
2.3 AGREEMENT TO GRANT OPTION. On the Closing Date, and subject to
performance by the Parties of the terms and provisions of this Agreement, Seller
shall grant to Purchaser options to acquire the Option Properties at the
purchase price and upon the terms and conditions set forth in the Option
Agreements.
2.4 RIGHT TO PURCHASE. On the Closing Date, and subject to the
performance by the Parties of the terms and provisions of this Agreement, Seller
shall grant to Purchaser the right to acquire certain property of Seller, upon
the terms and conditions set forth in the Right to Purchase Agreement.
ARTICLE III.
PURCHASE PRICE
3.1 PAYMENT OF PURCHASE PRICE. The Purchase Price shall be paid by
Purchaser delivering to, or at the direction of, the Seller at the Closing
Federal Reserve wire transfer funds or other immediately available collected
funds payable to the order of the Seller in the sum equal to the Purchase Price,
subject to adjustment as herein provided. On or before the Closing, the Parties
shall agree on an allocation of the Purchase Price as between the Real Property
and the Personal Property.
ARTICLE IV.
ITEMS TO BE
FURNISHED TO PURCHASER BY SELLER
4.1 DUE DILIGENCE MATERIALS. Seller previously has delivered to
Purchaser for its review, or, if not, within fifteen (15) days after the
Effective Date, Seller shall deliver to Purchaser for its review, the following
items:
a. True, correct, complete and legible copies of all Business
Agreements, Warranties, Permits, Accreditations,
Applicable Notices, Engineering Documents and Seller's
Operating and Service Agreements (solely for the purposes
of this Section 4.1a., the terms Business Agreements,
Warranties, Permits, and Engineering Documents shall
include all agreements, documents and instruments
otherwise included within such definitions, whether or not
the same are assignable by Seller);
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<PAGE> 12
b. True, correct, complete and legible copies of tax
statements or assessments for all real estate and personal
property taxes assessed against the Property for the
current and the two prior calendar years, if available;
c. True, correct, complete and legible listing of all
Fixtures, Personal Property and Excluded Property,
including a current depreciation schedule.
d. True, correct, complete and legible copies of all existing
fire and extended coverage insurance policies and any
other insurance policies pertaining to the Property, if
any;
e. True, correct, complete and legible copies of all
instruments evidencing, governing or securing the payment
of any loans secured by the property or related thereto.
Seller may make such instruments available for inspection
and copying by Purchaser at Seller's principal office;
f. True, correct, complete and legible copies of any and all
environmental studies or impact reports relating to the
Property, if any, and any approvals, conditions, orders or
declarations issued by any governmental authority relating
thereto (such studies and reports shall include, but not
be limited to, reports indicating whether the Property is
or has been contaminated by Hazardous Materials and
whether the Property is in compliance with the Americans
with Disabilities Act and Section 504 of the
Rehabilitation Act of 1973, as applicable);
g. True, correct, complete and legible copies of any and all
litigation files with respect to any pending litigation
and claim files for any claims made or threatened, the
outcome of which might materially affect the Property or
the use and operation of the Property, together with
summaries and such other more detailed information as
Purchaser may reasonably request with respect to any other
pending litigation or claim the outcome of which might
materially affect Seller or materially affect the
Property. Seller may make such files available for
inspection and copying by Purchaser at Seller's principal
office.
h. The Title Commitment, Exception Documents, Survey and
Search Reports.
i. Actual operating statements for the Property or, if the
Property has not been operated by Seller for twelve months
prior to the date of this Agreement, projected operating
results for the Property.
j. The Certificate of Occupancy, or its equivalent, for the
Property.
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<PAGE> 13
4.2 DUE DILIGENCE REVIEW. During the Review Period, Purchaser shall be
entitled to review the Due Diligence Materials delivered by Seller to Purchaser
pursuant to the provisions of Section 4.1 above. If Purchaser shall, for any
reason in Purchaser's sole discretion, judgment and opinion, disapprove or be
dissatisfied with any aspect of such information, or the Property, then
Purchaser shall be entitled to terminate this Agreement by giving written notice
thereof to Seller on or before the expiration of the Review Period, whereupon
this Agreement shall automatically be rendered null and void, all moneys which
have been delivered by Purchaser to Seller or the Title Company shall be
immediately returned to Purchaser and thereafter neither Party shall have any
further obligations or liabilities to the other hereunder. Alternatively,
Purchaser may give written notice setting forth any defect, deficiency or
encumbrance and specify a time within which Seller may remedy or cure such
matter prior to the expiration of the Review Period, but Seller shall have no
obligation to remedy or cure any such matters objected to by Purchaser. If any
defect, deficiency or encumbrance, so noticed, is not satisfied or resolved to
the satisfaction of Purchaser, in Purchaser's sole discretion, within the time
period specified in the written notice, this Agreement shall, at the option of
Purchaser, terminate as provided in this Section; said option to terminate to be
exercised, if at all, by Purchaser giving written notice thereof to Seller and
simultaneously paying Seller the sum of One Hundred Dollars ($100.00) on the
earlier of: (a) within three (3) Business Days after the expiration of said
specified time period, or (b) the Closing Date. In the event Purchaser fails to
exercise its option to terminate this Agreement within the time and in the
manner set forth in this Section 4.2, then Purchaser shall be deemed to have
accepted and approved the Due Diligence Materials and the Property, and to have
waived any such defect, deficiency or encumbrance, and to have accepted all
exceptions to title referenced in the Title Commitment and all matters shown on
the Survey. Such accepted title exceptions and survey matters shall be included
in the term "Permitted Exceptions" as used herein.
ARTICLE V.
REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS
5.1 REPRESENTATIONS AND WARRANTIES OF SELLER. To induce Purchaser to
enter into this Agreement and to purchase the Property, Seller represents and
warrants to Purchaser as follows:
a. Seller has the right to acquire and at the Closing,
Seller will have and will convey, transfer and assign to
Purchaser, or Seller will cause the conveyance, transfer
and assignment to Purchaser of, good, indefeasible,
marketable and insurable title to the Land, free and clear
of any deeds of trust, mortgages, liens, encumbrances,
leases, tenancies, licenses, chattel mortgages,
conditional sales agreements, security interests,
covenants, conditions, restrictions, judgments,
rights-of-way, easements, encroachments, claims and any
other matters affecting title or use of the Property,
except the Permitted Exceptions.
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<PAGE> 14
b. Seller has duly and validly authorized and executed this
Agreement, and has full right, title, power and authority
to enter into this Agreement and to consummate the
transactions provided for herein, and the joinder of no
person or entity will be necessary to convey the Property
fully and completely to Purchaser at Closing and to lease
the Property from Purchaser following Closing. Seller is a
corporation duly organized, validly existing and in good
standing under the laws of the State of Florida and is
qualified to do business in each state in which any of the
Property is located. The consummation of the transactions
contemplated herein does not require the approval of
Seller's shareholders or any third party, except such
third party approvals as Seller has obtained or will
obtain prior to the Closing Date. The execution by Seller
of this Agreement and the consummation by Seller of the
transactions contemplated hereby do not, and at the
Closing will not, result in a breach of any of the terms
or provisions of, or constitute a default or a condition
which upon notice or lapse of time or both would ripen
into a default under, Seller's Bylaws or Certificate of
Incorporation, any indenture, agreement, instrument or
obligation to which Seller is a party or by which the
Property or any portion thereof is bound; and does not
constitute a violation of any Laws, order, rule or
regulation applicable to Seller or any portion of the
Property of any court or of any federal, state or
municipal regulatory body or administrative agency or
other governmental body having jurisdiction over Seller or
any portion of the Property.
c. Except as may be disclosed in the Exception Documents,
there are no adverse or other parties in possession of the
Property or of any part thereof, and Seller has not
granted to any party any license, lease or other right
relating to the use or possession of the Property.
d. No notice has been received from any insurance company
that has issued a policy with respect to any portion of
the Property or from any board of fire underwriters (or
other body exercising similar functions), claiming any
defects or deficiencies or requiring the performance of
any repairs, replacements, alterations or other work and
as of the Closing no such notice will have been received
which shall not have been cured. No notice has been
received by Seller from any issuing insurance company that
any of such policies will not be renewed, or will be
renewed only at a higher premium rate than is presently
payable therefor.
e. No pending condemnation, eminent domain, assessment or
similar proceeding or charge affecting the Property or any
portion thereof exists. Seller has not heretofore received
any notice, and has no knowledge, that any such proceeding
or charge is contemplated. Seller has not received any
notice of a proposed increase in the assessed valuation of
the Property.
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<PAGE> 15
f. All Improvements (including all utilities) have been, or
as of the Closing will be, completed and installed in
accordance with the plans and specifications approved by
the governmental authorities having jurisdiction to the
extent applicable and are transferable to Purchaser
without additional cost. Permanent certificates of
occupancy, all licenses, permits, authorizations and
approvals required by all governmental authorities having
jurisdiction, and the requisite certificates of the local
board of fire underwriters (or other body exercising
similar functions) have been, or as of the Closing will
be, issued for the Improvements, and, as of the Closing,
where required, all of the same will be in full force and
effect. Except as may be set forth in any of the Due
Diligence Materials, the Improvements, as designed and
constructed, comply or will comply with all statutes,
restrictions, regulations and ordinances applicable
thereto, including but not limited to the Americans with
Disabilities Act and Section 504 of the Rehabilitation Act
of 1973, as applicable.
g. The existing water, sewer, gas and electricity lines,
storm sewer and other utility systems on the Land are
adequate to serve the utility needs of the Property for
operation as a correctional facility and detention
facility or other use set forth in the Permits. All
utilities required for the operation of the Improvements
enter the Land through adjoining public streets or through
adjoining private land in accordance with valid public or
private easements that will inure to the benefit of
Purchaser. All approvals, licenses and permits required to
fully operate said utilities have been obtained and are in
full force and effect. All of said utilities are installed
and operating, or will be, by Closing and all installation
and connection charges have been or will be paid in full.
h. Except as may be set forth in any of the Due Diligence
Materials, the location, construction, occupancy,
operation and use of the Property (including the
Improvements) do not violate any applicable law, statute,
ordinance, rule, regulation, order or determination of any
governmental authority or any board of fire underwriters
(or other body exercising similar functions), or any
restrictive covenant or deed restriction (recorded or
otherwise) affecting the Property or the location,
construction, occupancy, operation or use thereof,
including, without limitation, all applicable zoning
ordinances and building codes, flood disaster laws and
health and environmental laws and regulations, the
Americans with Disabilities Act and Section 504 of the
Rehabilitation Act of 1973, as applicable.
i. Except as may be set forth in any of the Due Diligence
Materials, there are not any structural defects in any of
the buildings or other Improvements
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<PAGE> 16
constituting the Property. The Improvements, all heating,
electrical, plumbing and drainage at, or servicing, the
Property and all facilities and equipment relating thereto
are and, as of the Closing, will be in good condition and
working order and adequate in quantity and quality for the
normal operation of the Property as a correctional or
detention facility or other use set forth in the Permits.
No part of the Property has been destroyed or damaged by
fire or other casualty. There are no unsatisfied requests
for repairs, restorations or alterations with regard to
the Property from any person, entity or authority,
including but not limited to any lender, insurance
provider or governmental authority.
j. Except as previously disclosed by Seller pursuant to
contracts delivered to Purchaser, no work has been
performed or is in progress at the Property, and no
materials will have been delivered to the Property that
might provide the basis for a mechanic's, materialmen's or
other lien against the Property or any portion thereof, or
amounts due for such work and material shall have paid or
discharged to Purchaser's and Title Company's satisfaction
as of Closing.
k. There exist no service contracts, management or other
agreements applicable to the Property, or amendments,
modifications or terminations thereof, to which Seller is
a party or otherwise known to Seller, other than Seller's
Operating and Service Agreements, the Business Agreements
and those agreements furnished to Purchaser pursuant to
Section 4.1.
l. Seller is not in default in any manner which would result
in a material adverse effect on Seller under any of the
Business Agreements, or Seller's Operating and Service
Agreements or any of the covenants, conditions,
restrictions, rights-of-way or easements affecting the
Property or any portion thereof, and, to Seller's
knowledge, no other party to any of the foregoing is in
default thereunder.
m. There are no actions, suits or proceedings pending or, to
Seller's knowledge, threatened against or affecting the
Property or any portion thereof, or relating to or arising
out of the ownership or operation of the Property, or by
any federal, state, county or municipal department,
commission, board, bureau or agency or other governmental
instrumentality, other than those disclosed to Purchaser
pursuant to Section 4.l. All judicial proceedings
concerning the Property will be finally dismissed and
terminated prior to Closing, excluding inmate lawsuits and
other lawsuits in which Seller is involved in its ordinary
course of business.
n. The Property has free and unimpeded access to presently
existing public highways and/or roads (either directly or
by way of perpetual easements);
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<PAGE> 17
and, all approvals necessary therefor have been obtained.
To the best of Seller's knowledge, no fact or condition
exists which would result in the termination of the
current access from the Property to any presently existing
public highways and/or roads adjoining or situated on the
Property.
o. There are no attachments, executions, assignments for the
benefit of creditors, or voluntary or involuntary
proceedings in bankruptcy or under any other debtor relief
laws contemplated by or, to Seller's knowledge, pending or
threatened against Seller or the Property.
p. Except as may be set forth in any of the Due Diligence
Materials, no Hazardous Materials have been installed,
used, generated, manufactured, treated, handled, refined,
produced, processed, stored or disposed of, or otherwise
present in, on or under the Property by Seller or to
Seller's knowledge. No activity has been undertaken on the
Property by Seller or to Seller's knowledge which would
cause (i) the Property to become a hazardous waste
treatment, storage or disposal facility within the meaning
of, or otherwise bring the Property within the ambit of
RCRA or any Hazardous Materials Law, (ii) a release or
threatened release of Hazardous Materials from the
Property within the meaning of, or otherwise bring the
Property within the ambit of, CERCLA or SARA or any
Hazardous Materials Law or (iii) the discharge of
Hazardous Materials into any watercourse, body of surface
or subsurface water or wetland, or the discharge into the
atmosphere of any Hazardous Materials which would require
a permit under any Hazardous Materials Law. No activity
has been undertaken with respect to the Property by Seller
or to Seller's knowledge which would cause a violation or
support a claim under RCRA, CERCLA, SARA or any Hazardous
Materials Law. No investigation, administrative order,
litigation or settlement with respect to any Hazardous
Materials is in existence with respect to the Property,
nor, to Seller's knowledge, is any of the foregoing
threatened. No notice has been received by Seller from any
entity, governmental body or individual claiming any
violation of any Hazardous Materials Law, or requiring
compliance with any Hazardous Materials Law, or demanding
payment or contribution for environmental damage or injury
to natural resources. Seller has not obtained and, to
Seller's knowledge, is not required to obtain, and Seller
has no knowledge of any reason Purchaser will be required
to obtain, any permits, licenses, or similar
authorizations to occupy, operate or use the Improvements
or any part of the Property by reason of any Hazardous
Materials Law. Notwithstanding the representations made
herein, such representations are and shall be deemed to be
limited by the matters detailed in any Phase I
Preliminary Site Assessment or other Due Diligence
Materials obtained by or provided to Purchaser in
connection herewith.
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<PAGE> 18
q. The Property includes all items of property, tangible and
intangible, currently used by Seller in connection with
the operation of the Property, other than the Excluded
Personal Property, Seller's Operating and Service
Agreements, and property expressly excluded from the
definition of the Property.
r. To the best of Seller's knowledge, the Due Diligence
Materials delivered to Purchaser are true, correct and
complete in all material respects.
Seller hereby agrees to indemnify and defend, at its sole cost and
expense, and hold Purchaser, its successors and assigns, harmless from and
against and to reimburse Purchaser with respect to any and all claims, demands,
actions, causes of action, losses, damages, liabilities, costs and expenses
(including, without limitation, reasonable attorney's fees and court costs)
actually incurred of any and every kind or character, known or unknown, fixed or
contingent, asserted against or incurred by Purchaser at any time and from time
to time by reason of or arising out of (a) the material breach of any
representation or warranty of Seller set forth in Section 5.1, (b) the failure
of Seller, in whole or in part, to perform any obligation required to be
performed by Seller pursuant to Section 5.1 or (c) the ownership, construction,
occupancy, operation, use and maintenance by Seller or its agents of the
Property prior to the Closing Date. This indemnity applies, without limitation,
to the violation on or before the Closing Date of any Hazardous Materials Law in
effect on or before the Closing Date and any and all matters arising out of any
act, omission, event or circumstance existing or occurring on or prior to the
Closing Date (including, without limitation, the presence on the Property or
release from the Property of Hazardous Materials disposed of or otherwise
released prior to the Closing Date), regardless of whether the act, omission,
event or circumstance constituted a violation of any Hazardous Materials Law at
the time of its existence or occurrence. Subject to the provisions of Section
10.1, the provisions of this Section 5.1 shall survive the Closing of the
transaction contemplated by this Agreement and shall continue thereafter in full
force and effect for the benefit of Purchaser, its successors and assigns.
Notwithstanding any provision of this Agreement to the contrary, Purchaser may
exercise any right or remedy Purchaser may have at law or in equity should
Seller fail to meet, comply with or perform its indemnity obligations required
by this Section 5.1. In the event a defect, claim or deficiency is actually
discovered by Purchaser prior to Closing or is noticed in writing by Seller to
Purchaser prior to Closing, Purchaser shall either terminate the Agreement as
provided herein or waive the defect, claim or deficiency and proceed to Closing.
5.2 COVENANTS AND AGREEMENTS OF SELLER. Seller covenants and agrees
with Purchaser, from the Effective Date until the Closing or earlier termination
of this Agreement:
a. Seller shall: (i) operate the Property in the ordinary
course of Seller's business and in the same manner as
currently operated; and (ii) fully maintain and repair the
Improvements, the Fixtures, and the Personal Property in
good condition and repair.
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<PAGE> 19
b. Purchaser shall be entitled to make all inspections or
investigations desired by Purchaser with respect to the
Property or any portion thereof, and shall have complete
physical access to the Property, which access shall occur
at such times and in such manner so as to not unreasonably
interfere with Seller's business operations or constitute
a safety hazard, as reasonably determined by Seller.
c. Seller shall cause to be maintained in full force and
effect fire and extended coverage insurance upon the
Property and public liability insurance with respect to
damage or injury to persons or property occurring on or
relating to operation of the Property in commercially
reasonable amounts, but no less than currently in effect.
d. Seller shall pay when due all bills and expenses of the
Property. Seller shall not enter into or assume any new
Business Agreements or modify, amend or terminate any
existing Business Agreements with regard to the Property
which are in addition to or different from those furnished
and disclosed to Purchaser and reviewed and approved
pursuant to Section 4.1.
e. Seller shall not create or permit to be created any liens,
easements or other conditions affecting any portion of the
Property or the uses thereof without the prior written
consent of Purchaser.
f. Seller will pay, as and when due, all interest and
principal and all other charges payable under any
indebtedness of Seller secured by the Property from the
date hereof until Closing, and will not suffer or permit
any default or amend or modify the documents evidencing or
securing any such indebtedness without the prior consent
of Purchaser. Seller will, subject to limitations provided
by law with respect to privacy rights of inmates, give to
Purchaser, its attorneys, accountants and other
representatives, during normal business hours and as often
as may be reasonably requested, full access to all books,
records and files relating to the Property so long as the
same does not unreasonably interfere with Seller's
business operations.
g. Seller shall not remove any Personal Property or Fixtures
from the Land or Improvements without replacing same with
substantially similar items of equal or greater value and
repairing the damage, if any, to the Property as a result
of such removal.
h. During the pendency of this Agreement, Seller, its
corporate officers, directors, and agents shall not
negotiate the sale or other disposition of the Property
with any person or entity other than Purchaser, and shall
not take any steps to initiate, consummate or document the
sale or other disposition
xvi
<PAGE> 20
of the Property, or any portion thereof, to any person or
entity other than Purchaser.
i. Prior to the Closing Date, Seller agrees to notify
Purchaser in writing within three (3) Business Days of any
offer received by, delivered to or communicated to Seller
for the purchase, sale, acquisition or other disposition
of the Property.
j. Seller shall provide representations, warranties and
consents as may be reasonably required in connection with
any public offering of stock or debt obligations by
Purchaser, including, but not limited to, inclusion of
financial statements, summary financial information and
other required information concerning Seller, or Seller as
lessee under the Lease, in any Securities and Exchange
Commission filings.
5.3 REPRESENTATIONS AND WARRANTIES OF PURCHASER. To induce Seller to
enter into this Agreement and to sell the Property, Purchaser represents and
warrants to Seller as follows:
a. Purchaser has duly and validly authorized and executed
this Agreement, and has full right, title, power and
authority to enter into this Agreement and to consummate
the transactions provided for herein, and the joinder of
no person or entity will be necessary to purchase the
Property from Seller at Closing, and to lease the Property
to Seller following Closing.
b. The execution by Purchaser of this Agreement and the
consummation by Purchaser of the transactions contemplated
hereby do not, and at the Closing will not, result in a
breach of any of the terms or provisions of, or constitute
a default or a condition which upon notice or lapse of
time or both would ripen into a default under, any
indenture, agreement, instrument or obligation to which
Purchaser is a party; and does not, and at the Closing
will not, constitute a violation of any Laws, order, rule
or regulation applicable to Purchaser of any court or of
any federal, state or municipal regulatory body or
administrative agency or other governmental body having
jurisdiction over Purchaser.
ARTICLE VI.
CONDITIONS TO OBLIGATIONS
6.1 CONDITIONS TO THE PURCHASER'S OBLIGATIONS. The obligations of
Purchaser to purchase the Property from Seller and to consummate the
transactions contemplated by this Agreement are subject to the satisfaction, at
all times prior to and as of the Closing (or such other time period specified
below), of each of the following conditions:
xvii
<PAGE> 21
a. All of the representations and warranties of Seller set
forth in this Agreement shall be true at all times prior
to, at and as of, the Closing in all material respects and
Seller shall deliver a Closing Certificate in
substantially the same form attached hereto as Exhibit D
updating such representations and warranties.
b. Seller shall have delivered, performed, observed and
complied with, all of the items, instruments, documents,
covenants, agreements and conditions required by this
Agreement to be delivered, performed, observed and
complied with by it prior to, or as of, the Closing.
c. Seller shall not be in receivership or dissolution or have
made any assignment for the benefit of creditors, or
admitted in writing its inability to pay its debts as they
mature, or have been adjudicated a bankrupt, or have filed
a petition in voluntary bankruptcy, a petition or answer
seeking reorganization or an arrangement with creditors
under the federal bankruptcy law or any other similar law
or statute of the United States or any state and no such
petition shall have been filed against it.
d. No material or substantial adverse change shall have
occurred with respect to the condition, financial or
otherwise, of the Seller or the Property.
e. Neither the Property nor any part thereof or interest
therein shall have been taken by execution or other
process of law in any action prior to Closing.
f. Seller shall have obtained and delivered to Purchaser a
current report, dated no more than ten (10) days prior to
this Agreement, from a licensed pest control company
reasonably acceptable to Purchaser, and which must show
the Property to be free of all termite, or other
destructive insect and pest infestation.
g. During the Review Period, Purchaser shall have
satisfactorily completed an inspection of the Property
with respect to the physical condition thereof by agents
or contractors selected by Purchaser.
h. During the Review Period, Purchaser shall have received,
in form acceptable to Purchaser, evidence of compliance by
the Property with all building codes, zoning ordinances
and other governmental entitlements as necessary for the
operation of the Property for the current and intended
use, including, without limitation, certificates of
occupancy and such other permits, licenses, approvals,
agreements and authorizations as are required for the
operation of
xviii
<PAGE> 22
the Property for the current and intended use and
satisfactory evidence of no violations of building or
other codes or laws.
i. During the Review Period, all necessary approvals,
consents and the like of third parties to the validity and
effectiveness of the transactions contemplated hereby have
been obtained.
j. During the Review Period, Purchaser is reasonably
satisfied that the Property is sufficient and adequate for
Seller to carry on the business now being conducted
thereon and the Property is in good condition and repair
as reasonably required for the proper operation and use
thereof in compliance with applicable laws.
k. During the Review Period, Purchaser has reviewed and
satisfied itself with respect to the Due Diligence
Materials and shall not have terminated this Agreement
pursuant to the provisions of Section 4.2 hereof.
l. No material portion of the Property shall have been
destroyed by fire or casualty.
m. No condemnation, eminent domain or similar proceedings
shall have been commenced or threatened with respect to
any material portion of the Property.
n. Purchaser shall have been successful in causing the
formation of a real estate investment trust whose
interests have been sold to the public and in connection
therewith shall have raised capital in an amount not less
than $100,000,000.00.
6.2 FAILURE OF CONDITIONS TO PURCHASER'S OBLIGATIONS. In the event any
one or more of the conditions to Purchaser's obligations are not satisfied or
waived in whole or in part at any time prior to or as of the Closing, Purchaser,
at Purchaser's option, shall be entitled to: (a) terminate this Agreement by
giving written notice thereof to Seller, whereupon all moneys, if any, which
have been delivered by Purchaser to Seller or the Title Company shall be
immediately refunded to Purchaser and Purchaser shall have no further
obligations or liabilities hereunder; or (b) proceed to Closing hereunder.
6.3 CONDITIONS TO THE SELLER'S OBLIGATIONS. The obligations of Seller
to sell the Property to Purchaser and to consummate the transactions
contemplated by this Agreement are subject to the satisfaction, at all times
prior to and as of the Closing (or such other time period specified below), of
each of the following conditions:
xix
<PAGE> 23
a. All of the representations and warranties of Purchaser set
forth in this Agreement shall be true at all times prior
to, at and as of, the Closing in all material respects and
Purchaser shall deliver a Closing Certificate in
substantially the same form attached hereto as Exhibit D
updating such representations and warranties.
b. Purchaser shall have delivered, performed, observed and
complied with, all of the items, instruments, documents,
covenants, agreements and conditions required by this
Agreement to be delivered, performed, observed and
complied with by it prior to, or as of, the Closing.
c. Purchaser shall not be in receivership or dissolution or
have made any assignment for the benefit of creditors, or
admitted in writing its inability to pay its debts as they
mature, or have been adjudicated a bankrupt, or have filed
a petition in voluntary bankruptcy, a petition or answer
seeking reorganization or an arrangement with creditors
under the federal bankruptcy law or any other similar law
or statute of the United States or any state and no such
petition shall have been filed against it.
d. Purchaser shall have been successful in causing the
formation of a real estate investment trust whose
interests have been sold to the public and in connection
therewith shall have raised capital in an amount not less
than $100,000,000.00
6.4 FAILURE OF CONDITIONS TO SELLER'S OBLIGATIONS. In the event any one
or more of the conditions to Seller's obligations are not satisfied or waived in
whole or in part at any time prior to or as of the Closing, Seller, at Seller's
option, shall be entitled to: (a) terminate this Agreement by giving written
notice thereof to Purchaser, whereupon all moneys, if any, which have been
delivered by Seller to Purchaser or the Title Company shall be immediately
refunded to Seller and Seller shall have no further obligations or liabilities
hereunder; or (b) proceed to Closing hereunder.
ARTICLE VII.
PROVISIONS WITH RESPECT TO THE CLOSING
7.1 SELLER'S CLOSING OBLIGATIONS. At the Closing, Seller shall
furnish and deliver to the Purchaser, at Seller's expense, the following:
a. The Deed, Title Policy (or the Title Commitment marked-up
and initialed by the Title Company), Bill of Sale,
Certificate of Non-Foreign Status, Closing Certificate,
Right to Purchase Agreement, Lease and Option Agreements,
each duly executed and acknowledged by Seller and, as
appropriate, in
xx
<PAGE> 24
recordable form acceptable in the state and county
in which the Property is located.
b. Certificates of casualty and fire insurance for the
Property and satisfactory evidence of all other
insurance coverages as required pursuant to the Lease
showing Purchaser as additional insured and loss
payee thereunder, where appropriate, with appropriate
provisions for prior notice to Purchaser in the event
of cancellation or termination of such policies and
otherwise in form and substance reasonably
satisfactory to Purchaser.
c. Search Reports, dated not more than five (5) days
prior to Closing, evidencing no UCC-1 Financing
Statements or other filings in the name of Seller
with respect to the Property which will remain on the
Property after the Closing.
d. Such affidavits or letters of indemnity as the Title
Company shall require in order to omit from the Title
Insurance Policy all exceptions for unfiled
mechanic's, materialman's or similar liens.
e. Any and all transfer declarations or disclosure
documents, duly executed by the appropriate parties,
required in connection with the Deed by any state,
county or municipal agency having jurisdiction over
the Property or the transactions contemplated hereby.
f. An opinion of Seller's counsel, dated as of the
Closing Date, in the form
of Exhibit L-1, attached hereto.
g. Such instruments or documents as are necessary, or
reasonably required by Purchaser or the Title
Company, to evidence the status and capacity of
Seller and the authority of the person or persons who
are executing the various documents on behalf of
Seller in connection with the purchase and sale
transaction contemplated hereby.
h. Such other documents as are reasonably required by
Purchaser to carry out the terms and provisions of
this Agreement.
7.2 PURCHASER'S CLOSING OBLIGATIONS. At the Closing, Purchaser
shall furnish and deliver to Seller, at Purchaser's expense, the following:
a. Federal Reserve, wire transfer funds or other
immediately available collected funds payable to the
order, or at the direction, of Seller representing
the cash portion of the Purchase Price due in
accordance with Section 3.1 herein.
xxi
<PAGE> 25
b. The Closing Certificate, Right to Purchase Agreement,
Lease and Option Agreements, duly executed and
acknowledged by Purchaser.
c. Such instruments or documents as are necessary, or
reasonably required by Seller or the Title Company, to
evidence the status and capacity of Purchaser and the
authority of the person or persons who are executing the
various documents on behalf of Purchaser in connection
with the purchase and sale transaction contemplated
hereby.
d. An opinion of Purchaser's counsel, dated as of the Closing
Date, in the form of Exhibit L-2, attached hereto.
e. Such other documents as are reasonably required by Seller
to carry out the terms and provisions of this Agreement.
f. All necessary approvals, consents, certificates and the
like of third parties to the validity and effectiveness of
the transaction contemplated hereby.
ARTICLE VIII.
EXPENSES OF CLOSING
8.1 ADJUSTMENTS. There shall be no adjustment of taxes, assessments,
water or sewer charges, gas, electric, telephone or other utilities, operating
expenses, employment charges, premiums on insurance policies, rents or other
normally proratable items, it being agreed and understood by the Parties that
the Seller shall be obligated to pay such items under the terms of the Lease.
8.2 CLOSING COSTS. Seller shall pay (a) all title examination fees and
premiums for the Title Policy; (b) the cost of the Search Reports; (c) the cost
of the Survey; (d) Seller's legal, accounting and other professional fees and
expenses and the cost of all opinions, certificates, instruments, documents and
papers required to be delivered, or to cause to be delivered, by Seller
hereunder, including without limitation, the cost of performance by Seller of
its obligations hereunder; (e) all other costs and expenses which are required
to be paid by Seller pursuant to other provisions of this Agreement; (f) any and
all state, municipal or other documentary or transfer taxes payable in
connection with the delivery of any instrument or document provided in or
contemplated by this Agreement or any agreement or commitment described or
referred to herein; and (g) the charges for or in connection with the recording
and/or filing of any instrument or document provided herein or contemplated by
this Agreement or any agreement or document described or referred to herein.
Purchaser shall pay (a) Purchaser's legal, accounting and other professional
fees and expenses and the cost of all opinions, certificates, instruments,
documents and papers required to be delivered, or to cause to be delivered, by
Purchaser hereunder, including, without limitation, the cost of performance by
Purchaser of its obligations hereunder; and (b) all other costs and expenses
which
xxii
<PAGE> 26
are required to be paid by Purchaser pursuant to other provisions of this
Agreement. Purchaser and Seller shall each be responsible for other costs in the
usual and customary manner for this kind of transaction in the county where the
Property is located.
8.3 COMMISSIONS/BROKER'S FEES. Seller hereby represents and warrants to
Purchaser that it has not contacted any real estate broker, finder or any other
party in connection with this transaction, and that it has not taken any action
which would result in any real estate broker's, finder's or other fees being due
or payable to any party with respect to the transaction contemplated hereby.
Purchaser hereby represents and warrants to Seller that Purchaser has not
contacted any real estate broker, finder or any other party in connection with
this transaction, and that it has not taken any action which would result in any
real estate broker's, finder's or other fees being due or payable to any party
with respect to the transaction contemplated hereby. Each Party hereby
indemnifies and agrees to hold the other Party harmless from any loss,
liability, damage, cost or expenses (including reasonable attorneys' fees)
resulting to such other Party by reason of a breach of the representation and
warranty made by such Party herein.
ARTICLE IX.
DEFAULT AND REMEDIES
9.1 SELLER'S DEFAULT; PURCHASER'S REMEDIES.
a. Seller shall be deemed to be in default hereunder upon the
occurrence of one of the following events: (i) any of
Seller's warranties or representations set forth herein
shall be untrue in any material respect when made or at
Closing; or (ii) Seller shall fail to meet, comply with,
or perform any covenant, agreement or obligation on its
part required within the time limits and in the manner
required in this Agreement, which, in either of such
events, is not cured by Seller within ten (10) days
following receipt by Seller of written notice of default
from Purchaser.
b. In the event Seller shall be deemed to be in default
hereunder Purchaser may, at Purchaser's sole option, do
any one or more of the following: (i) terminate this
Agreement by written notice delivered to Seller on or
before the Closing; and/or (ii) enforce specific
performance of this Agreement against Seller including
Purchaser's reasonable costs and attorneys fees in
connection therewith and/or (iii) exercise any other right
or remedy Purchaser may have at law or in equity by reason
of such default including, but not limited to, the
recovery of reasonable attorneys' fees incurred by
Purchaser in connection herewith.
xxiii
<PAGE> 27
9.2 PURCHASER'S DEFAULT; SELLER'S REMEDIES.
a. Purchaser shall be deemed to be in default hereunder upon
the occurrence of one of the following events: (i) any of
Purchaser's warranties or representations set forth herein
shall be untrue in any material respect when made or at
Closing; or (ii) Purchaser shall fail to meet, comply
with, or perform any covenant, agreement or obligation on
its part required within the time limits and in the manner
required in this Agreement, which, in either of such
events, is not cured by Purchaser within ten (10) days
following receipt by Purchaser of written notice of
default from Seller.
b. In the event Purchaser shall be deemed to be in default
hereunder Seller may, at Seller's sole option, do any one
or more of the following: (i) terminate this Agreement by
written notice delivered to Purchaser on or before the
Closing; and/or (ii) enforce specific performance of this
Agreement against Purchaser including Seller's reasonable
costs and attorneys fees in connection therewith.
ARTICLE X.
MISCELLANEOUS
10.1 CASUALTY. Prior to the Closing Date, and notwithstanding the
pendency of this Agreement, the entire risk of loss or damage by fire or other
casualty shall be borne and assumed by Seller, except as otherwise provided in
this Section 10.1. Until the Closing has occurred, Seller shall keep all
insurance policies in effect. If, prior to the Closing Date, any part of the
Property is damaged or destroyed by fire or other casualty, Seller shall
immediately notify Purchaser of such fact. If such damage or destruction is
material (as defined below), Purchaser shall have the option to terminate this
Agreement upon written notice to Seller given not later than thirty (30) days
after receipt of Seller's notice. For purposes hereof "material" shall be deemed
to be any uninsured damage or destruction to the Property (except that a
casualty shall not be deemed uninsured solely because all, or a portion of, the
cost of the casualty is subject to a deductible) or any insured damage or
destruction (i) where the cost of repair or replacement is estimated, in
Purchaser's good faith judgment, to be One Hundred Thousand and No/100
($100,000.00) or more, (ii) where the repair or replacement is estimated, in
Purchaser's good faith judgment, to require more than one hundred twenty (120)
days to repair, or (iii) which would result in an abatement of rent that would
not be fully covered by rent loss insurance (or its equivalent) to Seller upon
the Closing. If Purchaser does not exercise this option to terminate this
Agreement, or if the casualty is not material, neither party shall have the
right to terminate this Agreement, and the parties shall proceed to the Closing
pursuant to the terms hereof without modification of the terms of this Agreement
and without any reduction in the Purchase Price, and the repair and restoration
of the Property shall proceed in accordance with the terms and provisions of the
Lease to be entered into between Seller and Purchaser with the same effect as if
such casualty had occurred during the term of the Lease. If Purchaser does not
elect to terminate this Agreement by reason of any casualty, Purchaser shall
have the right to participate in
xxiv
<PAGE> 28
any adjustment of the insurance claim and, in such event, Purchaser and Seller
shall cooperate each with the other in good faith.
10.2 CONDEMNATION. Prior to the Closing Date, if all or any portion of
the Property is taken, or if access thereto is reduced or restricted, by eminent
domain or otherwise (or if such taking, reduction or restriction is pending,
threatened or contemplated) (hereinafter a "Condemnation Proceeding"), Seller
shall immediately notify Purchaser of such fact. In the event that such notice
relates to the taking of a material (as defined below) portion of the Property,
Purchaser shall have the option, in its sole and absolute discretion, to
terminate this Agreement upon written notice to Seller given not later than
thirty (30) days after receipt of Seller's notice, whereupon neither party shall
have any rights, obligations or liabilities hereunder except with respect to
those rights, obligations or liabilities which expressly survive the termination
of this Agreement. For the purposes of this Section, and without limiting the
generality of the foregoing, a taking shall be deemed material if it (i)
restricts access to the Property (ii) reduces the parking available to Property
unless an equal or greater number of spaces may be created through a
reconfiguration of the parking facilities, or (iii) would, in the reasonable
estimation of Purchaser, cost more than $100,000 to restore the Property or make
alterations to the Property in order to maintain the Property as a fully
functioning correctional and detention facility comparable in all respects to
the condition of the Property absent such Condemnation Proceeding. If Purchaser
does not elect to terminate this Agreement as herein provided, the parties shall
proceed to the Closing pursuant to the terms hereof without modification of the
terms of this Agreement and without any reduction in the Purchase Price, and any
condemnation award and repair and restoration of the Property shall be governed
by the terms and provisions of the Lease to be entered into between Seller and
Purchaser at the Closing with the same effect as if such Condemnation Proceeding
had occurred during the term of the Lease. If Purchaser does not elect to
terminate this Agreement by reason of any Condemnation Proceeding, Purchaser
shall have the right to participate in any Condemnation Proceeding with respect
to the Property and, in such event, Purchaser and Seller shall cooperate each
with the other in good faith.
10.3 SURVIVAL. All of the representations, warranties, covenants,
agreements and indemnities of Seller and Purchaser contained in this Agreement,
to the extent not performed at the Closing, shall survive the Closing for the
period of one (1) year after the Closing Date and shall not be deemed to merge
upon the acceptance of the Deed by Purchaser.
10.4 RIGHT OF ASSIGNMENT. Neither this Agreement nor any interest
herein may be assigned or transferred by Purchaser to any person, firm,
corporation or other entity without the prior written consent of Seller, which
consent may be given or withheld in the sole discretion of Seller.
10.5 NOTICES. All notices, requests and other communications under this
Agreement shall be in writing and shall be either (a) delivered in person, (b)
sent by certified mail, return-receipt requested or (c) delivered by a
recognized national delivery service addressed as follows:
xxv
<PAGE> 29
If intended for Seller: Wackenhut Corrections Corporation
4200 Wackenhut Drive, Suite 100
Palm Beach Gardens, FL 33410-4243
Phone: (561) 622-5656
Attention: Dr. George C. Zoley
With a copy to: Akerman, Senterfitt & Eidson, P.A.
One SE Third Avenue
Miami, Florida 33131
Phone: (305) 374-5600
Attention: Bruce I. March, Esq.
If intended for Purchaser: CPT Operating Partnership L.P.
4200 Wackenhut Drive
Palm Beach Gardens, Florida 33410-4243
Phone: (561) 691-6644
Attention: Mr. Charles R. Jones
With a copy to: Josias, Goren, Cherof, Doody and Ezrol, P.A.
3009 East Commercial Boulevard, Suite 200
Ft. Lauderdale, Florida 33308
Phone: (954) 771-4500
Attention: Donald J. Doody, Esq.
or at such other address, and to the attention of such other person, as the
parties shall give notice as herein provided. A notice, request and other
communication shall be deemed to be duly received if delivered in person or by a
recognized national delivery service, when delivered to the address of the
recipient, if sent by mail, on the date of receipt by the recipient as shown on
the return-receipt card; provided that if a notice, request or other
communication is served by hand on a day which is not a Business Day, or after
5:00 P.M. on any Business Day at the addressee's location, such notice or
communication shall be deemed to be duly received by the recipient at 9:00 A.M.
on the first Business Day thereafter.
10.6 ENTIRE AGREEMENT; MODIFICATIONS. This Agreement embodies and
constitutes the entire understanding between the Parties with respect to the
transactions contemplated herein, and all prior or contemporaneous agreements,
understandings, representations and statements (oral or written) are merged into
this Agreement. Neither this Agreement nor any provision hereof may be waived,
modified, amended, discharged or terminated except by an instrument in writing
signed by the Party against whom the enforcement of such waiver, modification,
amendment, discharge or termination is sought, and then only to the extent set
forth in such instrument.
10.7 APPLICABLE LAW. THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED
HEREBY SHALL BE GOVERNED BY AND CONSTRUED IN
xxvi
<PAGE> 30
ACCORDANCE WITH THE LAWS OF THE STATE OF FLORIDA. The Parties agree that
jurisdiction and venue for any litigation arising out of this Agreement shall be
in the Courts of Palm Beach County, Florida or the U.S. District Court for the
Southern District of Florida and, accordingly, consent thereto.
10.8 CAPTIONS. The captions in this Agreement are inserted for
convenience of reference only and in no way define, describe, or limit the scope
or intent of this Agreement or any of the provisions hereof.
10.9 BINDING EFFECT. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective heirs,
executors, administrators, legal representatives, successors, and assigns.
10.10 TIME IS OF THE ESSENCE. With respect to all provisions of this
Agreement, time is of the essence. However, if the first date of any period
which is set out in any provision of this Agreement falls on a day which is not
a Business Day, then, in such event, the time of such period shall be extended
to the next day which is a Business Day.
10.11 WAIVER OF CONDITIONS. Any Party may at any time or times, at its
election, waive any of the conditions to its obligations hereunder, but any such
waiver shall be effective only if contained in a writing signed by such Party.
No waiver by a Party of any breach of this Agreement or of any warranty or
representation hereunder by the other Party shall be deemed to be a waiver of
any other breach by such other Party (whether preceding or succeeding and
whether or not of the same or similar nature), and no acceptance of payment or
performance by a Party after any breach by the other Party shall be deemed to be
a waiver of any breach of this Agreement or of any representation or warranty
hereunder by such other Party, whether or not the first Party knows of such
breach at the time it accepts such payment or performance. No failure or delay
by a Party to exercise any right it may have by reason of the default of the
other Party shall operate as a waiver of default or modification of this
Agreement or shall prevent the exercise of any right by the first Party while
the other Party continues to be so in default.
10.12 LIABILITY OF GENERAL PARTNER OF PURCHASER. Seller acknowledges
that Purchaser has disclosed that the general partner of Purchaser (the "General
Partner") is a Maryland business trust formed pursuant to a Declaration of
Trust, as amended, a copy of which is duly filed with the Department of
Assessments and Taxation of the State of Maryland, which provides that no
trustee, officer, shareholder, employee or agent of the General Partner shall be
held personally liable under any written instrument creating an obligation of,
or claim against, the General Partner and that all persons dealing with the
General Partner, in any way, shall look only to the assets of the General
Partner for the payment of any sum or the performance of any obligation. Seller
agrees that any liability of the General Partner or any trustee, officer,
shareholder, employee or agent acting on behalf of the General Partner arising
out of this Agreement or the performance by Purchaser of its obligations
hereunder is limited to the assets of the General Partner in accordance with the
above Declaration of Trust.
xxvii
<PAGE> 31
EXECUTED to be effective as of the Effective Date.
PURCHASER:
CPT OPERATING PARTNERSHIP L.P.
By: Correctional Properties Trust, a Maryland real
estate investment trust, its General Partner
By:
-------------------------------------------
Charles R. Jones, President
Date:
----------------------------------------
Purchaser's Tax Identification Number:
----------------------------------------------
SELLER:
WACKENHUT CORRECTIONS CORPORATION
By:
-----------------------------------------------
George R. Zoley, Vice Chairman of the Board
Date:
--------------------------------------------
Seller's Tax Identification Number:
--------------------------------------------------
AGREEMENT OF TITLE COMPANY
By its execution of this Agreement, the Title Company agrees to: (a)
timely file a return with the Internal Revenue Service on Form 1099-B, Form
1099-S and/or such other form or forms as the Internal Revenue Service may by
form or regulation require, and (b) furnish Purchaser with a written statement
showing the name and address of the Title Company and the information shown on
such form or forms with respect to Purchaser, and (c) comply with the provisions
of the Agreement which are applicable to the Title Company. Such form or forms
shall be filed in order that the parties to this transaction will be in
compliance with Section 6045 of the Internal Revenue Code of 1986, as
xxviii
<PAGE> 32
amended. Purchaser and Seller shall each provide their taxpayer identification
numbers to the Title Company so that such information may be included in the
form or forms filed by the Title Company.
______________ TITLE INSURANCE CORPORATION
By:
----------------------------------------
Name:
-----------------------------------
Its:
------------------------------------
Date:
-----------------------------------
xxix
<PAGE> 33
LIST OF SCHEDULES AND EXHIBITS
<TABLE>
<S> <C>
Schedule I - Purchase Price
Exhibit A - Real Property Descriptions
Exhibit B - Bill of Sale and Assignment
Exhibit C - Certificate of Non-Foreign Status
Exhibit D - Closing Certificate
Exhibit E - Deed
Exhibit F - Excluded Personal Property
Exhibit G - Right to Purchase Agreement
Exhibit H - Master Agreement to Lease and Lease Agreement
Exhibit I - Option Agreements
Exhibit J - Personal Property
Exhibit K - Surveyor's Certificate
Exhibit L-1 - Opinion of Seller's Counsel
Exhibit L-2 - Opinion of Purchaser's Counsel
</TABLE>
xxx
<PAGE> 1
Exhibit 3.2
FORM OF
CORRECTIONAL PROPERTIES TRUST
ARTICLES OF AMENDMENT AND RESTATEMENT
OF DECLARATION OF TRUST
Correctional Properties Trust, a Maryland real estate investment trust
(the "Trust"), hereby certifies to the State Department of Assessment and
Taxation of Maryland that:
FIRST: The Trust desires to amend and restate its Declaration of Trust
as currently in effect.
SECOND: The Declaration of Trust is amended and as so amended is
restated in its entirety by striking out Articles I through Article XII and
inserting in lieu thereof the following:
ARTICLE I
FORMATION
The Trustees hereby form a real estate investment trust (the "Trust")
within the meaning of Title 8 of the Corporations and Associations Article of
the Annotated Code of Maryland, as amended from time to time ("Maryland REIT
Law"). The Trust is not intended to be, and shall not be deemed to be, a general
partnership, limited partnership, limited liability partnership, joint venture,
joint stock company, limited liability company, corporation or other form of
organization (but nothing herein shall preclude the Trust from being treated for
tax purposes as an association under the Internal Revenue Code of 1986, as
amended from time to time (the "Code")). The shareholders shall be beneficiaries
of the Trust, subject to the terms and conditions set forth herein.
ARTICLE II
NAME
The name of the Trust is:
CORRECTIONAL PROPERTIES TRUST
Under circumstances in which the Board of Trustees of the Trust (the
"Board of Trustees" or "Board") determines that the use of the name of the Trust
is not practical, legal or convenient, the
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Trust may use any other designation or name of the Trust as designated by the
Board of Trustees from time to time. The Trust shall have the authority to
operate under an assumed name or names, including, without limitation, in such
state or states or any political subdivision thereof where it would not be
legal, practical or convenient to operate in the name of the Trust. The Trust
shall have the authority to file such assumed name certificate or other
instruments in such places as may be required by applicable law to operate under
such assumed name or names.
ARTICLE III
PURPOSES AND POWERS
Section 1. PURPOSES. The Trust is a for-profit real estate investment
trust organized for the purpose of engaging in any activity permitted to real
estate investment trusts under the laws of the State of Maryland.
Section 2. POWERS. The Trust shall have all the powers granted to real
estate investment trusts generally by the Maryland REIT Law or any successor
statute and shall have all further powers as are not inconsistent with and are
appropriate to promote and attain its purposes. In addition, it is intended that
the business of the Trust will be conducted so that the Trust will qualify as a
"real estate investment trust" as defined in the Code and the provisions of this
Declaration of Trust shall be construed in such manner as to facilitate that
qualification under the Code.
ARTICLE IV
RESIDENT AGENT AND PRINCIPAL OFFICE
The name and address of the resident agent of the Trust in the State of
Maryland is The CSC Lawyers Incorporating Service Company, 11 East Chase Street,
Baltimore, Maryland 21202. The address of the Trust's initial principal office
is 4200 Wackenhut Drive, Palm Beach Gardens, Florida 33410-4243. The Trust may
have such other offices or places of business within or without the State of
Maryland as the Trustees from time to time determine.
ARTICLE V
BOARD OF TRUSTEES
Section 1. NUMBER. The Trust currently has nine (9) Trustees, but such
number may be hereafter increased and decreased from time to time by the Board
of Trustees acting pursuant to the Bylaws to not more than fifteen (15) members
and not less three (3) members. At least a majority of the members of the Board
of Trustees must be Independent Trustees. An "Independent Trustee"
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is an individual who qualifies as a Trustee under the Bylaws of the Trust, but
who is neither (a) an officer or an employee of the Trust or its affiliates, nor
(b) a director, trustee, officer or employee of, or other person who has a
material financial interest in, any of (1) The Wackenhut Corporation, a Florida
corporation, or Wackenhut Corrections Corporation, a Florida corporation, or (2)
any lessee or tenant of property owned by the Trust, or (3) any owner, lessee or
tenant of any property financed by the Trust or by the Trust's affiliates, other
than any such owner, lessee or tenant which is an affiliate of the Trust, or (4)
any management company operating any property owned or financed by the Trust or
by the Trust's affiliates, or (5) an affiliate of any of the foregoing. As used
herein, the term "affiliate" shall have the meaning ascribed to such term in
Rule 405 under the Securities Act of 1933, as amended. A Trustee need not be a
shareholder. The business and affairs of the Trust shall be managed under the
direction of the Trustees and the Trustees shall have full, exclusive and
absolute power, control, and authority over the assets of the Trust and over the
business of the Trust as if they, in their own right, are the sole owners of the
Trust. This Declaration of Trust shall be construed with the presumption in
favor of the grant of power and authority to the Trustees.
Section 2. ELECTION.
(a) The Trustees of the Trust (other than any Trustees who may
be elected by holders of Preferred Shares as provided for pursuant to Article
VIII Section 5 hereof) shall be and are divided into three classes: Class I,
Class II and Class III. The number of Trustees in each class shall be as nearly
equal as the then-authorized number of Trustees constituting the Board of
Trustees permits. Each Trustee shall serve for a term ending on the date of the
third Annual Meeting of the shareholders following the Annual Meeting at which
such Trustee was elected; PROVIDED, HOWEVER, that each initial Trustee in Class
I shall serve for a term ending on the date of the Annual Meeting held in 1999,
each initial Trustee in Class II shall serve for a term ending on the date of
the Annual Meeting held in 2000, and each initial Trustee in Class III shall
serve for a term ending on the date of the Annual Meeting held in 2001. Any
Trustee who may be elected by holders of Preferred Shares as provided for
pursuant to Article VIII Section 5 hereof shall serve for a term ending on the
date of the Annual Meeting next following the Annual Meeting of shareholders at
which such Trustee was elected or for such other period not beyond the third
Annual Meeting of shareholders following such Trustee's election as may be
provided for pursuant to such provisions. The names of the initial Class I
Trustees are: Richard R. Wackenhut, William M. Murphy and Robert R. Veach, Jr.
The names of the initial Class II Trustees are: George R. Wackenhut, Anthony D.
Travisono and Clarence E. Anthony. The names of the initial Class III Trustees
are: George C. Zoley, Charles R. Jones and James D. Motta.
(b) In the event of any increase or decrease in the authorized
number of Trustees:
(1) Each Trustee then serving shall nevertheless continue as a
Trustee of the class of which he is a member until the expiration of his term or
his prior death, retirement, resignation or removal; and
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(2) Except to the extent that an increase or decrease in the
authorized number of Trustees occurs in connection with the rights of holders of
Preferred Shares to elect additional Trustees, the newly-created or eliminated
trusteeships resulting from any increase or decrease shall be apportioned by the
Board of Trustees among the three classes so as to keep the number of Trustees
in each class as nearly equal as possible.
(c) Cumulative voting will not be permitted in the election of
Trustees.
Section 3. TERM. Notwithstanding the provisions of Article V Sections
2(a) and (b), each Trustee shall serve until his successor is elected and
qualifies or until his prior death, retirement, resignation or removal.
Section 4. REMOVAL. Subject to the provisions of Article V Section
5(b), the shareholders may, at any time, remove any Trustee, with or without
cause, by an affirmative vote of holders of two-thirds of shares entitled to
vote in the election of Trustees.
Section 5. VACANCY.
(a) Except as may otherwise be provided pursuant to Article
VIII Section 5 hereof with respect to any rights of holders of Preferred Shares
to elect additional Trustees or any agreement relating to the right to designate
nominees for election to the Board of Trustees, should a vacancy in the Board of
Trustees occur or be created (whether arising through death, retirement,
resignation or removal or through an increase but not a decrease in the number
of authorized Trustees), such vacancy shall be filled by the affirmative vote of
a majority of the remaining Trustees, even though less than a quorum of the
Board of Trustees may exist. A Trustee so elected to fill a vacancy shall serve
for the remainder of the term of the class to which he was elected and until his
successor is elected and qualifies.
(b) During any period when the holders of any series of
Preferred Shares have the right to elect additional Trustees as provided for or
fixed pursuant to the provisions of Article VIII Section 5 hereof, then upon
commencement and for the duration of the period during which such right
continues (i) the then otherwise total and authorized number of Trustees of the
Trust shall automatically be increased by the number of such additional
Trustees, and such holders of Preferred Shares shall be entitled to elect the
additional Trustees so provided for or fixed pursuant to said provisions, (ii)
each such additional Trustee shall serve until the next Annual Meeting of
shareholders and until such Trustee's successor shall have been duly elected and
qualifies, or until such Trustee's right to hold such office terminates pursuant
to said provisions, whichever occurs earlier, subject to his earlier death,
disqualification, resignation or removal and (iii) the removal of any such
additional Trustee shall be governed by the terms of the Preferred Shares as
provided for or fixed pursuant to Article VIII Section 5.
Section 6. LEGAL TITLE. Legal title to all Trust Property (as
hereinafter defined) shall be vested in the Trustees, but they may cause legal
title to any Trust Property to be held by or in the
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name of any Trustee, or the Trust, or any other person as nominee. "Trust
Property" shall mean all property, real, personal or otherwise, tangible or
intangible, which is transferred or conveyed to the Trust or the Trustees
(including all rents, income, profits and gains therefrom), or which is
otherwise owned or held by, or for the account of, the Trust or the Trustees.
Section 7. SUCCESSOR TRUSTEES. The right, title and interest of the
Trustees in and to the Trust Property shall vest automatically in all persons
who may become Trustees hereafter upon their due election and qualification
without any further act, and thereupon they shall have the same rights,
privileges, powers, duties and immunities as though originally named as Trustees
in this Declaration of Trust. Appropriate written evidence of the election and
qualification of successor Trustees shall be filed with the records of the Trust
and in such other offices or places as the Trustees may deem necessary,
appropriate or desirable. Upon the resignation, removal or death of a Trustee or
other termination of his term of office, he (and in the event of his death, his
estate) automatically shall cease to have any right, title or interest in or to
any of the Trust Property, and the right, title and interest of such Trustee in
and to the Trust Property shall vest automatically in the remaining Trustees
without any further act.
ARTICLE VI
POWERS OF TRUSTEES
Section 1. POWERS OF TRUSTEES. The Trustees shall have all the powers
necessary, convenient or appropriate to effectuate the purposes of the Trust and
may take any action which they deem necessary or desirable to carry out such
purposes. Any determination of the purposes of the Trust made by the Trustees in
good faith shall be conclusive. In construing the provisions of this Declaration
of Trust, the presumption shall be in favor of the grant of power to the
Trustees. Except as otherwise provided under the Maryland REIT Law or this
Declaration of Trust, the Trustees' powers shall include, without limitation,
the following:
(1) To purchase, acquire through the issuance of shares in the
Trust, obligations of the Trust or otherwise, and to mortgage, sell, acquire or
lease, hold, manage, improve, lease to others, option, exchange, release and
partition, real estate interests of every nature, including freehold, leasehold,
mortgage, ground rent and other interests therein, and to erect, construct,
alter, repair, demolish or otherwise change buildings and structures of every
nature;
(2) To purchase, acquire through the issuance of shares in the
Trust, obligations of the Trust or otherwise, option, sell and exchange, stocks,
bonds, notes, certificates of indebtedness and securities of every nature;
(3) To purchase, acquire through the issuance of shares in the
Trust, obligations of the Trust or otherwise, mortgage, sell, acquire or lease,
hold, manage, improve, lease to others, option and exchange personal property of
every nature;
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(4) To hold legal title to property of the Trust in the name
of the Trust, or in the name of one or more of the Trustees for the Trust, or of
any other person for the Trust, without disclosure of the interest of the Trust
therein;
(5) To borrow money for the purposes of the Trust and to give
notes, debentures, bonds or other negotiable or nonnegotiable instruments or
obligations of the Trust therefor; to enter into other obligations or guarantee
the obligations of others on behalf of and for the purposes of the Trust; and to
mortgage or pledge or cause to be mortgaged or pledged real and personal
property of the Trust to secure such notes, debentures, bonds, instruments or
other obligations;
(6) To lend money on behalf of the Trust and to invest the
funds of the Trust;
(7) To create reserve funds for such purposes as they deem
advisable;
(8) To deposit funds of the Trust in banks and other
depositories without regard to whether such accounts will draw interest;
(9) To pay taxes and assessments imposed upon or chargeable
against the Trust or the Trustees (other than income, social security and other
taxes required to be paid by the Trustees individually based upon their
compensation from the Trust) by virtue of or arising out of the existence,
property, business or activities of the Trust;
(10) To purchase, issue, sell or exchange shares in the Trust;
(11) To exercise in respect of property of the Trust all
options, privileges and rights, whether to vote, assent, subscribe or convert;
or of any other nature; to grant proxies; and to participate in and accept
securities issued under any voting trust agreement;
(12) To participate in any reorganization, readjustment,
consolidation, merger, dissolution, sale or purchase of assets, lease, or
similar proceedings of any corporation, partnership or other organization in
which the Trust shall have an interest and in connection therewith to delegate
discretionary powers to any reorganization, protective or similar committee and
to pay assessments and other expenses in connection therewith;
(13) To engage or employ officers, other employees, agents and
representatives of any nature, or independent contractors, including, without
limiting the generality of the foregoing, transfer agents for the transfer of
shares in the Trust, registrars, underwriters, dealers, agents or other
distributors for the sale of shares in the Trust, independent certified public
accountants, attorneys at law, appraisers, real estate agents and brokers; and
to delegate to one or more Trustees, agents, representatives, officers,
employees, independent contractors or other persons such powers and duties as
the Trustees deem appropriate;
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(14) To determine conclusively the allocation between capital
and income of the receipts, holdings, expenses and disbursements of the Trust,
regardless of the allocation which might be considered appropriate in the
absence of this provision;
(15) To determine conclusively the value from time to time,
and to revalue, the real estate, securities and other property of the Trust by
means of independent appraisals or otherwise;
(16) To compromise or settle claims, questions, disputes and
controversies by, against or affecting the Trust;
(17) To solicit proxies of the shareholders;
(18) To adopt a fiscal year for the Trust and to change such
fiscal year;
(19) To adopt and use a seal;
(20) To merge the Trust with or into any other trust,
corporation, entity or person in accordance with the laws of the State of
Maryland;
(21) To exercise exclusive power to make and alter the Bylaws
of the Trust in a manner that is not inconsistent with law or this Declaration
of Trust to regulate the governance of the Trust and the administration of its
affairs;
(22) To make donations for the public welfare or for
community, charitable, religious, educational, scientific, civic or similar
purposes, regardless of any direct benefit to the Trust;
(23) To cause the Trust to purchase interests in one or more
general or limited partnerships or limited liability companies formed to carry
out the activities described above, and to exercise all of the rights, powers
and duties granted by the laws of the jurisdictions in which such partnerships
and limited liability companies are formed to general or limited partners or
members, as the case may be;
(24) To deal with the Trust Property in every way, including
providing for the Trust to be promotor, general or limited partner, member,
associate or manager of any joint ventures, partnerships, limited liability
companies and any other combinations or associations, that would be lawful for
an individual, whether similar to or different from the ways herein and
hereinabove specified; and
(25) To cause the Trust to exercise its powers through
ownership or operation of corporate subsidiaries, partnerships, limited
liability companies and other combinations and operations.
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Section 2. TRUSTEES' RIGHT TO OWN SHARES. A Trustee may acquire, hold
and dispose of shares in the Trust for his individual account and may exercise
all rights of a shareholder to the same extent and in the same manner as if he
were not a Trustee.
Section 3. TRANSACTIONS BETWEEN THE TRUST AND ITS TRUSTEES, OFFICERS,
EMPLOYEES AND AGENTS. Subject to any express restrictions in this Declaration of
Trust or adopted by the Trustees in the Bylaws or by resolution, the Trust may
enter into any contract or transaction of any kind (including without limitation
for the purchase, lease or sale of property or for any type of services,
including those in connection with underwriting or the offer or sale of
securities of the Trust) with any person, including any Trustee, officer,
employee or agent of the Trust or any person affiliated or associated with a
Trustee, officer, employee or agent of the Trust, whether or not any of them has
a financial interest in such transaction.
ARTICLE VII
REIT STATUS
The Trust is intended to qualify as a real estate investment trust
under the Maryland REIT Law, or any successor statutes. The Trust shall also
seek to elect and maintain status as a real estate investment trust ("REIT")
under Sections 856-860 or any successor sections of the Code. It shall be the
duty of the Board of Trustees to use its commercially reasonable efforts to
ensure that the Trust satisfies the requirements for qualification as a REIT
under the Code, including, but not limited to, the ownership of its outstanding
shares, the nature of its assets, the sources of its income, and the amount and
timing of its distributions to its shareholders. The Board of Trustees shall
endeavor to take no action to disqualify the Trust as a REIT or to otherwise
revoke the Trust's election to be taxed as a REIT without the affirmative vote
of the holders of not less than two-thirds of all of the outstanding shares of
the Trust entitled to vote on such matter.
ARTICLE VIII
SHARES AND SHAREHOLDERS
Section 1. AUTHORIZED CAPITAL SHARES. The total number of shares which
the Trust initially has authority to issue is 150,000,000 shares of a class
denominated Common Shares, $.001 par value per share, and 50,000,000 shares of a
class denominated Preferred Shares, $.001 par value per share, for an aggregate
of 200,000,000 shares with an aggregate par value of $200,000.
Section 2. CERTIFICATES OF OWNERSHIP. Ownership of shares shall be, as
determined by the Trustees, either (i) evidenced by certificates in such form as
shall be determined by the Trustees from time to time, or (ii) registered in
uncertificated form, each in accordance with the laws of the State
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of Maryland. The owners of the shares, who are the beneficiaries of the Trust,
shall be designated as "shareholders." The certificates shall be negotiable and
title thereto shall be transferred by assignment or delivery in all respects as
a stock certificate of a Maryland corporation except as may be noted thereon.
Section 3. FRACTIONAL SHARES. The Trust may issue shares in fractional
denominations to the same extent as its whole shares, and any fractional share
shall carry proportionately the rights of a whole share, including without
limitation, the right to vote, the right to receive dividends and distributions
and the right to participate upon liquidation of the Trust. A fractional share
shall not however, have any right to receive a certificate evidencing it,
regardless of whether a full share has such right, but if so determined by the
Trustees, may be represented by scrip.
Section 4. NO LEGAL TITLE TO TRUST PROPERTY. The shareholders shall
have no legal title or interest in the Trust Property and no right to a
partition thereof or to an accounting therefor during the continuance of the
Trust but only to the rights expressly provided in this Declaration of Trust and
under Maryland REIT Law. Neither the transfer of shares nor the death,
insolvency or incapacity of any shareholder shall operate to dissolve or
terminate the Trust, nor shall it entitle any transferee, legal representative
or other person to a partition of the property of the Trust or to an accounting
therefor.
Section 5. COMMON SHARES/PREFERRED SHARES. Common Shares may be issued
from time to time upon authorization by the Board of Trustees of the Trust.
Preferred Shares may be issued from time to time upon authorization by the Board
of Trustees of the Trust, in such series and with such preferences, conversion
or other rights, voting powers, restrictions, limitations as to dividends or
distributions, qualifications or terms or conditions of redemption or other
provisions as may be fixed by the Board of Trustees, except as otherwise set
forth in this Declaration of Trust. Without limiting the foregoing, the Board of
Trustees shall have the power to classify and reclassify any unissued shares of
the Trust of any class or series from time to time by setting or changing the
preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends or distributions, qualifications or terms or
conditions of redemption of the shares. Shares may be issued for such
consideration, if any, as the Board of Trustees determines, including, without
limitation, for services and as otherwise provided in this Article VIII Section
12, and also may be issued as a result of a share dividend or share split,
without any consideration, and all shares so issued will be fully paid and
non-assessable by the Trust. The Board of Trustees may also authorize the
issuance of debt instruments, shares, and securities convertible into shares of
the Trust for such consideration as the Board of Trustees may deem advisable.
Section 6. ANNUAL MEETING. A meeting of shareholders shall be held
annually after the delivery of the annual report of the Trust at a convenient
location, within or without the United States, as determined by the Board of
Trustees, upon proper notice as set forth in the Bylaws of the Trust. However,
the failure to hold an annual meeting shall not invalidate the Trust's existence
or affect any otherwise valid act of the Trust or Trustees.
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Section 7. DIVIDENDS AND DISTRIBUTIONS. Subject to the provisions of
Article VII, the Trustees, within thirty (30) days after the end of each fiscal
year in each calendar year after the calendar year in which the Trust is
created, and, in their discretion, more frequently, shall use commercially
reasonable efforts to declare and pay to the shareholders such dividends and
distributions, as may be necessary to continue to qualify the Trust as a "real
estate investment trust," as defined in the Code, as well as such additional
dividends and distributions as the Trustees in their discretion may declare.
Section 8. DIVIDENDS AND DISTRIBUTIONS; RIGHTS UPON LIQUIDATION. After
the provisions with respect to preferential dividends or distributions of any
class or series of Preferred Shares, if any, shall have been satisfied, and
subject to any other conditions that may be fixed in accordance with the
provisions of this Article VIII Section 5, then, and not otherwise, all Common
Shares will participate equally in dividends and distributions payable to
holders of shares of Common Shares when and as declared by the Board of Trustees
at their discretion. In the event of voluntary or involuntary dissolution or
liquidation of the Trust, after providing for the payment of all liabilities,
and after distribution in full of the preferential amounts, if any, to be
distributed to the holders of Preferred Shares pursuant to the additional
rights, if any, of the holders of Preferred Shares fixed in accordance with
Article VIII Section 5, the holders of Common Shares shall be entitled to
receive all of the remaining assets of the Trust, tangible and intangible, of
whatever kind available for distribution to shareholders ratably in proportion
to the number of Common Shares held by them respectively.
Section 9. VOTING. Each holder of Common Shares shall be entitled to
one vote per share on all matters to be voted on by the holders of Common Shares
of the Trust. Except as may be otherwise provided or fixed by the Board of
Trustees with respect to the voting rights of Preferred Shares pursuant to
Article VIII Section 5, and except as required by law or the rules of any stock
exchange on which the shares of the Trust may be listed, the holders of
Preferred Shares shall have no voting rights and shall have no rights to receive
notice of any meetings.
Section 10. VOTING RIGHTS OF COMMON SHAREHOLDERS. Holders of the Common
Shares shall be entitled to vote only on the following matters: (a) except as
may be otherwise provided or fixed by the Board of Trustees with respect to
voting rights of Preferred Shares pursuant to Article VIII Section 5, election
or removal of Trustees as provided in Article V Sections 2 and 4; (b) amendment
of this Declaration of Trust to the extent provided in Article XI; (c) a merger
of the Trust to the extent required under the Maryland REIT Law or the rules of
any stock exchange on which the shares of the Trust may be listed; (d) with
regard to the REIT status, as provided in Article VII; (e) termination of the
Trust as provided in Article XII; (f) on such other matters as a vote of the
holders of Common Shares may be required by law or pursuant to the rules of any
stock exchange on which the shares of the Trust may be listed from time to time;
and (g) with respect to such other matters as may be determined by the Board of
Trustees from time to time. Except with respect to the foregoing matters, no
action taken by the shareholders at any meeting shall in any way bind the Trust
or Trustees.
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Section 11. PREEMPTIVE RIGHTS. No holder of shares of the Trust shall
have any preemptive or preferential rights to subscribe to or purchase (i) any
shares of any class or series of the Trust, whether now or hereafter authorized;
(ii) any warrants, rights, or options to purchase any such shares; or (iii) any
securities or obligations convertible into or exchangeable for any such shares
or into or for warrants, rights or options to purchase any such shares.
Section 12. EMPLOYEE, TRUSTEE AND OTHER OPTIONS AND PLANS. By action of
the Trustees, the Trust may issue, for such consideration as the Trustees deem
appropriate, options, warrants or other rights, including share appreciation
rights, to acquire shares, and securities convertible into and exchangeable for
shares, and, in the case of incentive or other compensatory plans for Trustees,
officers or employees of, and independent contractors and consultants to, the
Trust, the Trustees may award such securities as fully paid and nonassessable
shares to plan participants for no or nominal consideration, and may cause the
Trust to make loans to (or accept promissory obligations for future payment
from) such participants to assist them in the exercise of options or other
rights and in the payment for shares, and may determine that any such loan (or
promissory obligation) shall not affect the fully paid and nonassessable
character of shares so issued.
Section 13. REACQUIRED SHARES. Subject to compliance with the Maryland
REIT Law, the Trust may repurchase or otherwise acquire its own shares and other
securities at such price or prices as the Board of Trustees may authorize and
for this purpose the Trust may create and maintain such reserves as are deemed
necessary or appropriate. Shares issued hereunder and purchased or otherwise
acquired for the account of the Trust shall constitute authorized but unissued
shares of the Trust.
Section 14. TRANSFERABILITY OF SHARES. Subject to the provisions of
Article IX, shares in the Trust shall be transferable in accordance with the
procedures prescribed from time to time in the Trust's Bylaws. Except as may be
otherwise provided in the Bylaws, the persons in whose name the shares are
registered on the books of the Trust shall be deemed the absolute owners thereof
and, until a transfer is effected on the books of the Trust, the Trustees shall
not be affected by any notice, actual or constructive, of any transfer.
ARTICLE IX
RESTRICTIONS AND LIMITATIONS
ON TRANSFER AND OWNERSHIP OF SHARES
Section 1. RESTRICTIONS ON TRANSFER.
Section 1.1. DEFINITIONS. The following terms shall have the
following meanings:
(A) "Beneficial Ownership" shall mean ownership of
Equity Shares by a Person who would be treated as an owner of such Equity Shares
either directly under Section 542
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of the Code or indirectly or constructively through the application of Section
544 of the Code, as modified by Section 856(h) of the Code. The terms
"Beneficial Owner," "Beneficially Owns," and "Beneficially Owned" shall have
correlative meanings.
(B) "Beneficiary" shall mean, with respect to any
Share Trust, one or more organizations described in each of Section 170(b)(1)(A)
and Section 170(c) of the Code that are named by the Trust as the beneficiary or
beneficiaries of such Share Trust, in accordance with the provisions of Article
IX Section 2.1 hereof.
(C) "Constructive Ownership" shall mean ownership of
equity interests by a Person who would be treated as an owner of such interests
either directly, indirectly or constructively under the Code including, without
limitation, Sections 318 of the Code, as applied by Section 856(d)(5) of the
Code. The terms "Constructive Owner," "Constructively Owns," and "Constructively
Owned" shall have correlative meanings.
(D) "Equity Shares" shall mean Preferred Shares and
Common Shares. The term "Equity Shares" shall include all Preferred Shares and
Common Shares that are held as Shares- in-Trust in accordance with the
provisions of this Article IX hereof.
(E) "Initial Public Offering" means the sale of
Common Shares pursuant to the Trust's first effective registration statement for
such Common Shares filed under the Securities Act of 1933, as amended.
(F) "Market Price" shall mean, with respect to
Common Shares or Preferred Shares, the last reported sales price of such shares
reported on the New York Stock Exchange on the trading day immediately preceding
the relevant date, or if such shares are not then traded on the New York Stock
Exchange, the last reported sales price of such shares on the trading day
immediately preceding the relevant date as reported on any exchange or quotation
system over which such shares may be traded, or if such shares are not then
traded over any exchange or quotation system, then the market price of such
shares on the relevant date as determined in good faith by the Board of Trustees
of the Trust.
(G) "Non-Transfer Event" shall mean an event other
than a purported Transfer that would cause any Person to Beneficially Own or
Constructively Own Equity Shares in excess of the Ownership Limit, including,
but not limited to, the granting of any option or entering into any agreement
for the sale, transfer or other disposition of Equity Shares, or the Transfer of
any securities or rights convertible into or exchangeable for Equity
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Shares or the acquisition of an interest in any entity other than the Trust, or
the commencement of a relationship with any Person.
(H) "Operating Partnership" shall mean CPT Operating
Partnership L.P., a Delaware limited partnership.
(I) "Ownership Limit" shall mean, with respect to
the Common Shares, 9.8% of the number of each class or series of the outstanding
Common Shares and, with respect to the Preferred Shares, 9.8% of the number of
each class or series of the outstanding Preferred Shares.
(J) "Permitted Transferee" shall mean any Person
designated as a Permitted Transferee in accordance with the provisions of
Article IX Section 2.5 hereof.
(K) "Person" shall mean an individual, corporation,
partnership, estate, trust, a portion of a trust permanently set aside for or to
be used exclusively for the purposes described in Section 642(c) of the Code,
association, private foundation within the meaning of Section 509(a) of the
Code, joint stock company or other entity and also includes a group as that term
is used for purposes of Section 13(d)(3) of the Securities Exchange Act of 1934,
as amended.
(L) "Prohibited Owner" shall mean, with respect to
any purported Transfer or Non-Transfer Event, any Person who, but for the
provisions of this Article IX Section 2 hereof, would own record title to Equity
Shares.
(M) "Restriction Termination Date" shall mean the
first day after the date of the Initial Public Offering on which the Board of
Trustees and the shareholders of the Trust determine that it is no longer in the
best interests of the Trust to attempt to, or continue to, qualify as a REIT.
(N) "Shares-in-Trust" shall mean any Equity Shares
designated Shares-in- Trust pursuant to this Article IX Section 1.3 hereof.
(O) "Share Trust" shall mean any separate trust
created pursuant to this Article IX Section 1.3 hereof and administered in
accordance with the terms of this Article IX Section 2 hereof, for the exclusive
benefit of any Beneficiary.
(P) "Share Trustee" shall mean any Person
unaffiliated with both the Trust and any Prohibited Owner, such Share Trustee to
be designated by the Trust to act as trustee of any Share Trust, or any
successor trustee thereof.
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<PAGE> 14
(Q) "Transfer" shall mean any sale, transfer, gift,
assignment, devise or other disposition of Equity Shares, whether voluntary or
involuntary, whether of record, constructively or beneficially and whether by
operation of law or otherwise.
Section 1.2. RESTRICTION ON TRANSFERS.
(A) Except as provided in this Article IX Section
1.7 hereof, during the period commencing on the date of the Initial Public
Offering and ending immediately prior to the Restriction Termination Date, (i)
no Person shall Beneficially Own or Constructively Own any Equity Shares in
excess of the Ownership Limit and (ii) any Transfer or Non-Transfer Event that,
if effective, would result in any Person Beneficially Owning or Constructively
Owning Equity Shares in excess of the Ownership Limit shall be void AB INITIO as
to that number of Equity Shares which would be otherwise Beneficially Owned or
Constructively Owned by such Person in excess of the Ownership Limit, and the
intended transferee shall acquire no rights with respect to such excess Equity
Shares. Notwithstanding the foregoing, in case of a Transfer or Non-Transfer
Event arising from the grant of any options to any Person pursuant to any share
option plan of the Trust or otherwise, the period referred to in the first
sentence of this paragraph shall commence on the date on which the Trust
commences its existence.
(B) Except as provided in this Article IX Section
1.7 hereof, from the date of the Initial Public Offering and ending immediately
prior to the Restriction Termination Date, any Transfer or Non-Transfer Event
that, if effective, would result in the Equity Shares being beneficially owned
by fewer than 100 Persons (determined without reference to any rules of
attribution) shall be void AB INITIO as to the Transfer of that number of shares
which would result in the Equity Shares being beneficially owned by fewer than
100 persons, and the intended transferee shall acquire no rights with respect to
such excess Equity Shares.
(C) From the date of the Initial Public Offering and
ending immediately prior to the Restriction Termination Date, any Transfer or
Non-Transfer Event that, if effective, would result in the Trust being "closely
held" within the meaning of Section 856(h) of the Code shall be void AB INITIO
as to that number of Equity Shares which would cause the Trust to be "closely
held" within the meaning of Section 856(h) of the Code, and the intended
transferee shall acquire no rights with respect to such excess Equity Shares.
(D) From the date of the Initial Public Offering and
ending immediately prior to the Restriction Termination Date, any Transfer or
Non-Transfer Event that, if effective, would cause the Trust to Constructively
Own 9.8% or more of the ownership interests in a tenant of the real property of
the Trust, the Operating Partnership or any direct or indirect subsidiary
(including, without limitation, partnerships and limited liability companies) of
the Trust or the Operating Partnership, within the meaning of Section
856(d)(2)(B) of the Code, shall be void AB INITIO as to that number of Equity
Shares which would cause the Trust to Constructively Own 9.8% or more of the
ownership interests in a tenant of the real property of the Trust, the Operating
Partnership or any direct or indirect subsidiary (including, without limitation,
partnerships and limited liability
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<PAGE> 15
companies) of the Trust or the Operating Partnership, within the meaning of
Section 856(d)(2)(B) of the Code, and the intended transferee shall acquire no
rights with respect to such excess Equity Shares. Notwithstanding the foregoing,
in case of a Transfer or Non-Transfer Event arising from the grant of any
options to any Person pursuant to any share option plan of the Trust or
otherwise, the period referred to in the first sentence of this paragraph shall
commence on the date on which the Trust commences its existence.
Section 1.3. TRANSFER TO SHARE TRUST.
(A) If, notwithstanding the other provisions
contained in this Article IX, at any time after the date of the Initial Public
Offering and prior to the Restriction Termination Date, there is a purported
Transfer or Non-Transfer Event such that any Person would either Beneficially
Own or Constructively Own Equity Shares in excess of the Ownership Limit, then
(i) except as otherwise provided in Article IX Section 1.7 hereof, the purported
transferee shall acquire no right or interest (and, in the case of a
Non-Transfer Event, the person holding record title to the Equity Shares
Beneficially Owned or Constructively Owned by such Beneficial Owner or
Constructive Owner, shall cease to own any right or interest) in such number of
Equity Shares which would cause such Beneficial Owner or Constructive Owner to
Beneficially Own or Constructively Own Equity Shares in excess of the Ownership
Limit, and (ii) such number of Equity Shares in excess of the Ownership Limit
(rounded up to the nearest whole share) shall be designated Shares-in-Trust and,
in accordance with the provisions of Article IX Section 2 hereof, transferred
automatically and by operation of law to a Share Trust to be held in accordance
with that Article IX Section 2. Such transfer to a Share Trust and the
designation of shares as Shares-in-Trust shall be effective as of the close of
business on the business day prior to the date of the Transfer or Non-Transfer
Event, as the case may be.
(B) If, notwithstanding the provisions contained in
this Article IX, at any time after the date of the Initial Public Offering and
prior to the Restriction Termination Date, there is a purported Transfer or
Non-Transfer Event that, if effective, would cause the Trust to become "closely
held" within the meaning of Section 856(h) of the Code or would cause the Trust
to Constructively Own 9.8% or more of the ownership interests in a tenant of the
real property of the Trust, the Operating Partnership or any direct or indirect
subsidiary (including, without limitation, partnerships and limited liability
companies) of the Trust or the Operating Partnership, within the meaning of
Section 856(d)(2)(B) of the Code, then (i) the purported transferee shall not
acquire any right or interest (and, in the case of a Non-Transfer Event, the
person holding record title to the Equity Shares with respect to which such
Non-Transfer Event, occurred, shall cease to own any right or interest) in such
number of Equity Shares the ownership of which by such purported transferee or
record holder would cause the Trust to be "closely held" within the meaning of
Section 856(h) of the Code or would cause the Trust to Constructively Own 9.8%
or more of the ownership interests in a tenant of the real property of the
Trust, the Operating Partnership or any direct or indirect subsidiary
(including, without limitation, partnerships and limited liability companies) of
the Trust or the Operating Partnership, within the meaning of Section
856(d)(2)(B) of the Code, and (ii) such number of Equity Shares (rounded up to
the nearest whole share) shall be designated Shares-in-Trust and,
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<PAGE> 16
in accordance with the provisions of Article IX Section 2 hereof, transferred
automatically and by operation of law to a Share Trust to be held in accordance
with that Article IX Section 2. Such transfer to a Share Trust and the
designation of shares as Shares-in-Trust shall be effective as of the close of
business on the business day prior to the date of the Transfer or Non-Transfer
Event, as the case may be.
Section 1.4. REMEDIES FOR BREACH. If the Trust or its
designees shall at any time determine in good faith that a Transfer or
Non-Transfer Event has taken place in violation of Article IX Section 1.2 hereof
or that a Person intends to acquire or has attempted to acquire Beneficial
Ownership or Constructive Ownership of any Equity Shares in violation of Article
IX Section 1.2 hereof, the Trust shall take such action as it deems advisable to
refuse to give effect to or to prevent such Transfer or acquisition, including,
but not limited to, refusing to give effect to such Transfer on the books of the
Trust or instituting proceedings to enjoin such Transfer or acquisition.
Section 1.5. NOTICE OF RESTRICTED TRANSFER. Any Person who
acquires or attempts to acquire Equity Shares in violation of Article IX Section
1.2 hereof, or any Person who owned Equity Shares that were transferred to a
Share Trust pursuant to the provisions of Article IX Section 1.3 hereof, shall
immediately give written notice to the Trust of such event and shall provide to
the Trust such other information as the Trust may request in order to determine
the effect, if any, of such Transfer or Non-Transfer Event, as the case may be,
on the Trust's status as a REIT.
Section 1.6. OWNERS REQUIRED TO PROVIDE INFORMATION. From the date of
the Initial Public Offering and prior to the Restriction Termination Date:
(A) Every Beneficial Owner or Constructive Owner of more than
5%, or such lower percentages as required pursuant to regulations under the
Code, of the outstanding Equity Shares of the Trust shall, within 30 days after
the close of the Trust's taxable year, give written notice to the Trust stating
the name and address of such Beneficial Owner or Constructive Owner, the number
of shares of Equity Shares Beneficially Owned or Constructively Owned, and a
description of how such shares are held. Each such Beneficial Owner or
Constructive Owner shall provide to the Trust such additional information as the
Trust may request in order to determine the effect, if any, of such Beneficial
Ownership or Constructive Ownership on the Trust's status as a REIT and to
ensure compliance with the Ownership Limit.
(B) Each person who is a Beneficial Owner or Constructive
Owner of Equity Shares and each Person (including the shareholder of record) who
is holding Equity Shares for a Beneficial Owner or Constructive Owner shall
provide to the Trust such information as the Trust may request in order to
determine the Trust's status as a REIT and to ensure compliance with the
Ownership Limit.
Section 1.7. EXCEPTION. The Ownership Limit shall not apply to the
acquisition of Equity Shares by an underwriter that participates in a public
offering of such Shares for a period of 90 days following the purchase by such
underwriter of such Shares provided that the restrictions
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<PAGE> 17
contained in Section 1.2 of this Article IX will not be violated following the
distribution by such underwriter of such Shares. In addition, the Board of
Trustees may, in its sole discretion, exempt a Person from the Ownership Limit
under terms and conditions established in the sole discretion of the Board of
Trustees as it may deem necessary or desirable in order to maintain the Trust's
status as a REIT.
Section 2. SHARES-IN-TRUST.
Section 2.1. SHARE TRUST. Without limiting the automatic
effect of the following provisions of this Article IX Section 2.1, the
Prohibited Owner shall be obligated to submit the Shares-in-Trust to the Trust
for registration in the name of the Share Trustee. Any Equity Shares transferred
automatically and by operation of law to a Share Trust and designated
Shares-in-Trust pursuant to Article IX Section 1.3 hereof shall be held for the
exclusive benefit of the Beneficiary. The Trust shall name a Beneficiary of each
Share Trust within five days after discovery of the existence thereof. Any
transfer to a Share Trust, and subsequent designation of Equity Shares as
Shares-in-Trust pursuant to Article IX Section 1.3 hereof, shall be effective as
of the close of business on the business day prior to the date of the Transfer
or Non-Transfer Event that results in the transfer to the Share Trust.
Shares-in-Trust shall remain issued and outstanding Equity Shares of the Trust
and shall be entitled to the same rights and privileges on identical terms and
conditions as are all other issued and outstanding Equity Shares of the same
class and series. When transferred to the Permitted Transferee in accordance
with the provisions of Article IX Section 2.5 hereof, such Shares-in-Trust shall
cease to be designated as Shares-in-Trust.
Section 2.2. DIVIDEND RIGHTS. The Share Trustee, as record
holder of Shares-in- Trust, shall be entitled to receive all dividends and
distributions as may be declared by the Board of Trustees on such Equity Shares
and shall hold such dividends or distributions in trust for the benefit of the
Beneficiary. The Prohibited Owner with respect to Shares-in-Trust shall repay to
the Share Trustee the amount of any dividends or distributions received by it
that (i) are attributable to any Equity Shares designated Shares-in-Trust and
(ii) the record date of which was on or after the date that such shares became
Shares-in-Trust. The Trust shall take all measures that it determines are
reasonably necessary to recover the amount of any such dividend or distribution
paid to a Prohibited Owner, including, if necessary, withholding any portion of
future dividends or distributions payable on Equity Shares Beneficially Owned or
Constructively Owned by the Person who, but for the provisions of Article IX
Section 1.3 hereof, would Constructively Own or Beneficially Own the
Shares-in-Trust.
Section 2.3. RIGHTS UPON LIQUIDATION. In the event of any
voluntary or involuntary liquidation, dissolution or winding up of, or in a
distribution of the assets of the Trust, the Share Trustee of Shares-in-Trust
shall be entitled to receive on behalf of each Share Trust, ratably with each
other holder of Equity Shares of the same class or series, that portion of the
assets of the Trust which is available for distribution to the holders of such
class and series of Equity Shares. The Share Trustee shall distribute to the
Prohibited Owner the amounts received upon such liquidation, dissolution, or
winding up, or distribution; provided, however, that the Prohibited Owner shall
not
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<PAGE> 18
be entitled to receive amounts pursuant to this Article IX Section 2.3 in excess
of, in the case of a purported Transfer in which the Prohibited Owner gave value
for Equity Shares and which Transfer resulted in the transfer of the shares to
the Share Trust, the price per share, if any, such Prohibited Owner paid for the
Equity Shares and, in the case of a Non-Transfer Event or Transfer in which the
Prohibited Owner did not give value for such shares (e.g., if the shares were
received through a gift or devise) and which Non-Transfer Event or Transfer, as
the case may be, resulted in the transfer of shares to the Share Trust, the
price per share equal to the Market Price on the date of such Non- Transfer
Event or Transfer. Any remaining amount in such Share Trust shall be distributed
to the Beneficiary.
Section 2.4. VOTING RIGHTS. The Share Trustee shall be
entitled to vote all Shares- in-Trust. Any vote by a Prohibited Owner as a
holder of Equity Shares prior to the discovery by the Trust that the Equity
Shares are Shares-in-Trust shall, subject to applicable law, be rescinded and
shall be void AB INITIO with respect to such Shares-in-Trust and the Prohibited
Owner shall be deemed to have given, as of the close of business on the business
day prior to the date of the purported Transfer or Non-Transfer Event that
results in the transfer to the Share Trust of Equity Shares under Article IX
Section 1.3 hereof, an irrevocable proxy to the Share Trustee to vote the
Shares-in-Trust in the manner in which the Share Trustee, in its sole and
absolute discretion, desires.
Section 2.5. DESIGNATION OF PERMITTED TRANSFEREE. The Share
Trustee shall have the exclusive and absolute right to designate a Permitted
Transferee of any and all Shares-in-Trust. As soon as reasonably practicable, in
an orderly fashion so as not to materially adversely affect the Market Price of
the Shares-in-Trust, the Share Trustee shall designate any Person as a Permitted
Transferee, PROVIDED, HOWEVER, that (i) the Permitted Transferee so designated
purchases for valuable consideration (whether in a public or private sale) the
Shares-in-Trust, and (ii) the Permitted Transferee so designated may acquire
such Shares-in-Trust without such acquisition resulting in a transfer to a Share
Trust and the redesignation of such Equity Shares so acquired as Shares-in-Trust
under Article IX Section 1.3 hereof. Upon the designation by the Share Trustee
of a Permitted Transferee in accordance with the provisions of this Article IX
Section 2.5, the Share Trustee of a Share Trust shall (i) cause to be
transferred to the Permitted Transferee that number of Shares-in- Trust acquired
by the Permitted Transferee, (ii) cause to be recorded on the books of the Trust
that the Permitted Transferee is the holder of record of such number of Equity
Shares, and (iii) distribute to the Beneficiary any and all amounts held with
respect to the Shares-in-Trust after making that payment to the Prohibited Owner
pursuant to Article IX Section 2.6 hereof.
Section 2.6. COMPENSATION TO RECORD HOLDER OF EQUITY SHARES
THAT BECOME SHARES- IN-TRUST. Any Prohibited Owner shall be entitled (following
discovery of the Shares-in-Trust and subsequent designation of the Permitted
Transferee in accordance with Article IX Section 2.5 hereof) to receive from the
Share Trustee the lesser of (i) in the case of (a) a purported Transfer in which
the Prohibited Owner gave value for Equity Shares and which purported Transfer
resulted in the transfer of the shares to the Share Trust, the price per share,
if any, such Prohibited Owner paid for the Equity Shares, or (b) a Non-Transfer
Event or Transfer in which the Prohibited Owner did not give value for such
shares (e.g., if the shares were received through a gift or devise) and which
Non-Transfer
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<PAGE> 19
Event or Transfer, as the case may be, resulted in the transfer of shares to the
Share Trust, the price per share equal to the Market Price on the date of such
Non-Transfer Event or Transfer, and (ii) the price per share received by the
Share Trustee of the Share Trust from the sale or other disposition of such
Shares-in-Trust in accordance with Article IX Section 2.5 hereof. Any amounts
received by the Share Trustee in respect of such Shares-in-Trust and in excess
of such amounts to be paid the Prohibited Owner pursuant to this Article IX
Section 2.6 shall be distributed to the Beneficiary in accordance with the
provisions of Article IX Section 2.5 hereof. Each Beneficiary and Prohibited
Owner waive any and all claims that they may have against the Share Trustee and
the Share Trust arising out of the disposition of Shares-in-Trust, except for
claims arising out of the gross negligence or willful misconduct of, or any
failure to make payments in accordance with this Article IX by such Share
Trustee or the Share Trust.
Section 2.7. PURCHASE RIGHT IN SHARES-IN-TRUST.
Shares-in-Trust shall be deemed to have been offered for sale to the Trust, or
its designee, at a price per share equal to the lesser of (i) the price per
share in the transaction that created such Shares-in-Trust (or, in the case of
devise, gift or Non-Transfer Event, the Market Price at the time of such devise,
gift, or Non-Transfer Event) and (ii) the Market Price on the date the Trust, or
its designee, accepts such offer. The Trust shall have the right to accept such
offer for a period of ninety (90) days after the later of (i) the date of the
Non-Transfer Event or purported Transfer which resulted in such Shares-in-Trust
and (ii) the date the Trust determines in good faith that a Transfer or
Non-Transfer Event resulting in Shares-in-Trust has occurred, if the Trust does
not receive a notice of such Transfer or Non-Transfer Event pursuant to Article
IX Section 1.3 hereof
Section 3. REMEDIES NOT LIMITED. Nothing contained in this Article IX
shall limit the authority of the Trust to take such other action as it deems
necessary or advisable to protect the Trust and the interests of its
shareholders by preservation of the Trust's status as a REIT and to ensure
compliance with the Ownership Limit; provided, however, that nothing in this
Article IX or elsewhere in this Declaration of Trust shall preclude settlement
of any transaction entered into or through the facilities of the New York Stock
Exchange or any other exchange on which Equity Shares may be listed from time to
time.
Section 4. AMBIGUITY. In the case of an ambiguity in the application of
any of the provisions of Article IX, including any definition contained in
Article IX Section 1 hereof, the Board of Trustees shall have the power to
determine the application of the provisions of this Article IX with respect to
any situation based on the facts known to it.
Section 5. LEGEND. Each certificate for Equity Shares shall
bear the following legend:
"The [Common or Preferred] Shares represented by this certificate are
subject to restrictions on transfer as set forth in the Declaration of
Trust of the Trust. No Person may (i) Beneficially Own or
Constructively Own Common Shares in excess of 9.8% of the number of any
class or series of the outstanding Common Shares, (ii) Beneficially Own
or Constructively Own Preferred Shares in excess of 9.8% of the
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<PAGE> 20
number of any class or series of the outstanding Preferred Shares,
(iii) allow any Transfer or Non-Transfer Event to occur that would
result in the Equity Shares being beneficially owned by fewer than 100
Persons, (iv) Beneficially Own Equity Shares that would result in the
Trust being "closely held" under Section 856(h) of the Internal Revenue
Code of 1986, as amended (the "Code"), or (v) Constructively Own Equity
Shares that would cause the Trust to Constructively Own 9.8% or more of
the ownership interests in a tenant of the real property of the Trust,
the Operating Partnership or any direct or indirect subsidiary
(including, without limitation, partnerships and limited liability
companies) of the Trust or the Operating Partnership, within the
meaning of Section 856(d)(2)(B) of the Code. Any Person who attempts to
Beneficially Own or Constructively Own Equity Shares in excess of the
above limitations must immediately notify the Trust in writing. If the
restrictions above are violated, the Equity Shares represented hereby
will be transferred automatically and by operation of law to a Share
Trust and shall be designated Shares- in-Trust. All capitalized terms
in this legend have the meanings defined in the Trust's Declaration of
Trust, as the same may be further amended from time to time, a copy of
which, including the restrictions on transfer, will be sent without
charge to each shareholder who so requests."
Section 6. SEVERABILITY. If any provision of this Article IX or any
application of any such provision is determined to be invalid by any federal or
state court having jurisdiction over the issues, the validity of the remaining
provisions shall not be affected and other applications of such provision shall
be affected only to the extent necessary to comply with the determination of
such court.
ARTICLE X
INDEMNIFICATION AND NON-LIABILITY
Section 1. LIMITATION ON LIABILITY. To the maximum extent that Maryland
law in effect from time to time permits limitation of liability of trustees or
officers of real estate investment trusts, no Trustee or officer of the Trust
shall be liable to the Trust or its shareholders for money damages. Neither the
amendment nor repeal of this provision, nor the adoption or amendment of any
other provision of this Declaration of Trust or Bylaws inconsistent with this
provision, shall apply to or affect in any respect the applicability of the
preceding sentence with respect to any act or failure to act which occurred
prior to such amendment, repeal or adoption.
Section 2. INDEMNIFICATION. The Trust shall indemnify and advance
expenses to a Trustee or officer of the Trust to the fullest extent permitted by
and in accordance with the laws of the State of Maryland in effect from time to
time. To the extent determined by the Board of Trustees, in accordance with the
laws of the State of Maryland, the Trust may indemnify and advance expenses to
other employees and agents of the Trust. Neither the amendment nor repeal of
this provision, nor the adoption or amendment of any other provision of this
Declaration of Trust or Bylaws inconsistent with this provision, shall affect
any right of any person under this Article X Section 2 based on any event,
omission or proceeding prior to such amendment or repeal.
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Section 3. NON-LIABILITY AND INDEMNIFICATION OF SHAREHOLDERS.
Shareholders shall not by virtue of being shareholders of the Trust be liable
personally or individually in any manner whatsoever for any debt, act, omission
or obligation incurred by the Trust or the Trustees and shall be under no
obligation to the Trust or its creditors in respect to such shares other than
the obligation to pay to the Trust the full amount of the consideration for
which the shares were issued or to be issued. The shareholders shall not be
liable to assessment and the Trustees shall have no power to bind the
shareholders personally. The Trust shall indemnify and hold each shareholder
harmless from and against all claims and liabilities, whether they proceed to
judgment or are settled or otherwise brought to a conclusion, to which such
shareholder may become subject solely by reason of his being a shareholder or
having held shares of the Trust, and shall reimburse such shareholder for all
legal and other expenses reasonably incurred by him in connection with any such
claim or liability; provided, however, that no such shareholder shall be
indemnified or reimbursed if such claim, obligation or liability is adjudged
finally by a competent court of law to have arisen out of the shareholder's bad
faith, willful misconduct or gross negligence, and, provided, further, that such
shareholder must give prompt notice as to any such claims or liabilities or
suits and must take such action as will permit the Trust to conduct the defense
thereof. The rights accruing to a shareholder under this Article X Section 3
shall not exclude any other rights to which such shareholder lawfully may be
entitled, nor shall anything herein contained restrict the right of the Trust to
indemnify or reimburse a shareholder in any appropriate situation even though
not specifically provided herein; provided, however, that the Trust shall have
no liability to reimburse shareholders for taxes assessed against them by reason
of their ownership of shares, nor for any losses suffered by reason of changes
in the market value of securities of the Trust.
Section 4. INSURANCE. The Trust may, but shall not be required to,
purchase and maintain insurance on behalf of any person who is or was a
shareholder, trustee, officer, employee or agent of the Trust or who, while a
trustee, officer, employee or agent of the Trust is or was serving at the
request of the Trust as a trustee, officer, partner, trustee, employee or agent
of another foreign or domestic corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise, against liability asserted against or
incurred by such person in that capacity or arising from such person's status as
a shareholder, trustee, officer, employee or agent, whether or not the Trust
would have power to indemnify such person against the same liability under
Article X hereof.
Section 5. EXPRESS EXCULPATORY CLAUSES IN INSTRUMENTS. Neither the
shareholders nor the Trustees, officers, employees or agents of the Trust shall
be liable under any written instrument creating an obligation of the Trust, and
all persons shall look solely to the Trust Property for the payment of any claim
under or for the performance of that instrument. The omission of the foregoing
exculpatory language from any instrument shall not affect the validity or
enforceability of such instrument and shall not render any shareholder, Trustee,
officer, employee or agent liable thereunder to any third party, nor shall the
Trustees or any shareholder, officer, employee or agent of the Trust be liable
to anyone for such omission.
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ARTICLE XI
AMENDMENT
Except as otherwise provided in this Declaration of Trust, or as may be
otherwise provided or fixed by the Board of Trustees with respect to voting
rights of Preferred Shares pursuant to Article VIII Section 5, this Declaration
of Trust may be amended with the approval of the shareholders by the affirmative
vote of two-thirds of all of the votes entitled to be cast on such matters;
provided, however, that without shareholder approval (a) the Trustees by a
two-thirds vote may amend this Declaration of Trust to qualify, or continue to
qualify, the Trust as a real estate investment trust under the Code or under
Maryland law; (b) the Trustees by a majority vote may amend this Declaration of
Trust to increase or decrease the aggregate number of shares or the number of
shares of any series or class that the Trust has authority to issue; and (c) to
the extent permitted by the Maryland REIT Law, as amended from time to time, a
majority of the entire Board of Trustees may amend this Declaration of Trust to
change (i) the Trust's name, (ii) the name or designation of any class or series
of shares of the Trust, and (iii) the par value of any class or series of shares
of the Trust.
ARTICLE XII
TERMINATION OF TRUST
Subject to the voting rights, if any, of the Preferred Shares provided
or fixed pursuant to Article VIII Section 5, the existence of the Trust may be
terminated by voluntary dissolution upon the affirmative vote of the holders of
not less than two-thirds of the Common Shares. After such vote of the
shareholders becomes effective, (i) the Trust shall carry on no business except
for the purpose of winding up its affairs and (ii) the Trustees shall proceed to
wind up the affairs of the Trust and all of the powers of the Trustees under
this Declaration of Trust shall continue, including the powers to fulfill or
discharge the Trust's contracts, collect its assets, sell, convey, assign,
exchange, transfer or otherwise dispose of all or any part of the remaining
Trust Property to one or more persons or entities at public or private sale for
consideration which may consist in whole or in part of cash, securities or other
property of any kind, discharge or pay its liabilities and do all other acts
appropriate to liquidate its business. After termination of the Trust, the
liquidation of its business, and the distribution to the shareholders as set
forth in Article VIII Section 8, a majority of the then remaining Trustees shall
execute and file with the Trust's records, and with any appropriate Maryland
public agency, a document certifying that the Trust has been duly terminated,
and the Trustees shall be discharged from all liabilities and duties hereunder,
and the rights and interests of all shareholders shall cease.
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ARTICLE XIII
RELIANCE BY THIRD PARTIES
Any certificate shall be final and conclusive as to any persons dealing
with the Trust if executed by an individual who, according to the records of the
Trust or of any recording office in which this Declaration of Trust may be
recorded, appears to be the Secretary or an Assistant Secretary of the Trust or
a Trustee, and if certifying to: (a) the number or identity of Trustees,
officers of the Trust or shareholders; (b) the due authorization of the
execution of any document; (c) the action or vote taken, and the existence of a
quorum, at a meeting of Trustees or shareholders; (d) a copy of this Declaration
of Trust or of the Bylaws as a true and complete copy as then in force; (e) an
amendment to this Declaration of Trust; (f) the termination of the Trust; or (g)
the existence of any fact or facts which relate to the affairs of the Trust. No
purchaser, lender, transfer agent or other person shall be bound to make any
inquiry concerning the validity of any transaction purporting to be made on
behalf of the Trust by the Trustees or by any officer, employee or agent of the
Trust.
THIRD: The Trustees desire to amend and restate the Declaration of
Trust. The provisions set forth in these Articles of Amendment and Restatement
are all of the provisions of the Declaration of Trust currently in effect, as
herein amended.
FOURTH: The amendments to, and the restatement of, the Declaration of
Trust set forth in these Articles of Amendment and Restatement were unanimously
adopted and declared advisable by the Board of Trustees at a meeting held on
________, 1998, and were approved by the sole shareholder of the Trust by
written consent on _______, all in the manner prescribed by and in accordance
with the provisions of Section 8-501.3 of the Maryland REIT Law.
FIFTH: The name and address of the current resident agent of the Trust
are as set forth herein.
SIXTH: As of the date hereof, the Trust has nine Trustees. The names of
the current Trustees are as set forth herein.
SEVENTH: These Articles of Amendment and Restatement shall become
effective on ________, 1998 at ____ [a.m. or p.m.] Eastern Time.
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IN WITNESS WHEREOF, these Articles of Amendment and Restatement have
been executed on ________________, 1998 by the undersigned Trustees,
representing at least a majority of the entire number of Trustees of the Trust,
each of whom acknowledges that this document is the act of the Trust, that to
the best of his knowledge, information, and belief, the matters set forth herein
with respect to authorization and approval of these Articles of Amendment and
Restatement are true in all material respects and that this statement is made
under the penalty of perjury.
TRUSTEES:
-------------------------------------------
George R. Wackenhut
-------------------------------------------
Richard R. Wackenhut
-------------------------------------------
George C. Zoley
-------------------------------------------
Anthony D. Travisono
-------------------------------------------
Clarence E. Anthony
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James D. Motta
-------------------------------------------
William M. Murray
-------------------------------------------
Robert R. Veach, Jr.
-------------------------------------------
Charles R. Jones, Trustee and President
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<PAGE> 1
Exhibit 3.4
FORM OF
CORRECTIONAL PROPERTIES TRUST
AMENDED AND RESTATED
BYLAWS
ARTICLE I
OFFICES
Section 1. PRINCIPAL OFFICE. The principal office of the Trust shall be
located at such place or places as the Trustees may designate. The initial
principal office of the Trust shall be 4200 Wackenhut Drive, Palm Beach Gardens,
Florida 33410-4243.
Section 2. ADDITIONAL OFFICES. The Trust may have additional offices at
such places as the Trustees may from time to time determine or the business of
the Trust may require.
Section 3. FISCAL AND TAXABLE YEARS. The fiscal and taxable years of
the Trust shall begin on January 1 and end on December 31.
ARTICLE II
MEETINGS OF SHAREHOLDERS
Section 1. PLACE. All meetings of shareholders shall be held at the
principal office of the Trust or at such other place within or without the
United States as shall be determined by the Board of Trustees and stated in the
notice of the meeting.
Section 2. ANNUAL MEETING. An annual meeting of the shareholders for
the election of Trustees and the transaction of any business within the powers
of the Trust shall be held each year, following the delivery of the annual
report, referred to in Section 12 of this Article II, but in no event later than
120 days after the end of the Trust's fiscal year, at a convenient location, as
determined by the Board of Trustees, and on proper notice, on a date and at the
time set by the Trustees, beginning with the year 1999. Failure to hold an
annual meeting does not invalidate the Trust's existence or affect any otherwise
valid acts of the Trust.
Section 3. SPECIAL MEETINGS. The Chairman of the Board, a majority of
the Trustees or a majority of any committee of the Board of Trustees which has
been duly designated by the Board of Trustees and whose powers and authority, as
provided in a resolution of the Board of Trustees or
<PAGE> 2
these Bylaws, include the power to call such meetings may call special meetings
of the shareholders. Special meetings may not be called by the shareholders or
by any other person or persons or entity.
Section 4. NOTICE. Not less than 10 nor more than 90 days before each
meeting of shareholders, the secretary shall give to each shareholder entitled
to vote at such meeting and to each shareholder not entitled to vote who is
entitled to notice of the meeting written or printed notice stating the time and
place of the meeting and, in the case of a special meeting or as otherwise may
be required by any statute, the purpose for which the meeting is called, either
by mail or by presenting it to such shareholder personally or by leaving it at
his residence or usual place of business. If mailed, such notice shall be deemed
to be given when deposited in the United States mail addressed to the
shareholder at his post office address as it appears on the records of the
Trust, with postage thereon prepaid.
Section 5. SCOPE OF NOTICE. Any business of the Trust may be transacted
at an annual meeting of shareholders without being specifically designated in
the notice, except such business as is required by any statute to be stated in
such notice. No business shall be transacted at a special meeting of
shareholders except as specifically designated in the notice.
Section 6. ORGANIZATION. At every meeting of the shareholders, the
Chairman of the Board, if there be one, shall conduct the meeting or, in the
case of vacancy in office or absence of the Chairman of the Board, one of the
following officers present shall conduct the meeting in the order stated: the
Vice Chairman of the Board, if there be one, the President, the Vice Presidents
in their order of rank and seniority and the Secretary, or, in his absence, an
assistant secretary, or in the absence of both the Secretary and assistant
secretaries, a person appointed by the Chairman shall act as Secretary.
Section 7. QUORUM; ADJOURNMENT. At any meeting of shareholders, the
presence in person or by proxy of shareholders entitled to cast a majority of
all the votes entitled to be cast at such meeting shall constitute a quorum; but
this Section shall not affect any requirement under any statute or the
Declaration of Trust for the vote necessary for the adoption of any measure. If,
however, such quorum shall not be present at any meeting of the shareholders,
the shareholders entitled to vote at such meeting, present in person or by
proxy, shall have the power to adjourn the meeting from time to time to a date
not more than 120 days after the original record date without notice other than
announcement at the meeting. At such adjourned meeting at which a quorum shall
be present, any business may be transacted which might have been transacted at
the meeting as originally notified. In addition, any meeting of Shareholders
convened on the date for which it was called may be adjourned to a date not more
than 120 days after the original record date without notice other than
announcement at the meeting.
Section 8. VOTING: NONAPPLICABILITY OF CONTROL SHARE STATUTE. A
plurality of all the votes cast at a meeting of shareholders duly called and at
which a quorum is present shall be sufficient to elect a Trustee. Each share may
be voted for as many individuals as there are Trustees to be elected and for
whose election the share is entitled to be voted. A majority of the votes cast
at a meeting of
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<PAGE> 3
shareholders duly called and at which a quorum is present shall be sufficient to
approve any other matter which may properly come before the meeting, unless more
than a majority of the votes cast is required herein or by statute or by the
Declaration of Trust. Unless otherwise provided in the Declaration, each
outstanding share, regardless of class, shall be entitled to one vote on each
matter submitted to a vote at a meeting of shareholders.
TITLE 3, SUBTITLE 7, VOTING RIGHTS OF CERTAIN CONTROL SHARES, OF THE
CORPORATIONS AND ASSOCIATIONS ARTICLE OF THE ANNOTATED CODE OF MARYLAND (OR ANY
SUCCESSOR STATUTE) SHALL NOT APPLY TO ANY ACQUISITION OF OWNERSHIP OF, OR VOTING
RIGHTS, OR OTHER INTERESTS IN ANY SHARES OF THE TRUST BY ANY PERSON OR ENTITY.
Section 9. PROXIES. A shareholder may vote the shares owned of record
either in person or by proxy. The proxy shall be in writing and shall be signed
by the shareholder or by the shareholder's duly authorized attorney-in-fact or
be in such other form as may be permitted by the Maryland General Corporation
Law with respect to the use of proxies by stockholders in Maryland corporations,
including documents conveyed by electronic transmission. A copy, facsimile
transmission or other reproduction of the writing or transmission may be
substituted for the original writing or transmission for any purpose for which
the original writing or transmission could be used. Every proxy shall be dated,
but need not be sealed, witnessed or acknowledged. No proxy shall be valid after
eleven (11) months from its date, unless otherwise provided in the proxy.
Section 10. VOTING OF SHARES BY CERTAIN HOLDERS. Any trustee or other
fiduciary may vote shares registered in his name as such fiduciary, either in
person or by proxy. In the case of shares held of record by more than one
person, any co-owner or co-fiduciary may execute the proxy without the joinder
of the co-owner(s) or co-fiduciary(ies), unless the Secretary of the Trust is
notified in writing by any co-owner or co-fiduciary that the joinder of more
than one is to be required. Shares standing in the name of a corporation,
domestic or foreign, may be voted by the officer, agent, or proxy designated by
the corporate shareholder. Shares standing in the name of any general
partnership may be voted by any partner thereof, or by any agent or proxy
thereof. Shares standing in the name of any limited partnership may be voted by
any general partner, or by any agent or proxy thereof. The Trustees may adopt by
resolution a procedure by which a shareholder may certify in writing to the
Trust that any shares registered in the name of the shareholder are held for the
account of a specified person other than the shareholder. The resolution shall
set forth the class of shareholders who may make the certification, the purpose
for which the certification may be made, the form of certification and the
information to be contained in it; if the certification is with respect to a
record date or closing of the share transfer books, the time after the record
date or closing of the share transfer books within which the certification must
be received by the Trust; and any other provisions with respect to the procedure
which the Trustees consider necessary or desirable. On receipt of such
certification, the person specified in the certification shall be regarded as,
for the purposes set forth in the certification, the shareholder of record of
the specified shares in place of the shareholder who makes the certification.
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<PAGE> 4
Section 11. INSPECTORS. At any meeting of shareholders, the chairman of
the meeting may, or upon the request of any shareholder shall, appoint one or
more persons as inspectors for such meeting. Such inspectors shall ascertain and
report the number of shares represented at the meeting based upon their
determination of the validity and effect of proxies, count all votes, report the
results and perform such other acts as are proper to conduct the election and
voting with impartiality and fairness to all the shareholders. Each report of an
inspector shall be in writing and signed by him or by a majority of them if
there is more than one inspector acting at such meeting. If there is more than
one inspector, the report of a majority shall be the report of the inspectors.
The report of the inspector or inspectors on the number of shares represented at
the meeting and the results of the voting shall be prima facie evidence thereof.
Section 12. REPORTS TO SHAREHOLDERS. Not later than 120 days after the
close of each fiscal year of the Trust, the Trustees shall deliver or cause to
be delivered a report of the business and operations of the Trust during such
fiscal year to the shareholders, containing a balance sheet and a statement of
income and surplus of the Trust, accompanied by the certification of an
independent certified public accountant based on the accountant's full
examination of the books and records of the Trust in accordance with generally
accepted auditing procedures, and such further information as the Trustees may
determine is required pursuant to any law or regulation to which the Trust is
subject. A signed copy of the annual report and the accountant's certificate
shall be placed on file at the principal office of the Trust and filed by the
Trustees with such governmental agencies, if any, as may be required by law and
as the Trustees may deem appropriate.
Section 13. NOMINATIONS AND SHAREHOLDER BUSINESS.
(a) ANNUAL MEETINGS OF SHAREHOLDERS.
(1) Nominations of persons for election to the Board
of Trustees and the proposal of business to be considered by the
shareholders may be made at an annual meeting of shareholders (i)
pursuant to the Trust's notice of meeting, (ii) by or at the direction
of the Trustees, or (iii) by any shareholder of the Trust who was a
shareholder of record at the time of giving of notice provided for in
this Section 13(a), who is entitled to vote at the meeting and who
complied with the notice procedures set forth in this Section 13(a).
(2) For nominations or other business to be properly
brought before an annual meeting by a shareholder pursuant to clause
(iii) of paragraph (a)(1) of this Section 13, the shareholder must have
given timely notice thereof in writing to the Secretary of the Trust.
To be timely, a shareholder's notice shall be delivered to the
Secretary at the principal executive offices of the Trust not less than
60 days nor more than 90 days prior to the first anniversary of the
preceding year's annual meeting; provided, however, that in the event
that the date of the annual meeting is advanced by more than 30 days or
delayed by more than 60 days from such anniversary date, and with
respect to the first annual meeting, notice by the
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<PAGE> 5
shareholder to be timely must be so delivered not earlier than the 90th
day prior to such annual meeting and not later than the close of
business on the later of the 60th day prior to such annual meeting or
the tenth day following the day on which public announcement of the
date of such meeting is first made. Such shareholder's notice shall set
forth (i) as to each person whom the shareholder proposes to nominate
for election or reelection as a Trustee all information relating to
such person that is required to be disclosed in solicitations of
proxies for election of Trustees, or is otherwise required, in each
case pursuant to Regulation 14A under the Securities Exchange Act of
1934, as amended (the "Exchange Act") (including such person's written
consent to being named in the proxy statement as a nominee and to
serving as a Trustee if elected); (ii) as to any other business that
the shareholder proposes to bring before the meeting, a brief
description of the business desired to be brought before the meeting,
the reasons for conducting such business at the meeting and any
material interest in such business of such shareholder and of the
beneficial owner, if any, on whose behalf the proposal is made; and
(iii) as to the shareholder giving the notice and the beneficial owner,
if any, on whose behalf the nomination or proposal is made, (x) the
name and address of such shareholder, as they appear on the Trust's
books, and of such beneficial owner, and (y) the number of each class
of shares of the Trust which are owned beneficially and of record by
such shareholder and such beneficial owner.
(3) Notwithstanding anything in the second sentence
of paragraph (a)(2) of this Section 13 to the contrary, in the event
that the number of Trustees to be elected to the Board of Trustees is
increased and there is no public announcement naming all of the
nominees for Trustee or specifying the size of the increased Board of
Trustees made by the Trust at least 70 days prior to the first
anniversary of the preceding year's annual meeting, a shareholder's
notice required by this Section 13(a) shall also be considered timely,
but only with respect to nominees for any new positions created by such
increase, if it shall be delivered to the Secretary at the principal
executive offices of the Trust not later than the close of business on
the tenth day following the day on which such public announcement is
first made by the Trust.
(b) SPECIAL MEETINGS OF SHAREHOLDERS. Only such business shall
be conducted at a special meeting of shareholders as shall have been brought
before the meeting pursuant to the Trust's notice of meeting. Nominations of
persons for election to the Board of Trustees may be made at a special meeting
of shareholders at which Trustees are to be elected (i) pursuant to the Trust's
notice of meeting, (ii) by or at the direction of the Board of Trustees, or
(iii) provided that the Board of Trustees has determined that Trustees shall be
elected at such special meeting, by any shareholder of the Trust who was a
shareholder of record at the time of giving of notice provided for in this
Section 13(b), who is entitled to vote at the meeting and who complied with the
notice procedures set forth in this Section 13(b). In the event the Trust calls
a special meeting of shareholders for the purpose of electing one or more
Trustees to the Board of Trustees, any such shareholder may nominate a person or
persons (as the case may be) for election to such position as specified in the
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<PAGE> 6
Trust's notice of meeting, if the shareholder's notice containing the
information required by paragraph (a)(2) of this Section 13 shall be delivered
to the Secretary at the principal executive offices of the Trust not earlier
than the 90th day prior to such special meeting and not later than the close of
business on the later of the 60th day prior to such special meeting or the tenth
day following the day on which public announcement is first made of the date of
the special meeting and of the nominees proposed by the Trustees to be elected
at such meeting.
(c) GENERAL.
(1) Only such persons who are nominated in
accordance with the procedures set forth in this Section 13 shall be
eligible to serve as Trustees and only such business shall be conducted
at a meeting of shareholders as shall have been brought before the
meeting in accordance with the procedures set forth in this Section 13.
The presiding officer of the meeting shall have the power and duty to
determine whether a nomination or any business proposed to be brought
before the meeting was made in accordance with the procedures set forth
in this Section 13 and, if any proposed nomination or business is not
in compliance with this Section 13, to declare that such defective
nomination or proposal be disregarded.
(2) For purposes of this Section 13, "public
announcement" shall mean disclosure in a press release reported by the
Dow Jones News Service, Associated Press or comparable news service or
in a document publicly filed by the Trust with the Securities and
Exchange Commission pursuant to Sections 13, 14 or 15(d) of the
Exchange Act.
(3) Notwithstanding the foregoing provisions of this
Section 13, a shareholder shall also comply with all applicable
requirements of state law and of the Exchange Act and the rules and
regulations thereunder with respect to the matters set forth in this
Section 13. Nothing in this Section 13 shall be deemed to affect any
rights of shareholders to request inclusion of proposals in the Trust's
proxy statement pursuant to Rule 14a-8 under the Exchange Act.
Section 14. INFORMAL ACTION BY SHAREHOLDERS. Any action required or
permitted to be taken at a meeting of shareholders may be taken without a
meeting if a consent in writing, setting forth such action, is signed by each
shareholder entitled to vote on the matter and any other shareholder entitled to
notice of a meeting of shareholders (but not to vote thereat) has waived in
writing any right to dissent from such action, and such consent and waiver are
filed with the minutes of proceedings of the shareholders.
Section 15. VOTING BY BALLOT. Voting on any question or in any election
may be by voice vote unless the presiding officer shall order or any shareholder
shall demand that voting be by ballot.
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<PAGE> 7
ARTICLE III
TRUSTEES
Section 1. GENERAL POWERS; QUALIFICATIONS; TRUSTEES HOLDING OVER;
INDEPENDENT TRUSTEES. The business and affairs of the Trust shall be managed
under the direction of its Board of Trustees. A Trustee shall be an individual
at least 21 years of age who is not under legal disability. Unless otherwise
agreed between the Trust and the Trustee, each individual Trustee, including
each Independent Trustee (as defined below), may engage in other business
activities of the type conducted by the Trust and is not required to present to
the Trust any investment opportunities presented to them even though the
investment opportunities may be within the scope of the Trust's investment
policies. In case of failure to elect Trustees at an annual meeting of the
shareholders, the Trustees holding over shall continue to direct the management
of the business and affairs of the Trust until their successors are elected and
qualify. As used herein, the term "Independent Trustee" shall have the same
meaning ascribed to it in the Declaration of Trust.
Section 2. ANNUAL AND REGULAR MEETINGS. An annual meeting of the
Trustees shall be held immediately after and at the same place as the annual
meeting of shareholders, no notice other than this Bylaw being necessary. The
Trustees may provide, by resolution, the time and place, either within or
without the State of Maryland, for the holding of regular meetings of the
Trustees without other notice than such resolution.
Section 3. SPECIAL MEETINGS. Special meetings of the Trustees may be
called by or at the request of the Chairman of the Board, the Chief Executive
Officer or the President or by a majority of the Trustees then in office. The
person or persons authorized to call special meetings of the Trustees may fix
any place, either within or without the State of Maryland, as the place for
holding any special meeting of the Trustees called by them.
Section 4. NOTICE. Notice of any special meeting shall be given upon at
least 24 hours written notice, with such written notice delivered personally, by
telecopy, by mail or by a nationally recognized courier service to each Trustee
at his business or residence address. Personally delivered or telecopied notices
shall be given at least 24 hours prior to the meeting. If mailed or delivered by
a nationally recognized courier service, such notice shall be deemed given 48
hours after the time of mailing or delivery to the courier service. Neither the
business to be transacted at, nor the purpose of, any annual, regular or special
meeting of the Trustees need be stated in the notice, unless specifically
required by statute or these Bylaws.
Section 5. QUORUM. Except as provided in subsection (b) of Section 6, a
majority of the entire Board of Trustees shall constitute a quorum for
transaction of business at any meeting of the Trustees, provided that, if less
than a majority of such Trustees are present at said meeting, a majority of the
Trustees present may adjourn the meeting from time to time without further
notice. The Trustees present at a meeting which has been duly called and
convened may continue to transact
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<PAGE> 8
business until adjournment, notwithstanding the withdrawal of enough Trustees to
leave less than a quorum.
Section 6. VOTING.
(a) Except as provided in subsection (b) of this Section 6 and
in Section 15 of Article III, the action of the majority of the Trustees present
at a meeting at which a quorum is present shall be the action of the Trustees,
unless the concurrence of a greater proportion is required for such action by
the Declaration of Trust, these Bylaws or applicable statute.
(b) Notwithstanding the foregoing, two-thirds of the Trustees
shall be necessary to constitute a quorum to approve the actions set forth below
in clauses (1) through (4), and such action shall not be effective unless
approved by two-thirds of the Trustees (and, if an Interested Trustee
Transaction, as defined in Section 15 of this Article III, also by the vote of
the Independent Trustees pursuant to and in accordance with Article IV, Section
3). Such actions are:
(1) A Change of Control (as hereinafter defined) of
the Trust;
(2) Any amendment to the Declaration of Trust or
these Bylaws;
(3) Any waiver or modification of the Ownership Limit
(as defined in the Declaration of Trust); and
(4) The issuance of any equity securities (other
than Common Shares issued (a) for at least the fair market value
thereof at the time of issuance as determined in good faith by a
majority of the Board of Trustees, (b) pursuant to any share incentive
or option plans of the Company, or (c) in a bona fide underwritten
public offering managed by one or more nationally recognized investment
banking firms) or rights to acquire any such securities.
For purposes of this Section 6(b):
(1) The term "Change of Control" of the Trust shall
mean any transaction or series of transactions (whether by purchase of
existing Common Shares, issuance of Common Shares, merger,
consolidation or otherwise) the result of which is that either (i) any
Person or Group becomes the Beneficial Owner, directly or indirectly,
of 20% or more of the total voting power in the aggregate of all
classes of beneficial interests of the Trust then outstanding normally
entitled to vote in the election of Trustees of the Trust (or any
surviving entity) or (ii) the Beneficial Owners of the beneficial
interests of the Trust normally entitled to vote in the election of
Trustees immediately prior to the transaction beneficially own less
than 80% of the total voting power in the aggregate of all classes of
beneficial interests of the Trust then outstanding normally entitled to
vote in the election of Trustees of the Trust (or any surviving entity)
immediately after such transaction.
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<PAGE> 9
(2) The term "Person" as used herein shall have the
same meaning as such term has for purposes of Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934, as amended.
(3) The term "Group" as used herein shall have the
same meaning as such term has for purposes of Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934, as amended.
(4) The term "Beneficial Owner" as used herein shall
have the same meaning as such term has for purposes of Rule 13d-3
promulgated under the Securities Exchange Act of 1934, as amended,
except that a Person shall be deemed to have beneficial ownership of
all shares that a Person has the right to acquire, whether or not such
right is immediately exercisable.
(5) The term "Ownership Limit" as used herein shall
have the same meaning as such term has in the Declaration of Trust.
Section 7. TELEPHONE MEETINGS. Trustees may participate in a meeting by
means of a conference telephone or similar communications equipment if all
persons participating in the meeting can hear each other at the same time.
Participation in a meeting by these means shall constitute presence in person at
the meeting.
Section 8. INFORMAL ACTION BY TRUSTEES. Any action required or
permitted to be taken at any meeting of the Trustees may be taken without a
meeting, if a consent in writing to such action is signed by each Trustee and
such written consent is filed with the minutes of proceedings of the Trustees.
Section 9. VACANCIES. If for any reason any or all the Trustees cease
to be Trustees, such event shall not terminate the Trust or affect these Bylaws
or the powers of the remaining Trustees hereunder (even if fewer than three
Trustees remain). Any vacancy (including a vacancy created by an increase in the
number of Trustees) shall be filled at any regular meeting or at any special
meeting called for that purpose by a majority of the Trustees. Any individual so
elected as Trustee shall hold office for the remainder of the term of the class
to which he was elected or until his successor is elected and qualifies.
Section 10. COMPENSATION. Trustees shall not receive any stated salary
for their services as Trustees but, by resolution of the Trustees, may receive
cash compensation, a fixed sum of shares or options for a fixed sum of shares of
the Trust for any service or activity they perform or engage in as Trustees.
Trustees may receive a fee for, and non-employee Trustees shall be reimbursed
for expenses in connection with, attendance, if any, at each annual regular or
special meeting of the Trustees or of any committee thereof; and for their
expenses, if any, in connection with each property visit and any other service
or activity performed or engaged in as Trustees; but nothing herein
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<PAGE> 10
contained shall be construed to preclude any Trustees from serving the Trust in
any other capacity and receiving compensation therefor.
Section 11. REMOVAL OF TRUSTEES. The shareholders may remove any
Trustee in the manner provided in the Declaration of Trust.
Section 12. LOSS OF DEPOSITS. No Trustee shall be liable for any loss
which may occur by reason of the failure of the bank, trust company, savings and
loan association, or other institution with whom moneys or shares have been
deposited.
Section 13. SURETY BONDS. Unless required by law, no Trustee shall be
obligated to give any bond or surety or other security for the performance of
any of his duties.
Section 14. NUMBER, TENURE AND QUALIFICATIONS. The number of Trustees
of the Trust is nine (9), but such number may be changed to not less than three
(3), and not more than fifteen (15), as determined from time to time by the
Board of Trustees. Trustees need not be shareholders of the Trust.
Section 15. INTERESTED TRUSTEE TRANSACTIONS. Notwithstanding any other
provision of these Bylaws, the following actions (an "Interested Trustee
Transaction") of the Board of Trustees shall require the approval of the
Independent Committee, as defined in Article IV of these Bylaws: (i) the
selection of operators for the Trust's properties; and (ii) the entering into or
the consummation of any agreement or transaction with The Wackenhut Corporation,
a Florida corporation, Wackenhut Corrections Corporation, a Florida corporation,
or their respective affiliates, including, but not limited to, the negotiation,
enforcement and renegotiation of the terms of any lease of any of the Trust's
properties. As used herein, the word "affiliate" shall have the meaning given it
in Rule 405 under the Securities Act of 1933, as amended. Action by the
Independent Committee as provided herein shall be in lieu of action of the full
Board of Trustees, except as otherwise required by law or as expressly otherwise
provided in these Bylaws.
Section 16. OTHER INTERESTED TRUSTEE MATTERS. Without limiting the
requirements of Article III Section 15, a contract or other transaction between
the Trust and any of its Trustees or between the Trust and any other trust,
corporation, firm or other entity in which any of its Trustees is a trustee or
director or has a material financial interest is not void or voidable because of
any one or more of the following: (i) the common trustee/directorship or
interest; (ii) the presence of the Trustee at the meeting of the Board or
committee of the Board which authorizes, approves or ratifies the contract or
transaction; (iii) the counting of the vote of the Trustee for the
authorization, approval or ratification of the contract or transaction; or (iv)
the counting of the Trustee in determining the presence of a quorum at a meeting
of the Board of Trustees or committee of the Board of Trustees or at a meeting
of the shareholders, as the case may be, at which the contract or transaction is
authorized, approved or ratified.
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ARTICLE IV
COMMITTEES
Section 1. GENERAL. The Board of Trustees may, by a majority of the
whole board, designate one or more committees, each such committee to consist of
one or more of the Trustees of the Trust. The board may designate one or more
Trustees as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee. Any such committee, to the
extent provided by the Board of Trustees shall have and may exercise all the
powers and authority of the Board of Trustees in the management of the business
and affairs of the Trust, and may authorize the seal of the Trust to be affixed
to all papers which may require it; but no such committee shall have the power
or authority in reference to amending or supplementing the Declaration of Trust
(except that a committee may, to the extent authorized in the resolution or
resolutions providing for the issuance of shares adopted by the Board of
Trustees, fix the designations and any of the preferences or rights of such
shares, including without limitation, those relating to voting powers,
restrictions, limitations as to dividends or distributions, terms or conditions
of redemption, liquidation, any distribution of assets of the Trust, or the
conversion into, or the exchange of such shares for, shares of any other class
or classes or any other series of shares) or authorizing the increase or
decrease of the number of authorized shares of any class or series, or amending
the Bylaws of the Trust; and, unless the Board of Trustees or the Declaration of
Trust so provides, no such committee shall have the power or authority to
authorize a merger, declare a dividend or distribution, authorize the issuance
of shares or adopt a certificate of ownership.
Section 2. COMMITTEES. The Trust shall initially have the following
committees, the specific authority and members of which shall be as designated
herein or by resolution of the Board of Trustees.
(a) An Independent Committee, which shall consist solely of
all of the Independent Trustees and which shall have the authority to approve
the actions of the Board of Trustees as specified in Article III Section 15.
(b) An Audit Committee, which will consist solely of
Independent Trustees, and which shall make recommendations concerning the
engagement of independent public accountants, review with the independent public
accountants the plans and results of the audit engagement, approve professional
services provided by the independent public accountants, review the independence
of the independent public accountants, consider the range of audit and non-audit
fees and review the adequacy of the Trust's initial accounting controls.
(c) A Compensation Committee, which will consist solely of
Independent Trustees, and which shall determine compensation for the Trust's
executive officers and administer any share incentive plans adopted by the
Trust.
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<PAGE> 12
(d) An Executive Committee which shall have such authority as
may be delegated to it by the Trustees.
Section 3. RECORDS OF COMMITTEE MEETINGS; QUORUM; VOTE. Each committee
shall keep regular minutes of its meetings and report the same to the Board of
Trustees when required. The presence of a majority of the total membership of
any committee shall constitute a quorum for the transaction of business at any
meeting of such committee and the act of a majority of those present shall be
necessary and sufficient for the taking of any action at such meeting.
ARTICLE V
OFFICERS
Section 1. GENERAL PROVISIONS. The officers of the Trust may consist of
a Chairman of the Board, a Vice Chairman of the Board, a Chief Executive
Officer, a President, one or more Vice Presidents, a Treasurer, one or more
Assistant Treasurers, a Secretary, and one or more Assistant Secretaries. In
addition, the Trustees may from time to time appoint such other officers with
such powers and duties as they shall deem necessary or desirable. The officers
of the Trust shall be elected annually by the Trustees at the first meeting of
the Trustees held after each annual meeting of shareholders. If the election of
officers shall not be held at such meeting, such election shall be held as soon
thereafter as may be convenient. Each officer shall hold office until his
successor is elected and qualifies or until his death, resignation or removal in
the manner hereinafter provided. Any two or more offices except President and
Vice President may be held by the same person. In their discretion, the Trustees
may leave unfilled any office except that of President and Secretary. Election
of an officer or agent shall not of itself create contract rights between the
Trust and such officer or agent.
Section 2. REMOVAL AND RESIGNATION. Any officer or agent of the Trust
may be removed by the Trustees if in their judgment the best interests of the
Trust would be served thereby, but such removal shall be without prejudice to
the contract rights, if any, of the person so removed. Any officer of the Trust
may resign at any time by giving written notice of his resignation to the
Trustees, the Chairman of the Board, the President or the Secretary. Any
resignation shall take effect at any time subsequent to the time specified
therein or, if the time when it shall become effective is not specified therein
immediately upon its receipt. The acceptance of a resignation shall not be
necessary to make it effective unless otherwise stated in the resignation. Such
resignation shall be without prejudice to the contract rights, if any, of the
Trust.
Section 3. VACANCIES. A vacancy in any office may be filled by the
Trustees for the balance of the term.
Section 4. CHAIRMAN AND VICE CHAIRMAN OF THE BOARD. The Chairman of the
Board shall preside over the meetings of the Trustees and of the shareholders at
which he shall be present and
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<PAGE> 13
shall in general oversee all of the business and affairs of the Trust. In the
absence of the Chairman of the Board, the Vice Chairman of the Board shall
preside at such meetings at which he shall be present. The Chairman and the Vice
Chairman of the Board may execute any deed, mortgage, bond, contract or other
instrument, except in cases where the execution thereof shall be expressly
delegated by the Trustees or by these Bylaws to some other officer or agent of
the Trust or shall be required by law to be otherwise executed. The Chairman of
the Board and the Vice Chairman of the Board shall perform such other duties as
may be assigned to them by the Trustees.
Section 5. CHIEF EXECUTIVE OFFICER. The Trustees may designate a Chief
Executive Officer from among the officers of the Trust. The Chief Executive
Officer shall have responsibility for implementation of the policies of the
Trust as determined by the Trustees, and for the administration of the business
affairs of the Trust. In the absence of both the Chairman and Vice Chairman of
the Board, the Chief Executive Officer shall preside over the meetings of the
Trustees and of the shareholders at which he shall be present. The Chief
Executive Officer may execute any deed, mortgage, bond, contract or other
instrument, except in cases where the execution thereof shall be expressly
delegated by the Trustees or by these Bylaws to some other officer or agent of
the Trust or shall be required by law to be otherwise executed. The Chief
Executive Officer shall perform such other duties as may be assigned to him by
the Trustees.
Section 6. CHIEF OPERATING OFFICER. The Trustees may designate a Chief
Operating Officer from among the officers of the Trust. The Chief Operating
Officer may execute any deed, mortgage, bond, contract or other instrument,
except in cases where the execution thereof shall be expressly delegated by the
Trustees or by these Bylaws to some other officer or agent of the Trust or shall
be required by law to be otherwise executed; and in general shall perform all
duties incident to the office of Chief Operating Officer and such other duties
as may be prescribed by all the Trustees or the Chief Executive Officer from
time to time.
Section 7. CHIEF DEVELOPMENT OFFICER. The Trustees may designate a
Chief Development Officer from among the officers of the Trust. The Chief
Development Officer may execute any deed, mortgage, bond, contract or other
instrument, except in cases where the execution thereof shall be expressly
delegated by the Trustees or by these Bylaws to some other officer or agent of
the Trust or shall be required by law to be otherwise executed; and in general
shall perform all duties incident to the office of Chief Development Officer and
such other duties as may be prescribed by all the Trustees or the Chief
Executive Officer from time to time.
Section 8. CHIEF FINANCIAL OFFICER. The Trustees may designate a Chief
Financial Officer from among the officers of the Trust. The Chief Financial
Officer may execute any deed, mortgage, bond, contract or other instrument,
except in cases where the execution thereof shall be expressly delegated by the
Trustees or by these Bylaws to some other officer or agent of the Trust or shall
be required by law to be otherwise executed; and in general shall perform all
duties incident to the office of Chief Financial Officer and such other duties
as may be prescribed by all the Trustees or the Chief Executive Officer from
time to time.
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<PAGE> 14
Section 9. PRESIDENT. In the absence of the Chairman of the Board, the
Vice Chairman of the Board and the Chief Executive Officer, the President shall
preside over the meetings of the Trustees and of the shareholders at which he
shall be present. In the absence of a designation of a Chief Executive Officer
by the Trustees, the President shall be the Chief Executive Officer and shall be
ex officio a member of all committees that may, from time to time, be
constituted by the Trustees. The President may execute any deed, mortgage, bond,
contract or other instrument, except in cases where the execution thereof shall
be expressly delegated by the Trustees or by these Bylaws to some other officer
or agent of the Trust or shall be required by law to be otherwise executed; and
in general shall perform all duties incident to the office of President and such
other duties as may be prescribed by the Trustees or the Chief Executive Officer
from time to time.
Section 10. VICE PRESIDENTS. In the absence of the President or in the
event of a vacancy in such office, the Vice President (or in the event there be
more than one Vice President, the Vice Presidents in the order designated at the
time of their election or, in the absence of any designation, then in the order
of their election) shall perform the duties of the President and when so acting
shall have all the powers of and be subject to all the restrictions upon the
President; and shall perform such other duties as from time to time may be
assigned to him by the Chief Executive Officer, the President or the Trustees.
The Trustees may designate one or more Vice Presidents as Executive Vice
President or as Vice President for particular areas of responsibility.
Section 11. SECRETARY. The Secretary shall (a) keep the minutes of the
proceedings of the shareholders, the Trustees and committees of the Trustees in
one or more books provided for that purpose; (b) see that all notices are duly
given in accordance with the provisions of these Bylaws or as required by law;
(c) be custodian of the trust records and of the seal of the Trust; (d) keep a
register of the post office address of each shareholder which shall be furnished
to the Secretary by such shareholder; (e) have general charge of the share
transfer books of the Trust; and (f) in general perform such other duties as
from time to time may be assigned to him by the Chief Executive Officer, the
President or by the Trustees.
Section 12. TREASURER. The Treasurer shall have the custody of the
funds and securities of the Trust and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Trust and shall deposit all
moneys and other valuable effects in the name and to the credit of the Trust in
such depositories as may be designated by the Trustees. The Treasurer shall
disburse the funds of the Trust as may be ordered by the Trustees, taking proper
vouchers for such disbursements, and shall render to the Chief Executive
Officer, the President and Trustees, at the regular meeting of the Trustees or
whenever they may required it, an account of all his transactions as Treasurer
and of the financial condition of the Trust. If required by the Trustees, the
Treasurer shall give the Trust a bond in such sum and with such surety or
sureties as shall be satisfactory to the Trustees for the faithful performance
of the duties of his office and for the restoration to the Trust in case of his
death, resignation, retirement or removal from office, of all books, papers,
vouchers, moneys and other property of whatever kind in his possession or under
his control belonging to the Trust.
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<PAGE> 15
Section 13. ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. The
Assistant Secretaries and Assistant Treasurers, in general shall perform such
duties as shall be assigned to them by the Secretary or Treasurer, respectively,
or by the Chief Executive Officer, the President or the Trustees. The Assistant
Treasurers shall, if required by the Trustees, give bonds for the faithful
performance of their duties in such sums and with such surety or sureties as
shall be satisfactory to the Trustees.
Section 14. SALARIES. The salaries of the officers shall be fixed from
time to time by the Trustees and no officer shall be prevented from receiving
such salary by reason of the fact that he is also a Trustee.
ARTICLE VI
CONTRACTS, LOANS, CHECKS AND DEPOSITS
Section 1. CONTRACTS. The Trustees may authorize any officer or agent
to enter into any contract or to execute and deliver any instrument in the name
of and on behalf of the Trust and such authority may be general or confined to
specific instances.
Section 2. CHECKS AND DRAFTS. All checks, drafts or other orders for
the payment of money, notes or other evidences of indebtedness issued in the
name of the Trust shall be signed by such officer or officers, agent or agents
of the Trust in such manner as shall from time to time be determined by the
Trustees.
Section 3. DEPOSITS. All funds of the Trust not otherwise employed
shall be deposited from time to time to the credit of the Trust in such banks,
trust companies or other depositories as the Trustees may designate.
ARTICLE VII
SHARES
Section 1. CERTIFICATES. Subject to the authority of the Trustees to
determine to issue shares without certificates, each shareholder shall be
entitled to a certificate or certificates which shall represent and certify the
number of shares of each class of beneficial interest held by him in the Trust.
Each certificate shall be signed by the Chief Executive Officer, the President
or a Vice President and countersigned by the Secretary or an Assistant Secretary
or the Treasurer or an Assistant Treasurer and may be sealed with the seal, if
any, of the Trust. The signatures may be either manual or facsimile.
Certificates shall be consecutively numbered; and if the Trust shall, from time
to time, issue several classes of shares, each class may have its own number
series. A certificate is valid and may be issued whether or not an officer who
signed it is still an officer when it is issued. Each certificate representing
shares which are restricted as to their transferability or voting powers, which
are
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<PAGE> 16
preferred or limited as to their dividends or as to their allocable portion of
the assets upon liquidation or which are redeemable at the option of the Trust,
shall have a statement of such restriction, limitation, preference or redemption
provision, or a summary thereof, plainly stated on the Certificate. In lieu of
such statement or summary, the Trust may set forth upon the face or back of the
certificate a statement that the Trust will furnish to any shareholder, upon
request and without charge, a full statement of such information.
Section 2. TRANSFERS. Certificates shall be treated as negotiable, and
title thereto and to the shares they represent shall be transferred by delivery
thereof to the same extent as those of a Maryland stock corporation. No
transfers of shares of the Trust shall be made if (i) void ab initio pursuant to
any provision of the Declaration of Trust or (ii) the Board of Trustees,
pursuant to any provision of the Declaration of Trust, shall have refused to
permit the transfer of such shares. Permitted transfers of shares of the Trust
shall be made on the share records of the Trust only upon the instruction of the
registered holder thereof, or by his attorney thereunto authorized by power of
attorney duly executed and filed with the Secretary or with a transfer agent or
transfer clerk, and upon surrender of the certificate or certificates, if
issued, for such shares properly endorsed or accompanied by a duly executed
share transfer power and the payment of all taxes thereon. Upon surrender to the
Trust or the transfer agent of the Trust of a certificate for shares duly
endorsed or accompanied by proper evidence of succession, assignment or
authority to transfer, as to any transfers not prohibited by any provision of
the Declaration of Trust or by action of the Board of Trustees thereunder, it
shall be the duty of the Trust to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
Section 3. REPLACEMENT CERTIFICATE. Any officer designated by the
Trustees may direct a new certificate to be issued in place of any certificate
previously issued by the Trust alleged to have been lost, stolen or destroyed
upon the making of an affidavit of that fact by the person claiming the
certificate to be lost, stolen or destroyed. When authorizing the issuance of a
new certificate, the officer designated by the Trustees may, in his discretion
and as a condition precedent to the issuance thereof, require the owner of such
lost, stolen or destroyed certificate or the owner's legal representative to
advertise the same in such manner as he shall require and/or to give bond, with
sufficient surety, to the Trust to indemnify it against any loss or claim which
may arise as a result of the issuance of a new certificate.
Section 4. FIXING OF RECORD DATE. The Trustees may set, in advance, a
record date for the purpose of determining shareholders entitled to notice of or
to vote at any meeting of shareholders or determining shareholders entitled to
receive payment of any dividend or the allotment of any other rights, or in
order to make a determination of shareholders for any other purpose. Such date,
in any case, shall not be prior to the close of business on the day the record
date is fixed and shall be not more than 90 days and in the case of a meeting of
shareholders not less than ten days, before the date on which the meeting or
particular action requiring such determination of shareholders of record is to
be held or taken. If no record date is fixed for the determination of
shareholders, (a) the record date for the determination of shareholders entitled
to notice of or to vote at a meeting of shareholders shall be at the close of
business on the day on which the notice of meeting is mailed or
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<PAGE> 17
the 30th day before the meeting, whichever is the closer date to the meeting;
and (b) the record date for the determination of shareholders entitled to
receive payment of a dividend or an allotment of any other rights shall be the
close of business on the day on which the resolution of the Trustees, declaring
the dividend or allotment of rights, is adopted. When a determination of
shareholders entitled to vote at any meeting of shareholders has been made as
provided in this section, such determination shall apply to any adjournment
thereof, except that when the meeting is adjourned to a date more than 120 days
after the record date fixed for the original meeting, a new record date shall be
determined as set forth herein.
Section 5. SHARE LEDGER. The Trust shall maintain at its principal
office or at the office of its counsel, accountants or transfer agent, an
original or duplicate share ledger containing the name and address of each
shareholder and the number of shares of each class held by such shareholder.
ARTICLE VIII
DISTRIBUTIONS
Section 1. AUTHORIZATION. Dividends and other distributions upon the
shares of the Trust may be authorized and declared by the Board Trustees in
their discretion, subject to the provisions of law and the Declaration of Trust.
Dividends may be paid in cash, property or shares of the Trust, subject to the
provisions of law and the Declaration of Trust.
Section 2. CONTINGENCIES. Before payment of any dividends or any other
distributions, there may be set aside out of any funds of the Trust available
for dividends or any other distributions such sum or sums as the Trustees may
from time to time, in their absolute discretion, think proper as a reserve fund
for contingencies, for equalizing dividends, for repairing or maintaining any
property of the Trust or for such other purpose as the Trustees shall determine
to be in the best interest of the Trust, and the Trustees may modify or abolish
any such reserve in the manner in which it was created.
ARTICLE IX
SEAL
Section 1. SEAL. The Trustees may authorize the adoption of a seal by
the Trust. The seal shall have inscribed thereon the name of the Trust and the
year of its formation. The Trustees may authorize one or more duplicate seals
and provide for the custody thereof.
Section 2. AFFIXING SEAL. Whenever the Trust is required to place its
seal to a document, it shall be sufficient to meet the requirements of any law,
rule or regulation relating to a seal to place the word "(SEAL)" adjacent to the
signature of the person authorized to execute the document on behalf of the
Trust.
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<PAGE> 18
ARTICLE X
INDEMNIFICATION AND ADVANCES FOR EXPENSES
To the maximum extent permitted by Maryland law in effect from time to
time, the Trust shall indemnify (a) any Trustee or officer or any former Trustee
or officer (including among the foregoing, for all purposes of this Article X
and without limitation, any individual who, while a Trustee or officer and at
the express request of the Trust, serves or has served another corporation,
partnership, joint venture, trust, employee benefit plan or any other enterprise
as a director, officer, shareholder, partner or trustee of such corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise)
who has been successful, on the merits or otherwise, in the defense of a
proceeding to which he was made a party by reason of service in such capacity,
against reasonable expenses incurred by him in connection with the proceeding,
and (b) any Trustee or officer or any former Trustee or officer against any
claim or liability to which he may become subject by reason of such status
unless it is established that (i) his act or omission was material to the matter
giving rise to the proceeding and was committed in bad faith or was the result
of active and deliberate dishonesty, (ii) he actually received an improper
personal benefit in money, property or services or (iii) in the case of a
criminal proceeding, he had reasonable cause to believe that his act or omission
was unlawful. Notwithstanding the foregoing, if the proceeding was one by or in
the right of the Trust, indemnification may not be made in respect of any
proceeding in which the Trustee or officer shall have been adjudged to be liable
to the Trust. In addition, the Trust shall pay or reimburse, in advance of final
disposition of a proceeding, reasonable expenses incurred by a Trustee or
officer or former Trustee or officer made a party to a proceeding by reason such
status, provided that, the Trust shall have received (i) a written affirmation
by the Trustee or officer of his good faith belief that he has met the
applicable standard of conduct necessary for indemnification by the Trust as
authorized by these Bylaws and (ii) a written undertaking by or on its behalf to
repay the amount paid or reimbursed by the Trust if it shall ultimately be
determined that the applicable standard of conduct was not met. The Trust may,
with the approval of its Trustees, provide such indemnification or payment or
reimbursement of expenses to any Trustee or officer or any former Trustee or
officer who served a predecessor of the Trust as a trustee, director, officer or
partner, and to any employee or agent of the Trust or a Predecessor of the
Trust. Neither the amendment nor repeal of this Article, nor the adoption or
amendment of any other provision of the Declaration of Trust or these Bylaws
inconsistent with this Article, shall apply to or affect in any respect the
applicability of this Article with respect to any act or failure to act which
occurred prior to such amendment, repeal or adoption. Any indemnification or
payment or reimbursement of the expenses permitted by these Bylaws shall be
furnished in accordance with the procedures provided for indemnification or
payment or reimbursement of expenses, as the case may be, under Section 2-418 of
the Maryland General Corporation Law (the "MGCL") for directors of Maryland
corporations. The provisions of this Article X shall not be deemed to exclude
any other rights of indemnification or for the advancement of expenses to which
a Trustee or officer, or any former Trustee or officer, of the Trust may be
entitled pursuant to the Declaration of Trust, action by the shareholders or
Board of Trustees, by
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<PAGE> 19
agreement or otherwise. The Trust may provide to Trustees and officers such
other and further indemnification or payment or reimbursement of expenses, as
the case may be, to the fullest extent permitted by law.
ARTICLE XI
WAIVER OF NOTICE
Whenever any notice is required to be given pursuant to the Declaration
of Trust or Bylaws or pursuant to applicable law, a waiver thereof in writing,
signed by the person or persons entitled to such notice, whether before or after
the time stated therein, shall be deemed equivalent to the giving of such
notice. Neither the business to be transacted at nor the purpose of any meeting
need be set forth in the waiver of notice, unless specifically required by
statute. The attendance of any person at any meeting shall constitute a waiver
of notice of such meeting, except where such person attends a meeting for the
express purpose of objecting to the transaction of any business on the ground
that the meeting is not lawfully called or convened.
ARTICLE XII
AMENDMENT OF BYLAWS
In accordance with Article III hereof, the Trustees shall have the
exclusive power to adopt, alter or repeal any provision of these Bylaws and to
make new Bylaws.
ARTICLE XIII
MISCELLANEOUS
All references to the Declaration of Trust shall include any amendments
and supplements thereto.
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<PAGE> 1
Exhibit 3.5
NUMBER COMMON SHARES SHARES
OF BENEFICIAL INTEREST
FORMED UNDER THE LAWS
OF THE STATE OF MARYLAND
CUSIP 22025E 10 4
THIS CERTIFICATE IS TRANSFERABLE
IN NEW YORK, N.Y., DALLAS, TX SEE REVERSE FOR
AND RIDGEFIELD PARK, N.J. CERTAIN DEFINITIONS
CORRECTIONAL PROPERTIES TRUST
THIS CERTIFIES THAT
IS THE OWNER OF
FULLY PAID AND NON-ASSESSABLE COMMON SHARES OF BENEFICIAL INTEREST, PAR VALUE
$.001 PER SHARE, OF
Correctional Properties Trust, transferable on the books of the Company by the
holder hereof in person or by duly authorized attorney upon surrender of this
certificate properly endorsed. This certificate and the shares represented
hereby are issued and shall be held subject to all the provisions of the
Declaration of Trust of the Company (copies of which are on file with the
Transfer Agent), to all of which the holder by acceptance hereof assents. This
certificate is not valid unless countersigned by the Transfer Agent and
registered by the Registrar.
Witness the facsimile seal of the Company and the facsimile signatures of
its duly authorized officers.
Dated
Countersigned and Registered:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C. SEAL PRESIDENT AND
Transfer Agent and Registrar CHIEF EXECUTIVE OFFICER
By
VICE PRESIDENT, CHIEF FINANCIAL OFFICER,
SECRETARY AND TREASURER
Authorized SIGNATURE
<PAGE> 2
CORRECTIONAL PROPERTIES TRUST
The Common Shares represented by this certificate are subject to
restrictions on transfer as set forth in the Declaration of Trust of the Trust.
No Person may (i) Beneficially Own or Constructively Own Common Shares in excess
of 9.8% of the number of any class or series of the outstanding Common Shares,
(ii) Beneficially Own or Constructively Own Preferred Shares in excess of 9.8%
of the number of any class or series of the outstanding Preferred Shares, (iii)
allow any Transfer or Non-Transfer Event to occur that would result in the
Equity Shares being beneficially owned by fewer than 100 Persons, (iv)
Beneficially Own Equity Shares that would result in the Trust being "closely
held" under Section 856(h) of the Internal Revenue Code of 1986, as amended (the
"Code"), or (v) Constructively Own Equity Shares that would cause the Trust to
Constructively Own 9.8% or more of the ownership interests in a tenant of the
real property of the Trust, the Operating Partnership or any direct or indirect
subsidiary (including, without limitation, partnerships and limited liability
companies) of the Trust or the Operating Partnership, within the meaning of
Section 856(d)(2)(B) of the Code. Any Person who attempts to Beneficially Own or
Constructively Own Equity Shares in excess of the above limitations must
immediately notify the Trust in writing. If the restrictions above are violated,
the Equity Shares represented hereby will be transferred automatically and by
operation of law to a Share Trust and shall be designated Shares-in-Trust. All
capitalized terms in this legend have the meanings defined in the Trust's
Declaration of Trust, as the same may be further amended from time to time, a
copy of which, including the restrictions on transfer, will be sent without
charge to each shareholder who so requests.
THE COMPANY HAS THE AUTHORITY TO ISSUE SHARES OF MORE THAN ONE CLASS OR
SERIES. THE COMPANY WILL, ON REQUEST AND WITHOUT CHARGE, FURNISH A FULL
STATEMENT OF THE DESIGNATIONS AND ANY PREFERENCES, CONVERSION AND OTHER RIGHTS,
VOTING POWERS, RESTRICTIONS, LIMITATIONS AS TO DIVIDENDS OR DISTRIBUTIONS,
QUALIFICATIONS, AND TERMS AND CONDITIONS OF REDEMPTION OF THE SHARES OF EACH
CLASS AND SERIES WHICH THE COMPANY IS AUTHORIZED TO ISSUE. SUCH REQUEST MAY BE
MADE TO THE SECRETARY OF THE COMPANY AT ITS PRINCIPAL OFFICE.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
<TABLE>
<S> <C>
TEN COM - as tenants in common UNIF GIFT MIN ACT - _________________ Custodian ____________
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act _________________________
in common (State)
</TABLE>
Additional abbreviations may also be used though not in the above list.
For value received,_____________________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- ----------------------------
- ----------------------------
- --------------------------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
shares
- ------------------------------------------------------------------------
of the Common Shares represented by the within certificate, and
do hereby irrevocably constitute and appoint
Attorney
- -----------------------------------------------------------------------
to transfer the said stock on the books of the within named Company with full
power of substitution in the premises.
Dated:
Signature:
----------------------------------------
Notice: The signature to this assignment
must correspond with the name as written
upon the face of the certificate in
every particular, without alteration or
enlargement or any change whatever.
Signature guaranteed:
----------------------------------------
THE SIGNATURE(S) SHOULD BE GUARANTEED BY
AN ELIGIBLE GUARANTOR INSTITUTION
(BANKS, STOCKBROKERS, SAVINGS AND LOAN
ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED SIGNATURE
GUARANTEE MEDALLION PROGRAM), PURSUANT
TO S.E.C. RULE 17Ad-15.
<PAGE> 1
EXHIBIT 8.1
FORM OF
TAX OPINION TO BE PROVIDED
BY AKERMAN, SENTERFITT & EIDSON, P.A.
_____________, 1998
Correctional Properties Trust
4200 Wackenhut Drive
Palm Beach Gardens, Florida 33410-4243
RE: CERTAIN FEDERAL INCOME TAX CONSEQUENCES RELATING TO THE ORGANIZATION
AND OPERATION OF CORRECTIONAL PROPERTIES TRUST AS A REAL ESTATE
INVESTMENT TRUST.
Gentlemen:
We have acted as counsel to Correctional Properties Trust, a Maryland
real estate investment trust (the "Company"), in connection with the preparation
of a registration statement including the prospectus contained as a part of such
registration statement filed with the Securities and Exchange Commission on
February 20, 1998 (No.333-46681), as amended through the date hereof, with
respect to the offering and sale (the "Offering") of up to 7,130,000 Common
Shares of beneficial interest, $.001 par value per share, of the Company. In
connection with that representation, we prepared the summaries under the
sections titled "PROSPECTUS SUMMARY - TAX CONSIDERATIONS AND TAX STATUS OF THE
COMPANY" and "MATERIAL FEDERAL INCOME TAX CONSIDERATIONS" (the "Tax Summaries")
which are contained in the registration statement on Form S-11 with respect to
the Offering. This letter refers to the above registration statement, prospectus
and all Schedules, Annexes and Exhibits thereto and all amendments made thereto
through the date hereof collectively as the "Registration Statement."
Capitalized terms used herein have the meaning they have in the Registration
Statement.
In rendering the opinion below, we have examined such documents as we
have considered necessary or appropriate as a basis for such opinion, including
the following: (1) the Company's Declaration of Trust and Articles of Amendment
and Restatement of Declaration of Trust; (2) the Company's Bylaws and Amended
and Restated Bylaws; (3) the Registration Statement; (4) the Articles of
Incorporation of CPT Limited Partner, Inc., a Delaware corporation wholly owned
by the Company; (5) the Purchase Agreements; (6) the Certificate of Limited
Partnership of the Operating Partnership; (7) the Partnership Agreement of the
Operating Partnership among the Company as a general and limited partner and CPT
Limited Partner, Inc. as a limited partner; (8) the Master Lease; (9) the
Leases; (10) the Option Agreements; (11) the Right to Purchase Agreement; and
(12) a letter executed by a duly appointed officer of the Company setting forth
certain representations relating to
<PAGE> 2
Correctional Properties Trust
______________, 1998
Page 2
the Company and its operations (the "Representation Letter"). In our review, we
have assumed, with your consent, that the documents that we reviewed in proposed
form will be executed in substantially the same form. We have also assumed, with
your consent, that all facts, representations and statements set forth in the
above documents are true and correct in all material respects, and that the
transactions contemplated by those documents and as described in the
Registration Statement will be consummated in accordance with their terms and as
so described. We have also assumed that all obligations imposed by any such
documents on the parties thereto have been, or will be, performed or satisfied
in accordance with their terms; that such documents have been, or will be,
properly executed; that original documents are authentic and accurate; and that
copies of documents conform to the originals thereof.
In connection with the opinions rendered below, we have also made the
following assumptions: (1) the Company will comply with all applicable filing,
reporting, and administrative requirements relating to real estate investment
trust ("REIT") status such as, by way of example, making a timely election under
Section 856(c)(1) of the Internal Revenue Code of 1986, as amended (the "Code")
and maintaining the required records of actual ownership of its outstanding
stock and otherwise complying with Treasury Regulation Section 1.857-8; (2) the
Company will operate in a manner that will make the representations contained in
the Representation Letter true and correct in all material respects; and (3) the
Company will not make any amendments to its organizational documents or the
Partnership Agreement after the date hereof that would affect the Company's
qualification as a REIT for any taxable year.
In connection with the opinions rendered below, we also have relied
upon the correctness of the representations contained in the Representation
Letter. To the extent that any of the representations provided to us in the
Representation Letter are with respect to matters set forth in the Code and the
Regulations, we have reviewed with the individual making such representation the
relevant portion of the Code and the applicable Regulations and are reasonably
satisfied that such individual understands such provisions and is capable of
making such representations.
Since the Company's qualification as a REIT is dependent upon its
actual, not just its proposed future conduct, it is possible that the Company's
future actions or inactions may cause the Company not to qualify or not to
continue to qualify as a REIT. We will not review on a continuing basis the
Company's compliance with the documents or assumptions set forth above, or the
representations set forth in the Representation Letter. Our opinion does not
relate to the actual future operation of the Company to the extent that it may
differ from the proposed and intended operation that has been represented to us.
No assurance can be given that the actual results of the Company's operations
for any given taxable year will satisfy the requirements for qualification and
taxation as a REIT.
<PAGE> 3
Correctional Properties Trust
______________, 1998
Page 3
We have not been asked to nor do we give any opinion regarding Maryland
law as it may or may not affect the tax status of the Company. We assume that
the Company has been duly and properly formed under Maryland law. We have
relied, with your consent, on the opinion of Venable, Baetjer and Howard, LLP
regarding various aspects of Maryland law including the enforceability of the
Ownership Limit provisions contained in the Articles of Amendment and
Restatement of Declaration of Trust. We have not been asked to nor do we give
any opinion regarding any foreign, state or local tax issues.
For purposes of our opinions, we have made no independent investigation
of the facts contained in the documents and assumptions set forth above or the
representations set forth in the Representation Letter. If any of the
representations or the assumptions set forth in this opinion are not accurate,
the opinions and the Tax Summaries may not be accurate and could change. No
facts have come to our attention, however, that would cause us to question the
accuracy and completeness of such facts or documents in a material way.
Based on and subject to the documents, assumptions and comments set
forth above, the representations set forth in the Representation Letter, we are
of the opinion that:
(a) commencing with the Company's taxable year ending December
31, 1998, the Company will qualify to be taxed as a REIT pursuant to sections
856 through 860 of the Code, and the Company's proposed method of operation as
described in the Registration Statement, if followed, will enable it to meet the
requirements for qualification and taxation as a REIT under the Code;
(b) the descriptions of law and legal conclusions contained in
the Tax Summaries are correct in all material respects, and the discussion
contained therein fairly summarizes the federal income tax considerations that
are material to a holder of the Common Shares; and
(c) the Operating Partnership (and any Subsidiary
Partnership) will not be taxed as a corporation under the Code.
The foregoing opinions are based on current provisions of the Code and
the Regulations, published administrative interpretations thereof, and published
court decisions as of the date hereof. The Internal Revenue Service has not
issued Regulations or administrative interpretations with respect to various
provisions of the Code relating to REIT qualification. No assurance can be given
that the law will not change in a way that will prevent the Company from
qualifying as a REIT, or cause the Operating Partnership (or any Subsidiary
Partnership) to be taxed as a corporation. In addition, an opinion of counsel is
not binding on the Internal Revenue Service or a court.
<PAGE> 1
Exhibit 10.1
AGREEMENT OF LIMITED PARTNERSHIP
OF
CPT OPERATING PARTNERSHIP L.P.
AGREEMENT OF LIMITED PARTNERSHIP dated February 19, 1998 among
Correctional Properties Trust, a Maryland real estate investment trust (the
"General Partner"), and the Persons listed on EXHIBIT A attached hereto (the
"Initial Limited Partners," and together with any other Person who becomes a
limited partner in the Partnership as hereinafter provided, the "Limited
Partners"). The General Partner and the Limited Partners are sometimes referred
to individually as a "Partner" and collectively as the "Partners".
RECITALS
The persons executing this Agreement as a Partner desire to form a
limited partnership under the Revised Uniform Limited Partnership Act of the
State of Delaware (as the same may be amended from time to time, the "Act") to
be known as the CPT Operating Partnership L.P. (the "Partnership"). Upon the
execution of this Agreement and the simultaneous contributions by the Partners
to the Partnership contemplated hereby, the Partnership is created with the
General Partner serving as the Partnership's General Partner and owning all of
the general partnership interests in the Partnership, and the Initial Limited
Partners initially owning all of the limited partnership interests in the
Partnership.
TERMS OF AGREEMENT
In consideration of the foregoing and the mutual promises herein
contained, and other valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
Except as otherwise expressly provided herein, the following terms and
phrases used in this Agreement and the Exhibits hereto shall have the meanings
set forth below:
"Act" shall have the meaning ascribed to it in the Recitals hereto.
<PAGE> 2
"Adjusted Capital Account Deficit" shall mean, with respect to any
Partner, the deficit balance, if any, in such Partner's Capital Account as of
the end of any relevant fiscal year and after giving effect to the following
adjustments: (a) credit to such Capital Account any amounts which such Partner
is obligated or treated as obligated to restore with respect to any deficit
balance in such Capital Account pursuant to Section 1.704-1(b)(2)(ii)(c) of the
Regulations, or is deemed to be obligated to restore with respect to any deficit
balance pursuant to the penultimate sentences of Sections 1.704-2(g)(1) and
1.704-2(i)(5) of the Regulations; and (b) debit to such Capital Account the
items described in Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6) of the
Regulations. The foregoing definition of Adjusted Capital Account Deficit is
intended to comply with the requirements of the alternate test for economic
effect contained in Section 1.704-1(b)(2)(ii)(d) of the Regulations and shall be
interpreted consistently therewith.
"Administrative Expenses" shall mean all those administrative costs and
expenses of the General Partner described in SECTION 8.1(A).
"Affiliate" shall mean, with respect to any Partner (or as to any other
Person the affiliates of whom are relevant for purposes of any of the provisions
of this Agreement), (a) any member of the Immediate Family of such Partner; (b)
any shareholder, director, officer, trustee, general partner, shareholder of a
general partner or beneficiary of a Partner; (c) any legal representative,
successor, or assignee of any Person referred to in the preceding clauses (a)
and (b); (d) any trustee for the benefit of any Person referred to in the
preceding clauses (a) through (c); or (e) any Entity which directly or
indirectly through one or more intermediaries, Controls, is Controlled by, or is
under common Control with any Person referred to in the preceding clauses (a)
through (d).
"Agreement" shall mean this Agreement of Limited Partnership, as
originally executed and as amended, modified, supplemented or restated from time
to time, as the context requires.
"Audited Financial Statements" shall mean financial statements (balance
sheet, statement of operations, statement of partners' equity and statement of
cash flows) prepared in accordance with generally accepted accounting principles
and accompanied by an independent auditor's report.
"Bankruptcy" shall mean, with respect to any Partner, (a) the
commencement by such Partner of any proceeding seeking relief under any
provision or chapter of the federal Bankruptcy Code, 11 U.S.C. ss.ss.101 et
seq., as the same may be amended from time to time, or any other federal or
state law relating to insolvency, bankruptcy or reorganization; (b) an
adjudication that such Partner is insolvent or bankrupt; (c) the entry of an
order for relief under the federal Bankruptcy Code with respect to such Partner;
(d) the filing of any such petition or the commencement of any such case or
proceeding against such Partner, unless such petition and the case or proceeding
initiated thereby are stayed or dismissed within ninety (90) days from the date
of such filing; (e) the filing of an answer by such Partner admitting the
allegations of any such petition; (f) the appointment of a trustee, receiver or
custodian for all or substantially all of the assets of such Partner unless such
appointment is stayed, vacated or dismissed within ninety (90) days from the
date of such appointment but not less than five (5) days before the proposed
sale of any assets of such Partner; (g) the insolvency of such Partner or
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<PAGE> 3
the execution by such Partner of a general assignment for the benefit of
creditors; (h) the convening by such Partner of a meeting of its creditors, or
any class thereof, for purposes of effecting a moratorium upon or extension or
composition of its debts; (i) the failure of such Partner to pay its debts as
they mature; (j) the levy, attachment, execution or other seizure of
substantially all of the assets of such Partner where such seizure is not
discharged within thirty (30) days thereafter; (k) the admission by such Partner
in writing of its inability generally to pay its debts as they mature or that it
is generally not paying its debts as they become due; or (l) the taking of any
corporate or partnership action in connection with the foregoing.
"Business Day" shall mean any day other than a Saturday, a Sunday or a
day on which the American or New York Stock Exchange or The NASDAQ Stock Market
is closed.
"Capital Account" shall mean, with respect to any Partner, the separate
"book" account which the Partnership shall establish and maintain for such
Partner in accordance with Section 704(b) of the Code and Section
1.704-1(b)(2)(iv) of the Regulations and such other provisions of Section
1.704-1(b) of the Regulations that must be complied with in order for the
Capital Accounts to be determined in accordance with the provisions of said
Regulations.
"Capital Contribution" shall mean, with respect to any Partner, the
amount of money and assets contributed to the Partnership by such Partner (net
of liabilities to which such contributed assets are subject).
"Cash Equivalents" shall mean obligations of the United States
government with a maturity of not more than 60 days and time deposits and
accounts maintained in a national banking association and fully insured by the
Federal Deposit Insurance Corporation.
"Certificate" shall mean the Certificate of Limited Partnership
establishing the Partnership, as filed with the office of the Secretary of State
of in the State of Delaware, as amended and as it may hereafter be amended from
time to time in accordance with the terms of this Agreement and the Act.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"Contributed Assets" shall mean, with respect to a Partner, the real
property, personal property, contract rights, contracts, agreements and other
assets contributed by the Partner to the Partnership and shall include the
assets being contributed to the Partnership on the date hereof as the initial
capital contributions of the Partners.
"Control" shall mean the ability, whether by the direct or indirect
ownership of shares or other equity interests, by contract or otherwise, to
elect a majority of the directors of a corporation, to select the managing
partner of a partnership, or otherwise to select, or have the power to remove
and then select, a majority of those persons exercising governing authority over
an Entity. In the case of a limited partnership, the sole general partner, all
of the general partners to the extent each has equal management control and
authority, or the managing general partner or managing general partners
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<PAGE> 4
thereof shall be deemed to have control of such partnership and, in the case of
a trust, any trustee thereof or any Person having the right to select any such
trustee shall be deemed to have control of such trust.
"Depreciation" shall mean, with respect to any asset of the Partnership
for any fiscal year or other period, the depreciation, depletion or
amortization, as the case may be, allowed or allowable for federal income tax
purposes in respect of such asset for such fiscal year or other period;
provided, however, that if there is a difference between the Gross Asset Value
and the adjusted tax basis of such asset, Depreciation shall mean "book
depreciation, depletion or amortization" as determined under Section
1.704-1(b)(2)(iv)(g)(3) of the Regulations.
"Economic Capital Account" shall mean, with respect to any Partner, the
balance, if any, in such Partner's Capital Account as of the end of any relevant
period, increased by such Partner's share of Partnership Minimum Gain and
Minimum Gain Attributable to Partner Nonrecourse Debt, and decreased by the
items described in Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6).
"Entity" shall mean any general partnership, limited partnership,
corporation, joint venture, limited liability company, trust, business trust,
cooperative or association.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974
as amended from time to time (or any corresponding provisions of succeeding
laws).
"Event of Withdrawal" shall mean any event specified in Section 17-402
of the Act or any corresponding provision of succeeding law.
"Fiscal Year" shall have the meaning ascribed to it in SECTION 9.4.
"General Partner" shall mean Correctional Properties Trust, a Maryland
real estate investment trust, in its capacity as general partner of the
Partnership, its duly admitted successors and assigns and any other person who
is a general partner of the Partnership at the time of reference thereto.
"General Partnership Units" means the Units issued to the General
Partner.
"General Partnership Interest" shall mean the Partnership Interest held
by the General Partner.
"Gross Asset Value" shall mean, with respect to any asset, the asset's
adjusted basis for federal income tax purposes except as follows: (1) The
initial Gross Asset Value of any asset contributed by a Partner to the
Partnership shall be the gross fair market value of such asset at the time of
such contribution, as agreed to by the Partners; (2) The Gross Asset Values of
all Partnership assets shall be adjusted to equal their respective gross fair
market values, as agreed to by the Partners, as of the following times: (a) the
acquisition of an additional interest in the Partnership by any new or existing
Partner in exchange for more than a de minimis capital contribution; (b) the
distribution by the Partnership to a Partner of more than a de minimis amount of
Partnership property other than
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<PAGE> 5
money, unless all Partners receive simultaneous distributions of undivided
interests in the distributed property in proportion to their respective
Percentage Interests; (c) the liquidation of the Partnership within the meaning
of Regulations Section 1.704-1(b)(2)(ii)(g); and (d) the termination of the
Partnership for federal income tax purposes pursuant to Section 708(b)(1)(B) of
the Code; and (3) The Gross Asset Value of any Partnership asset distributed to
any Partner shall be the gross fair market value of such asset on the date of
distribution. If the Gross Asset Value of an asset has been determined or
adjusted pursuant to subparagraph (1) or (2) hereof, such Gross Asset Value
shall thereafter be adjusted by the Depreciation taken into account with respect
to such asset for purposes of computing Net Income and Net Loss.
"Initial Limited Partners" means CPT Limited Partner Inc., a Delaware
corporation, and Correctional Properties Trust, a Maryland real estate
investment trust.
"Limited Partners" shall mean those Persons who are, at the time of
reference thereto, a limited partner of the Partnership.
"Limited Partnership Interest" shall mean any Partnership Interest held
by any person or entity as a Limited Partner.
"Limited Partnership Units" shall mean the Units issued to the Limited
Partners.
"Liquidating Trustee" shall mean such individual or Entity as is
selected as the Liquidating Trustee hereunder by the General Partner, which
individual or Entity may include the General Partner or an Affiliate of the
General Partner, provided such Liquidating Trustee agrees in writing to be bound
by the terms of this Agreement. The Liquidating Trustee shall be empowered to
give and receive notices, reports and payments in connection with the
dissolution, liquidation and/or winding-up of the Partnership and shall hold and
exercise such other rights and powers as are necessary or required to permit all
parties to deal with the Liquidating Trustee in connection with the dissolution,
liquidation and/or winding-up of the Partnership.
"Minimum Gain Attributable to Partner Nonrecourse Debt" shall mean
"partner nonrecourse debt minimum gain" as determined in accordance with
Regulation Section 1.704-2(i)(2).
"Net Cash Flow" shall mean, with respect to any fiscal period of the
Partnership, the excess, if any, of "Receipts" over "Expenditures." For purposes
hereof, the term "Receipts" means the sum of (i) all cash receipts of the
Partnership from all sources for such period, excluding Net Sale Proceeds and
Net Financing Proceeds, (ii) Capital Contributions, and (iii) any amounts held
as reserves as of the last day of such period which the General Partner
reasonably deems to be in excess of necessary reserves as determined below. The
term "Expenditures" means the sum of (i) all cash expenses of the Partnership
for such period, (ii) the amount of all payments of principal and interest on
account of any indebtedness of the Partnership, or amounts due on such
indebtedness during such period, and (iii) such additional cash reserves as of
the last day of such period as the General Partner deems necessary for any
capital or operating expenditure permitted hereunder.
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<PAGE> 6
"Net Financing Proceeds" shall mean the proceeds realized from any
financing or refinancing of a Property or group of Properties, net of the
amounts used to retire any indebtedness, to pay transaction costs, and to fund
reserves established by the General Partner.
"Net Income or Net Loss" shall mean, for each Fiscal Year or other
applicable period, an amount equal to the Partnership's net income or loss for
such year or period as determined for federal income tax purposes and in
accordance with Section 703(a) of the Code (for this purpose, all items of
income, gain, loss or deduction required to be stated separately pursuant to
Section 703(a) of the Code shall be included in taxable income or loss), with
the following adjustments: (a) by including as an item of gross income any
tax-exempt income received by the Partnership; (b) by treating as a deductible
expense any expenditure of the Partnership described in Section 705(a)(2)(B) of
the Code (including amounts paid or incurred to organize the Partnership (unless
an election is made pursuant to Code Section 709(b)) or to promote the sale of
interests in the Partnership and by treating deductions for any losses incurred
in connection with the sale or exchange of Partnership property disallowed
pursuant to Section 267(a)(1) or Section 707(b) of the Code as expenditures
described in Section 705(a)(2)(B) of the Code; (c) in lieu of depreciation,
depletion, amortization, and other cost recovery deductions taken into account
in computing total income or loss, there shall be taken into account
Depreciation; (d) gain or loss resulting from any disposition of Partnership
property with respect to which gain or loss is recognized for federal income tax
purposes shall be computed by reference to the Gross Asset Value of such
property rather than its adjusted tax basis; and (e) in the event of an
adjustment of the Gross Asset Value of any Partnership asset which requires that
the Capital Accounts of the Partnership be adjusted pursuant to Regulation
Section 1.704-1(b)(2)(iv)(e), (f) and (m), the amount of such adjustment is to
be taken into account as additional Net Income or Net Loss pursuant to ARTICLE
VII hereof.
"Net Sale Proceeds" shall mean the net proceeds realized from any sale
of a Property or group of Properties, net of amounts used to repay indebtedness
and transaction costs and to fund reserves established by the General Partner.
"Nonrecourse Deductions" shall have the meaning set forth in Sections
1.704-2(b)(1) and (c) of the Regulations.
"Nonrecourse Liabilities" shall have the meaning set forth in Section
1.704-2(b)(3) of the Regulations.
"Partner Nonrecourse Debt" shall have the meaning set forth in Section
1.704-2(i)(3) of the Regulations.
"Partner Nonrecourse Deductions" shall have the meaning set forth in
Section 1.704-2(i)(2) of the Regulations.
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<PAGE> 7
"Partners" shall mean the General Partner and the Limited Partners,
their duly admitted successors or assigns or any Person who is a partner of the
Partnership at the time of reference hereto.
"Partnership" shall mean the limited partnership hereby constituted, as
such limited partnership may from time to time be constituted.
"Partnership Minimum Gain" shall have the meaning set forth in Section
1.704-2(b)(2) of the Regulations.
"Partnership Interest" shall mean the entire ownership interest of a
Partner in the Partnership at any particular time, including the right of such
Partner to any and all benefits to which a Partner may be entitled as provided
in this Agreement and in the Act, together with the obligations of such Partner
to comply with all of the terms and provisions of this Agreement and of the Act.
"Partnership Units" shall mean a unit of interest in the Partnership
issued under this Agreement.
"Percentage Interest" shall mean, with respect to any Partner, the
ratio of the number of General Partnership Units and Limited Partnership Units
held by such Partner to the aggregate number of Units of all such classes
outstanding in the Partnership at the time of determination.
"Person" shall mean any individual or Entity.
"Property" shall mean any real property in which the Partnership,
directly or indirectly, acquires ownership of all or a portion of a fee or
leasehold interest.
"Register" shall mean the register established pursuant to SECTION 3.5.
"Registered Office" shall mean the location of the principal office of
the Partnership as set forth in filings made by the Partnership pursuant to the
Act.
"Regulations" shall mean the final or temporary income tax regulations
promulgated under the Code, as such regulations may be amended and in affect
from time to time (including corresponding provisions of succeeding
regulations).
"Regulatory Allocations" shall have the meaning set forth in SECTION
7.3(F).
"REIT" shall mean a real estate investment trust as defined in Section
856 of the Code.
"REIT Requirements" shall mean the requirements for qualifying as a
real estate investment trust under the Code and Regulations.
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<PAGE> 8
"Section 704(c) Tax Items" shall have the meaning set forth in SECTION
7.3(C).
"Securities Act" shall mean the Securities Act of 1933, as amended from
time to time.
"Subsidiary" means, with respect to any Person, any corporation,
partnership or other entity of which a majority of (i) the voting power of the
voting equity securities; or (ii) the outstanding equity interests, is owned,
directly or indirectly, by such Person.
"Tax Items" shall have the meaning set forth in SECTION 7.3(A).
"Tax Matters Partner" shall have the meaning ascribed to it in SECTION
9.3.
"Tax Payment Loan" shall have the meaning ascribed to it in SECTION
6.5.
"Transfer" as a noun, shall mean any sale, assignment, conveyance,
pledge, hypothecation, gift, encumbrance or other transfer, and as a verb, shall
mean to sell, assign, convey, pledge, hypothecate, give, encumber or otherwise
transfer.
"Transferred Partnership Interest" shall have the meaning ascribed to
it in SECTION 11.3.
"Unit" shall have the meaning ascribed to it in SECTION 3.1(C).
"WCC" shall mean Wackenhut Corrections Corporation, a Florida
corporation, and each of its subsidiaries.
"Withholding Tax Act" shall have the meaning ascribed to it in SECTION
6.5.
ARTICLE II
FORMATION OF PARTNERSHIP
SECTION 2.1 FORMATION OF PARTNERSHIP.
The Partners hereby agree to form the Partnership as a limited
partnership pursuant to the provisions of the Act for the purposes and upon the
terms and conditions hereinafter set forth. The Partners agree that the rights
and liabilities of the Partners shall be as provided herein, except as otherwise
expressly required by the Act or other applicable law, if any.
SECTION 2.2 NAME, PRINCIPAL PLACE OF BUSINESS AND REGISTERED
OFFICE.
(a) The business of the Partnership shall be conducted under
the name of "CPT OPERATING PARTNERSHIP L.P." or such other name as the General
Partner may select, and all
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<PAGE> 9
transactions of the Partnership and title to all of the Partnership's assets, to
the extent permitted by applicable law, shall be carried on and completed in
such name.
(b) The principal place of business and registered office of
the Partnership shall be located at 4200 Wackenhut Drive, Palm Beach Gardens,
Florida 33410-4243. The General Partner may change the principal place of
business or the registered office of the Partnership at any time in its sole
discretion, and, in such event, shall give written notice thereof to all Limited
Partners and file any required amendments to the Certificate required by the
Act.
SECTION 2.3 PURPOSE.
The purpose of the Partnership shall be, directly or indirectly, to
acquire, hold, own, develop, redevelop, construct, improve, maintain, sell,
lease, rent, transfer, encumber, mortgage, convey, exchange, and otherwise
dispose of or deal with real property of every kind and nature, including
without limitation, the Properties; to act as and exercise all of the powers of
the general partner or a limited partner, as the case may be, in partnerships or
joint ventures in which the Partnership has an interest; to acquire, own, deal
with and dispose of securities and other interests in partnerships, corporations
or joint ventures, including corporations, partnerships, joint ventures and
other associations formed for the acquisition, development or redevelopment of
real and personal property or the provision of services thereto; to undertake
such other activities as may be necessary, advisable, desirable or convenient to
the business of the Partnership; to engage in such other ancillary activities as
shall be necessary or desirable to effectuate the foregoing purposes; and to
otherwise engage in or conduct any enterprise, business or activity in which a
limited partnership may engage in or conduct under the Act.
SECTION 2.4 POWERS.
The Partnership shall have and exercise all powers now or hereafter
permitted by the State of Delaware to be exercised by a limited partnership
formed under the Act. In connection with (and without limiting) the foregoing,
the Partnership shall have full power and authority, directly or through its
interests in other partnerships, corporations, joint ventures or other
associations, to enter into, perform, and carry out contracts of any kind, to
borrow and lend money and to issue evidences of indebtedness, whether or not
secured by mortgages, trust deeds, pledges or other liens, and to guaranty,
provide security for or cause any subsidiary joint venture or other association
in which the Partnership has an interest to guaranty or provide security for
indebtedness or other obligations of the Partnership or any subsidiary.
SECTION 2.5 TERM.
The Partnership shall commence existence upon the filing of the
Certificate with the Secretary of the State of Delaware and shall dissolve at
12:01 a.m. on December 31, 2048, unless sooner dissolved pursuant to law or this
Agreement.
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<PAGE> 10
SECTION 2.6 AMENDMENT OF CERTIFICATE.
Promptly upon the execution and delivery hereof, the General Partner
shall cause the Certificate to be filed with the Secretary of State of Delaware
and such other elections, notices, instruments, documents or certificates as may
be required by applicable law, including, without limitation, applications to do
business in all jurisdictions where the Partnership will own property, and which
may be necessary to enable the Partnership to conduct its business, and to own
its properties, under the Partnership's name, to be amended and/or filed or
recorded in all appropriate public offices.
SECTION 2.7 PARTNERSHIP ASSETS.
(a) The Partners shall use the Partnership's credit and assets
solely for the benefit of the Partnership. All real and personal property owned
by the Partnership shall be owned by the Partnership, and the Partners as such
shall have no direct interest therein.
(b) To the extent allowable under applicable law, title to all
or any part of the properties of the Partnership may be held in the name of the
Partnership or any other Person as nominee for the Partnership. Any such title
holder shall perform any and all of its respective functions to the extent and
upon such terms and conditions as may be determined from time to time by the
General Partner.
(c) No Partner shall, either directly or indirectly, take any
action to require partition or appraisement of the Partnership or of any of its
assets or properties or cause the sale of any Partnership property for other
than a Partnership purpose, and notwithstanding any provision of applicable law
to the contrary, each Partner (and its legal representatives, successors and
assigns) hereby irrevocably waives any and all right to maintain any action for
partition or to compel any sale with respect to its Partnership Interest or with
respect to any assets or properties of the Partnership, except as expressly
provided in this Agreement.
SECTION 2.8 LIMITATION ON LIABILITY OF PERSONS RELATED TO
PARTNERS.
Except as otherwise required by applicable law or as expressly agreed
in writing, no director, trustee, officer, shareholder, partner, employee or
agent of any Partner shall be personally liable for the payment of any sums
owing by such Partner to the Partnership or any other Partner under the terms of
this Agreement or for the performance of any other covenant or agreement of such
Partner contained herein.
SECTION 2.9 CONFLICTS OF INTEREST AND TRANSACTIONS WITH
AFFILIATES.
(a) Subject to the limitations expressly set forth herein, any
Partner and any Affiliate of any Partner may engage in or possess an interest in
any business or activity whatsoever, whether now existing or hereafter created,
without any accountability to the Partnership or any Partner. This Agreement
shall not give the Partnership or any Partner any interest in, or right to, any
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such business or activity or any proceeds, income or profit thereof or
therefrom. No Partner shall be obligated to offer any business opportunity to
the Partnership or any other Partner.
(b) Subject to the limitations expressly set forth herein, the
Partnership may enter into any arrangement, contract, agreement or business
venture that is not prohibited under the Act with any Partner or any Partner's
Affiliates. Each Partner understands and acknowledges that the conduct of the
business of the Partnership will involve business dealings with such other
business ventures or undertakings of the Partners and their Affiliates. Without
limiting the generality of the foregoing, the Partnership, at the discretion of
the General Partner, may borrow funds from any Partner or any Partner's
Affiliates. Except to the extent otherwise provided herein, any material
transaction between the Partnership and any Partner or Affiliate of a Partner
shall be on terms reasonably determined by the General Partner to be no less
favorable than the terms which could be obtained from unrelated third parties.
SECTION 2.10 STATUTORY COMPLIANCE.
The General Partner has executed and shall promptly cause to be filed
the Certificate in the Office of the Secretary of State of the State of Delaware
pursuant to the Act and hereafter shall execute such further documents and take
such further action as shall be appropriate to comply with the Act and all other
all requirements of law for the formation and operation of a limited partnership
in the State of Delaware and all other jurisdictions in which the Partnership
may elect to do business.
ARTICLE III
PARTNERSHIP INTERESTS
SECTION 3.1 IN GENERAL.
(a) The Partnership initially shall have two classes of
Partnership Interests: "General Partnership Interests," and "Limited Partnership
Interests," each of which shall be divided into units as provided in paragraph
(c) below. The Partnership may create and issue additional classes of General or
Limited Partnership Interests in accordance with SECTION 3.3.
(b) Any Person may at the same time hold more than one class
of Partnership Interest and, in such event, shall for the purposes of this
Agreement be separately entitled to the rights afforded a Partner in each of
such classes under this Agreement. If a General Partner contributes to the
capital of the Partnership as a Limited Partner or purchases any Limited
Partnership Interest, it shall be treated in all respects as a Limited Partner
as to such Limited Partnership Interests.
(c) Each class of Partnership Interest issued by the
Partnership shall be divided into units ("Units") with each Unit within a class
representing an equal undivided fractional share of
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each item of Partnership income, gain, and loss, and in each distribution of
Partnership assets, allocable to the Units of that class.
SECTION 3.2 PARTNERSHIP INTERESTS. An aggregate of 150,000,000 Units is
hereby authorized for issuance pursuant to SECTION 4.1, SECTION 4.2 and SECTION
4.4. The Limited Partnership Units and the General Partnership Units shall be
entitled to such voting and other rights as may be herein specified.
SECTION 3.3 CREATION AND ISSUANCE OF ADDITIONAL CLASSES OF
PARTNERSHIP INTERESTS.
(a) Subject only to the limitations expressly set forth in
this Agreement, the General Partner may from time to time solicit and accept
additional Capital Contributions from any Person and/or cause the Partnership to
create and issue such additional classes of Partnership Interests, rights,
options or warrants exercisable for or convertible into Partnership Interests,
or other securities or instruments of any type or class whatsoever. Any such
Partnership Interests, rights, options, warrants, securities or instruments may
be issued for cash, property, services, or such other type, form, and amount of
consideration (including notes, other evidences of indebtedness or obligations
of the Person acquiring the interest, instrument or security, as the case may
be) as the General Partner may determine to be appropriate. Each such class of
additional Partnership Interest shall have such rights, privileges and
preferences, and be subject to such limitations, as the General Partner shall
specify, including, without limitation, the right, but not the obligation, of
such Person acquiring the interest to exchange all or a portion of their
interest for cash or, at the option of the Partnership, for shares of capital
stock of the Initial Limited Partner.
(b) The creation of an additional class of Partnership
Interest permitted hereunder may be made by the General Partner by setting forth
either in an amendment or an addendum to this Agreement the relative rights,
obligations, duties, and preferences of each new class of Partnership Interests
created. A copy of this Agreement as so amended, or the addendum as so adopted,
as the case may be, shall be provided to each other Partner. All filings
necessary to be made under the Act or applicable law in connection with the
creation of such interests shall be made by the General Partner on behalf of the
Partnership.
SECTION 3.4 OTHER PROVISIONS RELATING TO ALL CLASSES OF
PARTNERSHIP INTERESTS.
(a) Fractional Units may be issued, with the amount of any
such fractional interest being rounded to the fourth decimal place.
(b) By executing this Agreement, each Partner consents and
authorizes the Partnership, acting solely through the General Partner, to issue,
subject to the express requirements and limitations hereof, such interests,
instruments and securities upon such terms and conditions as the General Partner
may from time to time determine to be appropriate.
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SECTION 3.5 REGISTER.
The General Partner shall maintain a Register at the principal place of
business of the Partnership setting forth the names, addresses and Capital
Accounts of the Partners, and the number and class of Partnership Interests held
by each Partner. Upon any adjustment or cancellation of any Partner's
Partnership Interest, the General Partner shall make such adjustment or
cancellation in the Register and send written notice thereof to the Partner so
affected. Upon an assignment by a Partner of all or a part of its Partnership
Interest in the Partnership pursuant to the terms hereof and as permitted
hereby, the General Partner shall register such assignment in the Register. The
General Partner shall note on the Register any restrictions on the transfer of
any Partner's Partnership Interests. In the absence of manifest error, the
Register shall constitute conclusive evidence of the interest of each Partner
and other Person in Partnership Units.
ARTICLE IV
CONTRIBUTIONS TO CAPITAL AND ISSUANCES OF
PARTNERSHIP INTERESTS
SECTION 4.1 GENERAL PARTNER CAPITAL CONTRIBUTIONS.
Concurrently herewith the General Partner shall contribute, or cause to
be contributed, its initial Capital Contribution to the Partnership as General
Partner in the amount as set forth on EXHIBIT A, , and the Partnership shall
issue to the General Partner, and register in the name of the General Partner on
the Register, General Partnership Units as set forth on EXHIBIT A.
SECTION 4.2 INITIAL LIMITED PARTNER CAPITAL CONTRIBUTIONS.
Concurrently herewith the Initial Limited Partners shall contribute, or
cause to be contributed, their initial Capital Contributions to the Partnership
in the amount as set forth on EXHIBIT A hereto, and the Partnership shall issue
to the Initial Limited Partners, and register in the name of the Initial Limited
Partners on the Register, Limited Partnership Units as set forth on EXHIBIT A.
SECTION 4.3 CAPITAL CONTRIBUTIONS GENERALLY.
Except as otherwise expressly provided herein or to the extent that a
Partner agrees to make a Capital Contribution to, or to purchase Partnership
Interests from, the Partnership: (i) no Partner shall be required to contribute
any capital to the Partnership; (ii) no Partner may withdraw any of its capital
from the Partnership; (iii) no Partner shall be required to make any loan to the
Partnership; (iv) loans by a Partner to the Partnership shall not be considered
a contribution of capital, shall not increase the Capital Account of the lending
Partner or the lending Partner's ownership interest in the
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Partnership and the repayment of such loans by the Partnership shall not
decrease, or result in any adjustment to, the Capital Account of the Partner
making the loans; (v) no interest shall be paid on any capital contributed to
the Partnership by any Partner; (vi) under any circumstances requiring a return
of all or any portion of a Capital Contribution, no Partner shall have the right
to receive property other than cash; and (vii) no Partner shall be required at
any time to restore any deficit in such Partner's Capital Account.
SECTION 4.4 CONTRIBUTION OF PROCEEDS OF ISSUANCE OF GENERAL
PARTNER STOCK
In connection with the initial offering of common stock by the General
Partner, the General Partner and the Initial Limited Partners shall make
aggregate Capital Contributions to the Partnership of the proceeds raised in
connection with such offering, grant, award, or issuance, provided that if the
proceeds actually received by the General Partner are less than the gross
proceeds of such offering, grant, award, or issuance as a result of any
underwriter's discount, commission, or fee or other expenses paid or incurred in
connection with such offering, grant, award, or issuance, then the General
Partner and the Initial Limited Partners shall be deemed to have made a Capital
Contribution to the Partnership in the amount of the gross proceeds of such
issuance and the Partnership shall be deemed simultaneously to have paid
pursuant to SECTION 8.1 for the amount of such underwriter's discount or other
expenses. Upon contribution of such additional capital to the Partnership, the
General Partner and the Initial Limited Partners will receive additional Units,
and their Percentage Interests will be adjusted, on a proportionate basis based
upon the amount of such additional capital contributions and the value of the
Partnership at the time of such contributions.
SECTION 4.5 NO THIRD PARTY BENEFICIARY.
No creditor or other third party having dealings with the Partnership
shall have the right to enforce the right or obligation of any Partner to make
Capital Contributions or loans or to pursue any other right or remedy hereunder
or at law or in equity, it being understood and agreed that the provisions of
this Agreement shall be solely for the benefit of, and may be enforced solely
by, the parties hereto and their respective successors and assigns. None of the
rights or obligations of the Partners herein set forth to make Capital
Contributions or loans to the Partnership shall be deemed an asset of the
Partnership for any purpose by any creditor or other third party, nor may such
rights or obligations be sold, transferred or assigned by the Partnership or
pledged or encumbered by the Partnership to secure any debt or other obligation
of the Partnership or of any of the Partners.
ARTICLE V
CAPITAL ACCOUNTS
SECTION 5.1 ESTABLISHMENT AND MAINTENANCE OF CAPITAL ACCOUNTS.
(a) A Capital Account shall be established for each Partner in
the amount of such Partner's initial Capital Contribution to the Partnership.
Unless otherwise provided in this
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Agreement, each Partner's Capital Account shall be determined and maintained in
accordance with the rules of Regulation Section 1.704-1(b)(2)(iv) (or any
corresponding provision of succeeding law), and all provisions of this Agreement
relating to the maintenance of Capital Accounts shall be interpreted and applied
in a manner consistent with such regulations. If the General Partner shall
determine that it is prudent to modify the manner in which the Capital Accounts,
or any debits or credits thereto, are computed in order to comply with such
regulations, the General Partner shall make such modifications.
(b) Pursuant to the foregoing accounting rules, a Partner's
Capital Account shall be increased, decreased, adjusted, and maintained as
provided in ARTICLE VII.
SECTION 5.2 SUCCESSION TO CAPITAL ACCOUNTS.
Subject to SECTION 11.4, in the event of a transfer of any Partnership
Interest permitted herein, the Capital Account of the transferor Partner that is
attributable to the transferred Partnership Interest shall be carried over to
the transferee of such interest and adjusted as provided in the Regulations
under Code Section 704.
SECTION 5.3 CERTAIN ADJUSTMENTS.
In connection with any Capital Contribution to the Partnership in
consideration for a Partnership Interest, or a distribution by the Partnership
to a Partner in respect of a Partnership Interest, the General Partner shall be
authorized to increase or decrease the Capital Accounts to reflect a revaluation
of Partnership property as provided in Regulation Section 1.704-1(b)(2)(iv)(f).
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 DISTRIBUTIONS.
The General Partner shall cause the Partnership to declare and pay
quarterly (or more frequently, as the General Partner may determine)
distributions of Net Cash Flow to the holders of the General Partnership Units
and the Limited Partnership Units within ninety (90) days following the end of
the quarter in respect of which the payment is made, out of funds legally
available therefor, in such aggregate amount as the General Partner in its
discretion shall determine, in accordance with their respective Percentage
Interests.
SECTION 6.2 DISTRIBUTIONS TO PAY TAXES.
(a) Notwithstanding anything to the contrary in SECTION 6.1,
if the Partnership has taxable income for any Fiscal Year (including any taxable
gain associated with the sale of section
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704(c) property (as defined in Regulation Section 1.704-3)), the Partnership
shall, out of any funds legally available therefor, distribute to the Partners,
on or before the 90th day following the end of the calendar year that includes
the last day of such Fiscal Year, the amount necessary for the Partners (and all
Persons who are required to pay taxes on the taxable income of the Partnership
by reason of their direct or indirect ownership of any interest in the
Partnership) to pay federal, state and local income taxes with respect to such
taxable income, computed by multiplying such taxable income by the highest
combined federal, state and local income tax rate applicable to any such Person
for the calendar year that includes the last day of the Fiscal Year in which
such taxable income is allocated to such Partner.
(b) The Partnership shall not make a distribution under this
SECTION 6.2 if it does not have sufficient cash on hand to fund such
distribution.
SECTION 6.3 DISTRIBUTIONS UPON LIQUIDATION.
Liquidating distributions shall in all cases be made in accordance with
the provisions of SECTION 13.5.
SECTION 6.4 ADDITIONAL DISTRIBUTION RULES.
(a) EFFECTIVE DATE. Distributions shall be charged against the
Partners' Capital Accounts as of the date the distributions are made.
(b) DIVISION AMONG LIMITED PARTNERS. Except as may otherwise
be provided herein or in the instruments creating a class of Partnership
Interests, each distribution made to the Limited Partners of a given class
pursuant to this ARTICLE VI shall be divided among the Limited Partners of such
class so that each of them shall receive the same proportion thereof as the
Units of such class owned by such Limited Partner bear to all Units of the same
class then owned by all Limited Partners.
(c) OBLIGATION TO REPAY DISTRIBUTION. In the absence of fraud
or mistake, or except as otherwise required by law, no Partner shall have any
obligation or responsibility to repay to the Partnership any distribution made
by the Partnership to a Partner pursuant to this Agreement.
(d) LEGAL REQUIREMENTS. Notwithstanding anything contained
herein to the contrary, the General Partner may withhold making a distribution
to any Limited Partner, or to any transferee of a Limited Partner, until the
Limited Partner or the transferee has provided the General Partner with all
necessary information and assurances, including an opinion of counsel
satisfactory to the General Partner requested by the General Partner, to
determine that such distribution will be in compliance with all applicable laws.
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SECTION 6.5 TAXES WITHHELD.
Unless treated as a Tax Payment Loan (as hereinafter defined), any
amount paid by the Partnership for or with respect to any Partner on account of
any withholding tax or other tax payable with respect to the income, profits or
distributions of the Partnership pursuant to the Code, the Regulations, or any
state or local statute, regulation or ordinance requiring such payment (a
"Withholding Tax Act") shall be treated as a distribution to such Partner for
all purposes of this Agreement, consistent with the character or source of the
income, profits or cash which gave rise to the payment or withholding
obligation. To the extent that the amount required to be remitted by the
Partnership under the Withholding Tax Act exceeds the amount then otherwise
distributable to such Partner, the excess shall constitute a loan from the
Partnership to such Partner (a "Tax Payment Loan") which shall be payable upon
demand and shall bear interest, from the date that the Partnership makes the
payment to the relevant taxing authority, at the federal tax underpayment rate,
under Section 6621(a)(2) of the Code, as reported from time to time. So long as
any Tax Payment Loan or the interest thereon remains unpaid, the Partnership
shall make future distributions due to such Partner under this Agreement by
applying the amount of any such distribution first to the payment of any unpaid
interest on all Tax Payment Loans of such Partner and then to the repayment of
the principal of all Tax Payment Loans of such Partner. The General Partner
shall have the authority to take all actions necessary to enable the Partnership
to comply with the provisions of any Withholding Tax Act applicable to the
Partnership and to carry out the provisions of this Section. Nothing in this
Section shall create any obligation on the General Partner to advance funds to
the Partnership or to borrow funds from third parties in order to make any
payments on account of any liability of the Partnership under a Withholding Tax
Act.
SECTION 6.6 IN-KIND DISTRIBUTIONS.
If, at the discretion of the General Partner, any assets of the
Partnership other than cash are distributed to the Partners in kind, such assets
shall be valued on the basis of the fair market value thereof as determined by
the General Partner in its reasonable discretion on the date of distribution.
Without limiting the General Partner's discretion to make such a valuation or
requiring that any such appraisal be made, the valuation of any asset by the
General Partner on the basis of the determination of its fair market value by an
independent appraiser shall be deemed to be a reasonable value for such asset
and a reasonable exercise of such discretion. If any Partnership property other
than cash is distributed to a Partner, the Capital Accounts of the Partners
shall be adjusted to reflect the manner in which the unrealized income, gain,
loss or deduction inherent in such property (that has not previously been
reflected in the Partners' Capital Accounts) would be allocated among the
Partners if there had been a taxable disposition of such property at its fair
market value on the date of distribution. The Capital Accounts of the Partner
receiving a distribution in kind shall then be reduced by the fair market value
of the property distributed. Subject to the limitations on such distributions in
connection with any distribution of property of the Partnership in kind,
including any distribution in connection with the liquidation of the
Partnership, the General Partner need not distribute each asset ratably to all
Partners, so long as all Partners concurrently receive distributions of cash and
other property, valued as provided above, in the proportion to which they would
otherwise be entitled.
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ARTICLE VII
ALLOCATIONS
SECTION 7.1 ALLOCATION OF NET INCOME AND NET LOSS.
Any Net Income or Net Loss shall, except as otherwise provided herein,
be allocated among the Partners as follows:
(a) First, Net Income or Net Loss shall be allocated to the
Partners in such manner as to cause, as quickly as possible, their Capital
Accounts to be proportionate to their Percentage Interests; and
(b) Any remaining Net Income or Net Loss shall be allocated to
the Partners in proportion to their Percentage Interests.
SECTION 7.2 SPECIAL ALLOCATIONS.
Notwithstanding anything to the contrary contained in this Agreement:
(a) MINIMUM GAIN CHARGEBACK (NONRECOURSE LIABILITIES). If
there is a net decrease in Partnership Minimum Gain for any Partnership fiscal
year (except as a result of conversion or refinancing of Partnership
indebtedness, certain capital contributions or revaluation of the Partnership
property as further outlined in Regulation Sections 1.704-2(d)(4), (f)(2) or
(f)(3)), each Partner shall be specially allocated items of Partnership income
and gain for each year (and, if necessary, subsequent years) in an amount equal
to that Partner's share of the net decrease in Partnership Minimum Gain. The
items to be so allocated shall be determined in accordance with Regulation
Section 1.704-2(f). This paragraph (a) is intended to comply with the minimum
gain chargeback requirement in said section of the Regulations and shall be
interpreted consistently therewith. Allocations pursuant to this paragraph (a)
shall be made in proportion to the respective amounts required to be allocated
to each Partner pursuant hereto.
(b) MINIMUM GAIN ATTRIBUTABLE TO PARTNER NONRECOURSE DEBT. If
there is a net decrease in Minimum Gain Attributable to Partner Nonrecourse Debt
during any fiscal year (other than due to the conversion, refinancing or other
change in the debt instrument causing it to become partially or wholly
nonrecourse, certain capital contributions, or certain revaluations of
Partnership property as further outlined in Regulation Section 1.704-2(i)(4)),
each Partner shall be specially allocated items of Partnership income and gain
for such year (and, if necessary, subsequent years) in an amount equal to that
Partner's share of the net decrease in the Minimum Gain Attributable to Partner
Nonrecourse Debt. The items to be so allocated shall be determined in accordance
with Regulation Section 1.704-2(i)(4) and (j)(2). This paragraph (b) is intended
to comply with the minimum gain chargeback requirement with respect to Partner
Nonrecourse Debt contained in said section of the Regulations and shall be
interpreted consistently therewith. Allocations pursuant to
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this paragraph (b) shall be made in proportions to the respective amounts
required to be allocated to each Partner pursuant hereto.
(c) QUALIFIED INCOME OFFSET. In the event a Partner receives
any adjustments, allocations or distributions described in Regulation Section
1.704-1(b)(2)(ii)(d)(4), (5) or (6), and such Partner has an Adjusted Capital
Account Deficit, items of Partnership income and gain shall be specially
allocated to such Partner in an amount and manner sufficient to eliminate the
Adjusted Capital Account Deficit as quickly as possible. This paragraph (c) is
intended, among other things, to meet the requirements for a "qualified income
offset" under Regulation Section 1.704-1(b)(2)(ii)(d) and shall be interpreted
consistently therewith.
(d) NONRECOURSE DEDUCTIONS. Nonrecourse Deductions for any
fiscal year or other applicable period shall be allocated to the Partners in
accordance with their respective Percentage Interests.
(e) PARTNER NONRECOURSE DEDUCTIONS. Partner Nonrecourse
Deductions for any fiscal year or other applicable period shall be specially
allocated to the Partner that bears the economic risk of loss for the debt
(i.e., the Partner Nonrecourse Debt) in respect of which such Partner
Nonrecourse Deductions are attributable (as determined under Regulation Section
1.704-2(b)(4) and (i)(1)).
(f) CURATIVE ALLOCATIONS. The Regulatory Allocations shall be
taken into account in allocating other items of income, gain, loss and deduction
among the Partners so that, to the extent possible, the cumulative net amount of
allocations of Partnership items under SECTION 7.1 shall be equal to the net
amount that would have been allocated to each Partner if the Regulatory
Allocations had not occurred. This paragraph (f) is intended to minimize to the
extent possible and to the extent necessary any economic distortions which may
result from application of the Regulatory Allocations and shall be interpreted
in a manner consistent therewith. For purposes hereof, "Regulatory Allocations"
shall mean the allocations provided under this SECTION 7.2 (except under
paragraphs (d) and (f) hereof).
SECTION 7.3 TAX ALLOCATIONS.
(a) GENERALLY. Subject to paragraphs (b), (c) and (d) hereof,
items of income, gain, loss, deduction and credit to be allocated for income tax
purposes (collectively, "Tax Items") shall be allocated among the Partners on
the same basis as their respective book items.
(b) SECTIONS 1245/1250 RECAPTURE. If any portion of gain from
the sale of property is treated as gain which is ordinary income by virtue of
the application of Code Sections 1245 or 1250 ("Affected Gain"), then (i) such
Affected Gain shall be allocated among the Partners in the same proportion that
the depreciation and amortization deductions giving rise to the Affected Gain
were allocated and (ii) other Tax Items of gain of the same character that would
have been recognized, but for the application of Code Sections 1245 and/or 1250,
shall be allocated away from
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those Partners who are allocated Affected Gain pursuant to clause (i) so that,
to the extent possible, the other Partners are allocated the same amount, and
type, of capital gain that would have been allocated to them had Code Sections
1245 and/or 1250 not applied. For purposes hereof, in order to determine the
proportionate allocations of depreciation and amortization deductions for each
fiscal year or other applicable period, such deductions shall be deemed
allocated on the same basis as Net Income and Net Loss for such respective
period.
(c) ALLOCATIONS RESPECTING SECTION 704(C) AND REVALUATIONS.
Notwithstanding paragraph (b) hereof, Tax Items with respect to Partnership
property that is subject to Code Section 704(c) and/or Regulation Section
1.704-1(b)(2)(iv)(f) (collectively "Section 704(c) Tax Items") shall be
allocated in accordance with said Code section and/or Regulation Section
1.704-1(b)(4)(i), as the case may be. The Partnership shall apply the
"traditional method" for such allocations, as described in Regulation Section
1.704-3(b), and the allocation of Tax Items shall be subject to the ceiling rule
stated in Regulation Section 1.704-3(b)(1).
SECTION 7.4 ADDITIONAL SPECIAL ALLOCATIONS.
Notwithstanding anything to the contrary in SECTION 7.1 or elsewhere in
this Agreement, a portion of any Net Income or Net Loss allocable to the
Partnership from certain partnerships in which it holds interests that would
otherwise be allocable to the holder of the General Partnership Units shall
instead be allocable to the other Partners in proportion to their respective
Percentage Interests.
ARTICLE VIII
EXPENSES; RIGHTS, DUTIES AND RESTRICTIONS OF
THE GENERAL PARTNER
SECTION 8.1 EXPENSES BORNE BY THE PARTNERSHIP.
(a) The total costs and expenses to be incurred by the General
Partner in connection with the transactions contemplated by this Agreement shall
be paid by, and allocated to, the Partnership. Such costs and expenses shall
include, without limitation, (i) all expenses relating to the formation of the
General Partner and the Partnership, (ii) all expenses relating to the public
offering and registration of securities by the General Partner, (iii) all
expenses associated with the preparation and filing of any periodic reports by
the Partnership and the General Partner under federal, state or local laws or
regulations, (iv) all expenses associated with compliance by the Partnership and
the General Partner with laws, rules and regulations promulgated by any
regulatory body and (v) all other operating or administrative costs of the
Partnership and the General Partner incurred in the ordinary course of its
business on behalf of the Partnership (collectively "Administrative Expenses").
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(b) Except as otherwise provided in paragraph (c) below, all
fees and other costs that the General Partner incurs for legal and accounting
services provided to the General Partner after the date hereof by third parties
in connection with the preparation and maintenance of the General Partner's
books and records, financial statements, tax returns and reports to stockholders
and the Securities and Exchange Commission, shall be paid by, and allocated to,
the Partnership and shall be deemed Administrative Expenses. The General Partner
shall be entitled to reimbursement by the Partnership for any such expenditures
incurred by it on behalf of the Partnership.
(c) In the event that the General Partner hereafter acquires
any assets outside of the Partnership or an entity wholly-owned by the
Partnership, the percentage of Administrative Expenses allocated to the
Partnership shall be reduced to an amount that is fair and equitable to the
Partnership under the circumstances, as determined by the General Partner.
SECTION 8.2 POWERS AND DUTIES OF GENERAL PARTNER.
(a) The General Partner shall be responsible for the
management of the Partnership's business and affairs. Except as otherwise herein
expressly provided, the General Partner shall have, and is hereby granted, full
and complete power, authority and discretion to take such action for and on
behalf of the Partnership as the General Partner shall, in its sole and absolute
discretion, deem necessary or appropriate to carry out the purposes for which
the Partnership was organized. Except as otherwise expressly provided herein,
the General Partner shall exercise all of the powers of the Partnership and have
specifically, without limiting the foregoing the right, power and authority:
(i) To manage, control, invest, reinvest, acquire by
purchase, lease or otherwise, sell, contract to purchase or sell,
grant, obtain, or exercise options to purchase, options to sell or
conversion rights, assign, transfer, convey, deliver, endorse,
exchange, pledge, mortgage, abandon, improve, repair, maintain, insure,
lease for any term and otherwise deal with any and all property of
whatsoever kind and nature, and wheresoever situated, in furtherance of
the business or purposes of the Partnership;
(ii) To acquire, directly or indirectly, interests in
real estate of any kind and of any type, and any and all kinds of
interests therein and interests in Entities investing therein, and to
determine the manner in which title thereto is to be held; to manage
(directly or through property managers), insure against loss, protect
and subdivide any of the real estate, interests therein or parts
thereof; to improve, develop or redevelop any such real estate; to
participate in the ownership and development of any property; to
dedicate for public use, to vacate any subdivisions or parts thereof,
to re-subdivide, to contract to sell, to grant options to purchase or
lease, to sell on any terms; to convey, to mortgage, pledge or
otherwise encumber said property, or any part thereof; to lease said
property or any part thereof from time to time, upon any terms and for
any period of time, and to renew or extend leases, to amend, change or
modify the terms and provisions of any leases and to grant options to
lease and options to renew leases and options to purchase; to partition
or to exchange said real
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property, or any part thereof, for other real or personal property; to
collect all rental and other income accruing to the Partnership; to
grant easements or charges of any kind; to release, convey or assign
any right, title or interest in or about or easement appurtenant to
said property or any part thereof; to construct and reconstruct,
remodel, alter, repair, add to or take from buildings on said premises;
to insure any Person having an interest in or responsibility for the
care, management or repair of such property; to direct the trustee of
any land trust to mortgage, lease, convey or contract to convey the
real estate held in such land trust or to execute and deliver deeds,
mortgages, notes, and any and all documents pertaining to the property
subject to such land trust or in any matter regarding such trust; to
execute assignments of all or any part of the beneficial interest in
such land trust;
(iii) To employ, engage or contract with or dismiss
from employment or engagement Persons to the extent deemed necessary or
appropriate by the General Partner for the operation and management of
the Partnership business, including but not limited to, contractors,
subcontractors, engineers, architects, surveyors, mechanics,
consultants, accountants, attorneys, insurance brokers, real estate
brokers and others;
(iv) To enter into, make, amend, perform and carry
out or cancel and rescind, contracts and other obligations on behalf of
the Partnership and to cause all Administrative Expenses to be paid;
(v) To borrow money, procure loans and advances from
any Person for Partnership purposes, and to apply for and secure, from
any Person, credit or accommodations; to contract liabilities and
obligations, direct or contingent and of every kind and nature
(including interest rate swaps, caps and hedges) with or without
security; and to repay, discharge, settle, adjust, compromise, or
liquidate any such loan, advance, credit, obligation or liability;
(vi) To pledge, hypothecate, mortgage, assign,
deposit; deliver, enter into sale and leaseback arrangements or
otherwise give as security or as additional or substitute security, or
for sale or other disposition any and all Partnership property,
tangible or intangible, including, but not limited to, real estate and
beneficial interests in land trusts, and to make substitutions thereof,
and to receive any proceeds thereof upon the release or surrender
thereof; to sign, execute and deliver any and all assignments, deeds
and other contracts and instruments in writing; to authorize, give,
make, procure, accept and receive moneys, payments, property, notices,
demands, vouchers, receipts, releases, compromises and adjustments; to
waive notices, demands, protests and authorize and execute waivers of
every kind and nature; to enter into, make, execute, deliver and
receive written agreements, undertakings and instruments of every kind
and nature; to give oral instructions and make oral agreements; and
generally to do any and all other acts and things incidental to any of
the foregoing or with reference to any dealings or transactions which
the General Partner may deem necessary, proper or advisable to effect
or accomplish any of the foregoing or to carry out the business and
purposes of the Partnership;
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(vii) To sell or otherwise dispose of any or all
assets of the Partnership;
(viii) To acquire and enter into any contract of
insurance which the General Partner deems necessary or appropriate for
the protection of the Partnership, for the conservation of the
Partnership's assets or for any purpose convenient or beneficial to the
Partnership and to settle claims under such insurance;
(ix) To conduct any and all banking transactions on
behalf of the Partnership; to adjust and settle checking, savings, and
other accounts with such institutions as the General Partner shall deem
appropriate; to draw, sign, execute, accept, endorse, guarantee,
deliver, receive and pay any checks, drafts, bills of exchange,
acceptances, notes, obligations, undertakings and other instruments for
or relating to the payment of money in, into, or from any account in
the Partnership's name; to execute, procure, consent to and authorize
extensions and renewals of the same; to make deposits and withdraw the
same and to negotiate or discount commercial paper, acceptances,
negotiable instruments, bills of exchange and dollar drafts; to pay all
taxes, assessments, rents and other impositions applicable to the
assets of the Partnership and to seek to reduce the same; to invest all
monies of the Partnership;
(x) To demand, sue for, receive, and otherwise take
steps to collect or recover all debts, rents, proceeds, interests,
dividends, goods, chattels, income from property, damages and all other
property, to which the Partnership may be entitled or which are or may
become due the Partnership from any Person; to commence, prosecute or
enforce, or to defend, answer or oppose, contest and abandon all legal
proceedings in which the Partnership is or may hereafter be interested;
and to settle, compromise or submit to arbitration any accounts, debts,
claims, disputes and matters which may arise between the Partnership
and any other Person and to grant an extension of time for the payment
or satisfaction thereof on any terms, with or without security;
(xi) To confess judgment against the Partnership;
(xii) To make arrangements for financing, including
the taking of all action deemed necessary or appropriate by the General
Partner to cause any approved loans to be closed including, without
limitation, the execution and delivery on behalf of the Partnership of
notes, mortgages, deeds of trust and like instruments;
(xiii) To take all reasonable measures necessary to
insure compliance by the Partnership with applicable arrangements, and
other contractual obligations and arrangements entered into by the
Partnership from time to time in accordance with the provisions of this
Agreement, including periodic reports as required to be submitted to
lenders and using all due diligence to insure that the Partnership is
in compliance with its contractual obligations;
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(xiv) To maintain the Partnership's books and
records;
(xv) To prepare and deliver, or cause to be prepared
and delivered by the Partnership's accountants, all financial and other
reports with respect to the operations of the Partnership, and all
federal and state tax returns and reports;
(xvi) To act in any state or nation in which the
Partnership may lawfully act, for itself or as principal, agent or
representative for any Person, including the Partnership, with respect
to any business of the Partnership;
(xvii) To become a partner or member in, and perform
the obligations of a partner or member of, any general or limited
partnership or limited liability company;
(xviii) To apply for, register, obtain, purchase or
otherwise acquire trademarks, trade names, labels and designs relating
to or useful in connection with any business of the Partnership, and to
use, exercise, develop and license the use of the same;
(xix) To pay or reimburse any and all actual fees,
costs and expenses incurred in the formation and organization of the
Partnership;
(xx) To do all acts which are necessary, customary or
appropriate for the protection and preservation of the Partnership's
assets, including the establishment of reserves;
(xxi) To exercise all rights, and to perform all
duties, responsibilities and obligations, granted to or required of the
General Partner by this Agreement; and
(xxii) In general, to exercise all of the general
rights, privileges and powers permitted to be had and exercised by the
provisions of the Act.
SECTION 8.3 PROSCRIPTIONS.
The General Partner shall not have the authority to:
(a) Do any act in contravention of this Agreement or which
would make it impossible to carry on the ordinary business of the Partnership;
(b) Possess any Partnership property or assign rights in
specific Partnership property for other than Partnership purposes; or
(c) Do any act in contravention of applicable law.
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SECTION 8.4 ADDITIONAL PARTNERS.
Additional Partners may be admitted to the Partnership only as provided
in ARTICLE XII hereof.
SECTION 8.5 COMPENSATION OF THE GENERAL PARTNER.
The General Partner shall not be entitled to any compensation for
services rendered to the Partnership solely in its capacity as General Partner
except with respect to reimbursement for those costs and expenses pursuant to
SECTION 8.1 hereof including those constituting Administrative Expenses.
SECTION 8.6 WAIVER AND INDEMNIFICATION.
(a) Neither the General Partner nor any Person acting on its
behalf, pursuant hereto, shall be liable, responsible or accountable in damages
or otherwise to the Partnership or to any Partner for any acts or omissions
performed or omitted to be performed by it within the scope of the authority
conferred upon the General Partner by this Agreement and the Act, provided that
the General Partner's or such other Person's conduct or omission to act was
taken in good faith and in the belief that such conduct or omission was in the
best interests of the Partnership and, provided further, that the General
Partner or such other Person shall not be guilty of fraud, willful misconduct or
gross negligence.
(b) To the fullest extent permitted by Delaware law, the
Partnership shall indemnify the General Partner and its Affiliates and any
Person acting on their behalf (each, an "Indemnitee") from and against any and
all losses, claims, damages, liabilities, joint or several, expenses (including,
without limitation, reasonable attorneys' fees and other legal fees and
expenses), judgments, fines, settlements, and other amounts arising from any and
all claims, demands, actions, suits or proceedings, civil, criminal,
administrative or investigative, that relate to the operations of the
Partnership or the General Partner as set forth in this Agreement, in which such
Indemnitee may be involved, or is threatened to be involved, as a party or
otherwise, except to the extent it is finally determined by a court of competent
jurisdiction, from which no further appeal may be taken, that such Indemnitee's
action constituted intentional acts or omissions constituting willful misconduct
or fraud. Without limitation, the foregoing indemnity shall extend to any
liability of any Indemnitee, pursuant to a loan guaranty or otherwise for any
indebtedness of the Partnership or any Subsidiary of the Partnership (including,
without limitation, any indebtedness which the Partnership or any Subsidiary of
the Partnership has assumed or taken subject to), and the General Partner is
hereby authorized and empowered, on behalf of the Partnership, to enter into one
or more indemnity agreements consistent with the provisions of this SECTION 8.6
in favor of any Indemnitee having or potentially having liability for any such
indebtedness. Any indemnification pursuant to this SECTION 8.6 shall be made
only out of the assets of the Partnership, and neither the General Partner nor
any Limited Partner shall have any obligation to contribute to the capital of
the Partnership, or otherwise provide funds, to enable the Partnership to fund
its obligations under this SECTION 8.6.
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(c) Reasonable expenses incurred by an Indemnitee who is a
party to a proceeding shall be paid or reimbursed by the Partnership in advance
of the final disposition of the proceeding.
(d) The indemnification provided by this SECTION 8.6 shall be
in addition to any other rights to which an Indemnitee or any other Person may
be entitled under any agreement, pursuant to any vote of the Partners, as a
matter of law or otherwise, and shall continue as to an Indemnitee who has
ceased to serve in such capacity unless otherwise provided in a written
agreement pursuant to which such Indemnitees are indemnified.
(e) The Partnership may, but shall not be obligated to,
purchase and maintain insurance, on behalf of the Indemnitees and such other
Persons as the General Partner shall determine, against any liability that may
be asserted against or expenses that may be incurred by such Person in
connection with the Partnership's activities, regardless of whether the
Partnership would have the power to indemnify such Person against such liability
under the provisions of this Agreement.
(f) For purposes of this SECTION 8.6, the Partnership shall be
deemed to have requested an Indemnitee to serve as fiduciary of an employee
benefit plan whenever the performance by such Indemnitee of its duties to the
Partnership also imposes duties on, or otherwise involves services by, such
Indemnitee to the plan or participants or beneficiaries of the plan; excise
taxes assessed on an Indemnitee with respect to an employee benefit plan
pursuant to applicable law shall constitute fines within the meaning of this
SECTION 8.6; and actions taken or omitted by the Indemnitee with respect to an
employee benefit plan in the performance of its duties for a purpose reasonably
believed by it to be in the interest of the participant and beneficiaries of the
plan shall be deemed to be for a purpose which is not opposed to the best
interests of the Partnership.
(g) In no event may an Indemnitee subject any of the Partners
to personal liability by reason of the indemnification provisions set forth in
this Agreement.
(h) An Indemnitee shall not be denied indemnification in whole
or in part under this SECTION 8.6 because the Indemnitee had an interest in the
transaction with respect to which the indemnification applies if the transaction
was otherwise permitted by the terms of this Agreement.
(i) The provisions of this SECTION 8.6 are for the benefit of
the Indemnitees, their heirs, successors, assigns and administrators and shall
not be deemed to create any rights for the benefit of any other Persons. Any
amendment, modification or repeal of this SECTION 8.6 or any provision hereof
shall be prospective only and shall not in any way affect the Partnership's
liability to any Indemnitee under this SECTION 8.6, as in effect immediately
prior to such amendment, modification, or repeal with respect to claims arising
from or relating to matters occurring, in whole or in part, prior to such
amendment, modification or repeal, regardless of when such claims may arise or
be asserted.
(j) All rights of any indemnitee hereunder shall survive the
dissolution of the Partnership; provided, however, that a claim for
indemnification under this Agreement must be made
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by or on behalf of the Person seeking indemnification prior to the time the
Partnership is liquidated hereunder. The indemnification rights contained in
this Agreement shall be cumulative of, and in addition to, any and all other
rights, remedies and recourse to which the person seeking indemnification shall
be entitled, whether at law or at equity.
SECTION 8.7 OPERATION IN ACCORDANCE WITH REIT REQUIREMENTS.
The Partners acknowledge and agree that the Partnership shall be
operated in a manner that will enable the General Partner to (a) satisfy the
REIT Requirements and (b) avoid the imposition of any federal income or excise
tax liability on either the General Partner or the Partnership. The General
Partner shall not be required to take any action which would result in the
General Partner ceasing to satisfy the REIT Requirements or the imposition of
any federal income or excise tax liability on the General Partner.
SECTION 8.8 RELIANCE BY THIRD PARTIES.
(a) Notwithstanding anything to the contrary in this
Agreement, any Person dealing with the Partnership shall be entitled to assume
that the General Partner has full power and authority to encumber, sell or
otherwise use in any manner any and all assets of the Partnership and to enter
into any contracts on behalf of the Partnership, and such Person shall be
entitled to deal with the General Partner as if it were the Partnership's sole
party in interest, both legally and beneficially.
(b) Each Limited Partner hereby waives any and all defenses or
other remedies which may be available against such Person to contest, negate or
disaffirm any action of the General Partner in connection with any such dealing.
In no event shall any Person dealing with the General Partner or its
representatives be obligated to ascertain that the terms of this Agreement have
been complied with or to inquire into the necessity or expedience of any act or
action of the General Partner or its representatives. Each and every
certificate, document or other instrument executed on behalf of the Partnership
by the General Partner shall be conclusive evidence in favor of any and every
person relying thereon or claiming thereunder that (i) at the time of the
execution and delivery of such certificate, document or instrument, this
Agreement was in full force and effect, (ii) the Person executing and delivering
such certificate, document or instrument was duly authorized and empowered to do
so for and on behalf of the Partnership, and (iii) such certificate, document or
instrument was duly executed and delivered in accordance with the terms and
provisions of this Agreement and is binding upon the Partnership.
(c) Nothing herein contained shall impose any obligation on
any Person or firm doing business with the Partnership to inquire as to whether
or not the General Partner has properly exercised its authority in executing any
contract, lease, mortgage, deed or other instrument on behalf of the
Partnership, and any such third Person shall be fully protected in relying upon
such authority.
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SECTION 8.9 OTHER MATTERS CONCERNING THE GENERAL PARTNER.
(a) The General Partner may rely and shall be protected in
acting or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, or other document believed by it to be genuine and
to have been singed or presented by the proper party or parties.
(b) The General Partner may consult with legal counsel,
accountants, appraisers, management consultants, investment bankers and other
consultants and advisers selected by it, and any act taken or omitted to be
taken in reliance upon the opinion of such Persons as to matters which such
General Partner reasonably believes to be within such Person's professional
expertise shall be conclusively presumed to have been done or omitted in good
faith and in accordance with such opinion.
(c) The General Partner shall have the right, in respect of
any of its powers or obligations hereunder, to act through any of its duly
authorized officers and any attorney or attorneys-in-fact duly appointed by the
General Partner; and any Person dealing with the Partnership shall be entitled
to rely on any certificate, document or other instrument executed on behalf of
the Partnership by a duly authorized officer or by a duly authorized attorney or
attorneys-in-fact of the General Partner. Each such attorney-in-fact shall, to
the extent provided by the General Partner in the power of attorney, have full
power and authority to do and perform all and every act and duty which is
permitted or required to be done by the General Partner hereunder.
(d) Notwithstanding any other provisions of this Agreement or
the Act, any action of the General Partner on behalf of the Partnership or any
decision of the General Partner to refrain from acting on behalf of the
Partnership, undertaken in the good faith belief that such action or omission is
necessary or advisable in order (i) to protect or further the ability of the
General Partner to continue to have the General Partner qualify as a REIT or
(ii) to avoid the General Partner incurring any taxes under Section 857 or
Section 4981 of the Code, is expressly authorized under this Agreement and is
deemed approved by all of the Limited Partners. Nothing however in this
Agreement shall be deemed to give rise to any liability on the part of the
Limited Partners for the General Partner's failure to have the General Partner
qualify or continue to qualify as a REIT or failure to avoid incurring any taxes
under the foregoing Sections of the Code.
SECTION 8.10 MEETINGS OF PARTNERS.
(a) Meetings of Partners may be called at any time by the
General Partner to consider, and shall be so called so that the Partners may act
on, any matter on which they are entitled to act under the terms of this
Agreement or the Act.
(b) The General Partner may fix a date not more than 60 nor
less than five (5) days preceding the date of any meeting of Partners, or
preceding the last day on which the consent of Partners may be effectively
expressed for any purpose without a meeting, as a record date for the
determination of the Partners entitled to notice of, and to vote at, such
meeting or to express such consent. In either such case, such Partners, and only
such Partners as shall be Partners of record on
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the record date shall be entitled to notice of, and to vote at, such meeting and
any adjournment thereof, or to express such consent, as the case may be,
notwithstanding any transfer of any Partnership Interest on the Register after
any such record date fixed as aforesaid.
(c) Notice of any meeting at which Partners are entitled to
vote, or of any matter upon which action by written consent of such Partners is
to be taken, shall be given to each Partner of record not less than five (5) nor
more than 60 days prior to the date of such meeting or the date on which consent
must be given, as the case may be. Each such notice will include a statement
setting forth (i) the date, time and place of the meeting or the date by which
such action is to be taken, (ii) a description of the matter on which such
Partners are entitled to vote or of such matter upon which written consent is
sought and (iii) instructions for the delivery of proxies or consents.
(d) Except as otherwise provided by law, at any meeting of
Partners, the holders of a majority of the Units entitled to vote as such
meeting shall constitute a quorum at such meeting. In the absence of a quorum,
the holders of a majority of the Units entitled to vote thereat present in
person or by proxy may adjourn any meeting, from time to time, until a quorum
shall be present. At any such adjourned meeting at which a quorum shall be
present, any business may be transacted which might have been transacted at the
meeting as originally called.
(e) Each Partner entitled to vote at a meeting or to express
consent to Partnership action in writing without a meeting may authorize another
person or persons to act for him by proxy. A proxy acting for any Partner shall
be duly appointed by an instrument in writing subscribed by such Partner and
reasonably acceptable in form and substances to the General Partner. Except as
otherwise provided by law, no vote on any question upon which a vote of the
Partners may be taken need be by ballot unless the General Partner shall
determine that it shall be by ballot or the holders of a majority of all Units
present in person or by proxy and entitled to participate in such vote shall so
demand. In a vote by ballot each ballot shall state the Partnership Interests
voted and the name of the Partner or proxy voting. Unless otherwise provided by
law or by this Agreement, all questions shall be decided by the vote of the
holders of a majority of the Units present in person or by proxy at the meeting
and entitled to vote on the question.
(f) Any action required to or which may be taken at a meeting
of Partners may be taken without a meeting, without prior notice and without a
vote, if a consent or consents in writing, setting forth the action so taken,
shall be signed by Partners having not less than the minimum number of votes
that would be necessary to authorize such action at a meeting at which all Units
entitled to vote thereon were present and voted, and shall be delivered to the
Partnership by delivery to the General Partner (who shall have custody of the
books in which proceedings of meetings of Partners are recorded). Prompt notice
of the taking of action without a meeting shall be given to the Partners
entitled to vote who have not consented in writing.
(g) The General Partner, in its sole discretion, shall
establish all other provisions relating to meetings of Partners, in addition to
those expressly provided herein, including notice of the time, place or purpose
of any meeting at which any matter is to be voted on by any Partner,
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waiver of any such notice, action by consent without a meeting, the
establishment of a record date, quorum requirements, voting in person or by
proxy or any other matter with respect to the exercise of any such right to
vote, in each case consistent with the terms hereof and in accordance with the
Act.
ARTICLE IX
ACCOUNTING AND RECORDS
SECTION 9.1 BOOKS AND RECORDS.
The General Partner shall keep books of account for the Partnership in
accordance with the method of accounting used for federal income tax purposes.
Upon at least five Business Days' prior notice to the General Partner, any
Limited Partner shall have the right, to the extent provided for in the Act, to
inspect and copy at its own expense the Partnership's books and records during
normal business hours.
SECTION 9.2 ANNUAL REPORTS.
(a) Not later than 90 days after the end of each Fiscal Year
(or such earlier date as may be required under the Code) the General Partner
shall deliver to each Partner a report indicating each Partner's share for
federal income tax purposes of the Partnership's income, credits and deductions
for the immediately preceding Fiscal Year, together with all other information
concerning the Partnership which may be required by the Code from time to time.
(b) The General Partner shall also cause an annual report of
the operation of the Partnership to be distributed to the Partners within 120
days after the end of each Fiscal Year together with Audited Financial
Statements reflecting the Partnership's operation during such year.
(c) The General Partner may also furnish the Limited Partners
with such other periodic reports concerning the Partnership's business and
activities as the General Partner considers necessary to advise all Partners
properly about their investment in the Partnership and shall, upon the written
request of any Limited Partner, provide such Partner with:
(i) a copy of the Partnership's federal, state and
local income tax returns for each Fiscal Year;
(ii) a current list of the name and last known
business, residence or mailing address of each Partner; and
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(iii) a copy of this Agreement and the Certificate
and all amendments thereto, together with executed copies of all powers
of attorney pursuant to which this Agreement, the Certificate and all
amendments thereto have been executed.
SECTION 9.3 TAX RETURNS.
The General Partner shall cause all income and other tax returns of the
Partnership to be prepared and filed in a timely manner. The General Partner
shall be the Tax Matters Partner (as defined in section 6231(a)(7) of the Code)
of the Partnership.
SECTION 9.4 FISCAL YEAR.
The fiscal year ("Fiscal Year") of the Partnership shall be the
calendar year.
SECTION 9.5 BANK ACCOUNTS.
All funds of the Partnership shall be deposited in such accounts
established in the Partnership's name with such financial institutions as may be
determined from time to time by the General Partner. Withdrawals from any such
accounts shall be made in the Partnership's name upon the signature of such
officers of the General Partner and such other signature or signatures, if any,
as the General Partner shall from time to time designate. Funds in such accounts
shall not be commingled with the funds of any Partner.
ARTICLE X
CHANGES IN GENERAL PARTNERS
SECTION 10.1 PERMITTED ASSIGNMENT OF GENERAL PARTNERSHIP INTEREST;
PERMITTED WITHDRAWAL BY THE GENERAL PARTNER.
The General Partner shall not have the right to resign or withdraw or
to Transfer all or any portion of its General Partnership Interest represented
by General Partnership Units, except that the General Partner may (a) assign all
or a portion of its General Partnership Interest represented by outstanding
General Partnership Units to a substitute or additional General Partner
permitted under and selected in accordance with SECTION 10.2; (b) assign its
General Partnership Interest represented by outstanding General Partnership
Units to any Entity that has, by merger, consolidation or otherwise, acquired
substantially all of its assets and continued its business and has been
designated to succeed to its rights and obligations under this Agreement in
accordance herewith; and (c) pledge or grant a security interest in its right to
receive payments and distributions under this Agreement. In connection with any
Transfer described in clauses (a) and(b) of all the General Partnership
Interest,
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the General Partner may withdraw as such upon the admission of the assignee.
SECTIONS 10.2 AND 10.4 shall apply in the case of a Transfer of all or a portion
of a General Partnership Interest.
SECTION 10.2 ADMISSION OF ADDITIONAL GENERAL PARTNERS.
One or more additional or substitute General Partners may be admitted
to the Partnership from time to time by the General Partner in the circumstances
contemplated by SECTION 10.1, provided the additional or substitute general
partner is to be able to fulfill the duties of a general partner hereunder, as
determined by the General Partner. Otherwise, no additional General Partner may
be admitted to the Partnership except as provided in SECTION 12.1. The terms of
such assignment and the nature of the duties of the newly admitted General
Partner shall be as agreed upon between the General Partner and such additional
General Partner.
SECTION 10.3 EFFECT OF WITHDRAWAL OF GENERAL PARTNER.
(a) Upon the occurrence of an Event of Withdrawal of the
General Partner (other than one permitted by SECTION 10.1), the General Partner
shall cease to be such, and its Partnership Interest shall be converted to an
undesignated Limited Partnership Interest entitling the holder thereof to the
same share of the Partnership's income, gain, loss, deduction and distributions
as are allocated to the General Partner hereunder, subject to the Partnership's
right to set off (i) any damages caused to it if the Event of Withdrawal is in
violation of this Agreement and (ii) any obligation of the General Partner under
paragraph (b).
(b) Upon the occurrence of an Event of Withdrawal of the
General Partner, the General Partner shall pay to the Partnership in cash the
amount of any deficit balance in its Capital Account unless the Event of
Withdrawal is permitted by SECTION 10.1.
SECTION 10.4 LIABILITY OF A WITHDRAWN GENERAL PARTNER.
Any General Partner who shall commit or suffer an Event of Withdrawal
or shall otherwise withdraw from the Partnership shall remain liable for
obligations and liabilities incurred by it as General Partner prior to the
occurrence of such Event of Withdrawal or other withdrawal, but it shall be free
of any such obligation or liability incurred on account of the activities of the
Partnership thereafter.
ARTICLE XI
TRANSFERS OF LIMITED PARTNERSHIP INTERESTS
SECTION 11.1 GENERAL TRANSFER PROVISIONS AND RESTRICTIONS.
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(a) Subject to SECTION 11.1(B), any Limited Partner may
Transfer all or any portion of, or right in or to, Units of Limited Partnership
Interest, without the consent of the General Partner or any other Partner.
(b) Notwithstanding the foregoing,
(i) no Transfer of any Limited Partnership Interest
shall be permitted if, in the opinion of the General Partner based on
the advice of counsel, there is a significant possibility that such
Transfer:
(A) may not be effected without registration
under the Securities Act of 1933, or would result in the
violation of any applicable state securities laws; or
(B) would result in the termination of the
Partnership within the meaning of section 708 of the Code, or
would have a material adverse effect on any Partner for
federal income tax purposes; or
(C) would cause the Partnership to be taxed
other than as a partnership for federal income tax purposes or
impair the ability of the Partnership to take advantage of any
favorable tax election or treatment as a result of being taxed
as a partnership (whether such impairment shall arise from the
termination of the Partnership for federal tax purposes or
otherwise); or
(D) would cause the Partnership to become,
with respect to any employee benefit plan subject to Title 1
of ERISA, a "party-in-interest" (as defined in Section 3(14)
of ERISA) or a "disqualified person" (as defined in Section
4975(c) of the Code); or
(E) would cause any portion of the assets of
the Partnership to constitute assets of any employee benefit
plan pursuant to Department of Labor Regulations Section
2510.2-101; and
(ii) No Limited Partner shall effect any Transfer:
(A) to any person or entity who lacks the
legal right, power or capacity to own Partnership Units;
(B) in violation of any provision of any
mortgage or trust deed (or the note or bond secured thereby)
to which the Partnership is a party or is otherwise bound;
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(C) of any component portion of Partnership
Units, such as the Capital Account, or rights to distribution,
separate and apart from all other components of Partnership
Units; or
(D) in the event such Transfer would cause
the General Partner or any successor thereto to cease to
comply with the REIT Requirements.
In furtherance of this subsection, the General Partner and the Partnership shall
in no event recognize any trade of a Limited Partnership Interest in a secondary
market or the substantial equivalent thereof and shall take such actions as are
necessary so that such trades are not recognized.
(c) All Transfers of Limited Partnership Interests shall be by
instrument in form and substance reasonably satisfactory to the General Partner.
Any Transfer of Limited Partnership Interests in violation of this Agreement
shall be null and void and shall not operate to vest any rights in any
transferee.
(d) In no event shall the Partnership dissolve or terminate
upon the admission of any Partner to the Partnership or upon any permitted
Transfer of a Partnership Interest by any Partner. Each Partner hereby waives
its right to dissolve, liquidate or terminate the Partnership in such event. No
Transfer of any Limited Partnership Interest in the Partnership shall constitute
a change of Control of the Partnership.
SECTION 11.2 EXPENSES.
All expenses of the Partnership and of the Partners occasioned by a
permitted Transfer shall be borne by the Partner effecting such Transfer.
SECTION 11.3 ALLOCATIONS WITH RESPECT TO TRANSFERRED INTEREST.
Upon the permitted Transfer of all or any part of a Partnership
Interest ("Transferred Partnership Interest"), each item of Partnership income
(or loss) and deduction allocable to such Partnership Interest shall be pro
rated (as to the Transferred Partnership Interest) between the transferor and
transferee on the basis of the number of days in the taxable year of the
Partnership preceding (and including) and succeeding, respectively, the date as
of which the assignment is executed. Unless otherwise agreed by the transferor
and transferee Partners, gain or loss from the sale or other taxable disposition
of a Partnership capital asset shall be allocated to the Persons who were
Partners at the time such gain or loss was recognized by the Partnership.
SECTION 11.4 ELECTION.
The General Partner may, in its sole discretion, cause the Partnership
to elect, pursuant to section 754 of the Code, to adjust the basis of
Partnership property as provided in sections 734(b)
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<PAGE> 35
and 743(b) of the Code. The General Partner shall be responsible for determining
the adjustments required or permitted by said sections of the Code, except that,
in the case of any adjustment required or permitted under section 743(b) of the
Code, the transferee Partner or Partners shall be solely responsible for
determining the adjustments required thereunder unless such Partner or Partners
provide the General Partner with all the information necessary for the General
Partner to determine the adjustments. If any adjustments to the basis of
Partnership property are made pursuant to section 732(d), 734(b) or 743(b), the
capital accounts of the Partners shall be adjusted as specified in Regulation
Section 1.704-1(b)(2)(iv)(m).
SECTION 11.5 TRANSFEREE'S RIGHTS.
The Transfer of a Limited Partnership Interest in accordance with this
Agreement entitles the transferee to share in such profits and losses, to
receive such distributions, and to receive such allocations of income, gain,
loss, deduction, or credit or similar item to which the transferor Partner was
entitled (to the extent of the Transferred Partnership Interest) but does not
entitle the transferee to become or to exercise any other rights of a Partner
unless and until the transferor Partner has advised the General Partner that
such transferor Partner is to be admitted as a Partner pursuant to, and has
satisfied the requirements of, ARTICLE XII.
ARTICLE XII
ADMISSION OF PARTNERS
SECTION 12.1 PROCEDURE.
(a) Substitute or additional General or Limited Partners may
be admitted to the Partnership as a result of a permitted Transfer of
Partnership Interests pursuant to ARTICLE X OR XI. Additional General or Limited
Partners shall also be admitted to the Partnership as a result of the issuance
of additional Partnership Interests pursuant to ARTICLE III. Each substitute or
additional Partner shall sign a supplement to this Agreement at the time such
Partner is admitted confirming the admission of the new Partner hereunder, and
containing such Person's binding agreement to be bound by all of the terms of
this Agreement.
(b) In connection with the admission of any new Partner to the
Partnership, the General Partner shall have the power, right and authority to
amend this Agreement to reflect the rights and obligations of such new Partner,
including without limitation its obligations to contribute to the capital of the
Partnership, rights to distributions, or rights to approve or consent to
Partnership actions.
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<PAGE> 36
ARTICLE XIII
DISSOLUTION, LIQUIDATION AND WINDING-UP
SECTION 13.1 EVENTS OF DISSOLUTION.
The occurrence of any of the following shall constitute an event of
dissolution of the Partnership (an "Event of Dissolution"):
(a) the expiration of the term of the Partnership as provided
herein;
(b) the sale or other disposition in a single transaction or
series of related transactions of all or substantially all of the assets of the
Partnership unless such sale or other disposition involves any deferred payment
of the consideration for such sale or disposition, in which case the General
Partner may elect to defer the dissolution of the Partnership until the last day
of the Fiscal Year during which the Partnership shall receive the balance of
such deferred payment;
(c) SUBJECT TO SECTION 13.2, the occurrence of an Event of
Withdrawal with respect to a General Partner;
(d) the acquisition by a single Person of all of the
Partnership Interests;
(e) the issuance of a decree of dissolution by a court of
competent jurisdiction pursuant to the Act; or
(f) the consent of the General Partner and the holders of at
least 50% of the Limited Partnership Units.
SECTION 13.2 CONTINUATION OF THE BUSINESS OF THE PARTNERSHIP
AFTER CERTAIN EVENTS OF DISSOLUTION.
(a) Notwithstanding SECTION 13.1(C), if, at the time of an
Event of Withdrawal, there shall be one or more General Partners not affected by
the Event of Withdrawal, then such other General Partner or General Partners
shall (and are hereby authorized to) carry on the business of the Partnership,
and if they do so the Partnership shall not be liquidated and its business wound
up.
(b) Notwithstanding SECTION 13.1(C), at the time of an Event
of Withdrawal to which subsection (a) is not applicable, the Partnership shall
not be liquidated and its business wound up if, within 90 days after the
occurrence of the Event of Withdrawal, not less than a majority in interest of
the remaining Partners agree in writing to continue the business of the
Partnership and to the appointment, effective as of the date of the Event of
Withdrawal of one or more replacement General Partners who agree to serve as
such.
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<PAGE> 37
SECTION 13.3 EFFECT OF EVENT OF DISSOLUTION.
Upon the occurrence of an Event of Dissolution, unless otherwise
provided in SECTION 13.2, the Partnership shall be dissolved and shall continue
solely for the purposes of winding up its business and liquidating in accordance
with this Article all of its assets and collecting the proceeds from such
liquidation, at which time the Partnership shall be wound up. Unless the
business of the Partnership is continued as provided in SECTION 13.2, after the
occurrence of an Event of Dissolution the Partnership shall engage in no further
business other than as necessary to operate on an interim basis and for the
Partnership to collect its receivables, liquidate its assets and pay or
discharge its liabilities in accordance with this Article.
SECTION 13.4 ACCOUNTING.
In the event of the dissolution, liquidation and winding-up of the
Partnership, a proper accounting (which shall be certified) shall be made of the
Capital Account of each Partner and of the Net Income or Net Losses of the
Partnership from the date of the last previous accounting to the date of
dissolution. Financial statements presenting such accounting shall include a
report thereon of a certified public accountant selected by the Liquidating
Trustee.
SECTION 13.5 DISTRIBUTION ON DISSOLUTION.
(a) In the event of the dissolution and liquidation of the
Partnership for any reason, the assets of the Partnership shall be liquidated
for distribution and distributed in the following rank and order:
(i) First, for payment of creditors of the
Partnership (including creditors who are Partners) in the order of
priority as provided by law;
(ii) Next, for establishment of reserves as provided
by the Liquidating Trustee to provide for contingent liabilities, if
any;
(iii) Last, for payment to the General Partner and
the Limited Partners in accordance with the positive balances in their
respective Capital Accounts after giving effect to all contributions,
distributions and allocations for all periods, including the period in
which such distribution occurs (other than those adjustments made
pursuant to this SECTION 13.5(A)(IV)).
(b) Whenever the Liquidating Trustee reasonably determines
that any reserves established pursuant to paragraph (a)(ii) above are in excess
of the reasonable requirements of the Partnership, the amount determined to be
excess shall be distributed to the Partners in accordance with the above
provisions.
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<PAGE> 38
SECTION 13.6 TIMING REQUIREMENTS.
In the event that the Partnership is "liquidated" within the meaning of
Section 1.704-1(b)(2)(ii)(g) of the Regulations, any and all distributions to
the Partners pursuant to SECTION 13.5(A) hereof shall be made no later than the
later to occur of (i) the last day of the taxable year of the Partnership in
which such liquidation occurs, or (ii) ninety (90) days after the date of such
liquidation.
SECTION 13.7 SALE OF PARTNERSHIP ASSETS.
In the event of the liquidation of the Partnership in accordance with
the terms of this Agreement, the Liquidating Trustee may sell Partnership
property if the Liquidating Trustee has in good faith solicited bids from
unrelated third parties before making any such sale; provided, however, all
sales, leases, encumbrances or transfers of Partnership assets shall be made by
the Liquidating Trustee solely on an "arm's-length" basis, at the best price and
on the best terms and conditions as the Liquidating Trustee in good faith
believes are reasonably available at the time and under the circumstances and on
a non-recourse basis to the Limited Partners. The liquidation of the Partnership
shall not be deemed finally completed until the Partnership shall have received
cash payments in full with respect to obligations such as notes, installment
sale contracts or other similar receivables received by the Partnership in
connection with the sale of Partnership assets and all obligations of the
Partnership have been satisfied, released or assumed by the General Partner. The
Liquidating Trustee shall continue to act to enforce all of the rights of the
Partnership pursuant to any such obligations until such obligations are paid in
full or otherwise satisfied.
SECTION 13.8 DISTRIBUTIONS IN KIND.
In the event that it becomes necessary to make a distribution of
Partnership property in kind, the Liquidating Trustee may transfer and convey
such property to the distributees as tenants in common, subject to any
liabilities attached thereto, so as to vest in them undivided interests in the
whole of such property in proportion to their respective rights to share in the
proceeds of the sale of such property (other than as a creditor) in accordance
with the provisions of SECTION 13.5 hereof.
SECTION 13.9 DOCUMENTATION OF LIQUIDATION.
Upon the completion of the dissolution and liquidation of the
Partnership, the Partnership shall terminate and the Liquidating Trustee shall
have the authority to execute and record any and all documents or instruments
required to effect the dissolution, liquidation and termination of the
Partnership.
SECTION 13.10 LIABILITY OF THE LIQUIDATING TRUSTEE.
The Liquidating Trustee shall be indemnified and held harmless by the
Partnership from and against any and all claims, demands, liabilities, costs,
damages and causes of action of any nature
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<PAGE> 39
whatsoever arising out of or incidental to the Liquidating Trustee's taking of
any action authorized under or within the scope of this Agreement; provided,
however, that the Liquidating Trustee shall not be entitled to indemnification,
and shall not be held harmless, where the claim, demand, liability, cost, damage
or cause of action at issue arose out of: (a) a matter entirely unrelated to the
Liquidating Trustee's action or conduct pursuant to the provisions of this
Agreement; or (b) the willful misconduct or gross negligence of the Liquidating
Trustee.
ARTICLE XIV
RIGHTS AND OBLIGATIONS OF THE LIMITED PARTNERS
SECTION 14.1 NO PARTICIPATION IN MANAGEMENT.
The Limited Partners shall not take part in the management or control
of the Partnership's business, transact any business in the Partnership's name,
have the power to sign documents for or otherwise bind the Partnership or except
as required by the Act or expressly provided by this Agreement, have any right
to vote on or consent to any matter, provided, however, that nothing in the
foregoing shall be deemed to prohibit or preclude any Limited Partner or its
Affiliates from serving as an officer, trustee, director or employee of the
General Partner or its Affiliates or otherwise transacting business with the
Partnership.
SECTION 14.2 DEATH, INCOMPETENCE, BANKRUPTCY, ETC.
The death, incompetence, Bankruptcy, dissolution or liquidation of a
Limited Partner shall not cause a dissolution of the Partnership. The rights of
such a Limited Partner to share in the income and losses of the Partnership, to
receive distributions and to assign its Partnership Interest pursuant to this
Article, on the happening of such an event, shall devolve on such Limited
Partner's beneficiary or other successor, executor, administrator, guardian or
other legal representative for the purpose of settling the estate or
administering the property of such Limited Partner. Such successor or personal
representative, however, shall be admitted as a Limited Partner only upon
compliance with the requirements set forth in SECTION 12.1(A).
SECTION 14.3 NO WITHDRAWAL.
No Limited Partner may withdraw from the Partnership without the prior
written consent of the General Partner, other than as expressly provided in this
Agreement.
SECTION 14.4 POWER OF ATTORNEY.
(a) Each Limited Partner constitutes and appoints the General
Partner, any Liquidating Trustee, and authorized officers and attorneys-in-fact
of each, and each of those acting singly, in each case with full power of
substitution, as its true and lawful agent and attorney-in-fact,
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<PAGE> 40
with full power and authority in its name, place and stead to: execute, swear
to, acknowledge, deliver, file and record in the appropriate public offices (i)
all certificates, documents and other instruments (including, without
limitation, this Agreement and the Certificate and all amendments or
restatements thereof) that the General Partner or the Liquidating Trustee deems
appropriate or necessary to form, qualify or continue the existence or
qualification of the Partnership as a limited partnership (or a partnership in
which the limited partners have limited liability) in the State of Delaware and
in all other jurisdictions in which the Partnership may conduct business or own
property; (ii) all instruments that the General Partner deems appropriate or
necessary to reflect any amendment, change, modification or restatement of this
Agreement in accordance with its terms; (iii) all conveyances and other
instruments or documents that the General Partner deems appropriate or necessary
to reflect the dissolution and liquidation of the Partnership pursuant to the
terms of this Agreement, including, without limitation, a certificate of
cancellation; and (iv) all instruments relating to the admission, withdrawal,
removal or substitution of any Partner pursuant to the provisions of this
Agreement, or the Capital Contribution of any Partner.
(b) The foregoing power of attorney is irrevocable and a power
coupled with an interest, in recognition of the fact that each of the Partners
will be relying upon the power of the General Partner to act as contemplated by
this Agreement in any filing or other action by it on behalf of the Partnership,
and it shall survive the death, incapacity or incompetency of a Limited Partner
to the effect and extent permitted by law and the Transfer of all or any portion
of such Limited Partner's Partnership Units and shall extend to such Limited
Partner's heirs, distributees, successors, assigns and personal representatives.
SECTION 14.5 LIMITED LIABILITY OF LIMITED PARTNERS.
The Limited Partners shall not be personally liable for any obligations
or debts of the Partnership to third parties, except to the extent provided in
the Act.
ARTICLE XV
GENERAL PROVISIONS
SECTION 15.1 NOTICES.
All notices, offers or other communications required or permitted to be
given pursuant to this Agreement shall be in writing and may be personally
served, telecopied, delivered by reputable courier service or sent by United
States mail and shall be deemed to have been given when delivered in person,
upon receipt of telecopy or courier service or three business days after deposit
in United States Mail, registered or certified, postage prepaid, and properly
addressed to the most current address of such party noted in the Register, by or
to the appropriate party. The address of any party hereto may be changed by a
notice in writing given in accordance with the provisions hereof.
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<PAGE> 41
SECTION 15.2 SUCCESSORS.
This Agreement and all the terms and provisions hereof shall be binding
upon and shall inure to the benefit of all Partners, and their legal
representatives, heirs, successors and permitted assigns, except as expressly
herein otherwise provided.
SECTION 15.3 EFFECT AND INTERPRETATION.
This Agreement and all of the terms and provisions hereof shall be
governed by and construed in accordance with the law, including the law on
conflicts of law, of the State of Delaware.
SECTION 15.4 COUNTERPARTS.
This Agreement may be executed in counterparts, each of which shall be
an original, but all of which shall constitute one and the same instrument.
SECTION 15.5 PARTNERS NOT AGENTS.
Nothing contained herein shall be construed to constitute any Partner
the agent of another Partner, except as specifically provided herein, or in any
manner to limit the Partners in the carrying on of their own respective
businesses or activities. Notwithstanding anything to the contrary contained
herein, no recourse shall be had by the Partnership or any Partner against any
trustee, director, shareholder, officer, employee, agent or attorney of the
General Partner under this Agreement, and none of the foregoing shall have any
personal liability for or with respect to any of the foregoing.
SECTION 15.6 ENTIRE UNDERSTANDING.
This Agreement constitutes the entire agreement and understanding among
the Partners and supersedes any prior understandings and/or written or oral
agreements among them respecting the subject matter within.
SECTION 15.7 AMENDMENTS.
(a) The General Partner shall have the power and authority, in
its sole discretion and without the consent of any other Partner, to amend any
and all of the provisions of this Agreement, including, without limitation, to
(i) establish the rights, privileges, duties and obligations of any Partner or
class of Partnership Interest, (ii) add to the obligations of the General
Partner or surrender any right or power granted to the General Partner or any
Affiliate of the General Partner for the benefit of the Limited Partners; (iii)
reflect the issuance of additional Partnership Interests, and the admission,
substitution, termination or withdrawal of Partners, in each case in accordance
with the provisions of this Agreement; (iv) record permitted Transfers of
Partnership Units on the books of the Partnership; (v) reflect a change that is
of an inconsequential nature and does not adversely
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<PAGE> 42
affect the holders of the Limited Partnership Units in any material respect;
(vi) cure any ambiguity or correct plain errors in this Agreement; or (vii)
satisfy any legal requirements; except that, without the consent of each
existing Partner adversely affected thereby, the General Partner shall not
(except, in each and every case, as may be required to correct plain errors or
ambiguities in this Agreement) amend this Agreement so as to (i) require any
Partner to make any additional contribution to the capital of the Partnership;
or (ii) require any Partner to restore any negative balance in its capital
account or otherwise to contribute any capital to the Partnership, except as
required under the Act, the Code or other applicable laws or as expressly
provided herein. In addition, this Agreement shall not be amended without the
prior written consent of each Partner adversely affected if such amendment would
(i) convert a Limited Partnership Interest in the Partnership into a General
Partnership Interest, (ii) affect a Limited Partner's right to receive
distributions or (iii) modify the limited liability of a Limited Partner.
(b) The General Partner will provide notice to the Limited
Partners promptly after any action under SECTION 15.7(A) if taken.
(c) This SECTION 15.7 may not be amended except with the prior
written consent of the General Partner and the holders of 50% of the then
outstanding Limited Partnership Units of each class.
SECTION 15.8 SEVERABILITY.
If any provision of this Agreement, or the application of such
provision to any person or circumstance, shall be held invalid by a court of
competent jurisdiction, the remainder of this Agreement, or the application of
such provision to persons or circumstances other than those to which it is held
invalid by such court, shall not be affected thereby.
SECTION 15.9 TRUST PROVISION.
This Agreement, to the extent executed by the trustee of a trust, is
executed by such trustee solely as trustee and not in a separate capacity.
Nothing herein contained shall create any liability on, or require the
performance of any covenant by, any such trustee individually, nor shall
anything contained herein subject the individual personal property of any
trustee to any liability.
SECTION 15.10 PRONOUNS AND HEADINGS.
As used herein, all pronouns shall include the masculine, feminine and
neuter, and all defined terms shall include the singular and plural thereof
wherever the context and facts require such construction. The headings, titles
and subtitles herein are inserted for convenience of reference only and are to
be ignored in any construction of the provisions hereof. Any references in this
Agreement to "including" shall be deemed to mean "including without limitation".
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<PAGE> 43
SECTION 15.11 ASSURANCES.
Each of the Partners shall hereafter execute and deliver such further
instruments and do such further acts and things as may be required or useful to
carry out the intent and purpose of this Agreement and as are not inconsistent
with the terms hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement or
caused this Agreement to be executed as of the date and year first above
written.
GENERAL PARTNER:
Correctional Properties Trust, a Maryland real estate
investment trust
By: /s/ George C. Zoley
------------------------------------------------
Name: George C. Zoley
Title: Chairman of the Board
INITIAL LIMITED PARTNERS:
Correctional Properties Trust, a Maryland real estate
investment trust
By: /s/ George C. Zoley
------------------------------------------------
Name: George C. Zoley
Title: Chairman of the Board
CPT Limited Partner Inc., a Delaware corporation
By: /s/ Charles R. Jones
------------------------------------------------
Name: Charles R. Jones
Title: President
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<PAGE> 44
EXHIBIT A
GENERAL PARTNER
Name: Correctional Properties Trust
Address: 4200 Wackenhut Drive
Palm Beach Gardens, FL 33410-4243
Initial Capital Contribution: $20.00
General Partnership Units: One (1)
INITIAL LIMITED PARTNERS
1. Name: Correctional Properties Trust
Address: 4200 Wackenhut Drive
Palm Beach Gardens, FL 33410-4243
Initial Capital Contribution: $1,960.00
Limited Partnership Units: Ninety-eight (98)
2. Name: CPT Limited Partner Inc.
Address: 4200 Wackenhut Drive
Palm Beach Gardens, FL 33410-4243
Initial Capital Contribution: $20.00
Limited Partnership Units: One (1)
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<PAGE> 1
EXHIBIT 10.2
FORM OF
MASTER AGREEMENT TO LEASE
BETWEEN
CPT OPERATING PARTNERSHIP L.P., LANDLORD
AND
WACKENHUT CORRECTIONS CORPORATION, TENANT
DATED: ____________, 1998
<PAGE> 2
TABLE OF CONTENTS
PAGE
ARTICLE I
SEPARATE LEASE AGREEMENTS; PREMISES AND TERM ..................... 1
1.01 Separate Lease Agreements .......................... 1
1.02 Leased Property .................................... 2
1.03 Term ............................................... 2
1.04 Holding Over ....................................... 3
1.05 Surrender .......................................... 3
1.06 Affiliates as Tenant ............................... 3
ARTICLE II
RENT ............................................................. 4
2.01 Base Rent .......................................... 4
2.02 Additional Rent .................................... 4
2.03 Other Additional Rent .............................. 5
2.04 Place(s) of Payment of Rent; Direct Payment
of Other Additional Rent ........................... 5
2.05 Net Lease .......................................... 5
2.06 No Termination, Abatement, Etc ..................... 5
ARTICLE III
IMPOSITIONS AND UTILITIES ........................................ 6
3.01 Payment of Impositions ............................. 6
3.02 Definition of Impositions .......................... 7
3.03 Utilities .......................................... 8
3.04 Escrow of Impositions .............................. 8
3.05 Discontinuance of Utilities ........................ 9
ARTICLE IV
INSURANCE ........................................................ 9
4.01 Property Insurance ................................. 9
4.02 Liability Insurance ................................ 10
4.03 Insurance Requirements ............................. 10
4.04 Replacement Cost ................................... 11
i
<PAGE> 3
4.05 Blanket Policy ..................................... 11
4.06 No Separate Insurance .............................. 12
4.07 Waiver of Subrogation .............................. 12
4.08 Mortgages .......................................... 12
ARTICLE V
INDEMNITY; HAZARDOUS SUBSTANCES .................................. 13
5.01 Tenant's Indemnification ........................... 13
5.02 Hazardous Substances or Materials .................. 13
5.03 Limitation of Landlord's Liability ................. 15
ARTICLE VI
USE AND ACCEPTANCE OF PREMISES ................................... 15
6.01 Use of Leased Property ............................. 15
6.02 Acceptance of Leased Property ...................... 16
6.03 Conditions of Use and Occupancy .................... 16
6.04 Financial Statements and Other Information ......... 16
ARTICLE VII
REPAIRS, COMPLIANCE WITH LAWS, AND MECHANICS' LIENS .............. 17
7.01 Maintenance ........................................ 17
7.02 Compliance with Laws ............................... 17
7.03 Required Alterations ............................... 17
7.04 Mechanics' Liens ................................... 18
7.05 Replacements of Fixtures ........................... 18
ARTICLE VIII
ALTERATIONS AND SIGNS; TENANT'S PROPERTY;
CAPITAL ADDITIONS TO THE LEASED PROPERTY ......................... 19
8.01 Tenant's Right to Construct ........................ 19
8.02 Scope of Right ..................................... 19
8.03 Cooperation of Landlord ............................ 20
8.04 Commencement of Construction ....................... 20
8.05 Rights in Tenant Improvements ...................... 21
8.06 Personal Property .................................. 21
8.07 Requirements for Personal Property ................. 21
8.08 Signs .............................................. 23
8.09 Financings of Capital Additions to a Leased Property 23
ii
<PAGE> 4
ARTICLE IX
DEFAULTS AND REMEDIES ............................................ 25
9.01 Events of Default .................................. 25
9.02 Remedies ........................................... 27
9.03 Right of SetOff .................................... 29
9.04 Performance of Tenant's Covenants .................. 29
9.05 Interest on Past Due Payments ...................... 29
9.06 Litigation; Attorneys' Fees ........................ 29
9.07 Remedies Cumulative ................................ 30
9.08 Escrows and Application of Payments ................ 30
9.09 Power of Attorney .................................. 30
ARTICLE X
DAMAGE AND DESTRUCTION ........................................... 31
10.01 General ............................................ 31
10.02 Landlord's Inspection .............................. 32
10.03 Landlord's Costs ................................... 32
10.04 Rent Abatement ..................................... 32
10.05 Substantial Damage During Lease Term ............... 32
10.06 Damage Near End of Term ............................ 33
ARTICLE XI
CONDEMNATION ..................................................... 33
11.01 Definition ......................................... 33
11.02 Apportionment of Compensation ...................... 33
11.03 Effect on Lease Obligations ........................ 34
11.04 Condemnation Caused by Default of Tenant ........... 35
11.05 Restoration of Premises ............................ 35
11.06 Landlord's Inspection .............................. 36
ARTICLE XII
TENANT'S RIGHT OF FIRST REFUSAL .................................. 36
12.01 Rights of First Refusal ............................ 36
12.02 Restriction on Exercise of Purchase Refusal Right .. 37
ARTICLE XIII
ASSIGNMENT AND SUBLETTING; ATTORNMENT ............................ 37
13.01 Prohibition Against Subletting and Assignment ...... 37
iii
<PAGE> 5
13.02 Changes of Control ................................. 38
13.03 Operating/Service Agreements ....................... 38
13.04 Permitted Subleases ................................ 39
13.05 Assignment ......................................... 39
13.06 REIT Limitations ................................... 40
13.07 Attornment ......................................... 40
ARTICLE XIV
ARBITRATION ...................................................... 40
14.01 Controversies ...................................... 40
14.02 Appointment of Arbitrators ......................... 41
14.03 Arbitration Procedure .............................. 41
14.04 Expenses ........................................... 41
14.05 Enforcement of the Arbitration Award ............... 41
ARTICLE XV
QUIET ENJOYMENT, SUBORDINATION,
ATTORNMENT, ESTOPPEL CERTIFICATES ................................ 42
15.01 Quiet Enjoyment .................................... 42
15.02 Landlord Mortgages; Subordination .................. 42
15.03 Attornment; NonDisturbance ......................... 42
15.04 Estoppel Certificates .............................. 43
ARTICLE XVI
MISCELLANEOUS .................................................... 44
16.01 Notices ............................................ 44
16.02 Advertisement of Leased Property ................... 44
16.03 Landlord's Access .................................. 44
16.04 Entire Agreement ................................... 45
16.05 Severability ....................................... 45
16.06 Captions and Headings .............................. 45
16.07 Governing Law ...................................... 45
16.08 Memorandum of Lease ................................ 45
16.09 Waiver ............................................. 45
16.10 Binding Effect ..................................... 45
16.11 Authority .......................................... 45
16.12 Transfer of Permits, Etc ........................... 46
16.13 Modification ....................................... 46
16.14 Incorporation by Reference ......................... 46
16.15 No Merger .......................................... 46
iv
<PAGE> 6
16.16 Laches ............................................. 46
16.17 Waiver of Jury Trial ............................... 47
16.18 Permitted Contests ................................. 47
16.19 Construction of Lease .............................. 47
16.20 Counterparts ....................................... 48
16.21 Relationship of Landlord and Tenant ................ 48
16.22 Landlord's Status as a REIT ........................ 48
16.23 Sale of Real Estate Assets ......................... 48
16.24 Arbitration ........................................ 48
16.25 Liability of General Partner of Landlord ........... 49
16.26 Warranties ......................................... 49
v
<PAGE> 7
MASTER AGREEMENT TO LEASE
This Master Agreement to Lease ("Agreement") dated as of the ______ day
of _______________________, 1998 by and between CPT OPERATING PARTNERSHIP L.P.,
a Delaware limited partnership ("Landlord") and WACKENHUT CORRECTIONS
CORPORATION, a Florida corporation ("Tenant").
RECITALS
A. Tenant has concurrently conveyed to Landlord various properties upon
which Tenant engages in the business of the development and management of
correctional and detention facilities, which properties are listed on Schedule A
attached hereto (the "Real Estate Conveyance"), and Landlord and Tenant desire
to provide for the lease by Landlord back to the Tenant of such properties; and
B. Landlord may from time to time lease additional properties that
Landlord may acquire to Tenant; and
C. Landlord and Tenant desire that each of the properties listed on
Schedule A and each additional property that Landlord may lease to Tenant shall
be the subject of a separate and individual lease agreement describing said
property, the rent and various other terms of said lease (each such lease
agreement referred to individually as a "Lease,"and the property that is the
subject of an individual Lease being referred to as "Leased Property"); and
D. Landlord and Tenant desire to set forth in this Agreement certain
terms and conditions applicable to all Leases of all Leased Properties, except
as any individual Lease with respect to a particular Leased Property may
otherwise provide;
NOW, THEREFORE, in consideration of the premises and of their respective
agreements and undertakings herein and in each Lease, Landlord and Tenant agree
as follows:
ARTICLE I
SEPARATE LEASE AGREEMENTS; PREMISES AND TERM
1.01 SEPARATE LEASE AGREEMENTS. Landlord and Tenant are concurrently
entering into a separate Lease for each of the Leased Properties referred to in
Schedule A hereto, and may in the future enter into one or more additional
separate Leases for one or more additional Leased Properties. Except as
specifically set forth in a separate Lease, or any amendment, supplement,
schedule or exhibit thereto, all of the provisions of this Agreement shall be
deemed to be
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incorporated into and made a part of each such separate Lease made between the
Landlord as landlord (or Lessor) and the Tenant as tenant (or Lessee) during the
term of such separate Lease.
1.02 LEASED PROPERTY. Except as set forth in an individual Lease
(including any schedule or exhibit thereto), the property that is the subject of
each Lease and that shall be considered as leased by the Landlord to the Tenant
thereunder shall consist of:
(a) The land described in the Lease, together with all rights,
titles, appurtenant interests, covenants, licenses, privileges and benefits
thereto belonging, and any easements, rights-of-way, rights of ingress or egress
or other interests in, on, or to any land, highway, street, road or avenue, open
or proposed, in, on, across, in front of, abutting or adjoining such real
property including, without limitation, any strips and gores adjacent to or
lying between such real property and any adjacent real property (the "Land");
(b) All buildings, improvements, structures and Fixtures now located
or to be located or to be constructed on the Land, including, without
limitation, landscaping, parking lots and structures, roads, drainage and all
above ground and underground utility structures, and other so-called
"infrastructure" improvements (the "Improvements");
(c) All equipment, machinery, fixtures, and other items of real
and/or personal property, including all components thereof, located in, on or
used in connection with, and permanently affixed to or incorporated into, the
Improvements, including, without limitation, all furnaces, boilers, heaters,
electrical equipment, electronic security equipment, heating, plumbing,
lighting, ventilating, refrigerating, incineration, air and water pollution
control, waste disposal, air-cooling and air-conditioning systems and apparatus,
sprinkler systems and fire and theft protection equipment, and similar systems,
all of which, to the greatest extent permitted by law, are hereby deemed to
constitute real estate, together with all replacements, modifications,
alterations and additions thereto (collectively the "Fixtures");
(d) All furniture, equipment, inventory and other personal property
identified on Schedule B attached hereto or in an individual Lease and
incorporated herein or therein by reference (collectively, the "Personal
Property"). For purposes hereof, Personal Property shall not include certain
proprietary property of Tenant as set forth on Schedule C.
The Land, Improvements, Fixtures and Personal Property are hereinafter referred
to as the "Leased Property."
SUBJECT, HOWEVER, to the easements, liens, encumbrances, restrictions,
agreements, and other title matters listed or specifically referred to in any
individual Lease ("Permitted Exceptions").
1.03 TERM. The term of each Lease shall be as set forth in the individual
Lease for a particular Leased Property (the "Term").
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1.04 HOLDING OVER. Should Tenant, without the express consent of
Landlord, continue to hold and occupy the Leased Property after the expiration
of the Term, such holding over beyond the Term and the acceptance or collection
of Rent by the Landlord shall operate and be construed as creating a tenancy
from month-to-month and not for any other term whatsoever. During any such
holdover period, Tenant shall pay to Landlord for each month (or portion
thereof) Tenant remains in the Leased Property one hundred fifty percent (150%)
of the Base Rent in effect on the expiration date. Said month-to-month tenancy
may be terminated by Landlord by giving Tenant thirty (30) days written notice,
and at any time thereafter Landlord may re-enter and take possession of the
Leased Property.
1.05 SURRENDER. Subject to Landlord's option to purchase Tenant's
personal property in accordance with Section 8.06 and except as a result of (i)
Tenant Improvements and Capital Additions (as such terms are defined in Section
8.01 hereof); (ii) normal and reasonable wear and tear (subject to the
obligation of Tenant to maintain the Leased Property in good order and repair
during the Term); and (iii) casualty, taking or other damage and destruction not
required to be repaired by Tenant, Tenant shall surrender and deliver up the
Leased Property, including all Personal Property and replacements thereof
required to be provided by Tenant pursuant to the terms of Sections 8.06 and
8.07 hereof, at the expiration or termination of the Term broom clean, free of
all Tenant's personal property (but not the Personal Property), and in good
order and condition.
1.06 AFFILIATES AS TENANT. Subject to the Landlord's reasonable right to
approve the terms of any subleases in accordance with the provisions of Article
XIII and the receipt by Landlord of such certifications and opinions of counsel
as Landlord may reasonably require, any Affiliate of Wackenhut Corrections
Corporation ("Wackenhut Corrections") may become a party to this Lease as a
Tenant (each as "alternate Tenant") with respect to an individual Leased
Property, and shall be liable (jointly and severally with Wackenhut Corrections)
for all obligations of a Tenant. The foregoing notwithstanding, (a) Wackenhut
Corrections shall remain fully liable for all obligations as Tenant with respect
to each Leased Property, and (b) Wackenhut Corrections shall have the right to
give any notice, consent or waiver, or to exercise any option permitted under
any Lease and to agree to any amendment or modification with respect to this
Lease or any individual Lease with respect to a Leased Property, as and on
behalf of the Lessee with respect to each such Leased Property (and each
alternate Tenant hereby grants to Wackenhut Corrections an irrevocable power of
attorney, coupled with an interest, to take any such actions) and any other
party to this Lease or to any related and associated agreements shall be fully
protected in relying on any such actions taken by Wackenhut Corrections or (with
respect to the applicable Leased Property) by any alternate Tenant. For purposes
of this Section, "Affiliate" shall mean any Person directly or indirectly
controlling, controlled by, or under common control with Wackenhut Corrections.
A "Person" as used herein shall mean and include natural persons, corporations,
limited partnerships, general partnerships, joint stock companies, trusts,
banks, trust companies, land trusts, business trusts or other organizations,
whether or not legal entities, and governments and agencies and political
subdivisions thereof.
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ARTICLE II
RENT
2.01 BASE RENT. Unless otherwise provided in an individual Lease, Tenant
shall pay Landlord annual base rent for each Leased Property that is the subject
of a Lease without notice, demand, set-off or counterclaim in advance, in lawful
money of the United States of America in the amount specified therein (the "Base
Rent") for the Term in consecutive monthly installments payable in advance on
the Commencement Date of each Lease and thereafter on the first day of each
month during the Term, in accordance with the Base Rent Schedule set forth in or
attached to each individual Lease.
2.02 ADDITIONAL RENT. Beginning on the first day of the first month of
each Lease Year following the first Lease Year, the Tenant shall pay Landlord an
amount (the "Additional Rent") equal to a percentage of the prior Lease Year's
Total Rent (for purposes hereof, "Total Rent" is Base Rent plus the Additional
Rent for the prior Lease Year) determined as follows:
(a) for the second and third Lease Year of each Lease, Tenant shall
pay as Additional Rent an amount equal to the greater of: (i) the product of the
prior Lease Year's Total Rent multiplied by three percent (3%) or (ii) the
product of the prior Lease Year's Total Rent multiplied by the percentage
increase in the Cost of Living Increase (as defined below) from the first day of
the first month of the prior Lease Year to the first day of the first month of
the Lease Year in question, subject to a maximum annual adjustment to Additional
Rent for any Lease Year of four percent (4%) of the prior Lease Year's Total
Rent.
(b) for the fourth Lease Year and each Lease Year thereafter, Tenant
shall pay as Additional Rent an amount equal to the product of the prior Lease
Year's Total Rent multiplied by the percentage increase in the Cost of Living
Increase (as defined below) from the first day of the first month of the prior
Lease Year to the first day of the first month of the Lease Year in question,
subject to a maximum annual adjustment to Additional Rent for any Lease Year of
four percent (4%) of the prior Lease Year's Total Rent.
(c) the term "Lease Year" for purposes hereof means for each Lease
the twelve (12) month period during the Term commencing on the Commencement Date
or, if the Commencement Date is not the first day of a calendar month,
commencing on the first day of the first calendar month following the
Commencement Date, and each successive twelve month period thereafter during the
Term.
(d) The term "Consumer Price Index" for the purposes hereof shall
mean the Consumer Price Index for All Urban Consumers (1982-84 = 100) U.S. City
Average, All Items, as published by the Bureau of Labor Statistics of the United
States Department of Labor (the "Index"). If the Index is changed so that base
years of other than 1982-84 are used, the Index used herein shall be converted
in accordance with the conversion factor published by the Bureau of Labor
Statistics
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<PAGE> 11
of the United States Department of Labor. If the Index is discontinued or
otherwise revised during the Term, such other government index or computation by
which Landlord and Tenant agree that the Index has been replaced, shall be used
by Landlord in order to obtain substantially the same result as would be
obtained if the Index had not been discontinued or revised; provided, however,
that if Landlord and Tenant cannot, in good faith, agree upon such replacement
index, Landlord shall, in its reasonable discretion, select the replacement
index.
(e) In no event shall Total Rent for any Lease Year of the Term, as
determined pursuant to this Section 2.02, be less than the amount of Total Rent
paid by Tenant for the immediately prior Lease Year.
2.03 OTHER ADDITIONAL RENT. In addition to Base Rent and Additional Rent,
Tenant shall pay all other amounts, liabilities, obligations and Impositions (as
hereinafter defined ) which Tenant assumes or agrees to pay under this Agreement
or any Lease and any fine, penalty, interest, charge and cost which may be added
for nonpayment or late payment of such items (collectively the "Other Additional
Rent").
2.04 PLACE(S) OF PAYMENT OF RENT; DIRECT PAYMENT OF OTHER ADDITIONAL
RENT. The Base Rent, Additional Rent and Other Additional Rent are hereinafter
referred to as "Rent."Landlord shall have all legal, equitable and contractual
rights, powers and remedies provided either in this Agreement, in any Lease or
by statute or otherwise in the case of nonpayment of the Rent. Tenant shall make
all payments of Base Rent and Additional Rent at Landlord's principal place of
business or as Landlord may otherwise from time to time direct in writing, and
all payments of Other Additional Rent directly to the person or persons to whom
such amount is owing at the time and times when such payments are due, and shall
give to Landlord such evidence of such direct payments as Landlord shall
reasonably request.
2.05 NET LEASE. Each Lease shall be deemed and construed to be an
"absolute net lease" or "triple net lease,"and Tenant shall pay all Rent,
Impositions, and other charges and expenses in connection with each Leased
Property throughout the Term, without abatement, deduction or set-off.
2.06 NO TERMINATION, ABATEMENT, ETC. Except as otherwise specifically
provided in this Agreement or a particular Lease, Tenant shall remain bound by
this Agreement or such Lease in accordance with its terms. Except as otherwise
specifically provided in this Agreement or a particular Lease, Tenant shall not,
without the prior written consent of Landlord, modify, surrender or terminate
the Agreement or such Lease, nor seek nor be entitled to any abatement,
deduction, deferment or reduction of Rent, or set-off against the Rent. Except
as specifically provided in this Agreement or a particular Lease, the
obligations of Landlord and Tenant shall not be affected by reason of (i) the
lawful or unlawful prohibition of, or restriction upon, Tenant's use of the
Leased Property, or any part thereof, the interference with such use by any
person, corporation, partnership or other entity, or by reason of eviction by
paramount title; (ii) any claim which Tenant has or might have against Landlord
or by reason of any default or breach of any warranty by Landlord under this
Agreement or a particular Lease or any other agreement between Landlord and
Tenant, or to which
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Landlord and Tenant are parties; (iii) any bankruptcy, insolvency,
reorganization, composition, readjustment, liquidation, dissolution, winding up
or other proceeding affecting Landlord or any assignee or transferee of
Landlord; or (iv) any other cause, whether similar or dissimilar to any of the
foregoing, other than a discharge of Tenant from any such obligations as a
matter of law. Except as otherwise specifically provided in this Agreement or a
particular Lease, and to the maximum extent permitted by law, Tenant hereby
specifically waives all rights, including but not limited to any rights under
any statute relating to rights of tenants in any state in which any Leased
Property is located, arising from any occurrence whatsoever, which may now or
hereafter be conferred upon it by law (a) to modify, surrender or terminate any
Lease or quit or surrender the Leased Property or any portion thereof; or (b)
entitling Tenant to any abatement, reduction, suspension or deferment of the
Rent or other sums payable by Tenant hereunder. The obligations of Landlord and
Tenant hereunder shall be separate agreements and the Rent and all other sums
shall continue to be payable in all events unless the obligations to pay the
same shall be terminated pursuant to the express provisions of this Agreement or
a particular Lease or by termination of this Agreement or a particular Lease
other than by reason of an Event of Default.
ARTICLE III
IMPOSITIONS AND UTILITIES
3.01 PAYMENT OF IMPOSITIONS. Subject to the adjustments set forth herein,
Tenant shall pay, as Other Additional Rent, all Impositions (as hereinafter
defined) that may be levied or become a lien on the Leased Property or any part
thereof at any time (whether prior to or during the Term), without regard to
prior ownership of said Leased Property, before the same becomes delinquent.
Tenant shall furnish to Landlord on an annual basis copies of official receipts
or other satisfactory proof evidencing such payments. Tenant's obligation to pay
such Impositions shall be deemed absolutely fixed upon the date such Impositions
become a lien upon the Leased Property or any part thereof. Tenant, at its
expense, shall prepare and file all tax returns and reports in respect of any
Imposition as may be required by governmental authorities, provided, Landlord
shall be responsible for the preparation and filing of any such tax returns or
reports in respect of any real or personal property owned by Landlord. Tenant
shall be entitled to any refund due from any taxing authority if no Event of
Default (as hereinafter defined) shall have occurred hereunder and be
continuing. Landlord shall be entitled to any refund from any taxing authority
if an Event of Default has occurred and is continuing. Any refunds retained by
Landlord due to an Event of Default shall be applied as provided in Section
9.08. Landlord and Tenant shall, upon request of the other, provide such data as
is maintained by the party to whom the request is made with respect to the
Leased Property as may be necessary to prepare any required returns and reports.
In the event governmental authorities classify any property covered by this
Lease as personal property, Landlord and Tenant shall file all personal property
tax returns in such jurisdictions where it may legally so file with respect to
their respective owned personal property. Landlord, to the extent it possesses
the same, and Tenant, to the extent it possess the same, will provide the other
party, upon request, with cost and depreciation records necessary for filing
returns for any property so classified as personal
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property. Where Landlord is legally required to file personal property tax
returns, Tenant will be provided with copies of assessment notices indicating a
value in excess of the reported value in sufficient time for Tenant to file a
protest. Tenant may, upon notice to Landlord, at Tenant's option and at Tenant's
sole cost and expense, protest, appeal, or institute such other proceedings as
Tenant may deem appropriate to effect a reduction of real estate or personal
property assessments and Landlord, at Tenant's expense as aforesaid, shall fully
cooperate with Tenant in such protest, appeal, or other action. Tenant shall
provide Landlord copies of all materials filed or presented in connection with
any such proceeding. Tenant shall promptly reimburse Landlord for all personal
property taxes paid by Landlord upon receipt of billings accompanied by copies
of a bill therefor and payments thereof which identify the personal property
with respect to which such payments are made. Impositions imposed in respect to
the tax-fiscal period during which the Term commences and terminates shall be
adjusted and prorated between Landlord and Tenant on a per diem basis, with
Tenant being obligated to pay its pro rata share from and including the
Commencement Date to and including the expiration or termination date of the
Term, whether or not such Imposition is imposed before or after such
commencement or termination, and Tenant's obligation to pay its prorated share
thereof shall survive such termination.
Tenant shall also pay to Landlord a sum equal to the amount which
Landlord may be caused to pay of any privilege tax, sales tax, gross receipts
tax, rent tax, occupancy tax or like tax (excluding any income tax payable with
respect to Landlord's business operations), hereinafter levied, assessed, or
imposed by any federal, state, county or municipal governmental authority, or
any subdivision thereof, upon or measured by rent or other consideration
required to be paid by Tenant under this Agreement.
3.02 DEFINITION OF IMPOSITIONS. "Impositions" means, collectively, (i)
taxes (including without limitation, all real estate and personal property ad
valorem (whether assessed as part of the real estate or separately assessed as
unsecured personal property, sales and use, business or occupation, single
business, gross receipts, transaction, privilege, rent or similar taxes, but not
including income or franchise or excise taxes payable with respect to Landlord's
receipt of Rent); (ii) assessments (including without limitation, all
assessments for public improvements or benefits, whether or not commenced or
completed prior to the date hereof and whether or not to be completed within the
Term); (iii) ground rents, water, sewer or other rents and charges, excises, tax
levies, and fees (including without limitation, license, permit, inspection,
authorization and similar fees); (iv) to the extent they may become a lien on
the Leased Property all taxes imposed on Tenant's operations of the Leased
Property including without limitation, employee withholding taxes, income taxes
and intangible taxes; (v) any taxes arising out of or incurred as a result of
any sale, transfer, assignment or other disposition by Tenant of its interest in
the Leased Property or this Agreement, whether or not permitted under this
Agreement; and (vi) all other governmental charges, in each case whether general
or special, ordinary or extraordinary, or foreseen or unforseen, of every
character in respect of the Leased Property or any part thereof and/or the Rent
(including all interest and penalties thereon due to any failure in payment by
Tenant), which at any time prior to, during or in respect of the Term hereof may
be assessed or imposed on or in respect of or be a lien upon (a) Landlord or
Landlord's interest in the Leased Property or any part thereof; (b) the Leased
Property
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<PAGE> 14
or any part thereof or any rent therefrom or any estate, right, title or
interest therein; or (c) any occupancy, operation, use or possession of, or
sales from, or activity conducted on, or in connection with the Leased Property
or the leasing or use of the Leased Property or any part thereof. Tenant shall
not, however, be required to pay (i) any tax based on net income (whether
denominated as a franchise or capital stock or other tax) imposed on Landlord;
or (ii) any income, franchise, transfer, documentary stamp, intangible, gross
receipts, inheritance, devolution, gift, estate, payroll, stamp act, or
reassessment or supplemental assessments of ad valorem real or personal property
taxes due to the sale, transfer, assignment, or other disposition of the title,
estate or interest of Landlord in the Leased Property or this Agreement;
provided, however, that if any tax, assessment, tax levy or charge which Tenant
is obligated to pay pursuant to the first sentence of this definition and which
is in effect at any time during the Term hereof is totally or partially
repealed, and a tax, assessment, tax levy or charge set forth in clause (i) or
(ii) immediately above is levied, assessed or imposed expressly in lieu thereof
Tenant shall then pay such tax, levy, or charge set forth in said clause (i) or
(ii).
3.03 UTILITIES. Tenant shall contract for, in its own name, and will pay,
as Other Additional Rent all taxes, assessments, charges/deposits, and bills for
utilities, including without limitation charges for water, gas, oil, sanitary
and storm sewer, electricity, telephone service, trash collection, and all other
utilities which may be charged against the occupant of the Improvements during
the Term. Tenant shall at all times maintain that amount of heat necessary to
ensure against the freezing of water lines. Tenant hereby agrees to indemnify
and hold Landlord harmless from and against any liability or damages to the
utility systems and the Leased Property that may result from Tenant's failure to
maintain sufficient heat in the Improvements.
3.04 ESCROW OF IMPOSITIONS. In the event Tenant persistently fails to
timely pay Impositions with respect to any Leased Facility, then, upon thirty
(30) days written notice from Landlord to Tenant, Tenant shall thereafter
deposit with Landlord on the first day of each month during the remaining Term
hereof and any extended Term, a sum equal to one-twelfth (1/12th) of the
Impositions assessed against such Leased Property which sums shall be used by
Landlord toward payment of such Impositions. If, at the end of any applicable
tax year, any such funds held by Landlord are insufficient to make full payment
of taxes or other Impositions for which such funds are held, Tenant, on demand,
shall pay to Landlord any additional funds necessary to pay and discharge the
obligations of Tenant pursuant to the provisions of this section. If, however,
at the end of any applicable tax year, such funds held by Landlord are in excess
of the total payment required to satisfy taxes or other Impositions for which
such funds are held, Landlord shall apply such excess amounts to Tenant's tax
and Imposition escrow fund for the next tax year. If any such excess exists
following the expiration or earlier termination of any Lease, and subject to
Section 9.08 below, Landlord shall promptly refund such excess amounts to
Tenant. The receipt by Landlord of the payment of such Impositions by and from
Tenant shall only be as an accommodation to Tenant and the taxing authorities,
and shall not be construed as rent or income to Landlord, Landlord serving, if
at all, only as a conduit for delivery purposes. All such deposits by Tenant
shall be held in an interest-bearing account with one or more national banks
having total assets of not less than $1,000,000,000, with all interest thereon
accruing in favor of Tenant. In lieu of making escrow
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deposits as aforesaid, Tenant may elect to provide Landlord with a letter of
credit, or a payment bond, in the face amount of one year's Impositions on the
subject Leased Property, issued by a national bank or reputable bonding or
surety company, in all respects reasonably acceptable to Landlord. Said letter
of credit or payment bond shall be drawable or callable, as the case may be,
upon Tenant's failure to timely pay any such Impositions, for the sole purpose
of providing the funds necessary to pay such Impositions, and shall otherwise be
in form and substance reasonably satisfactory to Landlord.
For purposes hereof, "persistently fails to timely pay Impositions" shall
mean failure to timely pay any Imposition with respect to any Leased Premises in
any two (2) Lease Years in any five (5) consecutive Lease Year Period,
notwithstanding Tenant's subsequent payment of such Impositions.
3.05 DISCONTINUANCE OF UTILITIES. Landlord will not be liable for damages
to person or property or for injury to, or interruption of, business for any
discontinuance of utilities nor will such discontinuance in any way be construed
as an eviction of Tenant or cause an abatement of Rent or operate to release
Tenant from any of Tenant's obligations under this Lease.
ARTICLE IV
INSURANCE
4.01 PROPERTY INSURANCE. Tenant shall, at Tenant's expense, keep the
Improvements, Fixtures, and other components of the Leased Property insured
against the following risks:
(a) Loss or damage by fire, vandalism and malicious mischief,
earthquake, sprinkler leakage and all other physical loss perils commonly
covered by "All Risk" insurance in an amount not less than one hundred percent
(100%) of the then full replacement cost thereof (as hereinafter defined). Such
policy shall include an agreed amount endorsement if available at a reasonable
cost. Such policy shall also include endorsements for contingent liability for
operation of building and zoning laws, demolition costs, and increased cost of
construction.
(b) Loss or damage by explosion of steam boilers, pressure vessels,
or similar apparatus, now or hereafter installed on the Leased Property, in
commercially reasonable amounts acceptable to Landlord.
(c) Loss of rent under a rental value or business interruption
insurance policy covering risk of loss during the first six (6) months of
reconstruction necessitated by the occurrence of any hazards described in
Sections 4.01(a) or 4.01(b), above, and which causes an abatement of Rent as
provided in Article X hereof, in an amount sufficient to prevent Landlord or
Tenant from becoming a co-insurer, containing endorsements for extended period
of indemnity and premium
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adjustment, and written with an agreed amount clause, if the insurance provided
for in this clause (c) is available.
(d) If the Land is located in whole or in part within a designated
flood plain area, loss or damage caused by flood in commercially reasonable
amounts acceptable to Landlord.
(e) Loss or damage commonly covered by blanket crime insurance
including employee dishonesty, loss of money orders or paper currency,
depositor's forgery, and loss of property accepted by Tenant for safekeeping, in
commercially reasonable amounts acceptable to Landlord.
(f) In connection with any repairs or rebuilding by Tenant under
Article X hereof, Tenant shall maintain (or cause its contractor to maintain)
appropriate builder's risk insurance covering any loss or casualty to the
subject Improvements during the course of such repairs or rebuilding.
4.02 LIABILITY INSURANCE. Tenant shall, at Tenant's expense, maintain
liability insurance against the following:
(a) Claims for personal injury or property damage commonly covered
by comprehensive general liability insurance with endorsements for blanket,
contractual, personal injury, owner's protective liability, real property, fire
damage, legal liability, broad form property damage, and extended bodily injury,
with commercially reasonable amounts for bodily injury and property damage
acceptable to Landlord, but with a combined single limit of not less than Five
Million Dollars ($5,000,000.00) per occurrence and Ten Million Dollars
($10,000,000.00) in the aggregate. At Landlord's request, such $5,000,000.00 and
$10,000,000.00 minimum requirements shall be increased by up to four percent
(4%) per year.
(b) Claims commonly covered by worker's compensation insurance for
all persons employed by Tenant on the Leased Property. Such worker's
compensation insurance shall be in accordance with the requirements of all
applicable local, state, and federal law.
4.03 INSURANCE REQUIREMENTS. The following provisions shall apply to all
insurance coverages required hereunder:
(a) The carriers of all policies shall have a Best's Rating of
"A-"or better and a Best's Financial Category of XII or larger and shall be
authorized to do insurance business in the state in which the Leased Property is
located.
(b) Tenant shall be the "named insured" and Landlord and any
mortgagee of Landlord shall be an "additional named insured" on each liability
insurance policy required under Section 4.01, except that if such coverage is
under a blanket policy, Landlord and its mortgagee shall each be designated an
"additional named insured" only with respect to the particular Leased
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Property covered under any such policy or policies and the operations and
services conducted thereon. Landlord and any mortgagee of Landlord shall be
designated "loss payee" or "mortgagee loss payee" on each property insurance
policy required under Section 4.02 except that if such coverage is under a
blanket insurance policy, each shall be designated a "loss payee" or "mortgagee
loss payee" only with respect to the particular Leased Property covered
thereunder.
(c) Tenant shall deliver to Landlord certificates or policies
showing the required coverages and endorsements. The policies of insurance shall
provide that the policy may not be canceled or not renewed, and no material
change or reduction in coverage may be made, without at least thirty (30) days'
prior written notice to Landlord.
(d) The policies shall contain a severability of interest and/or
cross-liability endorsement, providing that the acts or omissions of Tenant will
not invalidate the Landlord's coverage, and providing that Landlord shall not be
responsible for payment of premiums.
(e) All loss adjustment shall require the written consent of
Landlord and Tenant, as their interests may appear.
(f) At least ten (10) days prior to the expiration of each policy,
Tenant shall deliver to Landlord a certificate showing renewal of such policy
and payment of the annual premium therefor.
Landlord shall have the right to review the insurance coverages required
hereunder with Tenant from time to time with respect to such insurance coverages
required hereunder from time to time, to obtain the input of third party
professional insurance advisors (at Landlord's expense) with respect to such
insurance coverages, and to consult with Tenant in Tenant's annual review and
renewal of such insurance coverages. All insurance coverages hereunder shall be
in such form, substance and amounts as are customary or standard in Tenant's
industry.
4.04 REPLACEMENT COST. The term "full replacement cost" means the actual
replacement cost thereof from time to time including increased cost of
construction, with no reductions or deductions. If, as reasonably determined by
Landlord after consultation with Landlord's third party professional insurance
advisors, there has been an increase in the replacement cost of the
Improvements, then, upon request of Landlord, Tenant shall, not later than
thirty (30) days after the anniversary of each applicable insurance policy,
adjust the amount of the replacement cost endorsement to reflect any such
increase. If Tenant makes any Permitted Alterations (as hereinafter defined) to
the Leased Property, Landlord may have such full replacement cost redetermined
at any time after such Permitted Alterations are made, regardless of when the
full replacement cost was last determined.
4.05 BLANKET POLICY. Tenant may carry the insurance required by this
Article under a blanket policy of insurance, provided that the coverage afforded
Tenant will not be reduced or
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diminished or otherwise be different from that which would exist under a
separate policy meeting all of the requirements of this Agreement.
4.06 NO SEPARATE INSURANCE. Tenant shall not take out separate insurance
concurrent in form or contributing in the event of loss with that required in
this Article, or increase the amounts of any then existing insurance pertaining
to a particular Leased Property by securing an additional policy or additional
policies with respect to such Leased Property, unless all parties having an
insurable interest in the subject matter of the insurance, including Landlord
and any mortgagees, are included therein as additional named insureds or loss
payees, the loss is payable under said insurance in the same manner as losses
are payable under this Agreement, and such additional insurance is not
prohibited by the existing policies of insurance. Tenant shall immediately
notify Landlord of the taking out of such separate insurance or the increasing
of any of the amounts of the existing insurance by securing an additional policy
or additional policies. The term "mortgages" as used in this Agreement includes
Deeds of Trust and the term "mortgagees" includes trustees and beneficiaries
under a Deed of Trust.
4.07 WAIVER OF SUBROGATION. Each party hereto hereby waives any and every
claim which arises or may arise in its favor and against the other party hereto
during the Term or any extension or renewal thereof, for any and all loss of, or
damage to, any of its property located within or upon, or constituting a part
of, the Leased Property, which loss or damage is covered by valid and
collectible insurance policies, to the extent that such loss or damage is
recoverable under such policies. Said mutual waiver shall be in addition to, and
not in limitation or derogation of, any other waiver or release contained in
this Lease with respect to any loss or damage to property of the parties hereto.
Inasmuch as the said waivers will preclude the assignment of any aforesaid claim
by way of subrogation (or otherwise) to an insurance company (or any other
person), each party hereto agrees immediately to give each insurance company
which has issued to it policies of insurance, written notice of the terms of
said mutual waivers, and to have such insurance policies properly endorsed, if
necessary, to prevent the invalidation of said insurance coverage by reason of
said waivers, so long as such endorsement is available at a reasonable cost.
4.08 MORTGAGES. The following provisions shall apply if Landlord now or
hereafter places a mortgage on the Leased Property or any part thereof: (i)
Tenant shall obtain a standard form of mortgage clause insuring the interest of
the mortgagee; (ii) Tenant shall deliver evidence of insurance to such
mortgagee; (iii) loss adjustment shall require the consent of the mortgagee; and
(iv) Tenant shall obtain such other coverages and provide such other information
and documents as may be reasonably required by the mortgagee.
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ARTICLE V
INDEMNITY; HAZARDOUS SUBSTANCES
5.01 TENANT'S INDEMNIFICATION. Subject to Section 4.07 and other than for
circumstances involving Landlord's gross negligence or intentional misconduct,
Tenant hereby agrees to indemnify and hold harmless Landlord, its agents, and
employees from and against any and all demands, claims, causes of action, fines,
penalties, damages (including consequential damages), losses, liabilities
(including strict liability), judgments, and expenses (including, without
limitation, attorneys' fees, court costs, and the costs set forth in Section
9.06) incurred in connection with or arising from: (i) the use, condition,
operation or occupancy of each Leased Property; (ii) any activity, work, or
thing done, or permitted or suffered by Tenant in or about the Leased Property;
(iii) any acts, omissions, or negligence of Tenant or any person claiming under
Tenant, or the contractors, agents, employees, invitees, or visitors of Tenant
or any such person; (iv) any claim of any person incarcerated, held or detained
in the Leased Premises, including claims alleging breach or violation of such
person's civil or legal rights; (v) any breach, violation, or nonperformance by
Tenant or any person claiming under Tenant or the employees, agents,
contractors, invitees, or visitors of Tenant or of any such person, of any term,
covenant, or provision of this Agreement or any Lease or any law, ordinance, or
governmental requirement of any kind; (vi) any injury or damage to the person,
property or business of Tenant, its employees, agents, contractors, invitees,
visitors, or any other person entering upon the Leased Property under the
express or implied invitation of Tenant; and (vii) and any accident, injury to
or death of persons or loss of damage to any item of property occurring at the
Leased Property. If any action or proceeding is brought against Landlord, its
employees, or agents by reason of any such claim, Tenant, upon notice from
Landlord, will defend the claim at Tenant's expense with counsel reasonably
satisfactory to Landlord. In the event Landlord reasonably determines that its
interests and the interests of Tenant in any such action or proceeding are not
substantially the same and that Tenant's counsel cannot adequately represent the
interests of Landlord therein, Landlord shall have the right to hire separate
counsel in any such action or proceeding and the reasonable costs thereof shall
be paid for by Tenant.
5.02 HAZARDOUS SUBSTANCES OR MATERIALS. If the Leased Property was owned
or operated by Tenant prior to the date Landlord acquired such Leased Property,
then Tenant warrants and represents to Landlord as of the date of this Agreement
the following: (a) no Hazardous Materials (as hereinafter defined) have been
installed, used, generated, manufactured, treated, handled, refined, produced,
processed, stored or disposed of, or otherwise present in, on or under the
Property by or to Tenant's knowledge; (b) no activity has been undertaken on the
Leased Property by Tenant or to Tenant's knowledge which would cause (i) the
Leased Property to become a hazardous waste treatment, storage or disposal
facility within the meaning of, or otherwise bring the Leased Property within
the ambit of any Hazardous Materials Law (as hereinafter defined), (ii) a
release or threatened release of Hazardous Materials from the Leased Property
within the meaning of, or otherwise bring the Leased Property within the ambit
of, any Hazardous Materials Law or (iii) the discharge of Hazardous Materials
into any watercourse, body of surface or subsurface water or wetland, or the
discharge into the atmosphere of any Hazardous Materials which would require a
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permit under any Hazardous Materials Law; (c) no activity has been undertaken
with respect to the Leased Property by Tenant or to Tenant's knowledge which
would cause a violation or support a claim under any Hazardous Materials Law;
(d) no investigation, administrative order, litigation or settlement with
respect to any Hazardous Materials is in existence with respect to the Leased
Property, nor, to Tenant's knowledge, is any of the foregoing threatened; (e) no
notice has been received by Tenant from any entity, governmental body or
individual claiming any violation of any Hazardous Materials Law, or requiring
compliance with any Hazardous Materials Law, or demanding payment or
contribution for environmental damage or injury to natural resources; (f) Tenant
has not obtained and, to Tenant's knowledge, is not required to obtain, and
Tenant has no knowledge of any reason Landlord will be required to obtain, any
permits, licenses, or similar authorizations to occupy, operate or use the
Improvements or any part of the Leased Property by reason of any Hazardous
Materials Law. Notwithstanding the representations made herein, such
representations are and shall be deemed to be limited by the matters detailed in
any Phase I Preliminary Site Assessment or other environmental report obtained
by or provided to Landlord prior to the date of this Agreement.
During the Term, Tenant shall not, either with or without negligence,
permit the release or other escape onto or from the Leased Property of any
Hazardous Substances, or allow the storage or use of such substances or
materials on the Leased Property in any manner not sanctioned by law and by the
standards prevailing in the industry for the storage and use of such substances
or materials. Subject to the provisions of Section 16.03, Landlord or any
representatives or agents of Landlord may inspect the Leased Property from time
to time to determine compliance by Tenant with the environmental representations
and covenants set forth in this Section 5.02, and Tenant will cooperate with
such inspections.
Without limitation, "Hazardous Substances" for the purpose of this
Section 5.02 shall include any substances regulated by any local, state or
federal law relating to environmental conditions and industrial hygiene,
including, without limitation, the Resource Conservation and Recovery Act of
1976 ("RCRA"), the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 ("CERCLA"), as amended by the Superfund Amendments and
Reauthorization Act of 1986 ("SARA"), the Hazardous Materials Transportation
Act, the Federal Water Pollution Control Act, the Clean Air Act, the Clean Water
Act, the Toxic Substances Control Act, the Safe Drinking Water Act, and all
similar federal, state and local environmental statutes, ordinances and the
regulations, orders, or decrees now or hereafter promulgated thereunder
(collectively, "Hazardous Materials Law"). Notwithstanding the foregoing, Tenant
anticipates using, storing and disposing of certain hazardous substances in
connection with operation of correctional or detention facilities which are not
in violation of the foregoing laws. Such substances include, but are not limited
to the following: medical wastes, diesel fuel, maintenance and janitorial
supplies, and waste from reprographic activities. Upon request by Landlord,
Tenant shall submit to Landlord annual reports regarding Tenant's use, storage,
and disposal of any of the foregoing materials, said reports to include
information regarding continued hazardous materials inspections, personal
interviews, and federal, state and local agency listings. In addition, Tenant
shall execute affidavits, representations and the like from time to time at
Landlord's request concerning Tenant's best
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knowledge and belief regarding the presence or absence of Hazardous Materials on
the Leased Property. Other than for circumstances involving Landlord's gross
negligence or intentional misconduct, Tenant shall indemnify and hold harmless
Landlord from and against all liabilities (including punitive damages), costs
and expenses (including reasonable attorneys' fees) imposed upon or asserted
against the Landlord or the Leased Property on account of any applicable
federal, state or local law, ordinance, regulation, order, permit, decree or
similar items relating to hazardous substances, human health or the environment
(collectively, "Environmental Laws") (irrespective of whether there has occurred
any violation of any Environmental Law ), in respect of the Leased Property,
including (a) liability for response costs and for costs of removal and remedial
action incurred by the United States Government, any state or local governmental
unit to any other person or entity, or damages from injury to or destruction or
loss of natural resources, including the reasonable costs of assessing such
injury, destruction or loss, incurred pursuant to any Environmental Law, (b)
liability for costs and expenses of abatement, investigation, removal,
remediation, correction or clean-up, fines, damages, response costs or penalties
which arise from the provisions of any Environmental Law, (c) liability for
personal injury or property damage arising under any statutory or common-law
tort theory, including damages assessed for the maintenance of a public or
private nuisance or for carrying on of a dangerous activity or (d) by reason of
a breach of an environmental representation or warranty given by Tenant to
Landlord.
5.03 LIMITATION OF LANDLORD'S LIABILITY. Landlord, its agents and
employees, will not be liable for any loss, injury, death, or damage (including
consequential damages) to persons, property, or Tenant's business occasioned by
theft, act of God, public enemy, injunction, riot, strike, insurrection, war,
court order, requisition, order of governmental body or authority, fire,
explosion, falling objects, steam, water, rain or snow, leak or flow of water
(including water from the elevator system), rain or snow from any Leased
Property or into any Leased Property or from the roof, street, subsurface or
from any other place, or by dampness or from the breakage, leakage, obstruction,
or other defects of the pipes, sprinklers, wires, appliances, plumbing, air
conditioning, or lighting fixtures of the Leased Property, or from construction,
repair, or alteration of the Leased Property or from any acts or omissions of
any other occupant or visitor of the Leased Property, or from the presence or
release of any hazardous substance or material on or from the Leased Property or
from any other cause beyond Landlord's control.
ARTICLE VI
USE AND ACCEPTANCE OF PREMISES
6.01 USE OF LEASED PROPERTY. Each Leased Property shall be used and
occupied exclusively as a correctional or detention facility together with uses
related or incidental to the operation of a correctional or detention facility
or required pursuant to any governmental operating agreement or sublease or any
other purpose for which the Leased Property is being used at the Commencement
Date of the Term, and for no other purpose without the prior written consent of
the Landlord. Tenant shall obtain and maintain all approvals, licenses, and
consents needed to use and
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operate each Leased Property for such purposes. Tenant shall promptly deliver to
Landlord complete copies of surveys, examinations, certification and licensure
inspections, compliance certificates, and other similar reports issued to Tenant
by any governmental agency for the use and occupancy of the Leased Property.
6.02 ACCEPTANCE OF LEASED PROPERTY. Except as otherwise specifically
provided in this Agreement or in any individual Lease, Tenant acknowledges that
(i) Tenant and its agents have had an opportunity to inspect the Leased
Property; (ii) Tenant has found the Leased Property fit for Tenant's use; (iii)
delivery of the Leased Property to Tenant is in an "as-is" condition; (iv)
Landlord is not obligated to make any improvements or repairs to the Leased
Property; and (v) the roof, walls, foundation, heating, ventilating, air
conditioning, telephone, sewer, electrical, mechanical, utility, plumbing, and
other portions of the Leased Property are in good working order. Tenant waives
any claim or action against Landlord with respect to the condition of the Leased
Property. LANDLORD MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, IN
RESPECT OF THE LEASED PROPERTY OR ANY PART THEREOF, EITHER AS TO ITS FITNESS FOR
USE, DESIGN OR CONDITION FOR ANY PARTICULAR USE OR PURPOSE OR OTHERWISE, AS TO
QUALITY OR THE MATERIAL OR WORKMANSHIP THEREIN, LATENT OR PATENT, IT BEING
AGREED THAT ALL SUCH RISKS ARE TO BE BORNE BY TENANT.
6.03 CONDITIONS OF USE AND OCCUPANCY. Tenant agrees that during the Term
it shall use and keep the Leased Property in a careful, safe and proper manner;
not injure, overload, deface, damage or otherwise commit any nuisance or suffer
any waste thereon; not use or occupy the Leased Property for any unlawful
purposes; not use or occupy the Leased Property or permit the same to be used or
occupied, for any purpose or business deemed extra hazardous on account of fire
or otherwise; keep the Leased Property in such repair and condition as may be
required by the local board of health, or other city, state or federal
authorities, free of all cost to Landlord; not permit any acts to be done which
will cause the cancellation, invalidation, or suspension of any insurance
policy; and permit Landlord and its agents to enter upon the Leased Property at
all reasonable times after notice to Tenant to examine the condition thereof.
6.04 FINANCIAL STATEMENTS AND OTHER INFORMATION. Within ten (10) days
following Tenant's filing of quarterly and annual reports with the Securities
and Exchange Commission, Tenant shall deliver to Landlord copies of such
reports. Tenant shall provide Landlord at the same time Tenant provides copies
of its quarterly and annual reports as aforesaid (or more often as may be
reasonably requested by Landlord in writing), the following additional financial
information for each calendar quarter hereafter, with respect to each Leased
Property: gross revenues, average occupancy rates and total cash flow (i.e.,
operating income plus depreciation and amortization plus Base Rent plus
Additional Rent hereunder). Tenant shall include, with the delivery of such
annual and quarterly reports, a certification of any officer of the Tenant as to
whether any Event of Default (as hereinafter defined) has occurred or is
continuing under a Lease or whether any event has occurred under a Lease which
would, with the lapse of time, giving of notice or both, constitute an Event of
Default. Tenant shall also deliver to Landlord such additional financial
information as
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Landlord may reasonably request, provided the same is of a type normally
maintained by Tenant or can be obtained without undue cost or burden on Tenant's
personnel and does not constitute information which Tenant reasonably determines
to be proprietary or confidential. Additionally, upon Landlord's request, Tenant
shall provide Landlord with copies of Tenant's annual capital expenditure
budgets for each Leased Property and any reports generated by Tenant regarding
maintenance and repairs of the Leased Property.
ARTICLE VII
REPAIRS, COMPLIANCE WITH LAWS, AND MECHANICS' LIENS
7.01 MAINTENANCE. Tenant shall maintain each Leased Property in good
order, repair and appearance, and repair each Leased Property, including without
limitation, all interior and exterior, structural and nonstructural repairs and
replacements to the roof, foundations, exterior walls, building systems, HVAC
systems, parking areas, sidewalks, water, sewer and gas connections, pipes, and
mains. Tenant shall pay as Other Additional Rent the full cost of maintenance,
repairs, and replacements. Tenant shall maintain all drives, sidewalks, parking
areas, and lawns on or about the Leased Property in a clean and orderly
condition, free of accumulations of dirt, rubbish, snow and ice. Tenant shall
permit Landlord or any representatives or agents of Landlord to inspect the
Leased Property as provided in Section 16.03 and shall implement all reasonable
suggestions of the Landlord as to the maintenance and replacement of the Leased
Property.
7.02 COMPLIANCE WITH LAWS. Tenant shall comply with all laws, ordinances,
orders, rules, regulations, and other governmental requirements relating to the
use, condition, or occupancy of each Leased Property, whether now or hereafter
enacted and in force including without limitation, (i) licensure requirements
for operation as a correctional or detention facility or any other use permitted
hereunder, (ii) requirements of any board of casualty insurance underwriters or
insurance service office for any other similar body having jurisdiction over the
Leased Property, and (iii) all zoning and building codes and Environmental Laws.
At Landlord's request, from time to time, Tenant shall deliver to Landlord
copies of certificates or permits evidencing compliance with such laws,
including without limitation, copies of the correctional or detention facility
licenses, certificates of occupancy and building permits. Tenant shall promptly
provide Landlord with copies of any notice from any governmental authority
alleging any non-compliance by Tenant or any Leased Property with any of the
foregoing requirements and such evidence as Landlord may reasonably require of
Tenant's remediation thereof. Tenant hereby agrees to defend, indemnify and hold
Landlord harmless from and against any loss, liability (including strict
liability), claim, damage (including consequential damages), cost and expense
(including attorneys' fees) resulting from any failure by Tenant to comply with
any laws, ordinances, rules, regulations, and other governmental requirements.
7.03 REQUIRED ALTERATIONS. Tenant shall, at Tenant's sole cost and
expense, make any additions, changes, improvements or alterations to each Leased
Property, including structural
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alterations, which may be required by any governmental authorities, including
those required to continue licensure requirements as a correctional or detention
facility, whether such changes are required by Tenant's use, changes in the law,
ordinances, or governmental regulations, defects existing as of the date of this
Lease, or any other cause whatsoever. Tenant shall provide prior written notice
to Landlord of any changes to each Leased Property pursuant to this Section 7.03
which involve changes to the structural integrity of such Leased Property or
materially affect the operational capabilities or rated capacity of the Leased
Property. All such additions, changes, improvements or alterations shall be
deemed to be a Tenant Improvement and shall comply with all laws requiring such
alterations and with the provisions of Section 8.01.
7.04 MECHANICS' LIENS. Tenant shall have no authority to permit or create
a lien against Landlord's interest in the Leased Property, and Tenant shall post
notices or file such documents as may be required to protect Landlord's interest
in the Leased Property against liens. Tenant hereby agrees to defend, indemnify,
and hold Landlord harmless from and against any mechanics' liens against the
Leased Property by reason of work, labor services or materials supplied or
claimed to have been supplied on or to the Leased Property. Tenant shall
immediately remove, bond-off, or otherwise obtain the release of any mechanics'
lien filed against the Leased Property. Tenant shall pay all expenses in
connection therewith, including without limitation, damages, interest, court
costs and reasonable attorneys' fees.
7.05 REPLACEMENTS OF FIXTURES. Tenant shall not remove Fixtures from any
Leased Property except to replace the Fixtures by other similar items of equal
quality and value. Items being replaced by Tenant may be removed and shall
become the property of Tenant and items replacing the same shall be and remain
the property of the Landlord. Tenant shall execute, upon written request from
Landlord, any and all documents necessary to evidence Landlord's ownership of
the Fixtures and replacements therefor. Tenant may finance replacements for the
Fixtures by equipment lease or by a security agreement and financing statement;
provided, however, that for any item of Fixtures or Personal Property having a
cost greater than or equal to Twenty Thousand Dollars ($20,000.00), Tenant may
not finance replacements by security agreement or equipment lease unless (i)
Landlord has consented to the terms and conditions of the equipment lease or
security agreement, including, without limitation, the amount to be financed and
the amortization schedule regarding the principal amount of any such financing;
(ii) the equipment lessor or lender has entered into a nondisturbance agreement
with the Landlord upon terms and conditions acceptable to Landlord, including
without limitation, the following: (a) Landlord shall have the right (but not
the obligation) to assume such security agreement or equipment lease upon the
occurrence of an Event of Default by Tenant under any Lease; (b) the equipment
lessor or lender shall notify Landlord of any default by Tenant under the
equipment lease or security agreement and give Landlord a reasonable opportunity
to cure such default; and (c) Landlord shall have the right to assign its rights
under the equipment lease, security agreement, or nondisturbance agreement; and
(iii) Tenant shall, within thirty (30) days after receipt of an invoice from
Landlord, reimburse Landlord for all costs and expenses incurred in reviewing
and approving the equipment lease, security agreement, and nondisturbance
agreement, including without limitation, reasonable attorneys' fees and costs.
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ARTICLE VIII
ALTERATIONS AND SIGNS; TENANT'S PROPERTY;
CAPITAL ADDITIONS TO THE LEASED PROPERTY
8.01 TENANT'S RIGHT TO CONSTRUCT. During the Term of this Agreement, so
long as no Event of Default shall have occurred and be continuing as to the
Leased Property that is the subject of such improvements, Tenant may make
Capital Additions (as defined herein), or other alterations, additions, changes
and/or improvements to any Leased Property as deemed necessary or useful to
operate the Leased Property as a correctional or detention facility or other
approved use (the "Primary Intended Use") (individually, a "Tenant
Improvement,"or collectively, "Tenant Improvements"). "Capital Additions" shall
mean the construction of one or more new buildings or one or more additional
structures annexed to any portion of any of the Improvements on a particular
Leased Property, which are constructed on any parcel of land or portion of the
Land of a particular Leased Property during the Term of any individual Lease,
including the construction of a new floor, or the repair, replacement,
restoration, remodeling or rebuilding of the Improvements or any portion thereof
on any Leased Property which are not normal, ordinary or recurring to maintain
the Leased Property. Except as otherwise agreed to by Landlord in writing, any
such Tenant Improvement shall be made at Tenant's sole expense and shall become
the property of Landlord upon termination of this Lease. Unless made on an
emergency basis to prevent injury to person or property, Tenant will submit
plans to Landlord for Landlord's prior approval, such approval not to be
unreasonably withheld or delayed, for any Tenant Improvement which is not a
Capital Addition and which has a cost of more than $500,000 or a cost which,
when aggregated with the costs of all such Tenant Improvements for any
individual Leased Facility in the same Lease Year, would cause the total costs
of all such Tenant Improvements to exceed $1,000,000. Such $500,000 and
$1,000,000 amounts shall be increased by four percent (4%) per annum,
cumulatively for each subsequent Lease Year. Additionally, in connection with
any Tenant Improvement, including any Capital Addition, Tenant shall provide
Landlord with copies of any plans and specification therefor, Tenant's budget
relating thereto, any required government permits or approvals, any construction
contracts or agreements relating thereto, and any other information relating to
such Tenant Improvement as Landlord shall reasonably request.
8.02 SCOPE OF RIGHT. Subject to Section 8.01 herein and Section 7.03
concerning required alterations, at Tenant's cost and expense, Tenant shall have
the exclusive right to:
(a) seek any governmental approvals, including building
permits, licenses, conditional use permits and any certificates of need that
Tenant requires to construct any Tenant Improvement;
(b) erect upon the Leased Property such Tenant Improvements as
Tenant deems desirable including but not limited to new facilities or expansions
to existing facilities;
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(c) make additions, alterations, changes and improvements in
any Tenant Improvement so erected; and
(d) engage in any other lawful activities that Tenant
determines are necessary or desirable for the development of the Leased Property
in accordance with its Primary Intended Use;
provided, however, Tenant shall not make any Tenant Improvement which would, in
Landlord's reasonable judgment, impair the value or Primary Intended Use of any
Leased Property without Landlord's prior written consent and provided, further
that Tenant shall not be permitted to create a mortgage, lien or any other
encumbrance on any individual Leased Property without Landlord's prior written
consent.
8.03 COOPERATION OF LANDLORD. Landlord shall cooperate with Tenant and
take such actions, including the execution and delivery to Tenant of any
applications or other documents, reasonably requested by Tenant in order to
obtain any governmental approvals sought by Tenant which have either been
approved by Landlord or for which Landlord's approval is not required to
construct any Tenant Improvement within ten (10) business days following the
later of (a) the date Landlord receives Tenant's request together with all
information reasonably requested by Landlord regarding the Tenant's
Improvements, or (b) the date of delivery of any such application or document to
Landlord together with all information reasonably requested by Landlord
regarding the Tenant's Improvements, so long as the taking of such action,
including the execution of said applications or documents, shall be without cost
to Landlord (or if there is a cost to Landlord, such cost shall be reimbursed by
Tenant), and will not cause Landlord to be in violation of any law, ordinance or
regulation.
8.04 COMMENCEMENT OF CONSTRUCTION. Tenant agrees that:
(a) Tenant shall diligently seek all governmental approvals
relating to the construction of any Tenant Improvement;
(b) Once Tenant begins the construction of any Tenant
Improvement, Tenant shall diligently prosecute any such construction to
completion in accordance with applicable insurance requirements and the laws,
rules and regulations of all governmental bodies or agencies having jurisdiction
over the Leased Property;
(c) Landlord shall have the right at any time and from time to
time to post and maintain upon the Leased Property such notices as may be
necessary to protect Landlord's interest from mechanics' liens, materialmen's
liens or liens of a similar nature;
(d) Tenant shall not suffer or permit any mechanics' liens or
any other claims or demands arising from the work of construction of any Tenant
Improvement to be enforced against the Leased Property or any part thereof, and
Tenant agrees to hold Landlord and said Leased
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Property free and harmless from all liability from any such liens, claims or
demands, together with all costs and expenses in connection therewith;
(e) All work shall be performed in a good and workmanlike
manner consistent with standards in the industry; and
(f) Subject to Section 8.09 in the case of Capital Additions,
Tenant shall not secure any construction or other financing for the Tenant
Improvements which is secured by a portion of the Leased Property without
Landlord's prior written consent, and any such financing (i) shall not exceed
the cost of the Tenant Improvements, (ii) shall be subordinate to any mortgage
or encumbrance now existing or hereinafter created by Landlord with respect to
the Leased Property, and (iii) shall be limited solely to Tenant's interest in
the Leased Property that is the subject of the improvements.
8.05 RIGHTS IN TENANT IMPROVEMENTS. Notwithstanding anything to the
contrary in this Lease, all Tenant Improvements constructed pursuant to Section
8.01 (other than a Capital Addition purchased or financed by Landlord), any and
all subsequent additions thereto and alterations and replacements thereof, shall
be the sole and absolute property of Tenant during the Term of the particular
Lease. Upon the expiration or early termination of any Lease, all such Tenant
Improvements shall become the property of Landlord. Without limiting the
generality of the foregoing, Tenant shall be entitled to all federal and state
income tax benefits associated with any Tenant Improvement (other than a Capital
Addition purchased or financed by Landlord) during the Term of this Agreement.
8.06 PERSONAL PROPERTY. Tenant shall install, place, and use on the
Leased Property such fixtures, furniture, equipment, inventory and other
personal property in addition to the Fixtures as may be required to effectively
operate the Leased Property as a correctional or detention facility or other
permitted use or as Tenant may, from time to time, deem necessary or useful to
operate the Leased Property as a correctional or detention facility. Upon
expiration or earlier termination of a Lease, Landlord shall have the option
(exercisable upon at least thirty (30) days notice to Tenant prior to such
expiration or termination) to purchase all or a part of such personal property
(except for Tenant's proprietary property described on Exhibit C) at net book
value as shown on Tenant's books and records. Landlord agrees, however, that
such option to purchase may be subject to a governmental entity's superior right
to acquire all or a portion of such personal property of Tenant under the terms
of its prison operating agreement with Tenant.
8.07 REQUIREMENTS FOR PERSONAL PROPERTY. Tenant shall comply with all
of the following requirements in connection with Personal Property:
(a) With respect to each Leased Property, Tenant shall notify
Landlord within one hundred twenty (120) days after each Lease Year of any
additions, substitutions, or replacements of an item of Personal Property at
such Leased Property which individually has a cost of more than $25,000.00 per
item or an aggregate cost of more than $100,000 for similar items of Personal
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Property purchased in one or more lots and shall furnish Landlord with such
other information as Landlord may reasonably request from time to time.
(b) The Personal Property shall be installed in a good and
workmanlike manner, in compliance with all governmental laws, ordinances, rules,
and regulations and all insurance requirements, and be installed free and clear
of any mechanics' liens.
(c) Tenant shall, at Tenant's sole cost and expense, maintain,
repair, and replace the Personal Property.
(d) Tenant shall, at Tenant's sole cost and expense, keep
Personal Property insured against loss or damage by fire, vandalism and
malicious mischief, sprinkler leakage, and other physical loss perils commonly
covered by fire and extended coverage, boiler and machinery, and difference in
conditions insurance in an amount not less than one hundred percent (100%) of
the then full replacement cost thereof. Tenant shall use the proceeds from any
such policy for the repair and replacement of Personal Property. The insurance
shall meet the requirements of Section 4.03.
(e) Tenant shall pay all taxes applicable to Personal
Property.
(f) If Personal Property is damaged or destroyed by fire or
any other case, Tenant shall promptly repair or replace Personal Property unless
Tenant is entitled to and elects to terminate the Lease pursuant to Section
10.05.
(g) Unless an Event of Default (or any event which, with the
giving of notice of lapse of time, or both, would constitute an Event of
Default) has occurred and remains uncured beyond any applicable grace period,
Tenant may remove Personal Property from the Leased Property from time to time
provided that (i) the items removed are not required to operate the Leased
Property as a licensed correctional or detention facility or other permitted use
(unless such items are being replaced by Tenant); and (ii) Tenant repairs any
damage to the Leased Property resulting from the removal of Personal Property.
(h) Tenant shall remove any of Tenant's personal property, but
not any Personal Property, upon the termination or expiration of the Lease
(unless and to the extent the same shall be purchased by Landlord pursuant to
Section 8.06) and shall repair any damage to the Leased Property resulting from
the removal of Tenant's personal property. If Tenant fails to remove Tenant's
personal property within ninety (90) days after the termination or expiration of
the Lease, then Tenant shall be deemed to have abandoned Tenant's personal
property, Tenant's personal property shall become the property of Landlord, and
Landlord may remove, store and dispose of Tenant's personal property. In such
event, Tenant shall have no claim or right against Landlord for such property or
the value thereof regardless of the disposition thereof by Landlord. Tenant
shall pay Landlord, upon demand, all expenses incurred by Landlord in removing,
storing, and disposing of Tenant's personal property and repairing any damage
caused by such removal. Tenant's obligations hereunder shall survive the
termination or expiration of the Lease.
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(i) Tenant shall perform its obligations under any equipment
lease or security agreement for Personal Property.
8.08 SIGNS. Tenant may, at its own expense, erect and maintain
identification signs at the Leased Property, provided such signs comply with all
laws, ordinances, and regulations. On the termination or expiration of a Lease,
Tenant shall, within thirty (30) days after notice from Landlord, remove the
signs and repair any damage to the Leased Property resulting from such removal.
8.09 FINANCINGS OF CAPITAL ADDITIONS TO A LEASED PROPERTY.
(a) Landlord may, but shall be under no obligation to, provide
or arrange construction, permanent or other financing for a Capital Addition
proposed to be made to any Leased Property by Tenant. Within thirty (30) days of
receipt of such a request by Tenant, Landlord shall notify Tenant as to whether
it will finance the proposed Capital Addition and, if so, the terms and
conditions upon which it would do so, including the terms of any amendment to an
individual Lease or a new lease agreement for such proposed Capital Addition.
(b) If Landlord agrees to finance the proposed Capital
Addition of Tenant, Tenant shall provide Landlord with the following:
(i) all customary or other required loan documentation which
may be required;
(ii) any information, certificates, licenses, permits or
documents requested by either Landlord or any lender with whom Landlord has
agreed or may agree to provide financing which are necessary to confirm that
Tenant will be able to use the Capital Addition upon completion thereof in
accordance with the Primary Intended Use (as defined in Section 8.01), including
all required, federal, state or local government licenses and approvals;
(iii) a certificate from Tenant's architect, setting forth in
reasonable detail the projected (or actual, if available) cost of the proposed
Capital Addition;
(iv) an amendment to this Lease, or a new lease agreement,
duly executed and acknowledged, in form and substance satisfactory to Landlord
and Tenant, and containing such provisions as may be necessary or appropriate,
including without limitation, any appropriate changes in the legal description
of the Land, the Rent, and other changes with respect to the Capital Addition;
(v) a deed conveying title to Landlord to any land acquired
for the purpose of constructing the Capital Addition, free and clear of any
liens or encumbrances except those approved by Landlord and, both prior to and
following completion of the Capital Addition, an as-built survey thereof
satisfactory to Landlord;
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(vi) endorsements to any outstanding policy of title
insurance covering the Leased Property or a supplemental policy of title
insurance covering the Leased Property satisfactory in form and substance to
Landlord (a) updating the same without any additional exceptions, except as may
be permitted by Landlord; and (b) increasing the coverage thereof by an amount
equal to the fair market value of the Capital Addition;
(vii) if required by Landlord, (a) an owner's policy of title
insurance insuring fee simple title to any land conveyed to Landlord pursuant to
subparagraph (v), free and clear of all liens and encumbrances except those
approved by Landlord and (b) a lender's policy of title insurance satisfactory
in form and substance to Landlord and any lending institution advancing a
portion of the cost of the Capital Addition;
(viii) if required by Landlord, upon completion of the Capital
Addition, an M.A.I. appraisal of the Leased Property indicating that the value
of the Leased Property upon completion of the Capital Addition exceeds the fair
market value of the Leased Property prior thereto by an amount not less than
ninety-five percent (95%) of the cost of such Capital Addition; and
(ix) such other certificates (including, but not limited to,
endorsements, increasing the insurance coverage, if any, at the time required),
documents, opinions of counsel, appraisals, surveys, certified copies of duly
adopted resolutions of the board of directors of Tenant authorizing the
execution and delivery of any amendment to an individual Lease or new lease
agreement and any other instruments as may be reasonably required by Landlord
and any lending institution advancing any portion of the cost of the Capital
Addition.
(c) Upon making a request to finance a Capital Addition,
whether or not such financing is actually consummated, Tenant shall pay or agree
to pay, upon demand, all reasonable costs and expenses of Landlord and any
lending institution which has committed to finance such Capital Addition which
have been paid or incurred by them in connection with the financing of the
Capital Addition, including, but not limited to, (i) the fees and expenses of
their respective counsel, (ii) all printing expenses, (iii) the amount of any
filing, registration and recording taxes and fees, (iv) documentary stamp taxes,
if any, (v) title insurance charges, appraisal fees, if any, rating agency fees,
if any, (vi) commitment fees, if any, and (vii) costs of obtaining regulatory
and governmental approvals for the construction, operation, use or occupancy of
the Capital Addition.
(d) (i) If Landlord and Tenant are unable to agree on the
terms of the financing of a Capital Addition by Landlord, Tenant may undertake
the cost of any such Capital Addition and seek construction, permanent or other
financing from other sources.
(ii) In the event Tenant shall construct any
Capital Addition and shall have obtained construction, permanent or other
financing in connection therewith from sources other than Landlord, as set forth
in the foregoing Section 8.09(d)(i), Landlord shall have the option to acquire
such Capital Addition for a period of one (1) year following the date Tenant
first receives inmates or detainees in such Capital Addition ("Service
Commencement Date"). The price at which
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Landlord may acquire such Capital Addition shall be an amount equal to 105% (or
such lower percentage as may be agreed to by the Tenant) of the aggregate costs
related to the acquisition, development, design, construction, equipment and
start-up of such Capital Addition, which in the case of goods or services
provided by the Tenant, will not exceed the costs which would be paid therefor
if purchased from a third party in an arm's-length transaction ("Tenant's
Cost"). Landlord's exercise of such option shall require Landlord to acquire
such Capital Addition on such terms and conditions as Landlord and Tenant shall
reasonably agree, which shall be generally consistent with the terms and
conditions of Landlord's initial acquisition of the related Leased Property from
Tenant. Upon such acquisition, Landlord shall lease such Capital Addition to
Tenant on the terms and conditions set forth herein, and Landlord and Tenant
shall execute a new Lease, or an amendment to the existing Lease, with respect
thereto. In such case, the Base Rent shall be the fair market rental value of
the Capital Addition, as reasonably and mutually determined by Landlord and
Tenant or, if Landlord and Tenant fail to agree, as determined through
arbitration in accordance with Section 16.24. Regardless of whether the
foregoing option is exercised, all Capital Additions shall become the property
of Landlord upon the expiration or termination of this Lease.
ARTICLE IX
DEFAULTS AND REMEDIES
9.01 EVENTS OF DEFAULT. The occurrence of any one or more of the
following shall be an event of default ("Event of Default") hereunder:
(a) Tenant fails to pay in full any installment of Rent, or
any other monetary obligation payable by Tenant to Landlord under a Lease,
within fifteen (15) days after notice of nonpayment from Landlord;
(b) Tenant fails to observe and perform any other covenant,
condition or agreement under this Agreement or a Lease to be performed by Tenant
(except those described in Section 9.01(a) of this Agreement) and such failure
continues for a period of thirty (30) days after written notice thereof is given
to Tenant by Landlord; or if, by reason of the nature of such default, the same
cannot with due diligence be remedied within said thirty (30) days, such failure
will not be deemed to continue if Tenant proceeds promptly and with due
diligence to remedy the failure and diligently completes the remedy thereof on a
best efforts basis; provided, however, said cure period will not extend beyond
thirty (30) days if the facts or circumstances giving rise to the default are
creating a further harm to Landlord or the Leased Property and Landlord makes a
good faith determination that Tenant is not undertaking remedial steps that
Landlord would cause to be taken if such Lease were then to terminate;
(c) If Tenant: (a) admits in writing its inability to pay its
debts generally as they become due, (b) files a petition in bankruptcy or a
petition to take advantage of any insolvency act, (c) makes an assignment for
the benefit of its creditors, (d) is unable to pay its debts as they mature,
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(e) consents to the appointment of a receiver of itself or of the whole or any
substantial part of its property, or (f) files a petition or answer seeking
reorganization or arrangement under the federal bankruptcy laws or any other
applicable law or statute of the United States of America or any state thereof;
(d) If Tenant, on a petition in bankruptcy filed against it,
is adjudicated as bankrupt or a court of competent jurisdiction enters an order
or decree appointing, without the consent of Tenant, a receiver of Tenant of the
whole or substantially all of its property, or approving a petition filed
against it seeking reorganization or arrangement of Tenant under the federal
bankruptcy laws or any other applicable law or statute of the United States of
America or any state thereof, and such judgment, order or decree is not vacated
or set aside or stayed within ninety (90) days from the date of the entry
thereof;
(e) If the estate or interest of Tenant in any Leased Property
or any part thereof is levied upon or attached in any proceeding and the same is
not vacated or discharged within the later of ninety (90) days after
commencement thereof or thirty (30) days after receipt by Tenant of notice
thereof from Landlord (unless Tenant is contesting such lien or attachment in
accordance with this Agreement);
(f) Any representation or warranty made by Tenant (or an
Affiliate of Tenant in cases where a Lease is executed by such Affiliate) in the
Agreement or any Lease or in any certificate, demand or request made pursuant to
any Lease proves to be incorrect, in any material respect and any adverse effect
on Landlord of any such misrepresentation or breach of warranty has not been
corrected to Landlord's satisfaction within thirty (30) days after Tenant
becomes aware of, or is notified by the Landlord of the fact of, such
misrepresentation or breach of warranty;
(g) A default by Tenant (or an Affiliate of Tenant in cases
where a Lease is executed by such Affiliate) in any payment of principal or
interest on any obligations for borrowed money having a principal balance of
Twenty-Five Million Dollars ($25,000,000) or more in the aggregate (excluding
obligations which are limited in recourse to specific property of Tenant
provided that such property is not a substantial portion of the assets of Tenant
and excluding any debt which is denominated as "subordinated debt"), or in the
performance of any other provision contained in any instrument under which any
such obligation is created or secured (including the breach of any covenant
thereunder), if an effect of such default is that the holder(s) of such
obligation cause such obligation to become due prior to its stated maturity; or
(h) A final, non-appealable judgment or judgments for the
payment of money in excess of Ten Million Dollars ($10,000,000) in the aggregate
not fully covered (excluding deductibles) by insurance is rendered against
Tenant (or an Affiliate of Tenant in cases where a Lease is executed by such
Affiliate) and the same remains undischarged, unvacated, unbonded or unstayed
for a period of one hundred twenty (120) consecutive days or if the holder of
such judgment proceeds to enforce the judgment against Tenant.
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Notwithstanding the foregoing, an Event of Default under the foregoing
subsections (a), (c), (d), (g) and (h) shall constitute an Event of Default
under all of the Leases and an Event of Default under the foregoing subsections
(b), (e) and (f) shall constitute an Event of Default only with respect to the
specific Lease and Leased Property to which such Event of Default applies.
Provided, (i) with respect to the Events of Default under the foregoing
subsections (b), (e) and (f) or (ii) with respect to a default by Tenant which
is not cured within the applicable grace period under any Operating Contracts
(as hereinafter defined) in effect with respect to 50% or more of the inmate
beds at an individual Leased Premises (each a "Nonmonetary Default"), if such
Nonmonetary Default shall at any time be applicable to Leased Properties
which, in the aggregate, represent a combined acquisition cost equal to the
lesser of (x) twenty five percent (25%) of the acquisition cost for all of the
Leased Properties or (y) $150,000,000, then such Nonmonetary Default shall
constitute an Event of Default under all of the Leases.
9.02 REMEDIES. To the extent any Event of Default is applicable only to
a specific Lease or Leases, or a specific Leased Property or Leased Properties
(in accordance with Section 9.01 above), the remedies set forth herein shall be
exercisable solely with respect to such Lease or Leases, or Leased Property or
Leased Properties, and shall not be exercisable with respect to any other Leases
or Leased Property. To the extent any Event of Default constitutes an Event of
Default under all of the Leases (in accordance with Section 9.01 above), the
remedies set forth herein shall be exercisable with respect to all of the Leases
and all of the Leased Properties. Subject to the foregoing provisions, Landlord
may exercise any one or more of the following remedies upon the occurrence of an
Event of Default:
(a) Landlord may terminate the applicable Lease, exclude
Tenant from possession of the subject Leased Property and use reasonable efforts
to lease such Leased Property to others which shall consist of soliciting offers
to lease from at least two private or governmental owners or operators of
correctional or detention facilities. If any Lease is terminated pursuant to the
provisions of this subparagraph (a), Tenant will remain liable to Landlord for
damages in an amount equal to the Rent and other sums which would have been
owing by Tenant under such Lease for the balance of the Term if the Lease had
not been terminated, less the net proceeds, if any, of any re-letting of the
subject Leased Property by Landlord subsequent to such termination, after
deducting all Landlord's expenses in connection with such re-letting, including
without limitation, the expenses set forth in Section 9.02(b)(2) below. Landlord
will be entitled to collect such damages from Tenant monthly on the days on
which the Rent and other amounts would have been payable under the subject Lease
if such Lease had not been terminated and Landlord will be entitled to receive
such damages from Tenant on each such day. Alternatively, at the option of
Landlord, if such Lease is terminated, and at any time thereafter, Landlord will
be entitled, in lieu of proceeding to collect damages on a monthly basis as set
forth in the preceding sentence, to recover from Tenant (a) all unpaid Rent then
due and payable, and (b) the worth at the time of the award (as hereafter
defined) of the Rent which would have been due and payable from the date of
termination through the Expiration Date as if the Lease had not been terminated.
The "worth at the time of award" of the amount referred to in clause (b) is
computed at "present value" using New York Prime Rate. For purposes of this
Agreement, "New York Prime Rate" shall mean that rate of interest identified as
prime or national prime by the Wall Street Journal, or if not published or
found, then the rate of interest charged by the American bank with the greatest
number of assets on ninety (90) day unsecured notes to its preferred customers.
For the purpose of determining unpaid Rent under clause
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(b), the Rent reserved in the Lease will be deemed to be the sum of the
following: (i) the Base Rent computed pursuant to Section 2.01; (ii) the
Additional Rent computed pursuant to Section 2.02; and (iii) the Other
Additional Rent computed pursuant to Section 2.04. Such computation of
Additional Rent or Other Additional Rent shall be based on the Additional Rent
and Other Additional Rent paid for the Lease Year preceding the date of
termination, increased by four (4%) percent per year thereafter. Following
payments by Tenant of the foregoing amounts, Landlord shall deliver and pay over
to Tenant all rent, income, and other proceeds of any nature realized from the
sale, lease or other disposition or utilization of the Leased Premises, if any,
actually received by Landlord, up to the amounts so paid by Tenant less
Landlord's reasonably incurred costs and expenses of maintaining and re-leasing
or selling the Leased Premises.
(b) (i) Without demand or notice, Landlord may re-enter and
take possession of the applicable Leased Property or any part of such Leased
Property; and repossess such Leased Property as of the Landlord's former estate;
and expel the Tenant and those claiming through or under Tenant from such Leased
Property; and, remove the effects of both or either, without being deemed guilty
of any manner of trespass and without prejudice to any remedies for arrears of
Rent or preceding breach of covenants or conditions. If Landlord elects to
re-enter, as provided in this paragraph (b) or if Landlord takes possession of
such Leased Property pursuant to legal proceedings or pursuant to any notice
provided by law, Landlord may, from time to time, without terminating the
subject Lease, re-let such Leased Property or any part of such Leased Property,
either alone or in conjunction with other portions of the Improvements of which
such Leased Property are a part, in Landlord's name but for the account of
Tenant, for such term or terms (which may be greater or less than the period
which would otherwise have constituted the balance of the Term of this Lease)
and on such terms and conditions (which may include concessions of free rent,
and the alteration and repair of such Leased Property) as Landlord, in its
uncontrolled discretion, may determine. Landlord may collect and receive the
Rents for such Leased Property. Landlord will not be responsible or liable for
any failure to re-let such Leased Property, or any part of such Leased Property,
or for any failure to collect any Rent due upon such re-letting. No such
re-entry or taking possession of such Leased Property by Landlord will be
construed as an election on Landlord's part to terminate this Lease unless a
written notice of such intention is given to Tenant. No notice from Landlord
under this Lease or under a forcible entry and detainer statute or similar law
will constitute an election by Landlord to terminate this Lease unless such
notice specifically says so. Landlord reserves the right following any such
re-entry or re-letting, or both, to exercise its right to terminate this Lease
by giving Tenant such written notice, and, in that event such Lease will
terminate as specified in such notice.
(ii) If Landlord elects to take possession of
such Leased Property according to this subparagraph (b) without terminating such
Lease, Tenant will pay Landlord (i) the Rent, Additional Rent and other sums
which would be payable under such Lease if such repossession had not occurred,
less (ii) the net proceeds, if any, of any re-letting of such Leased Property
after deducting all of Landlord's expenses incurred in connection with such
re-letting, including without limitation, all repossession costs, brokerage
commissions, legal expense, attorneys' fees, expense of employees, alteration,
remodeling, repair costs, and expense of preparation for such re-letting.
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If, in connection with any re-letting, the new Lease term extends beyond the
existing Term or such Leased Property covered by such re-letting includes areas
which are not part of such Leased Property, a fair apportionment of the Rent
received from such re-letting and the expenses incurred in connection with such
re-letting will be made in determining the net proceeds received from such
re-letting. In addition, in determining the net proceeds from such re-letting
over the term of the Lease, any rent concessions will be apportioned over the
term of the new Lease. Tenant will pay such amounts to Landlord monthly on the
days on which the Rent and all other amounts owing under this Agreement or such
Lease would have been payable if possession had not been retaken, and Landlord
will be entitled to receive the rent and other amounts from Tenant on each such
day.
(c) Landlord may re-enter the applicable Leased Property and
have, repossess and enjoy such Leased Property as if such Lease had not been
made, and in such event, Tenant and its successors and assigns shall remain
liable for any contingent or unliquidated obligations or sums owing at the time
of such repossession.
(d) Landlord may take whatever action at law or in equity as
may appear necessary or desirable to collect the Rent and other amounts payable
under the applicable Lease then due and thereafter to become due, or to enforce
performance and observance of any obligations, agreements or covenants of Tenant
under such Lease.
9.03 RIGHT OF SET-OFF. Landlord may, and is hereby authorized by
Tenant, at any time and from time to time, after advance notice to Tenant, to
set-off and apply any and all sums held by Landlord, including all sums held in
any escrow for Impositions, any indebtedness of Landlord to Tenant, and any
claims by Tenant against Landlord, against any obligations of Tenant under this
Agreement or any Lease and against any claims by Landlord against Tenant,
whether or not Landlord has exercised any other remedies hereunder. The rights
of Landlord under this Section are in addition to any other rights and remedies
Landlord may have against Tenant.
9.04 PERFORMANCE OF TENANT'S COVENANTS. Except in cases of emergency,
in which event Landlord may proceed without notice, Landlord may perform any
obligation of Tenant which Tenant has failed to perform within ten (10) days
after Landlord has sent a written notice to Tenant informing it of its specific
failure (provided no such notice shall be required if such failure is covered
under the provisions of Section 9.01). Tenant shall reimburse Landlord on
demand, as Other Additional Rent, for any expenditures thus incurred by Landlord
and shall pay interest thereon at the New York Prime Rate (as herein defined).
9.05 INTEREST ON PAST DUE PAYMENTS. Any payment not made by Tenant for
more than five (5) days after written notice of nonpayment from Landlord shall
bear interest at the rate of one percent (1%) per month from the due date
thereof through the date such payment is actually received by Landlord.
9.06 LITIGATION; ATTORNEYS' FEES. Within ten (10) days after Tenant has
knowledge of any material litigation or other proceeding that may be instituted
against Tenant , against any Leased
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Property to secure or recover possession thereof, or that may affect the title
to or the interest of Landlord in such Leased Property, Tenant shall give
written notice thereof to Landlord. Within thirty (30) days of Landlord's
presentation of an invoice, Tenant shall pay all reasonable costs and expenses
incurred by Landlord in enforcing or preserving Landlord's rights under this
Agreement and each Lease, whether or not an Event of Default has actually
occurred or has been declared and thereafter cured, including without
limitation, (i) the fees, expenses, and costs of any litigation, receivership,
administrative, bankruptcy, insolvency or other similar proceeding; (ii)
reasonable attorney, paralegal, consulting and witness fees and disbursements;
and (iii) the expenses, including without limitation, lodging, meals, and
transportation, of Landlord and its employees, agents, attorneys, and witnesses
in preparing for litigation, administrative, bankruptcy, insolvency or other
similar proceedings and attendance at hearings, depositions, and trials in
connection therewith. All such costs, charges and fees as incurred shall be
deemed to be Other Additional Rent under this Agreement. For purposes hereof,
"material litigation" instituted against Tenant shall be determined in
accordance with then applicable GAAP accounting standards.
9.07 REMEDIES CUMULATIVE. The remedies of Landlord herein are
cumulative to and not in lieu of any other remedies available to Landlord at law
or in equity. The use of any one remedy shall not be taken to exclude or waive
the right to use any other remedy.
9.08 ESCROWS AND APPLICATION OF PAYMENTS. As security for the
performance of its obligations hereunder, Tenant hereby assigns to Landlord all
its right, title and interest in and to all monies escrowed with Landlord under
this Agreement or under any Lease and all deposits with utility companies,
taxing authorities, and insurance companies; provided, however, that Landlord
shall not exercise its rights hereunder until an Event of Default has occurred.
Any payments received by Landlord under any provisions of this Agreement or
under any Lease during the existence, or continuance of an Event of Default
shall be applied to Tenant's obligations in the order which Landlord may
determine.
9.09 POWER OF ATTORNEY. Tenant hereby irrevocably and unconditionally
appoints Landlord, or Landlord's authorized officer, agent, employee or
designee, as Tenant's true and lawful attorney-in-fact, to act, after an Event
of Default, for Tenant in Tenant's name, place, and stead, and for Tenant's and
Landlord's use and benefit, to execute, deliver and file all applications and
any and all other necessary documents or things, to effect a transfer,
reinstatement, renewal and/or extension of any and all licenses and other
governmental authorizations issued to Tenant in connection with Tenant's
operation of any Leased Property, and to do any and all other acts incidental to
any of the foregoing. Tenant irrevocably and unconditionally grants to Landlord
as its attorney-in-fact full power and authority to do and perform, after an
Event of Default, every act necessary and proper to be done in the exercise of
any of the foregoing powers as fully as Tenant might or could do if personally
present or acting, with full power of substitution, hereby ratifying and
confirming all that said attorney shall lawfully do or cause to be done by
virtue hereof. This power of attorney is coupled with an interest and is
irrevocable prior to the full performance of the Tenant's obligations under this
Agreement and each Lease.
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ARTICLE X
DAMAGE AND DESTRUCTION
10.01 GENERAL. Tenant shall notify Landlord if any of the Leased
Property is damaged or destroyed by reason of fire or any other cause. Tenant
shall promptly repair, rebuild, or restore the Leased Property, at Tenant's
expense, so as to make the Leased Property at least equal in value to the Leased
Property existing immediately prior to such occurrence and as nearly similar to
it in character as is practicable and reasonable. Tenant will begin such repairs
or rebuilding and will prosecute the repairs and rebuilding to completion with
diligence, subject, however, to strikes, lockouts, acts of God, embargoes,
governmental restrictions, and other causes beyond Tenant's reasonable control.
Landlord will make available to Tenant the net proceeds of any fire or other
casualty insurance paid to Landlord for any such repair or rebuilding after
deduction of any costs of collection, including attorneys' fees. Before
beginning such repairs or rebuilding, or letting any contracts in connection
with such repairs or rebuilding which are estimated to exceed in the aggregate
$150,000 (which amount shall be increased by four percent (4%) per annum
cumulatively for each subsequent Lease Year) ("Substantial Repairs"), Tenant
will submit for Landlord's approval, which approval Landlord will not
unreasonably withhold or delay, complete and detailed plans and specifications
for such Substantial Repairs. Payment on account of Substantial Repairs will be
made, as work satisfactorily progresses, against properly certified vouchers of
a competent architect in charge of the work and approved by Landlord. Prior to
commencing Substantial Repairs, Tenant shall deliver to Landlord for Landlord's
approval a schedule setting forth the estimated monthly draws for such work.
Landlord will contribute to payments on account of Substantial Repairs out of
the insurance proceeds an amount equal to the proportion that the total net
amount received by Landlord from insurers bears to the total estimated cost of
the rebuilding or repairing, multiplied by the payment by Tenant on account of
such work. Landlord may, however, withhold ten percent (10%) from each payment
on account of Substantial Repairs until (i) the work of repairing or rebuilding
is completed and proof has been furnished to Landlord that no lien or liability
has attached or will attach to the Leased Property or to Landlord in connection
with such repairing or rebuilding, (ii) Tenant has obtained a certificate of use
and occupancy (or its functional equivalent) for the portion of the Leased
Premises repaired or rebuilt and (iii) if Tenant has an agreement with any
governmental authority for the detention of inmates at such Leased Property
which requires such governmental authority to approve such repairs or
rebuilding, such approval shall have been obtained. Upon the completion of
rebuilding or repairing and the furnishing of such proof, the balance of the net
proceeds of such insurance payable to Tenant on account of such repairing or
rebuilding will be paid to Tenant. Tenant will obtain and deliver to Landlord a
temporary or final certificate of occupancy before the Leased Property is
reoccupied for any purpose. Tenant shall complete all such repairs or rebuilding
free and clear of mechanic's or other liens, and in accordance with the building
codes and all applicable laws, ordinances, regulations, or orders of any state,
municipal, or other public authority affecting the repairs or rebuilding, and
also in accordance with all requirements of the insurance rating organization,
or similar body. Any remaining proceeds of insurance after such restoration will
be Tenant's property.
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10.02 LANDLORD'S INSPECTION. During the progress of Substantial
Repairs, Landlord and its architects and engineers may, from time to time,
inspect the Leased Property and will be furnished, if required by them, with
copies of all plans, shop drawings, and specifications relating to such repairs
or rebuilding. Tenant will keep all plans, shop drawings, and specifications
available, and Landlord and its architects and engineers may examine them at all
reasonable times. If, during such repairs or rebuilding, Landlord and its
architects and engineers determine that the repairs or rebuilding are not being
done in accordance with the approved plans and specifications, Landlord will
give prompt notice in writing to Tenant, specifying in detail the particular
deficiency, omission, or other respect in which Landlord claims such repairs or
rebuilding do not accord with the approved plans and specifications. Upon the
receipt of any such notice, Tenant will cause corrections to be made to any
deficiencies, omissions, or such other respect. Tenant's obligations to supply
builder's risk insurance, according to Article IV, will be applicable to any
repairs or rebuilding under this Section.
10.03 LANDLORD'S COSTS. Tenant shall, within thirty (30) days after
receipt of an invoice from Landlord, pay the reasonable costs, expenses, and
fees of any architect or engineer employed by Landlord to review any plans and
specifications and to supervise and approve any construction, or for any
services rendered by such architect or engineer to Landlord as contemplated by
any of the provisions of this Agreement, or for any services performed by
Landlord's attorneys in connection therewith; provided, however, that Landlord
will consult with Tenant and notify Tenant of the estimated amount of such
expenses.
10.04 RENT ABATEMENT. In the event that the provisions of Section 10.01
above shall become applicable, the Rent, real estate taxes and other Impositions
shall be abated or reduced proportionately during any period in which, by reason
of such damage or destruction, there is substantial interference with the
operation of the business of Tenant in the Leased Property, having regard to the
extent to which Tenant may be required to discontinue its business in the Leased
Property, and such abatement or reduction shall continue for the period
commencing with such destruction or damage and ending with the substantial
completion (defined below) by Tenant of such work or repair and/or
reconstruction. In the event that only a portion of any Leased Property is
rendered untenantable or incapable of such use, the Base Rent and all real
estate taxes and other Impositions payable hereunder shall be reduced on a pro
rata basis in the same proportion as the number of inmate or patient beds in the
Leased Property after the damage or destruction bears to the number of inmate or
patient beds in the Leased Property immediately prior thereto. For purposes of
this paragraph, substantial completion shall occur upon the earlier of (i) nine
(9) months from the date of the first disbursement of insurance proceeds, or
(ii) the issuance of a certificate of occupancy for the Leased Property.
Notwithstanding any other provision hereof, such rental abatement shall be
limited to the amount of any rental or business interruption insurance proceeds
actually received by Landlord.
10.05 SUBSTANTIAL DAMAGE DURING LEASE TERM. Provided Tenant has fully
complied with Section 4.01 hereof (including actually maintaining in effect
rental value insurance or business interruption insurance provided for in clause
(c) thereof) if, at any time during the Term of the
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particular Lease, the Leased Property is so damaged by fire or otherwise that
more than fifty percent (50%) of the inmate beds at the Leased Property are
rendered unusable, Tenant may, within sixty (60) days after such damage, give
notice of its election to terminate the Lease subject to the particular Leased
Property and, subject to the further provisions of this Section, such Lease will
cease on the tenth (10th ) day after the delivery of such notice. If the Lease
is so terminated, Tenant will have no obligation to repair, rebuild or replace
the Leased Property, but will have the obligation to pay to Landlord upon demand
the amount of any deductible or uninsured loss arising in connection therewith
and the entire insurance proceeds will belong to Landlord. If the Lease is not
so terminated, Tenant shall rebuild the Leased Property in accordance with
Section 10.01.
10.06 DAMAGE NEAR END OF TERM. Notwithstanding any provisions of
Section 10.01 to the contrary, if damage to or destruction of the Leased
Property occurs during the last twenty-four (24) months of the Term, and if such
damage or destruction cannot be fully repaired and restored within six (6)
months immediately following the date of loss, either party shall have the right
to terminate this Lease by giving notice to the other within thirty (30) days
after the date of damage or destruction, in which event Landlord shall be
entitled to retain the insurance proceeds and Tenant shall pay to Landlord on
demand the amount of any deductible or uninsured loss arising in connection
therewith; provided, however, that any such notice given by Landlord shall be
void and of no force and effect if Tenant exercises an available option to
extend the Term pursuant to provisions of the Lease for such Leased Property
within thirty (30) days following receipt of such termination notice.
ARTICLE XI
CONDEMNATION
11.01 DEFINITION. For purposes of this Agreement, the term
"Condemnation" shall mean the permanent or temporary taking of the Leased
Property, or any portion thereof, by right of eminent domain, or by conveyance
made in response to a threat of the exercise of such right, or by conveyance in
settlement of eminent domain litigation.
11.02 APPORTIONMENT OF COMPENSATION. In the event of Condemnation of
the Leased Property, or any part thereof, Landlord shall be entitled to all
compensation payable by the condemning authority under applicable law for (i)
the real property, or part thereof taken, (ii) for all improvements thereto
which are taken (except Tenant Improvements which are not Capital Additions
purchased or financed by Landlord and then, only the portion of any award
therefor allocable to the remaining Term of the Lease), (iii) for all severance
damages to the remainder property caused by the Condemnation, including
severance damages to the Fixtures and the Personal Property and (iv) attorneys
fees, expert fees and costs. Tenant shall be entitled to all compensation
payable by the condemning authority under applicable law for (i) personal
property of Tenant, trade fixtures of Tenant and Tenant Improvements taken
(subject to the limitations set forth above), (ii) the value of Tenant's
leasehold interest, (iii) business damages suffered by Tenant and (iv) attorneys
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fees, expert fees and costs. The foregoing notwithstanding, in the event of a
temporary taking by Condemnation for a period of six (6) months or less,
compensation payable by the condemning authority shall be payable solely to the
Tenant, subject to Tenant having paid to Landlord all rent payable under the
Lease for the period of the temporary taking. In the event the condemning
authority is not required under applicable law to pay compensation for an
element of damage or loss suffered by a party hereto, that party shall, to that
extent, be without a remedy, unless otherwise expressly and specifically
provided herein, it being the intent of the parties that, in the absence of an
express and specific agreement to the contrary, no party hereto shall be
obligated to compensate the other for any damage or loss suffered as a
consequence of Condemnation which is not compensable by the condemning authority
under applicable law. No party shall have the right to negotiate a settlement of
any claim for compensation made or possessed by another party, nor may any party
enter into an agreement with a condemning authority which waives or limits,
expressly or implicitly, the entitlement of another party to full compensation
in accordance with the provisions hereof.
11.03 EFFECT ON LEASE OBLIGATIONS.
(a) Total Taking. In the event of Condemnation of the entire
Leased Property, the Lease shall remain in effect, with the condemning authority
taking the Leased Property subject to the Lease, unless the condemning authority
shall have condemned the leasehold interest of Tenant. In the event of
condemnation of the entire Leased Property and the leasehold interest of Tenant,
the parties shall be relieved from continuing performance under the Lease to the
extent performance is rendered impractical or impossible, or is deemed excused
as a matter of law, and Tenant shall be relieved from payment of Rent or other
charges as of the date of change of ownership due to Condemnation. The parties
shall perform those obligations accruing under the Lease prior to the change in
ownership, including payment of Rent and other charges which become payable
prior to the change in ownership. To the extent Rent has been paid in advance,
Landlord shall refund to the Tenant a prorated portion thereof based on the
number of days of Tenant's occupancy under the Lease for the rental period in
question, compared to the number of days in the rental period for which Rent was
paid in advance.
(b) Partial Taking. In the event the Condemnation is of a
portion of the Leased Property, or of an easement or similar interest in the
Leased Property, the obligations of the parties under the Lease shall be
unaffected unless the effect of the Condemnation is to render the Leased
Property Unsuitable for its Primary Intended Use. The Leased Property shall be
deemed Unsuitable for its Primary Intended Use if the state or condition of the
Leased Property has been so affected by the Condemnation that, in the good faith
judgment of Tenant, reasonably exercised, the Leased Property cannot be operated
on a commercially practicable basis as a correctional or detention facility. If
Condemnation renders the Leased Property Unsuitable for its Primary Intended
Use, Tenant may terminate the Lease as of the date of the taking, or as of the
date of loss of occupancy of the condemned portion (if the date for vacating the
premises is different from the date of taking), or within thirty (30) days
following either the date of taking or the date of loss of occupancy of the
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condemned portion. Termination of the Lease hereunder shall not affect the
apportionment of compensation as otherwise agreed hereinabove.
(c) Temporary Taking. In the event all or any part of the
Leased Property is temporarily condemned for a period of six (6) months or less,
the parties shall be relieved from their obligations under the Lease only to the
extent performance is rendered impracticable or impossible and Tenant shall
remain obligated to pay rent to Landlord for the period of such temporary
taking. In the event of such a temporary taking, the entire amount of
compensation payable for the temporary taking, whether paid by the condemning
authority as damages, rent or otherwise, shall be payable to Tenant, subject to
Tenant having paid to Landlord all rent payable under the Lease for the period
of the said temporary taking.
11.04 CONDEMNATION CAUSED BY DEFAULT OF TENANT. In the event
Condemnation is the result of Tenant having defaulted in performance of Tenant's
obligations under the Lease including Tenant's obligation to maintain the Leased
Property or having defaulted under Tenant's operating agreement with the
applicable governmental authority whether or not the same constitutes a default
hereunder, Tenant shall be liable for any damage or loss suffered by Landlord
which is not compensated by the condemning authority.
11.05 RESTORATION OF PREMISES. If there is a partial taking of any
Leased Property and the subject Lease remains in full force and effect pursuant
to Section 11.02, Landlord shall furnish to Tenant the amount of the Award
payable to Landlord, as provided herein, in order for Tenant to accomplish all
necessary restoration. If Tenant receives an Award under Section 11.05, Tenant
shall repair or restore any Tenant Improvements up to but not exceeding the
amount of the Award payable to Tenant therefor. Before beginning such
restoration, or letting any contracts in connection with such restoration,
Tenant will submit for Landlord's approval, which approval Landlord will not
unreasonably withhold or delay, complete and detailed plans and specifications
for such restoration. Promptly after receiving Landlord's approval of the plans
and specifications, Tenant will begin such restoration and will prosecute the
repairs and rebuilding to completion with diligence, subject, however, to
strikes, lockouts, acts of God, embargoes, governmental restrictions, and other
causes beyond Tenant's reasonable control. Landlord will make available to
Tenant the net proceeds of any Award paid to Landlord for such restoration,
after deduction of any costs of collection, including attorneys' fees. Payment
will be made against properly certified vouchers of a competent architect in
charge of the work and approved by Landlord. Prior to commencing the
restoration, Tenant shall deliver to Landlord for Landlord's approval a schedule
setting forth the estimated monthly draws for such work. Landlord may, however,
withhold ten percent (10%) from each payment until the work of restoration is
completed and proof has been furnished to Landlord that no lien or liability has
attached or will attach to the Leased Property or to Landlord in connection with
such restoration. Upon the completion of restoration and the furnishing of such
proof, the balance of the Award will be paid to Tenant. Tenant will obtain and
deliver to Landlord a temporary or final certificate of occupancy before the
Leased Property is reoccupied for any purpose. Tenant shall complete such
restoration free and clear of mechanic's or other liens, and in accordance with
the building codes and all applicable laws, ordinances, regulations, or orders
of any state, municipal, or other public
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authority affecting the restoration, and also in accordance with all
requirements of the insurance rating organization, or similar body. Any
remaining proceeds of the Award after such restoration will be Tenant's
property.
11.06 LANDLORD'S INSPECTION. During the progress of such restoration,
Landlord and its architects and engineers may, from time to time, inspect the
Leased Property and will be furnished, if required by them, with copies of all
plans, shop drawings, and specifications relating to such restoration. Tenant
will keep all plans, shop drawings, and specifications available, and Landlord
and its architects and engineers may examine them at all reasonable times. If,
during such restoration, Landlord and its architects and engineers determine
that the restoration is not being done in accordance with the approved plans and
specifications, Landlord will give prompt notice in writing to Tenant,
specifying in detail the particular deficiency, omission, or other respect in
which Landlord claims such restoration does not accord with the approved plans
and specifications. Upon the receipt of any such notice, Tenant will cause
corrections to be made to any deficiencies, omissions, or such other respect.
Tenant's obligations to supply insurance, according to Article IV, will be
applicable to any restoration under this Section.
ARTICLE XII
TENANT'S RIGHT OF FIRST REFUSAL
12.01 RIGHTS OF FIRST REFUSAL. Subject to the terms and conditions set
forth in this Section 12.01 and provided that no Event of Default with respect
to the subject Leased Property has occurred and is continuing at such time or at
the expiration of this Agreement or the individual Lease, Tenant shall have a
right of first refusal (the "Purchase Refusal Right") to purchase any Leased
Property (including any Leased Property owned by an Affiliate [as defined in
Section 1.06 hereof] of Landlord). If during the Term and for a period of ninety
(90) days following termination of any Lease (other than as a result of the
exercise by Landlord of its rights or remedies under this Agreement), Landlord
or any Affiliate of Landlord receives a bona fide third party offer to Transfer
any Leased Property, then, prior to accepting such third party offer, Landlord
shall send written notice and a copy thereof to Tenant ("Landlord's Notice").
Tenant shall have thirty (30) days after receipt of Landlord's Notice to
exercise Tenant's Purchase Refusal Right, by giving Landlord written notice
thereof. Failure of Tenant to exercise the Purchase Refusal Right within such
time period set forth above shall be deemed to extinguish the Purchase Refusal
Right for a period of one hundred eighty (180) days. Thereafter, prior to the
expiration of such one hundred eighty (180) days, Landlord or its Affiliates may
Transfer such Leased Property provided however, that the Transfer of the Leased
Property is at a price equal to or greater than the price contained in the
Landlord's Notice, and otherwise consistent in all material respects with the
terms and conditions set forth in Landlord's Notice. Tenant's Purchase Refusal
Right shall revive in the event that Landlord fails to Transfer the Leased
Property within said one hundred eighty (180) days. In the event that Tenant
elects to exercise the Purchase Refusal Right and to acquire the Leased Property
thereby, (a) Tenant shall acquire such Leased Property on the same terms and
conditions and subject to all time periods
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and other limitations as provided in Landlord's Notice (provided, however,
Tenant shall in all events have not less than one hundred twenty (120) days to
close its acquisition of the Leased Property following its written notice
exercising its Purchase Refusal Right), and (b) concurrently with such
acquisition, the Lease of such Leased Property shall terminate (but Tenant shall
remain liable to pay any accrued Rent due and payable on the closing date with
respect to such Leased Property and all indemnifications and other provisions
that survive the expiration of the individual Lease or of this Agreement shall
continue in effect), and this Agreement shall be appropriately amended to
reflect the termination of such Lease.
Notwithstanding the foregoing provisions, the Purchase Refusal Right
shall not be applicable to any Transfer of a Leased Property to any Affiliate of
Landlord, so long as such Affiliate acquires such Leased Property subject to the
Purchase Refusal Right.
A "Transfer" is any direct or indirect sale, conveyance or other
disposition, including any transfer of a controlling ownership interest in any
owning partnership, limited liability company or corporation, and including any
lease with a term in excess of five (5) years.
12.02 RESTRICTION ON EXERCISE OF PURCHASE REFUSAL RIGHT.
Notwithstanding any other provision of this Article XII, Landlord shall not be
required to Transfer any Leased Property, or any portion thereof, which is a
real estate asset as defined in Section 856(c) (5) (B), or functionally
equivalent successor provision, of the Code, to Tenant if Landlord's counsel
advises Landlord that such Transfer may not qualify as a sale of property
described in Section 857(b) (6) (C), or functionally equivalent successor
provision of the Code. If Landlord determines not to Transfer such property
pursuant to the above sentence, Tenant's right, if any, to acquire any or all of
such property shall continue and be exercisable, upon and subject to all
applicable terms and conditions set forth in this Lease, at such time as the
transaction, upon the advise of Landlord's tax counsel, would qualify as a sale
of property described in Section 857(b) (6) (C) of the Code, or functionally
equivalent successor provision, and until such time Tenant shall lease the
Leased Property for the lesser of the rent otherwise called for in the Lease or
fair market rental. If the Transfer of the Leased Property is delayed pursuant
to this section, Landlord will use its reasonable best efforts to Transfer such
Leased Property to Tenant as soon as practicable in the next calendar year.
ARTICLE XIII
ASSIGNMENT AND SUBLETTING; ATTORNMENT
13.01 PROHIBITION AGAINST SUBLETTING AND ASSIGNMENT. Subject to
Sections 13.03, 13.04 and 7.05, Tenant shall not, without the prior written
consent of Landlord (which consent Landlord may grant or withhold in its sole
and absolute discretion), sublease, assign, mortgage, pledge, hypothecate,
encumber or otherwise transfer (except to an Affiliate of Tenant) this Agreement
or any Lease or any interest herein or therein, or all or any part of the Leased
Property, or suffer or permit any Lease or the leasehold estate created thereby
or any other rights arising under any Lease to be
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assigned, transferred, mortgaged, pledged, hypothecated or encumbered, in whole
or in part, whether voluntarily, involuntarily or by operation of law. For
purposes of this Section 13.01, an assignment of any Lease shall be deemed to
include any Change of Control of Tenant, as if such Change of Control were an
assignment of the Lease. No assignment shall in any way impair the continuing
primary liability of Tenant hereunder.
13.02 CHANGES OF CONTROL. A Change of Control requiring the consent of
Landlord shall mean:
(a) the issuance and/or sale by Tenant of a Controlling (which
shall mean, as applied to any Person, the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, by contract or
otherwise) interest in Tenant to a Person other than an Affiliate of Tenant,
other than in either case a distribution to the public pursuant to an effective
registration statement under the Securities Act of 1933, as amended (a
"Registered Offering") or a distribution by any stockholder of Tenant to such
stockholders' owners or shareholders;
(b) the sale, conveyance or other transfer of all or
substantially all of the assets of Tenant (whether by operation of law or
otherwise); or
(c) any transaction pursuant to which Tenant is merged with or
consolidated into another entity (other than an entity owned and Controlled by
an Affiliate of Tenant), and Tenant is not the surviving entity.
13.03 OPERATING/SERVICE AGREEMENTS.
(a) Permitted Agreements. Tenant shall, without Landlord's
prior approval, be permitted to enter into certain operating/service agreements
(or amendments thereto) for portions of any Leased Property to various licensees
in connection with Tenant's operation of correctional or detention facilities as
is customarily associated with or incidental to the operation of such Leased
Property, which agreements may be in the nature of a sublease agreement,
provided such agreements or any amendments thereto are consistent with the
requirements of this Section 13.03.
(b) Terms of Agreements. Each operating/service agreement
concerning any of the Leased Property shall be subject and subordinate to the
provisions of the applicable Lease. No agreement made as permitted by Section
13.03(a) shall affect or reduce any of the obligations of Tenant hereunder, and
all such obligations shall continue in full force and effect as if no agreement
had been made. No agreement shall impose any additional obligations on Landlord
under the applicable Lease.
(c) Copies. Tenant shall, within ten (10) days after the
execution and delivery of any operating/service agreement or any amendment
thereto permitted by Section 13.03(a), deliver a duplicate original thereof to
Landlord.
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(d) Assignment of Rights in Agreements. As security for
performance of its obligations under each Lease, Tenant hereby grants, conveys
and assigns to Landlord all right, title and interest of Tenant in and to all
operating/service agreements now in existence or hereinafter entered into for
any or all of the applicable Leased Property, and all extensions, modifications
and renewals thereof and all rents, issues and profits therefrom, to the extent
the same are assignable by Tenant. Landlord hereby grants to Tenant a license to
collect and enjoy all rents and other sums of money payable under any such
agreement concerning any of such Leased Property; provided, however, that
Landlord shall have the absolute right at any time after the occurrence and
continuance of an Event of Default upon notice to Tenant and any vendors or
licensees to revoke said license and to collect such rents and sums of money and
to retain the same. Tenant shall not (i) after the occurrence and continuance of
an Event of Default, consent to, cause or allow any material modification or
alteration of any of the terms, conditions or covenants of any of the agreements
or the termination thereof, without the prior written approval of Landlord nor
(ii) accept any rents or other prepaid sums (other than customary security
deposits) more than ninety (90) days in advance of the accrual thereof nor
permit anything to be done, the doing of which, nor omit or refrain from doing
anything, the omission of which, will or could be a breach of or default in the
terms of any of the agreements or otherwise fail to timely perform all of its
obligations thereunder.
(e) Licenses, Etc. For purposes of this Section 13.03, the
operating/service agreements shall mean any licenses, concession arrangements,
or other arrangements relating to the possession or use of all or any part of
any Leased Property but specifically excluding any facility operating agreement
or other agreement for the housing or detention of inmates or detainees.
13.04 PERMITTED SUBLEASES. Landlord acknowledges that from time to
time Tenant intends to respond to requests for proposal ("RFP's") from
governmental entities seeking a contract for the housing or detention of
inmates or detainees at the Leased Premises ("Operating Contract"). Landlord
agrees to cooperate with Tenant in promptly reviewing any RFP which requires
that a sublease or a right to assume a sublease be granted to the governmental
entity in connection with the proposed award of an Operating Contract and
will not unreasonably withhold or delay consent thereto provided the terms of
such agreements, including any amendments thereto, are in accordance with the
requirements of Section 13.03(b), (c) and (d) and Section 13.07. If the terms
of such sublease or rights to assume a sublease do not comply with all of the
provisions of Section 13.03(b) and Section 13.07 but are nonetheless
acceptable to Landlord, in the exercise of Landlord's sole discretion, Landlord
agrees to execute and deliver, at Tenant's request, a nondisturbance and
attornment agreement in favor of such governmental entity, in form reasonably
satisfactory to Landlord. The provisions of this Section 13.04 shall apply to
any amendments to any sublease to which Landlord has previously granted its
consent or provided a nondisturbance agreement. Tenant agrees that an Operating
Contract or any amendment to an Operating Contract shall be deemed a sublease
for purposes of this Section 13.04 if such Operating Contract contains
provisions (whether or not set forth in a separate sublease agreement) granting
the governmental entity a right to use or occupy the Leased Premises or to
designate a successor operator to Tenant in the event of termination of
Tenant's rights under such Operating Contract. Tenant agrees to deliver to
Landlord copies of all Operating Contracts in effect with respect to any Leased
Premises, together with any amendments thereof and any notices of termination or
default received from the relevant contracting governmental entities,
regardless of whether any such Operating Contract is deemed a sublease
hereunder.
13.05 ASSIGNMENT. No assignment or sublease shall in any way impair the
continuing primary liability of Tenant hereunder, and no consent to any
assignment or sublease in a particular instance shall be deemed to be a waiver
of the prohibition set forth in Article XIII. Any assignment shall be solely of
Tenant's entire interest in the subject Lease. Any assignment, sublease or other
transfer of all or any portion of Tenant's interest in any Lease in
contravention of Article XIII shall be voidable at Landlord's option.
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13.06 REIT LIMITATIONS. Anything contained in this Agreement to the
contrary notwithstanding, Tenant shall not (i) sublet or assign any Leased
Property or any Lease on any basis such that the rental or other amounts to be
paid by the sublessee or assignee thereunder would be based, in whole or in
part, on the income or profits derived by any person of the Leased Property or
by the business activities of the sublessee or assignee; (ii) sublet or assign
any Leased Property or any Lease to any person that Landlord owns, directly or
indirectly (by applying constructive ownership rules set forth in Section
856(d)(5) of the Code), a ten percent (10%) or greater interest as defined by
Section 856(d)(2)(B) of the Code; or (iii) sublet or assign any Leased Property
or any Lease in any other manner or otherwise derive any income which could
cause any portion of the amounts received by Landlord pursuant to any Lease or
any sublease to fail to qualify as "rents from real property" within the meaning
of Section 856(d) of the Code, or which could cause any other income received by
Landlord to fail to qualify as income described in Section 856(c) (2) of the
Code. The requirements of this Section 13.05 shall likewise apply to any further
subleasing by any subtenant.
13.07 ATTORNMENT. Unless otherwise agreed by Landlord under Section
13.04, Tenant shall insert in each sublease entered into after the date hereof
provisions to the effect that (a) such sublease is subject and subordinate to
all of the terms and provisions of the applicable Lease (including this
Agreement) and to the rights of Landlord hereunder, (b) in the event such Lease
shall terminate before the expiration of such sublease, the sublessee thereunder
will, at Landlords' option, attorn to Landlord and waive any right the sublessee
may have to terminate the sublease or to surrender possession thereunder, as a
result of the termination of such Lease (except that such waiver of a right of
termination shall not be required in connection with an Operating Contract that
is deemed a sublease for purposes of Section 13.04) (c) a concurrent copy of any
notice of default required or permitted to be given under the Sublease will be
given to Landlord, (d) any amendment to said sublease to Landlord's prior
consent in accordance with the provisions of Section 13.03 and Section 13.04, as
applicable, and (e) in the event the sublessee receives a written notice from
Landlord or Landlord's assignees, if any, stating that Tenant is in default
under such Lease, the sublessee shall thereafter be obligated to pay all rentals
accruing under said sublease directly to the party giving such notice, or as
such party may direct. All rentals received from the sublessee by Landlord or
Landlord's assignees, if any, as the case may be, shall be credit against the
amounts owing by Tenant under such Lease.
ARTICLE XIV
ARBITRATION
14.01 CONTROVERSIES. Except with respect to the payment of Rent
hereunder, which shall be subject to the provisions of Section 9.02, in the case
a controversy arises between the parties as to any of the requirements of this
Agreement or of any individual Lease or the performance thereunder which the
parties are unable to resolve, the parties agree to waive the remedy of
litigation (except for extraordinary relief in an emergency situation) and agree
that such controversy or controversies shall be determined by arbitration as
hereafter provided in this Article.
14.02 APPOINTMENT OF ARBITRATORS. The party or parties requesting
arbitration shall serve upon the other a demand therefor, in writing, specifying
in detail the controversy and matter(s) to
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be submitted to arbitration. The selection of arbitrators shall be conducted
pursuant to the rules for resolution of commercial disputes promulgated by the
American Arbitration Association. The party or parties giving notice shall
request a listing of available arbitrators from the American Arbitration
Association, and each party shall respond in the selection process within
fifteen (15) days after each receipt of such listings until a panel of three (3)
arbitrators has been designated. If either party fails to respond within fifteen
(15) days, it is agreed that the American Arbitration Association may make such
selections as are necessary to complete the panel of three (3) arbitrators.
14.03 ARBITRATION PROCEDURE. Within fifteen (15) days after the
selection of the arbitration panel, the arbitrators shall give written notice to
each party as to the time and the place of each meeting, which shall be held in
West Palm Beach, Florida, at which the parties may appear and be heard, which
shall be no later than sixty (60) days after certification of the arbitration
panel. The parties waive the applicability of rules of evidence or rules of
procedure in the proceedings. The applicable rules shall be those in effect at
the time for the resolution of commercial disputes promulgated by the American
Arbitration Association. Notwithstanding the foregoing, the substantive law
governing the arbitration shall be the laws of the State of Florida. The
arbitrators shall take such testimony and make such examination and
investigations as the arbitrators reasonably deem necessary. The decision of the
arbitrators shall be in writing signed by a majority of the panel which decision
shall be final and binding upon the parties to the controversy; provided,
however, in rendering their decisions and making awards, the arbitrators shall
not add to, subtract from or otherwise modify the provisions of this Agreement.
14.04 EXPENSES. The expenses of the arbitration shall be assessed by
the arbitrators and specified in the written decision. In the absence of a
determination or assessment of expenses of the arbitration procedure in the
award, all of the expenses of such arbitration shall be divided equally between
Landlord and Tenant. Each party in interest shall be responsible for and pay the
fees, costs and expenses of its own counsel, unless the arbitration award
provides for an assessment of reasonable attorneys' fees and costs.
14.05 ENFORCEMENT OF THE ARBITRATION AWARD. There shall be no appeal
from the decision of the arbitrators, and upon the rendering of an award, any
party thereto may file the arbitrators' decision in the United States District
Court for the Southern District of Florida or any other court of competent
jurisdiction for enforcement as provided by applicable law.
ARTICLE XV
QUIET ENJOYMENT, SUBORDINATION,
ATTORNMENT, ESTOPPEL CERTIFICATES
15.01 QUIET ENJOYMENT. So long as Tenant performs all of its
obligations under this Agreement and each Lease, Tenant's possession of the
Leased Property will not be disturbed by or through Landlord.
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15.02 LANDLORD MORTGAGES; SUBORDINATION. Subject to Section 15.03,
without the consent of Tenant, Landlord may, from time to time, directly or
indirectly, create or otherwise cause to exist any lien, encumbrances or title
retention agreement on the Leased Properties, or any portion thereof or any
interest therein, whether to secure any borrowing or other means of financing or
refinancing. So long as Landlord obtains a nondisturbance agreement in
accordance with Section 15.03, this Agreement and each Lease and Tenant's rights
under this Agreement and each Lease shall be subordinate to any ground lease or
underlying lease, first mortgage, first deed of trust, or other first lien
against any Leased Property, together with any renewal, consolidation,
extension, modification or replacement thereof, which now or at any subsequent
time affects any Leased Property or any interest of Landlord in any Leased
Property, except to the extent that any such instrument expressly provides that
this Agreement and each Lease is superior. This provision will be
self-operative, and no further instrument or subordination will be required in
order to effect it. However, Tenant shall execute, acknowledge and deliver to
Landlord, at any time and from time to time upon demand by Landlord, such
documents as may be requested by Landlord or any mortgagee or any holder of any
mortgage or other instrument described in this Section, to confirm or effect any
such subordination. If Tenant fails or refuses to execute, acknowledge, and
deliver any such document within twenty (20) days after written demand, Landlord
may execute, acknowledge and deliver any such document on behalf of Tenant as
Tenant's attorney-in-fact. Tenant hereby constitutes and irrevocably appoints
Landlord, its successors and assigns, as Tenant's attorney-in-fact to execute,
acknowledge, and deliver on behalf of Tenant any documents described in this
Section. This power of attorney is coupled with an interest and is irrevocable.
15.03 ATTORNMENT; NON-DISTURBANCE. If any holder of any mortgage,
indenture, deed of trust, or other similar instrument described in Section 15.02
succeeds to Landlord's interest in any Leased Property, Tenant will pay to such
holder all Rent subsequently payable under the subject Lease. Tenant shall, upon
request of anyone succeeding to the interest of Landlord, automatically become
the tenant of, and attorn to, such successor in interest without changing such
Lease. The successor in interest will not be bound by (i) any payment of Rent
for more than one (1) month in advance; (ii) any amendment or modification of
such Lease made without its written consent, provided such party shall first
have afforded Tenant with written notice of its interest, including an address
to which the required request for written consent may be sent; (iii) any claim
against Landlord arising prior to the date on which the successor succeeded to
Landlord's interest; or (iv) any claim or offset of Rent against the Landlord.
Upon request by Landlord or such successor in interest and without cost to
Landlord or such successor in interest, Tenant will execute, acknowledge and
deliver an instrument or instruments confirming the attornment. If Tenant fails
or refuses to execute, acknowledge and deliver any such instrument within twenty
(20) days after written demand, then Landlord or such successor in interest will
be entitled to execute, acknowledge, and deliver any document on behalf of
Tenant as Tenant's attorney-in-fact. Tenant hereby constitutes and irrevocably
appoints Landlord, its successors and assigns, as Tenant's attorney-in-fact to
execute, acknowledge, and deliver on behalf of Tenant any such document. This
power of attorney is coupled with an interest and is irrevocable.
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Landlord shall use reasonable efforts to obtain a non-disturbance
agreement from any such party referred to above which provides that in the event
such party succeeds to Landlord's interest under the Lease and provided that no
Event of Default by Tenant exists, such party will not disturb Tenant's
possession, use or occupancy of the Leased Property in accordance with the
provisions of this Agreement.
15.04 ESTOPPEL CERTIFICATES. At the request Tenant, Landlord shall
execute, acknowledge, and deliver an estoppel certificate, in recordable form,
in favor of the Tenant or any lender or purchaser of Tenant, as the case may be,
pertaining to matters reasonably and customarily requested in such certificates.
In the case of such estoppel certificates requested of Tenant by Landlord or any
mortgagee or purchaser of the Leased Property, Tenant shall execute, acknowledge
and deliver an estoppel certificate, in recordable form, in favor of Landlord or
any mortgagee or purchaser of any Leased Property certifying the following: (i)
that the subject Lease is unmodified and in full force and effect, or if there
have been modifications that the same is in full force and effect as modified
and stating the modifications; (ii) the date to which Rent and other charges
have been paid; (iii) that Tenant is not in default nor is there any fact or
condition which, with notice or lapse of time, or both, would constitute a
default, if that be the case, or specifying any existing default; (iv) that
Tenant has accepted and occupies such Leased Property; (v) that Tenant has no
defenses, set-offs, deductions, credits, or counterclaims against Landlord, if
that be the case, or specifying such that exist; (vi) that the Landlord has no
outstanding construction or repair obligations; and (vii) such other information
as may reasonably be requested by the Landlord or any mortgagee or purchaser.
Any purchaser or mortgagee may rely on this estoppel certificate. If Tenant
fails to deliver the estoppel certificates to Landlord within ten (10) days
after the request of the Landlord, then Tenant shall be deemed to have certified
that (a) such Lease is in full force and effect and has not been modified, or
that such Lease has been modified as set forth in the certificate delivered to
Tenant; (b) Tenant has not prepaid any Rent or other charges except for the
current month; (c) Tenant has accepted and occupies such Leased Property; (d)
Landlord is not in default nor is there any fact or condition which, with notice
or lapse of time, or both, would constitute a default; (e) Landlord has no
outstanding construction or repair obligation; and (f) Tenant has no defenses,
set-offs, deductions, credits, or counterclaims against Landlord. Tenant hereby
irrevocably appoints Landlord as Tenant's attorney-in-fact to execute,
acknowledge and deliver on Tenant's behalf any estoppel certificate which Tenant
does not object to within twenty (20) days after Landlord sends the certificate
to Tenant. This power of attorney is coupled with an interest and is
irrevocable.
ARTICLE XVI
MISCELLANEOUS
16.01 NOTICES. Landlord and Tenant hereby agree that all notices,
demands, requests, and consents (hereinafter "Notices") required to be given
pursuant to the terms of this Lease shall be in writing and shall be addressed
as follows:
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If to Tenant: Wackenhut Corrections Corporation
4200 Wackenhut Drive, Suite 100
Palm Beach Gardens, Florida 33410-4243
Attention: Dr. George C. Zoley
With a copy to: Akerman, Senterfitt & Eidson, P.A.
One S.E. Third Avenue, Suite 2800
Miami, Florida 33131
Attention: Bruce I. March, Esq.
If to Landlord: CPT Operating Partnership, L.P.
4200 Wackenhut Drive
Palm Beach Gardens, Florida 33410-4243
Attention: Mr. Charles R. Jones
With a copy to: Josias, Goren, Cherof, Doody and Ezrol, P.A.
3009 East Commercial Boulevard, Suite 200
Ft. Lauderdale, Florida 33308
Attention: Donald J. Doody, Esq.
and shall be served by (i) personal delivery, (ii) certified mail, return
receipt requested, postage prepaid, or (iii) nationally recognized overnight
courier. All notices shall be deemed to be given upon the earlier of actual
receipt or three (3) days after mailing, or one (1) business day after deposit
with the overnight courier. Any Notices meeting the requirements of this Section
shall be effective, regardless of whether or not actually received. Landlord or
Tenant may change its notice address at any time by giving the other party
Notice of such change.
16.02 ADVERTISEMENT OF LEASED PROPERTY. In the event the parties hereto
have not executed a renewal lease of any Leased Property within one (1) year
prior to the expiration of the Term, then Landlord or its agent shall have the
right to enter such Leased Property at all reasonable times and in accordance
with Section 16.03 for the purpose of exhibiting such Leased Property to others.
16.03 LANDLORD'S ACCESS. Landlord shall have the right to enter upon
the Leased Property, upon reasonable prior notice to Tenant, for purposes of
inspecting the same and assuring Tenant's compliance with this Agreement
provided, any such entry by Landlord shall be subject to all rules, guidelines
and procedures prescribed by Tenant in connection therewith. Landlord shall not
be allowed entry to the Leased Premises unless accompanied by such of Tenant's
personnel as Tenant shall require.
16.04 ENTIRE AGREEMENT. This Agreement and the individual Leases
contain the entire agreement between Landlord and Tenant with respect to the
subject matter hereof and thereof. No
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representations, warranties, and agreements have been made by Landlord except as
set forth in this Agreement and the Leases.
16.05 SEVERABILITY. If any term or provision of this Agreement or any
Lease is held or deemed by Landlord to be invalid or unenforceable, such holding
shall not affect the remainder of this Agreement or any Lease and the same shall
remain in full force and effect, unless such holding substantially deprives
Tenant of the use of the Leased Property or Landlord of the Rents therefor, in
which event the Lease for such Leased Property shall forthwith terminate as if
by expiration of the Term.
16.06 CAPTIONS AND HEADINGS. The captions and headings are inserted
only as a matter of convenience and for reference and in no way define, limit or
describe the scope of this Agreement or the intent of any provision hereof.
16.07 GOVERNING LAW. This Agreement and each of the Leases shall be
construed under the laws of the State of Florida.
16.08 MEMORANDUM OF LEASE. Landlord and Tenant agree that a record of
this Agreement or any Lease may be recorded by either party in a memorandum of
lease approved by Landlord and Tenant with respect to each Leased Property.
16.09 WAIVER. No waiver by either party of any condition or covenant
herein contained, or of any breach of any such condition or covenant, shall be
held or take to be a waiver of any subsequent breach of such covenant or
condition, or to permit or excuse its continuance or any future breach thereof
or of any condition or covenant, nor shall the acceptance of Rent by Landlord at
any time when Tenant is in default in the performance or observance of any
condition or covenant herein be construed as a waiver of such default, or of
Landlord's right to terminate this Agreement or any Lease or exercise any other
remedy granted herein on account of such existing default.
16.10 BINDING EFFECT. This Agreement and each Lease will be binding
upon and inure to the benefit of the heirs, successors, personal
representatives, and permitted assigns of Landlord and Tenant.
16.11 AUTHORITY. The persons executing this Agreement or any Lease on
behalf of Tenant warrant that (i) Tenant has the power and authority to enter
into this Agreement or such Lease; (ii) Tenant is qualified to do business in
the state in which the Leased Property is located; and (iii) they are authorized
to execute this Agreement and each Lease on behalf of Tenant. Tenant shall, at
the request of Landlord, provide evidence satisfactory to Landlord confirming
these representation.
16.12 TRANSFER OF PERMITS, ETC. Upon the expiration or earlier
termination of the Term of any Lease (whether pursuant to the provisions of this
Agreement or of such Lease), Tenant shall, at the option of Landlord, transfer
to and relinquish to Landlord or Landlord's nominee and cooperate with Landlord
or Landlords' nominee in connection with the processing by Landlord or
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such nominee of all licenses, operating permits, and other governmental
authorization and all contracts, including without limitation, the correctional
or detention facility license, and any other contracts with governmental or
quasi-governmental entities which may be necessary or appropriate for the
operation by Landlord or such nominee of the subject Leased Property for the
purposes of operating a correctional or detention facility; provided that the
costs and expenses of any such transfer or the processing of any such
application shall be paid by Landlord or Landlord's nominee; and provided
further that any management agreement, facility operating agreement or other
agreement for the housing or detention of inmates shall be expressly excluded.
Any such permits, licenses, certificates and contracts which are held in
Landlord's name now or at the termination of such Lease shall remain the
property of Landlord. To the extent permitted by law, Tenant hereby irrevocably
appoints Landlord, its successors and assigns and any nominee or nominees
specifically designated by Landlord or any successor or assign as Tenant's
attorney-in-fact to execute, acknowledge, deliver and file all documents
appropriate to such transfer or processing of any such application on behalf of
Tenant; this power of attorney is coupled with an interest and is irrevocable.
16.13 MODIFICATION. This Agreement and any Lease may only be modified
by a writing signed by both Landlord and Tenant.
16.14 INCORPORATION BY REFERENCE. All schedules and exhibits referred
to in this Agreement are incorporated into this Agreement, and all schedules and
exhibits referred to in any Lease (as well as the provisions of this Agreement,
except to the extent specifically excluded from or inconsistent with the terms
of such Lease) are incorporated into such Lease.
16.15 NO MERGER. The surrender of this Agreement or of any Lease by
Tenant or the cancellation of this Agreement or of any Lease by agreement of
Tenant and Landlord or the termination of this Agreement or of any Lease on
account of Tenant's default will not work a merger, and will, at Landlord's
option, except as otherwise expressly provided, terminate any subleases or
operate as an assignment to Landlord of any subleases. Landlord's option under
this paragraph will be exercised by notice to Tenant and all known subtenants of
any applicable Leased Property.
16.16 LACHES. No delay or omission by either party hereto to exercise
any right or power accruing upon any noncompliance or default by the other party
with respect to any of the terms hereof shall impair any such right or power or
be construed to be a waiver thereof.
16.17 WAIVER OF JURY TRIAL. To the extent that there is any claim by
one party against the other that is not to be settled by arbitration as provided
in Article XIV hereof, Landlord and Tenant waive trial by jury in any action,
proceeding or counterclaim brought by either of them against the other on all
matters arising out of this Agreement or the use and occupancy of the Leased
Property (except claims for personal injury or property damage).
16.18 PERMITTED CONTESTS. Tenant, on its own or on Landlord's behalf
(or in Landlord's name), but at Tenant's expense, may contest, by appropriate
legal proceedings conducted in good
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faith and with due diligence, the amount or validity or application, in whole or
in part, of any Imposition or any legal requirement or insurance requirement or
any lien, attachment, levy, encumbrance, charge or claim provided that (i) in
the case of an unpaid Imposition, lien, attachment, levy, encumbrance, charge or
claim, the commencement and continuation of such proceedings shall suspend the
collection thereof from Landlord and from the Leased Property; (ii) neither the
Leased Property nor any Rent therefrom nor any part thereof or interest therein
would be in any immediate danger of being sold, forfeited, attached or lost;
(iii) in the case of a legal requirement, Landlord would not be in any immediate
danger of civil or criminal liability for failure to comply therewith pending
the outcome of such proceedings; (iv) in the event that any such contest shall
involve a sum of money or potential loss in excess of Fifty Thousand Dollars
($50,000.00), Tenant shall deliver to Landlord and its counsel an opinion of
Tenant's counsel to the effect set forth in clauses (i), (ii) and (iii), to the
extent applicable; (v) in the case of a legal requirement and/or an Imposition,
lien, encumbrance, or charge, Tenant shall give such reasonable security as may
be demanded by Landlord to insure ultimate payment of the same and to prevent
any sale or forfeiture of the affected Leased Property or the Rent by reason of
such nonpayment or noncompliance; provided, however, the provisions of this
Section shall not be construed to permit Tenant to contest the payment of Rent
(except as to contests concerning the method of computation or the basis of levy
of any Imposition) or any other sums payable by Tenant to Landlord hereunder;
(vi) in the case of an insurance requirement, the coverage required by Article
IV shall be maintained; and (vii) if such contest be finally resolved against
Tenant, Tenant shall, as Other Additional Rent due hereunder, promptly pay the
amount required to be paid, together with all interest and penalties accrued
thereon, or comply with the applicable legal requirement or insurance
requirement. Landlord, at Tenant's expense, shall execute and deliver to Tenant
such authorizations and other documents as may be reasonably required in any
such contest, and, if reasonably requested by Tenant or if Landlord so desires,
Landlord shall join as a party therein. Tenant hereby agrees to indemnify and
save Landlord harmless from and against any liability, cost or expense of any
kind that may be imposed upon Landlord in connection with any such contest and
any loss resulting therefrom.
16.19 CONSTRUCTION OF LEASE. This Agreement and each of the Leases for
Leased Properties have been reviewed by Landlord and Tenant and their respective
professional advisors. Landlord, Tenant, and their advisors believe that this
Agreement and such Leases are the product of all their efforts, that they
express their agreement, and agree that they shall not be interpreted in favor
of either Landlord or Tenant or against either Landlord or Tenant merely because
of any party's efforts in preparing such documents.
16.20 COUNTERPARTS. This Agreement and each Lease may be executed in
duplicate counterparts, each of which shall be deemed an original hereof or
thereof.
16.21 RELATIONSHIP OF LANDLORD AND TENANT. The relationship of Landlord
and Tenant is the relationship of lessor and lessee. Landlord and Tenant are not
partners, joint venturers, or associates.
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16.22 LANDLORD'S STATUS AS A REIT. Tenant acknowledges that Landlord
intends to elect to be taxed as a real estate investment trust ("REIT") under
the Code. Tenant shall not do anything which would adversely affect Landlord's
status as a REIT. Tenant hereby agrees to modifications of this Agreement which
do not materially adversely affect Tenant's rights and liabilities if such
modifications are required to retain or clarify Landlord's status as a REIT.
16.23 SALE OF REAL ESTATE ASSETS. Notwithstanding any other provision
of this Agreement or of any Lease, Landlord shall not be required to sell or
transfer Leased Property, or any portion thereof, which is a real estate asset
as defined in Section 856(c)(6) of the Code, to Tenant if Landlord's counsel
advises Landlord that such sale or transfer may not be a sale of property
described in Section 857(b)(6)(C) of the Code. If Landlord determines not to
sell such property pursuant to the above sentence, Tenant's right, if any, to
purchase the Leased Property shall continue and be exercisable at such time as
the transaction, upon the advice of Landlord's counsel, would be a sale of
property described in Section 857(b)(6)(C) of the Code.
16.24 ARBITRATION. If it becomes necessary to determine the fair market
rental of a Capital Addition in connection with the exercise by the Landlord of
an option to purchase with respect thereto, the Landlord and Tenant shall
attempt to agree upon a single appraiser to make such determination within
thirty (30) days after a demand for arbitration has been made by either the
Landlord or Tenant. If the Landlord and Tenant are unable to agree upon a single
arbitrator within thirty (30) days thereafter, then the party giving the notice
of demand for arbitration shall give notice to the other of a person selected to
act as appraiser on its behalf. Within ten (10) days after such notice, the
Landlord (or Tenant, as the case may be) shall by notice to the Tenant (or the
Landlord, as the case may be) appoint a second person as appraiser on its
behalf. The appraisers thus appointed, each of whom must be a member of the
American Institute of Real Estate Appraisers (or any successor organization
thereto) and experienced in appraising correction and detention facilities (or
reasonably similar facilities), shall, within forty-five (45) days after the
date of the notice appointing the first appraiser, proceed to appraise the
relevant Capital Addition to determine the fair market rental thereof as of the
relevant date (giving effect to the impact, if any, of inflation from the date
of their decision to the relevant date); provided, however, that if only one
appraiser has been so appointed, or if two appraisers have been so appointed but
only one such appraiser has made such determination within the later to occur of
ten (10) business days following the delivery of such appraisal to the other
party or fifty (50) days after the making of Tenant's or Landlord's request,
then the determination of such appraiser shall be final and binding upon the
parties. If two appraisers have been appointed and have made their
determinations within the respective requisite periods set forth above and if
the difference between the amounts so determined does not exceed ten percent
(10%) of the lesser of such amounts, then the fair market rental shall be an
amount equal to fifty percent (50%) of the sum of the amounts so determined. If
the difference between the amounts so determined exceeds ten percent (10%) of
the lesser of such amounts, then such two appraisers shall have twenty (20) days
to appoint a third appraiser. If no such appraiser has been appointed within
such twenty (20) days or within ninety (90) days of the original request for a
determination of fair market value or fair market rental, whichever is earlier,
either Landlord or Tenant may apply to any court having jurisdiction to have
such appointment made by such court. Any appraiser appointed
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by the original appraisers or by such court shall be instructed to determine the
fair market rental within forty-five (45) days after appointment of such
appraiser. The determination of the appraiser which differs most in terms of
dollar amount from the determinations of the other two appraisers shall be
excluded, and the average of the sum of the remaining two determinations shall
be final and binding upon Landlord and Tenant as the fair market rental of the
Capital Addition. This provision for determining by appraisal shall be
specifically enforceable to the extent such remedy is available under applicable
law, and any determination hereunder shall be final and binding upon the parties
and judgment may be entered upon such determination in any court having
jurisdiction of the matter. The Landlord and Tenant shall each pay the fees and
expenses of the appraiser appointed by it and each shall pay one-half (1/2) of
the fees and expenses of the third appraiser and one-half (1/2) of all other
costs and expenses incurred in connection with each appraisal.
16.25 LIABILITY OF GENERAL PARTNER OF LANDLORD. Tenant acknowledges
that Landlord has disclosed that the general partner of Landlord (the "General
Partner") is a Maryland business trust formed pursuant to a Declaration of
Trust, as amended, a copy of which is duly filed with the Department of
Assessments and Taxation of the State of Maryland, which provides that no
trustee, officer, shareholder, employee or agent of the General Partner shall be
held personally liable under any written instrument creating an obligation of,
or claim against, the General Partner and that all persons dealing with the
General Partner, in any way, shall look only to the assets of the General
Partner for the payment of any sum or the performance of any obligation. Tenant
agrees that any liability of the General Partner or any trustee, officer,
shareholder, employee or agent acting on behalf of the General Partner arising
out of this Agreement or the performance by Landlord of its obligations
hereunder is limited to the assets of the General Partner in accordance with the
above Declaration of Trust.
16.26 WARRANTIES. Notwithstanding the assignment to Landlord of the
construction and manufacturers' warranties with respect to the Leased Property
or any Capital Addition in connection with the acquisition thereof from Tenant,
Landlord shall cooperate with Tenant in Tenant's enforcement, at Tenant's sole
cost and expense, of any express or implied warranties or guaranties of
workmanship or materials given by contractors, subcontractors, architects,
draftsmen, materialmen or manufacturers that guarantee or warrant against
defective design, workmanship or materials in connection with the construction
of, or any alteration or improvement to, the Leased Premises. Landlord will
execute such documents as Tenant may reasonably require in order to evidence the
authority of Tenant to enforce such guaranties and warranties in Landlord's name
or on Landlord's behalf.
IN WITNESS WHEREOF, the parties hereto have executed this Lease or
caused the same to be executed by their respective duly authorized officers as
of the date first set forth above.
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WITNESSES: CPT OPERATING PARTNERSHIP L.P.
By: Correctional Properties Trust, its
general partner
By:
- ---------------------------------- -----------------------------------
PRINT NAME OF WITNESS BELOW: Charles R. Jones, President
- ----------------------------------
- ----------------------------------
PRINT NAME OF WITNESS BELOW:
- ----------------------------------
WACKENHUT CORRECTIONS
CORPORATION
By:
- ---------------------------------- ----------------------------------------
PRINT NAME OF WITNESS BELOW: George Zoley, Vice Chairman of the Board
- ----------------------------------
- ----------------------------------
PRINT NAME OF WITNESS BELOW:
- ----------------------------------
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<PAGE> 57
SCHEDULE A
THE FACILITIES
Location
Facility Name (City, State)
- ------------- -------------
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<PAGE> 58
SCHEDULE B
PERSONAL PROPERTY
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<PAGE> 59
SCHEDULE C
[TENANT'S PROPRIETARY PROPERTY]
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<PAGE> 1
EXHIBIT 10.3
FORM OF
LEASE AGREEMENT
THIS LEASE AGREEMENT ("Lease") dated as of the ______ day of
____________________________________, 1998, by and between CPT OPERATING
PARTNERSHIP L.P., a Delaware limited partnership ("Landlord") and WACKENHUT
CORRECTIONS CORPORATION, a Florida corporation ("Tenant").
RECITALS
A. Tenant has concurrently conveyed to Landlord the property
described in Exhibit A hereto, and Landlord and Tenant desire that Landlord
lease such property back to Tenant; and
B. Landlord and Tenant have entered into a Master Agreement to
Lease of even date herewith (the "Master Agreement") which sets forth certain
agreements of the parties with respect to the lease of various properties
including the property that is the subject of this Lease;
NOW, THEREFORE, in consideration of the premises and of their
respective agreements and undertakings herein, Landlord and Tenant agree as
follows:
ARTICLE I
PREMISES AND TERM
1.01 Leased Property. Landlord hereby leases to Tenant and Tenant
leases from Landlord the Land located in _______________, described in Exhibit
A hereto, and all Improvements, Fixtures, and Personal Property thereon or
thereto (each as defined in the Master Agreement, and, together with said Land,
the "Leased Property"); such Leased Property collectively known and described
at the date hereof as [Name of Correctional or Detention Facility];
SUBJECT, HOWEVER, to the lien of the mortgage debt described in
Exhibit B hereto, if any, and to all easements, liens, encumbrances,
restrictions, agreements, and other title matters existing as of the date
hereof and listed in Exhibit C hereto (collectively "Permitted Exceptions").
1.02 Term. The initial term (the "Fixed Term") of the Lease shall be
for a fixed term of ten (10) years commencing on __________________________,
1998 (the "Commencement Date") and expiring on _______________________, 2008
(the "Expiration Date"). The Term of this Lease may be renewed as follows:
<PAGE> 2
(i) (a) provided that Tenant gives Landlord notice on or
before the date which is six (6) months prior to the Expiration Date, the Lease
shall be renewed at fair market rental rates as determined upon the mutual
agreement of Landlord and Tenant in accordance with Subsection 1.02(ii) for one
(1) additional five (5) year term (the "Extended Term") on the same terms and
provisions (other than with respect to renewal) as the Fixed Term, as set forth
in this Lease; (b) provided that Tenant gives Landlord notice on or before the
date which is six (6) months prior to the expiration of the Extended Term, the
Lease shall be renewed at fair market rental rates as determined upon the
mutual agreement of Landlord and Tenant in accordance with Subsection 1.02(ii)
for one (1) additional five (5) year term (the "Second Extended Term") on the
same terms and provisions (other than with respect to renewal) as the Fixed
Term, as set forth in this Lease; and (c) provided that Tenant gives Landlord
notice on or before the date which is six (6) months prior to the expiration of
the Second Extended Term, the Lease shall be renewed at fair market rental
rates as determined upon the mutual agreement of Landlord and Tenant in
accordance with subsection 1.02(ii) for one (1) additional five (5) year term
(the "Third Extended Term") on the same terms and provisions (other than with
respect to renewal) as the Fixed Term, as set forth in this Lease.
(ii) After receipt by Landlord of a notice from Tenant
electing to extend the Term of the Lease under Subsections 1.02(i)(a), (b) and
(c) above, Landlord and Tenant shall thereafter negotiate in good faith a
mutually acceptable amendment to the Lease confirming the extension of the
Lease Term and the fair market Base Rent and Additional Rent to be applicable
thereto. If Landlord and Tenant fail to reach a mutual agreement as to the fair
market Base Rent and Additional Rent to be applicable to such extension of the
Lease Term within the forty-five (45) day period following the date Tenant's
notice of election to extend is received by Landlord, then either party may at
any time thereafter, by written notice to the other, demand arbitration in
accordance with this Subsection and the Landlord and Tenant shall attempt to
agree upon a single arbitrator to make such determination. If Landlord and
Tenant are unable to agree upon a single arbitrator within thirty (30) days
thereafter, then the party giving the notice of demand for arbitration shall
give notice to the other of a person selected to act as appraiser on its
behalf. Within ten (10) days after such notice, Landlord (or Tenant, as the
case may be) shall by notice to the Tenant (or Landlord, as the case may be)
appoint a second person as appraiser on its behalf. The appraisers thus
appointed, each of whom must be a member of the American Institute of Real
Estate Appraisers (or any successor organization thereto) and experienced in
appraising correctional and detention facilities (or reasonably similar
facilities), shall, within forty-five (45) days after the date of the notice
appointing the first appraiser, proceed to appraise the Leased Property to
determine the fair market rental thereof as of the relevant date (giving effect
to the impact, if any, of inflation from the date of their decision to the
relevant date); provided, however, that if only one appraiser has been so
appointed, or if two appraisers have been so appointed but only one such
appraiser has made such determination within the later of occur of 10 business
days following delivery of such appraisal to the other party or fifty (50) days
after the making of Tenant's or Landlord's request, then the determination of
such appraiser shall be final and binding upon the parties. If two appraisers
have been appointed and have made their determinations within the respective
requisite periods set forth above and if the difference between the amounts so
determined does not exceed ten percent (10%) of the lesser of such amounts,
then the fair market rental shall be an amount equal to fifty percent (50%) of
the sum of the amounts so determined. If
2
<PAGE> 3
the difference between the amounts so determined exceeds ten percent (10%) of
the lesser of such amounts, then such two appraisers shall have twenty (20)
days to appoint a third appraiser. If no such appraiser has been appointed
within such twenty (20) days or within ninety (90) days of the original request
for a determination of fair market rental, whichever is earlier, either
Landlord or Tenant may apply to any court having jurisdiction to have such
appointment made by such court. Any appraiser appointed by the original
appraisers or by such court shall be instructed to determine the Fair Market
Rental within forty-five (45) days after appointment of such appraiser. The
determination of the appraiser which differs most in terms of dollar amount
from the determinations of the other two appraisers shall be excluded, and the
average of the sum of the remaining two determinations shall be final and
binding upon Landlord and Tenant as the fair market rental of the Leased
Property. This provision for determining by appraisal shall be specifically
enforceable to the extent such remedy is available under applicable law, and
any determination hereunder shall be final and binding upon the parties and
judgment may be entered upon such determination in any court having
jurisdiction of the matter. Landlord and Tenant shall each pay the fees and
expenses of the appraiser appointed by it and each shall pay one-half (1/2) of
the fees and expenses of the third appraiser and one-half (1/2) of all other
costs and expenses incurred in connection with each appraisal.
(iii) Notwithstanding the options to extend granted to
Tenant in Subsections 1.02(i)(a), (b) and (c) and above, if on the expiration of
the Fixed Term or on the expiration of the Extended Term, Second Extended Term
or any Subsequent Term (as defined below) of the Lease, there is in effect an
unexpired sublease approved by Landlord in accordance with Article XIII of the
Master Lease, then, in such event unless Landlord and Tenant have otherwise
mutually agreed in writing, the Term of this Lease shall be automatically
extended for one (1) additional five year term (a "Subsequent Term") on the
same terms and conditions and at the same Base Rent and Additional Rent
(including, without limitation, the method of determining any increases in
Additional Rent) in effect during the prior Lease Year.
(iv) The term "Term" used in this Agreement means the
Fixed Term, Extended Term, Second Extended Term, Third Extended Term, or any
Subsequent Term, as appropriate. The term "Lease Year" means each twelve (12)
month period during the Term commencing on the Commencement Date or, if the
Commencement Date is not the first day of a calendar month, commencing on the
first day of the first calendar month following the Commencement Date, and each
successive twelve month period thereafter during the Term.
ARTICLE II
RENT
2.01 Base Rent. Tenant shall pay Landlord Base Rent for the Term in
advance in consecutive monthly installments payable on the first day of each
month during the Term, the Extended Term, Second Extended Term, the Third
Extended Term or any Subsequent Term, commencing on the Commencement Date
provided for in Section 1.03 of the Master Agreement,
3
<PAGE> 4
in accordance with the Base Rent Schedule attached hereto as Exhibit B. Any
Rent (as defined in Section 2.04 of the Master Agreement) payable for a portion
of a month shall be prorated based upon the number of days in the applicable
month and an appropriate payment or refund, as the case may be, shall be made
in accordance with the terms of the Master Agreement, so as to charge Tenant
only for the fractional month falling within the Term.
2.02 Additional Rent. The Base Rent shall be subject to such
increases over the Term as determined pursuant to Section 2.02 of the Master
Agreement.
2.03 Other Additional Rent. Tenant shall also pay all Other
Additional Rent with respect to the Leased Property, as set forth in the Master
Agreement.
ARTICLE III
OTHER TERMS AND CONDITIONS
3.01 Master Agreement Incorporated Herein. All provisions of the
Master Agreement (except any provisions expressly therein not to be a part of
an individual lease of leased property) are hereby incorporated in and are a
part of this Lease of the Leased Property.
3.02 Recordation. At the request of Landlord or Tenant, a short form
memorandum of this Lease may be recorded in the real estate records of any
county which Landlord or Tenant deems appropriate in order to provide legal
notice of the existence hereof.
IN WITNESS WHEREOF, the Landlord and the Tenant have executed this
Lease or caused the same to be executed by their respective duly authorized
officers as of the date first set forth above.
<TABLE>
<S> <C>
CPT OPERATING PARTNERSHIP L.P.
By: Correctional Facilities Trust, a Maryland real
estate investment trust, its General Partner
By:
- ----------------------------- ------------------------------------------------
Witness Charles R. Jones, President
- -----------------------------
Print Name
- -----------------------------
Witness
- -----------------------------
Print Name
</TABLE>
4
<PAGE> 5
<TABLE>
<S> <C>
WACKENHUT CORRECTIONS CORPORATION
By:
- ----------------------------- ---------------------------------------------
Witness George C. Zoley, Vice Chairman of the Board
- -----------------------------
Print Name
- -----------------------------
Witness
- -----------------------------
Print Name
</TABLE>
5
<PAGE> 6
EXHIBIT A
[Legal Description of Leased Property]
<PAGE> 7
EXHIBIT B
Base Rent Schedule
(Property:____________________________________________________________________)
Tenant will pay to Landlord annual Base Rent of______________________ payable
in equal monthly instalments beginning on the Commencement Date of
_____________________.
Base Rent for any Subsequent Term shall be equal to the Base Rent and
Additional Rent (including, without limitation, the method of determining any
increases in Additional Rent) in effect during the prior Lease Year.
Base Rent for the Extended Term, Second Extended Term and Third Extended
Term shall be equal to the fair market rental value of the Leased Property as
of the respective commencement dates thereof.
<PAGE> 8
EXHIBIT C
Mortgage Debt
(Property:__________________________________________________________________)
This property is subject to the following Mortgage Debt: (or subsequent
Mortgage Debt)
<PAGE> 9
EXHIBIT D
Permitted Exceptions
(Property:__________________________________________________________________)
<PAGE> 1
EXHIBIT 10.4
FORM OF
RIGHT TO PURCHASE AGREEMENT
THIS RIGHT TO PURCHASE AGREEMENT (the "Agreement"), dated as of
__________, 1998, is made and entered into by and between WACKENHUT CORRECTIONS
CORPORATION, a Florida corporation (hereinafter referred to, together with its
Affiliates as hereinafter defined, as "WCC"), and CPT OPERATING PARTNERSHIP
L.P., a Delaware limited partnership (hereinafter referred to as the
"Company").
R E C I T A L S
A. The Company has as of the date hereof acquired from WCC certain
correctional and detention facilities (hereinafter referred to as the "Leased
Facilities") pursuant to a series of Purchase and Sale Agreements of even date
herewith (the "Purchase Agreements") and the Company has an option to acquire
and lease back to WCC certain other correctional or detention facilities (the
"Option Facilities") pursuant to certain Option Agreements of even date
herewith (the "Option Agreements"); and
B. In addition to the Leased Facilities, WCC has the right to
acquire certain other correctional or detention facilities presently under
construction in New Mexico as hereinafter described and intends to acquire or
have the right to acquire additional correctional and detention facilities in
the future; and
C. WCC desires to grant to the Company herewith an option under
certain circumstances to purchase Future Facilities and Restricted Facilities
(as hereinafter defined);
NOW, THEREFORE, in consideration of the sum of Ten Dollars ($10.00),
the mutual covenants and agreements contained herein, and in the Lease
Agreements, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, WCC and the Company agree as
follows:
1. DEFINITIONS. An "Affiliate" as used herein shall mean any
Person directly or indirectly controlling, controlled by, or under common
control with that Person.
"Facility" shall mean either a Future Facility or a Restricted
Facility.
"Future Facility" shall mean any correctional or detention facility,
other than a Restricted Facility, which WCC or its Affiliates owns or has the
right to acquire during the term of this Agreement.
"Future Facility Option Period" shall mean the time period within
which the Company must exercise (if at all) the option granted herein with
respect to an individual Future Facility which time
<PAGE> 2
period shall expire upon the earlier to occur of (i) four (4) years from
receipt of a certificate of occupancy (or its equivalent) for such Future
Facility, if developed by WCC or from the date of acquisition, if an operational
Future Facility is acquired by WCC or (ii) 6 months after receipt of written
notice from WCC of the date upon which such Future Facility achieved an
occupancy level of 75% of the number of beds authorized under the certificate of
occupancy (or its equivalent) for the Future Facility.
"Person" as used herein shall mean and include natural persons,
corporations, limited partnerships, general partnerships, joint stock
companies, joint ventures, associations, companies, trusts, banks, trust
companies, land trusts, business trusts, Indian tribes or other organizations,
whether or not legal entities, and governments and agencies and political
subdivisions thereof.
"Restricted Facility" shall mean any correctional or detention
facility which WCC or its Affiliates owns or has the right to acquire with
respect to which a sale thereof by WCC or its Affiliates to the Company is
prohibited under the terms of any governmentally assisted tax-exempt financing,
prison operating contract, governmental lease or other agreement entered into
between WCC and a governmental or quasi-governmental entity with respect to
such Restricted Facility.
"Restricted Facility Option Period" shall mean the time period within
which the Company must exercise (if at all) the option granted herein with
respect to an individual Restricted Facility which time period shall expire
upon the later to occur of (i) six (6) months after receipt of written notice
from WCC of the Restriction Release Date or (ii) six (6) months after receipt
of written notice from WCC of the date upon which such Restricted Facility
achieved an occupancy level of 75% of the number of beds authorized under the
certificate of occupancy for the Restricted Facility.
"Restriction Release Date" shall mean the day the Company receives a
notice from WCC that all restrictions on the sale or transfer of the ownership
interest of WCC or its Affiliates in a Restricted Facility have expired or been
waived or otherwise terminated.
"Total Facility Cost" shall mean the aggregate costs related to the
acquisition, development, design, construction, equipment and start-up of a
Facility which, in the case of goods or services provided by WCC, shall not
exceed the costs which would be paid therefor if purchased from a third party
in an arm's-length transaction.
2. FUTURE FACILITY OPTION. During the term of this Agreement, the
Company shall have an option to acquire any Future Facility exercisable at any
time prior to the expiration of the Future Facility Option Period for a
purchase price equal to 105% (or such lower percentage as may be agreed to by
WCC) of the Total Facility Cost. WCC shall notify the Company of the Total
Facility Cost as well as the terms of any prison operating contract,
governmental lease or option rights with respect to the Future Facility
promptly after such information is reasonably available to WCC. If the option
is exercised by the Company, the Future Facility must be acquired within the
Future Facility Option Period, unless otherwise mutually agreed by Company and
WCC or unless a later date is permitted or required under the terms and
conditions of a purchase and sale agreement for the Future
2
<PAGE> 3
Facility. The Company's exercise of such option shall be on such other terms
and conditions as the Company and WCC shall reasonably agree, which shall be
substantially similar to the Purchase Agreements.
3. RESTRICTED FACILITY OPTION. During the term of this Agreement,
the Company shall have an option to acquire any Restricted Facility exercisable
at any time prior to the expiration of the Restricted Facility Option Period
for a purchase price equal to 105% (or such lower percentage as may be agreed
to by WCC) of the Total Facility Cost. WCC shall notify the Company of the
Total Facility Cost as well as the terms of any restriction upon the sale of
the Restricted Facility to the Company, prison operating contract, governmental
lease or option rights with respect to the Restricted Facility promptly after
such information is reasonably available to WCC. If the option is exercised by
the Company, the Restricted Facility must be acquired within the Restricted
Facility Option Period, unless otherwise mutually agreed by Company and WCC or
unless a later date is permitted or required under the terms and conditions of
a purchase and sale agreement for the Restricted Facility. The Company's
exercise of such option shall be on such other terms and conditions as the
Company and WCC shall reasonably agree, which shall be generally consistent
with the terms and conditions of the Company's initial acquisition of the
Leased Facilities on the date hereof.
4. EXERCISE OF OPTION. The Company may exercise the option granted
under paragraphs 2 and 3 above only by providing to WCC the Company's written,
unqualified and irrevocable notice of its exercise of such option delivered in
accordance with the provisions of paragraph 11 hereof. In the event the option
is not so exercised prior to the expiration of the Future Facility Option
Period or the Restricted Facility Option Period, as applicable, the option with
respect to the relevant Facility shall expire and the parties shall have no
further obligation hereunder in connection with such Facility.
5. LEASE OF FACILITY. Upon the acquisition of a Facility, the
Company and WCC shall execute a new lease, or an amendment to an existing
lease, with respect thereto (any such new lease or amendment to an existing
lease shall constitute an "operating lease" for all tax and accounting
purposes, and subject to such limitation, shall have a lease term of at least
the same number of years remaining under the term of any prison operating
contract or governmental lease or lease assumption rights then in effect with
respect to the Facility). The initial annual base rent payable under such lease
shall be (i) with respect to a Facility acquired on or before the fifth
anniversary of the date of this Agreement, the greater of (a) fair market rent
as mutually agreed upon by the Company and WCC or in the absence of such
agreement, as determined by binding arbitration in accordance with paragraph 6
below or (b) 9.5% of the purchase price of such Facility and (ii) with respect
to a Facility acquired on or before the fifth anniversary after the date of
this Agreement, fair market rental value of the Facility as reasonably and
mutually determined by Company and WCC or, in the absence of such agreement as
determined by binding arbitration in accordance with paragraph 6 below. Any new
lease will be on terms substantially similar to the leases executed with
respect to the Leased Facilities, including the right of first refusal granted
to WCC therein.
3
<PAGE> 4
6. ARBITRATION. If it becomes necessary to determine the fair
market rental of a Facility through arbitration, the Company and WCC shall
attempt to agree upon a single appraiser to make such determination within
thirty (30) days after a demand for arbitration has been made by either the
Company or WCC. If the Company and WCC are unable to agree upon a single
arbitrator within such thirty (30) day period, then the party giving the notice
of demand for arbitration shall give notice to the other of a person selected
to act as appraiser on its behalf. Within ten (10) days after such notice, the
Company (or WCC, as the case may be) shall by notice to the WCC (or the
Company, as the case may be) appoint a second person as appraiser on its
behalf. The appraisers thus appointed, each of whom must be a member of the
American Institute of Real Estate Appraisers (or any successor organization
thereto) and experienced in appraising correctional and detention facilities
(or reasonably similar facilities), shall, within forty-five (45) days after
the date of the notice appointing the first appraiser, proceed to appraise the
relevant facility to determine the fair market rental thereof as of the
relevant date (giving effect to the impact, if any, of inflation from the date
of their decision to the relevant date); provided, however, that if only one
appraiser has been so appointed, or if two appraisers have been so appointed
but only one such appraiser has made such determination within the later of
occur of 10 business days following delivery of such appraisal to the other
party or fifty (50) days after the making of WCC's or the Company's request,
then the determination of such appraiser shall be final and binding upon the
parties. If two appraisers have been appointed and have made their
determinations within the respective requisite periods set forth above and if
the difference between the amounts so determined does not exceed ten percent
(10%) of the lesser of such amounts, then the fair market rental shall be an
amount equal to fifty percent (50%) of the sum of the amounts so determined. If
the difference between the amounts so determined exceeds ten percent (10%) of
the lesser of such amounts, then such two appraisers shall have twenty (20)
days to appoint a third appraiser. If no such appraiser has been appointed
within such twenty (20) days or within ninety (90) days of the original request
for a determination of fair market rental, whichever is earlier, either the
Company or WCC may apply to any court having jurisdiction to have such
appointment made by such court. Any appraiser appointed by the original
appraisers or by such court shall be instructed to determine the fair market
rental within forty-five (45) days after appointment of such appraiser. The
determination of the appraiser which differs most in terms of dollar amount
from the determinations of the other two appraisers shall be excluded, and the
average of the sum of the remaining two determinations shall be final and
binding upon the Company and WCC as the fair market rental of the Facility.
This provision for determining by appraisal shall be specifically enforceable
to the extent such remedy is available under applicable law, and any
determination hereunder shall be final and binding upon the parties and
judgment may be entered upon such determination in any court having
jurisdiction of the matter. The Company and WCC shall each pay the fees and
expenses of the appraiser appointed by it and each shall pay one-half (1/2) of
the fees and expenses of the third appraiser and one-half (1/2) of all other
costs and expenses incurred in connection with each appraisal.
7. EXISTING RESTRICTED FACILITIES. WCC and the Company acknowledge
and agree that as of the date hereof, WCC has a right to acquire two Facilities
which constitute Restricted Facilities for purposes of this Agreement. The
first such Restricted Facility is an approximately 379,000 square foot facility
in Lea County, New Mexico which has a design capacity of 1,200 beds. The
4
<PAGE> 5
second Restricted Facility is an approximately 201,000 square foot facility in
Guadalupe County, New Mexico which has a design capacity of 600 beds. These
Facilities constitute Restricted Facilities for purposes of this Agreement
because both the State of New Mexico and the respective counties in which these
Facilities are located have been granted an option to acquire one or both of
these Facilities prior to completion of construction. If such purchase option
is not exercised by the State of New Mexico or the respective county, then the
date on which WCC notifies Company that such option has expired or been waived
or otherwise terminated, shall constitute the Restriction Release Date for such
Facility.
8. TERM OF THE AGREEMENT. This Agreement and any unexercised
options granted hereunder shall expire on the earlier to occur of (i) the
expiration or termination of all of the Leases relating to any Facilities
(including the Leased Facilities) or (ii) fifteen (15) years from the date
hereof.
9. AUTHORITY OF WCC. WCC has duly and validly authorized and
executed this Agreement, and has full right, title, power and authority to
enter into this Agreement and to consummate the transactions provided for
herein. WCC is a corporation duly organized, validly existing and in good
standing under the laws of the State of Florida and is or will be qualified to
do business in each state in which any Facility is located in accordance with
applicable law. The execution by WCC of this Agreement does not result in a
breach of any of the terms or provisions of, or constitute a default or a
condition which upon notice or lapse of time or both would ripen into a default
under, WCC's bylaws or certificate of incorporation, or any indenture,
agreement, instrument or obligation to which WCC is a party; and does not
constitute a violation of any laws, order, rule or regulation applicable to WCC
issued or promulgated by any court or any federal, state or municipal
regulatory body or administrative agency or other governmental body having
jurisdiction over WCC.
10. REMEDIES. In the event WCC breaches this Agreement, the Company
shall have all rights and remedies available at law or in equity and the
Company shall be entitled, and is expressly and irrevocably authorized by WCC,
to demand and obtain specific performance, including, without limitation,
temporary and permanent injunctive relief, and all other appropriate and
equitable relief against WCC in order to enforce against WCC any of the
covenants and agreements contained in this Agreement and/or to prevent any
breach or threat of breach by WCC of the covenants and agreements of WCC
contained in this Agreement. Should the Company prevail in any action to
enforce this Agreement, the Company shall be entitled to recover all of its
costs and expenses relating thereto, including reasonable attorney's fees and
expenses.
11. RIGHT OF ASSIGNMENT. Neither this Agreement nor any interest
herein may be assigned or transferred by the Company to any person, firm,
corporation or other entity without the prior written consent of WCC, which
consent may be given or withheld in the sole discretion of WCC.
5
<PAGE> 6
12. NOTICES. WCC and the Company hereby agree that all notices,
demands, requests and consents (hereinafter "Notices") required to be given
pursuant to the terms of this Agreement shall be in writing and shall be
addressed as follows:
If to WCC: Wackenhut Corrections Corporation
4200 Wackenhut Drive
Palm Beach Gardens, Florida 33410-4243
Phone: (561) 622-5656
Attention: Dr. George C. Zoley
With a copy to: Akerman, Senterfitt & Eidson, P.A.
One SE Third Avenue
Miami, Florida 33131
Phone: (305) 374-5600
Attention: Bruce I. March, Esq.
If to the Company: CPT Operating Partnership L.P.
4200 Wackenhut Drive
Palm Beach Gardens, Florida 33410-4243
Phone: (561) 691-6644
Attention: Mr. Charles R. Jones
With a copy to: Josias, Goren, Cherof, Doody and Ezrol, P.A.
3009 East Commercial Boulevard, Suite 200
Ft. Lauderdale, Florida 33308
Phone: (954) 771-4500
Attention: Donald J. Doody, Esq.
or at such other address, and to the attention of such other person, as the
parties shall give notice as herein provided. A notice, request and other
communication shall be deemed to be duly received if delivered in person or by
a recognized delivery service, when delivered to the address of the recipient,
if sent by mail, on the date of receipt by the recipient as shown on the
return-receipt card, or provided that if a notice, request or other
communication is served by hand on a day which is not a Business Day, or after
5:00 P.M. on any Business Day at the addressee's location, such notice or
communication shall be deemed to be duly received by the recipient at 9:00 a.m.
on the first Business Day thereafter.
13. ENTIRE AGREEMENT; MODIFICATIONS. This Agreement embodies and
constitutes the entire understanding between the Parties with respect to the
transactions contemplated herein, and all prior or contemporaneous agreements,
understandings, representations and statements (oral or written) are merged
into this Agreement. Neither this Agreement nor any provision hereof may be
waived, modified, amended, discharged or terminated except by an instrument in
writing signed by
6
<PAGE> 7
the Party against whom the enforcement of such waiver, modification, amendment,
discharge or termination is sought, and then only to the extent set forth in
such instrument.
14. APPLICABLE LAW. THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED
HEREBY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF FLORIDA. The Parties agree that jurisdiction and venue for any
litigation arising out of this Agreement shall be in the Courts of Palm Beach
County, Florida or the U.S. District Court for the Southern District of Florida
and, accordingly, consent thereto.
15. CAPTIONS AND HEADINGS. The captions and headings are inserted
only as a matter of convenience and for reference and in no way define, limit
or describe the scope of this Agreement or the intent of any provision hereof.
16. BINDING EFFECT. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective heirs,
executors, administrators, legal representatives, successors, and assigns.
17. TIME IS OF THE ESSENCE. With respect to all provisions of this
Agreement, time is of the essence.
18. RECORDATION. At the option of WCC or the Company, this
Agreement, or a memorandum hereof, may be recorded in the real estate records
of any county which Landlord or Tenant deems appropriate in order to provide
legal notice of the existence hereof.
19. LIABILITY OF GENERAL PARTNER OF THE COMPANY. WCC acknowledges
that the Company has disclosed that the general partner of the Company (the
"General Partner") is a Maryland business trust formed pursuant to a
Declaration of Trust as amended, a copy of which is duly filed with the
Department of Assessments and Taxation of the State of Maryland, which provides
that no trustee, officer, shareholder, employee or agent of the General Partner
shall be held personally liable under any written instrument creating an
obligation of, or claim against, the General Partner and that all persons
dealing with the General Partner, in any way, shall look only to the assets of
the General Partner for the payment of any sum or the performance of any
obligation. WCC agrees that any liability of the General Partner or any
trustee, officer, shareholder, employee or agent acting on behalf of the
General Partner arising out of this Agreement or the performance by the Company
of its obligations hereunder is limited to the assets of the General Partner in
accordance with the above Declaration of Trust.
7
<PAGE> 8
<TABLE>
<S> <C>
WACKENHUT CORRECTIONS
CORPORATION
By:
------------------------------------------------------
George C. Zoley, Vice Chairman of the Board
CPT OPERATING PARTNERSHIP L.P.
By: Correctional Properties Trust, a Maryland
real estate investment trust, its General Partner
By:
-------------------------------------------------
Charles R. Jones, President
STATE OF FLORIDA )
) ss:
COUNTY OF )
The foregoing instrument was acknowledged before me this ____ day of
____________, 1998 by George C. Zoley, Vice Chairman of the Board of WACKENHUT
CORRECTIONS CORPORATION, on behalf of the corporation. He/she is personally
known to me or has produced ____________________ (type of identification) as
identification.
---------------------------------------------------------
NOTARY PUBLIC, STATE OF FLORIDA
---------------------------------------------------------
(Print, Type or Stamp Commissioned Name of Notary Public)
STATE OF FLORIDA )
) ss:
COUNTY OF )
The foregoing instrument was acknowledged before me this ____ day of
____________, 1998 by Charles R. Jones, President of Correctional Properties
Trust, the general partner of CPT Operating Partnership L.P. on behalf of the
limited partnership. He/she is personally known to me or has produced
____________________ (type of identification) as identification.
---------------------------------------------------------
NOTARY PUBLIC, STATE OF FLORIDA
---------------------------------------------------------
(Print, Type or Stamp Commissioned Name of Notary Public)
</TABLE>
8
<PAGE> 1
EXHIBIT 10.5
FORM OF
OPTION AGREEMENT
BY AND BETWEEN
WACKENHUT CORRECTIONS CORPORATION,
A FLORIDA CORPORATION
("SELLER")
AND
CPT OPERATING PARTNERSHIP L.P.
A DELAWARE LIMITED PARTNERSHIP
("PURCHASER")
__________________, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE I
DEFINITIONS..............................................................................................1
ARTICLE II
OPTION TO SELL AND PURCHASE AND AGREEMENT TO LEASE.......................................................7
2.1 Option to Sell and Purchase............................................................7
2.2 Exercise of Option.....................................................................7
2.3 Agreement to Lease.....................................................................8
ARTICLE III
PURCHASE PRICE...........................................................................................8
3.1 Payment of Purchase Price..............................................................8
ARTICLE IV
ITEMS TO BE FURNISHED TO PURCHASER BY SELLER.............................................................8
4.1 Due Diligence Materials................................................................8
4.2 Due Diligence Review...................................................................9
ARTICLE V
TITLE AND SURVEY........................................................................................10
5.1 Title Commitment, Exception Documents and Survey......................................10
5.2 Review Period.........................................................................10
5.3 Additional Exceptions.................................................................11
ARTICLE VI
REPRESENTATIONS, WARRANTIES,
COVENANTS AND AGREEMENTS................................................................................11
6.1 Representations and Warranties of Seller..............................................11
6.2 Covenants and Agreements of Seller....................................................15
6.3 Representations and Warranties of Purchaser...........................................16
ARTICLE VII
CONDITIONS TO OBLIGATIONS...............................................................................17
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C> <C> <C>
7.1 Conditions to the Purchaser's Obligations.............................................17
7.2 Failure of Conditions to Purchaser's Obligations......................................19
7.3 Conditions to the Seller's Obligations................................................19
7.4 Failure of Conditions to Seller's Obligations.........................................19
ARTICLE VIII
PROVISIONS WITH RESPECT TO THE CLOSING..................................................................20
8.1 Seller's Closing Obligations..........................................................20
8.2 Purchaser's Closing Obligations.......................................................21
ARTICLE IX
EXPENSES OF CLOSING.....................................................................................21
9.1 Adjustments...........................................................................21
9.2 Closing Costs.........................................................................21
9.3 Commissions/Broker's Fees.............................................................22
ARTICLE X
DEFAULT AND REMEDIES....................................................................................22
10.1 Seller's Default; Purchaser's Remedies................................................22
10.2 Purchaser's Default; Seller's Remedies................................................23
ARTICLE XI
MISCELLANEOUS...........................................................................................23
11.1 Survival..............................................................................23
11.2 Right of Assignment...................................................................24
11.3 Notices...............................................................................24
11.4 Entire Agreement; Modifications.......................................................25
11.5 Applicable Law........................................................................25
11.6 Captions..............................................................................25
11.7 Binding Effect........................................................................25
11.8 Extension of Dates....................................................................25
11.9 Time is of the Essence................................................................25
11.10 Waiver of Conditions..................................................................25
11.11 Memorandum of Option..................................................................26
11.12 Liability of General Partner of Purchaser.............................................26
LIST OF EXHIBITS.................................................................................................29
</TABLE>
ii
<PAGE> 4
OPTION AGREEMENT
THIS OPTION AGREEMENT (the "Agreement") is made and entered into by
and between WACKENHUT CORRECTIONS CORPORATION, a Florida corporation
(hereinafter referred to as "Seller"), and CPT OPERATING PARTNERSHIP L.P., a
Delaware limited partnership (hereinafter referred to as "Purchaser"). Seller
and Purchaser are sometimes collectively referred to herein as the "Parties"
and each of the Parties is sometimes singularly referred to herein as a
"Party".
RECITALS
A. Seller is the owner of, or has the right to acquire, the
Property (as hereinafter defined), consisting of certain real property and
improvements thereon being more particularly described on Exhibit A attached
hereto and made a part hereof; and,
B. In connection with Purchaser's acquisition of certain properties
from Seller pursuant to an Agreement of Sale and Purchase dated of even date
herewith, Purchaser desires to obtain, and Seller desires to grant to
Purchaser, an option to acquire the Property, and, simultaneous with any such
acquisition, to enter into a lease transaction pursuant to which Purchaser
shall lease to Seller, and Seller shall lease from Purchaser, the Property;
NOW, THEREFORE, in consideration of the sum of One Hundred Dollars
($100.00) paid to Seller by Purchaser, the mutual covenants and agreements
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties agree as follows:
ARTICLE I
DEFINITIONS
As used herein (including any Exhibits attached hereto), the following
terms shall have the meanings indicated:
"Accreditations" shall mean any and all accreditations and/or
certifications from any non-governmental entities required in connection with
the current or contemplated operation of the Property.
"Applicable Notices" shall mean any reports, notices of violation, or
notices of compliance issued in connection with any Accreditations or Permits.
"Bill of Sale" shall mean a bill or bills of sale in substantially the
same form as Exhibit B, attached hereto, and sufficient to transfer to
Purchaser all Personal Property.
<PAGE> 5
"Business Agreements" shall mean any leases, contract rights, loan
agreements, mortgages, easements, covenants, restrictions or other agreements
or instruments affecting all or a portion of the Property, to the extent the
same are assignable by Seller, but specifically excluding all of Seller's
Operating and Service Agreements.
"Business Day(s)"shall mean calendar days other than Saturdays,
Sundays and legal holidays.
"Certificate of Non-Foreign Status" shall mean a certificate dated as
of the Closing Date, addressed to Purchaser and duly executed by Seller, in
substantially the same form as Exhibit C, attached hereto.
"Claim" shall mean any obligation, liability, lien, encumbrance, loss,
damage, cost, expense or claim, including, without limitation, any claim for
damage to property or injury to or death of any person or persons.
"Closing" shall mean the consummation of the sale and purchase
provided for herein, to be held at the offices of Akerman, Senterfitt & Eidson,
P.A., One SE Third Avenue, Miami, Florida, or such other place as the Parties
may mutually agree.
"Closing Certificate" shall mean a certificate in substantially the
same form as Exhibit D, attached hereto, wherein Seller and Purchaser,
respectively, shall represent that the representations and warranties of Seller
and Purchaser, respectively, contained in this Agreement are true and correct
in all material respects as of the Closing Date as if made on and as of the
Closing Date.
"Closing Date" shall mean the actual day on which a transaction
contemplated hereby is closed with the transfer of title to the Property. The
Parties agree that the closing date shall be sixty (60) days following
Purchaser's exercise of the Option, or such earlier or later date as shall be
hereafter mutually agreed upon by the Parties, except that if construction of
the Property is not completed prior to the Closing Date, then the Closing Date
shall be extended until such construction has been completed unless Purchaser
elects to waive completion of construction in which event the Seller's
representations and warranties in Section 6.1(f), (g), (i) shall be deemed
waived by Purchaser.
"Deed" shall mean a deed in substantially the same form as Exhibit E,
attached hereto (as the same may be modified to comply with local law and
custom), executed by Seller, as grantor, in favor of Purchaser, as grantee,
conveying the Land and Improvements to Purchaser, subject only to the Permitted
Exceptions.
"Due Diligence Materials" shall mean the information to be provided by
Seller to Purchaser pursuant to the provisions of Section 4.1 hereof.
"Effective Date" shall mean the date the Option is validly exercised.
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<PAGE> 6
"Engineering Documents" shall mean all site plans, surveys, soil and
substrata studies, architectural drawings, plans and specifications,
engineering plans and studies, floor plans, landscape plans, Americans with
Disabilities Act compliance reports, environmental reports and studies,
professional inspection reports, construction and/or architect's reports or
certificates, feasibility studies, appraisals, and other similar plans and
studies that relate to the Real Property or the Personal Property, to the
extent the same are assignable by Seller.
"Exception Documents" shall mean true, correct and legible copies of
each document listed as an exception to title in the Title Commitment.
"Excluded Personal Property" shall mean all those items of tangible
and intangible personal property described on Exhibit F.
"Fixtures" shall mean all equipment, machinery, fixtures, and other
items of real and/or personal property, including all components thereof, now
or on the Closing Date located in, on or used in connection with, and
permanently affixed to or incorporated into, the Improvements, including,
without limitation, all furnaces, boilers, heaters, electrical equipment,
electronic security equipment, heating, plumbing, lighting, ventilating,
refrigerating, incineration, air and water pollution control, waste disposal,
air-cooling and air-conditioning systems and apparatus, sprinkler systems and
fire and theft protection equipment, and similar systems, all of which, to the
greatest extent permitted by law, are hereby deemed by the Parties to
constitute real estate, together with all replacements, modifications,
alterations and additions thereto, but specifically excluding all items
included within the definition of Personal Property and Excluded Personal
Property.
"Hazardous Materials" shall mean any substance, including without
limitation, asbestos or any substance containing asbestos and deemed hazardous
under any Hazardous Materials Law, the group of organic compounds known as
polychlorinated biphenyls, petroleum products, flammable explosives,
radioactive materials, infectious wastes, biomedical and medical wastes,
chemicals known to cause cancer or reproductive toxicity, pollutants,
effluents, contaminants, emissions or related materials and any items included
in the definition of hazardous or toxic wastes, materials or substances under
any Hazardous Materials Law.
"Hazardous Materials Law" shall mean any local, state or federal law
relating to environmental conditions and industrial hygiene, including, without
limitation, the Resource Conservation and Recovery Act of 1976 ("RCRA"), the
Comprehensive Environmental Response, Compensation and Liability Act of 1980
("CERCLA"), as amended by the Superfund Amendments and Reauthorization Act of
1986 ("SARA"), the Hazardous Materials Transportation Act, the Federal Waste
Pollution Control Act, the Clean Air Act, the Clean Water Act, the Toxic
Substances Control Act, the Safe Drinking Water Act, and all similar federal,
state and local environmental statutes, ordinances and the regulations, orders,
or decrees now or hereafter promulgated thereunder.
"Improvements" shall mean all buildings, improvements, structures and
Fixtures now or on the Closing Date located on the Land, including, without
limitation, landscaping, parking lots and
3
<PAGE> 7
structures, roads, drainage and all above ground and underground utility
structures, equipment systems and other so-called "infrastructure"
improvements.
"Intangible Property" means all Permits, Business Agreements and other
intangible property or any interest therein now or on the Closing Date owned or
held by Seller in connection with the Real Property, including all water rights
and reservations, rights to use the trade name applicable to the Property (but
excluding the name "Wackenhut Corrections" or any derivative thereof), as
depicted on Exhibit A hereof, and zoning rights related to the Real Property,
or any part thereof, to the extent the same are assignable by Seller; provided,
however, "Intangible Property" shall not include the general corporate
trademarks, trade names (except as set forth in the preceding sentence),
service marks, logos or insignia or the books and records of Seller, Seller's
accounts receivable and Seller's business and operating licenses for the
facilities on the Real Property.
"Land" means the real property more particularly described on Exhibit
A, attached hereto and made a part hereof, together with all of Seller's
rights, titles, appurtenant interests, covenants, licenses, privileges and
benefits thereto belonging, and Seller's right, title and interest in and to
any easements, rights-of-way, rights of ingress or egress or other interests
in, on, or to any land, highway, street, road or avenue, open or proposed, in,
on, across, in front of, abutting or adjoining such real property including,
without limitation, any strips and gores adjacent to or lying between such real
property and any adjacent real property.
"Laws" means all federal, state and local laws, moratoria,
initiatives, referenda, ordinances, rules, regulations, standards, orders and
other governmental requirements, including, without limitation, those relating
to the environment, health and safety, disabled or handicapped persons.
"Lease" shall mean the Master Agreement to Lease and the Lease
Agreement in substantially the same form as Exhibit G, attached hereto and made
a part hereof, which shall be executed and delivered by Seller (or an affiliate
of Seller) and Purchaser at the Closing, and pursuant to the terms of which
Purchaser shall lease the Property to Seller (or an affiliate of Seller)
following the Closing.
"Material" and "Materially" shall mean a condition, noncompliance,
defect or other fact which would: (a) cost, in the aggregate, in excess of Five
Hundred Thousand Dollars ($500,000.00) and, with respect to any single defect
or fact, would cost in excess of Two Hundred Fifty Thousand Dollars
($250,000.00), to correct or repair; or (b) in the aggregate, result in a loss
to Purchaser or a reduction in the value of the Property in excess of Five
Hundred Thousand Dollars ($500,000.00) and, with respect to any single defect
or fact, would result in a loss to Purchaser or a reduction in the value of the
Property in excess of Two Hundred Fifty Thousand Dollars ($250,000.00).
"Option" shall mean the option to purchase the Property granted by
Seller to Purchaser pursuant to Section 2.1 hereof.
"Option Period" shall mean the period of time within which the Option
must be exercised (if at all) by Purchaser, which shall expire on the earlier
to occur of (i) four (4) years from receipt
4
<PAGE> 8
of a certificate of occupancy (or its equivalent) for the Property, or (ii) six
(6) months after the Property achieves an occupancy level of 75% of the number
of beds authorized under the certificate of occupancy (or its equivalent) for
the Property.
"Permits" shall mean all permits, licenses (but excluding Seller's
business and operating licenses,) approvals, entitlements and other
governmental, quasi-governmental and nongovernmental authorizations including,
without limitation, certificates of use and occupancy, required in connection
with the ownership, planning, development, construction, use, operation or
maintenance of the Real Property, to the extent the same are assignable by
Seller. As used herein, "quasi-governmental" shall include the providers of all
utility services to the Real Property.
"Permitted Exceptions" shall mean those title exceptions which have
been approved in writing by Purchaser, or are deemed to have been approved by
Purchaser as set forth in Sections 5.2 and 5.3 hereof.
"Personal Property" shall mean all Intangible Property, Warranties,
and Engineering Documents, and all those items of tangible personal property
described on Exhibit H, attached hereto, other than the Fixtures and the
Excluded Personal Property, now or on the Closing Date owned by Seller and
located on or about the Land or Improvements or used in connection with the
operation thereof (specifically excluding personal property owned by employees
of Seller and personal property owned by inmates or detainees housed at the
Real Property).
"Property" shall mean, collectively, the Land, the Improvements, the
Fixtures, and the Personal Property.
"Purchase Price" shall mean an amount equal to the aggregate costs
related to the acquisition, development, design, construction, equipment and
start-up of the Property which, in the case of goods or services provided by
Seller, shall not exceed the costs which would be paid therefor if purchased
from a third party in an arm's-length transaction.
"Real Property" shall mean the Land, the Improvements and the
Fixtures.
"Review Period" means a period commencing on the Effective Date and
ending thirty (30) days from the date of Purchaser's receipt of the last of the
following documents: Title Commitment, Exception Documents, Search Reports,
Survey or Due Diligence Materials.
"Search Reports" shall mean reports of searches made of the Uniform
Commercial Code Records of the County in which the Property is located, and of
the office of the Secretary of State of the State in which the Property is
located and in the State in which the principal office of Seller is located,
which searches shall reflect that none of the Property is encumbered by liens
or security interests, which will remain on the Property after the Closing. The
Search Reports shall be updated, at Seller's expense, at or within five (5)
days prior to Closing.
5
<PAGE> 9
"Seller's Operating and Service Agreements" shall mean all management,
service and operating agreements and contracts entered into by Seller with
respect to the Property, including, but not limited to, agreements and
contracts to house inmates at the Property, food service and equipment
agreements, inmate pay telephone service agreements, medical and pharmaceutical
service and supply agreements, drug testing service agreements, public
performance and licensing agreements for motion picture video cassettes, inmate
educational and instructional service agreements, refuse service agreements,
pest control service agreements and machinery, equipment and uniform rental and
service agreements.
"Seller's Personal Property" shall mean all machinery, equipment,
tools, furniture, furnishings, movable walls or partitions, computers, signage,
trade fixtures or other tangible and intangible personal property, including
Seller's accounts receivable and business and operating licenses, and
consumable inventory and supplies, used or useful in Seller's business on the
Property, other than those items included within the definition of Personal
Property.
"Survey" shall mean a current "as-built" ALTA survey, certified to
ALTA requirements, prepared by an engineer or surveyor licensed in the State in
which the Land is located and reasonably acceptable to Purchaser, which shall:
(a) include a narrative legal description of the Land by metes and bounds
(which shall include a reference to the recorded plat, if any), and a
computation of the area comprising the Land in both acres and gross square feet
(to the nearest one thousandth of said respective measurement; (b) accurately
show the location on the Land of all improvements (dimensions thereof at the
ground surface level and the distance therefrom to the facing exterior property
lines of the Land), building and set-back lines, parking spaces (including
number of spaces), fences, evidence of abandoned fences, ponds, creeks,
streams, rivers, officially designated 100-year flood plains and flood prone
areas, canals, ditches, easements, roads, rights-of-way and encroachments; (c)
location of encroachments, if any, upon adjoining property, or from adjoining
property, upon the Land; (d) state the zoning classification of the Land; (e)
be certified as of the date of the Survey to the Seller, the Purchaser, the
Title Company, and any third-party lender designated by Purchaser; (f) legibly
identify any and all recorded matters shown on said survey by appropriate
volume and page recording references; (g) show the location and names of all
adjoining streets and the distance to the nearest streets intersecting the
streets that adjoin the Land; (h) be satisfactory to (and updated from time to
time as may be required by) the Title Company so as to permit it to delete the
standard exception for survey matters and replace it with an exception for the
matters shown on the Survey; and (i) include a written Surveyor's Certification
in substantially the same form as set forth on Exhibit I, attached hereto.
"Title Commitment" shall mean a current commitment issued by the Title
Company to the Purchaser pursuant to the terms of which the Title Company shall
commit to issue the Title Policy to Purchaser in accordance with the provisions
of this Agreement, and reflecting all matters which would be listed as
exceptions to coverage on the Title Policy.
6
<PAGE> 10
"Title Company" shall mean _____________ Title Insurance Corporation
or the national service office of another title insurance company licensed in
the state in which the Property is located and selected by Seller and
reasonably satisfactory to Purchaser.
"Title Policy" shall mean an ALTA Extended Coverage Owner's Policy of
Title Insurance (10/17/92 Form), or comparable state promulgated policy, with
liability in the amount of the Purchase Price, dated as of the Closing Date,
issued by the Title Company, insuring title to the fee interest in the Real
Property in Purchaser, subject only to the Permitted Exceptions and to the
standard printed exceptions included in the ALTA standard form owner's extended
coverage policy of title insurance including such other endorsements as
requested by Purchaser, with the following modifications: (a) the exception for
survey matters shall be deleted and replaced by an exception for the matters
shown on the Survey; (b) the exception for ad valorem taxes shall reflect only
taxes for the current and subsequent years; (c) any exception as to parties in
possession shall be limited to rights of Seller in possession, as lessee only,
pursuant to the Lease; and (d) there shall be no general exception for visible
and apparent easements or roads and highways or similar items (with any
exception for visible and apparent easements or roads and highways or similar
items to be specifically referenced to and shown on the Survey and also
identified by applicable recording information).
"Warranties" shall mean all warranties and guaranties with respect to
the Real Property or Personal Property, whether express or implied, which
Seller now holds or under which Seller is the beneficiary, to the extent the
same are assignable by Seller.
ARTICLE II
OPTION TO SELL AND PURCHASE AND AGREEMENT TO LEASE
2.1 Option to Sell and Purchase. Seller hereby grants Purchaser the
exclusive Option to purchase the Property for the Purchase Price. The option
must be exercised by Purchaser (if at all) prior to the expiration of the
Option Period. Upon Purchaser's valid exercise of the Option, this Agreement
shall be deemed a contract between Seller and Purchaser whereby, on the Closing
Date, Seller shall sell, convey, assign, transfer and deliver to Purchaser and
Purchaser shall purchase, acquire and accept from Seller, the Property, for the
Purchase Price and subject to the terms and conditions of this Agreement.
Purchaser acknowledges that Seller may elect to transfer some or all of the
Property to one or more affiliates of Seller prior to the Closing Date subject
to the terms and conditions of this Agreement. In such event, Seller shall,
upon the exercise of the Option by Purchaser and in accordance with the terms
and conditions of this Agreement, cause such affiliates to sell, convey,
assign, transfer and deliver to Purchaser such portion(s) of the Property as
may be transferred to such affiliate(s). In the event of any such transfers of
some or all of the Property to any affiliate of Seller, Seller shall not be
relieved of any of its obligations or liability hereunder. From and after the
date of any such transfer, the term "Seller" as used herein shall refer to both
7
<PAGE> 11
Wackenhut Corrections Corporation and the recipient of such transfer
collectively, and to each such party individually.
2.2 Exercise of Option. Purchaser may exercise the Option only by
providing to Seller Purchaser's written, unqualified notice of its exercise of
the Option, in accordance with the provisions of Section 11.3 hereof. The
effective time and date of such exercise shall be the date such notice is
deemed received by Seller pursuant to the provisions of Section 11.3 hereof. In
the event the Option is not duly exercised by Purchaser within the time set
forth in Section 2.1 above, the Option and this Agreement shall expire and the
Parties shall have no further obligation hereunder. Notwithstanding any other
term or provision hereof, unless Purchaser waives any of the following, the
Option shall not be exercisable unless and until (i) Seller has completed its
development and construction of the Improvements on the Property (other than
minor punch list items, which shall be diligently and promptly completed should
Purchaser exercise the Option) and Seller has received final certificates of
use and occupancy, and such other permits, licenses, approvals, agreements and
authorizations as are required for the operation of the Property for its
intended use and (ii) Seller and Purchaser shall have consummated the
transactions contemplated by that certain Agreement of Sale and Purchase, of
even date herewith.
2.3 Agreement to Lease. If Purchaser exercises the Option, then, on
the Closing Date, and subject to performance by the Parties of the terms and
provisions of this Agreement, Purchaser shall lease to Seller and Seller shall
lease from Purchaser, the Property at the rental and upon the terms and
conditions set forth in the Lease.
ARTICLE III
PURCHASE PRICE
3.1 Payment of Purchase Price. The Purchase Price shall be paid by
Purchaser delivering to the Seller, at the Closing, Federal Reserve wire
transfer funds or other immediately available collected funds payable to the
order of the Seller in the sum equal to the Purchase Price, subject to
adjustment as herein provided. On or before the Closing, the Parties shall
agree on an allocation of the Purchase Price as between the Real Property and
the Personal Property.
ARTICLE IV
ITEMS TO BE FURNISHED TO PURCHASER BY SELLER
4.1 Due Diligence Materials. Within fifteen (15) days after the
Effective Date, Seller shall deliver to Purchaser for its review the following
items:
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<PAGE> 12
(a) True, correct, complete and legible copies of all
Business Agreements, Warranties, Permits, Accreditations, Applicable Notices,
Engineering Documents and Seller's Operating and Service Agreements (solely for
the purposes of this Section 4.la., the terms Business Agreements, Warranties,
Permits, and Engineering Documents shall include all agreements, documents, and
instruments otherwise included within such definitions, whether or not the same
are assignable by Seller);
(b) True, correct, complete and legible copies of tax
statements or assessments for all real estate and personal property taxes
assessed against the Property for the current and the two prior calendar years,
if available;
(c) True, correct and legible listing of all Fixtures,
Personal Property and Excluded Property, including a current depreciation
schedule;
(d) True, correct, complete and legible copies of all
existing fire and extended coverage insurance policies and any other insurance
policies pertaining to the Property, if any;
(e) True, correct, complete and legible copies of all
instruments evidencing, governing or securing the payment of any loans secured
by the property or related thereto. Seller may make such instruments available
for inspection and copying by Purchaser at Seller's principal office;
(f) True, correct, complete and legible copies of any and
all environmental studies or impact reports relating to the Property, if any,
and any approvals, conditions, orders or declarations issued by any
governmental authority relating thereto (such studies and reports shall
include, but not be limited to, reports indicating whether the Property is or
has been contaminated by Hazardous Materials and whether the Property is in
compliance with the Americans with Disabilities Act and Section 504 of the
Rehabilitation Act of 1973, as applicable);
(g) True, correct, complete and legible copies of any and
all litigation files with respect to any pending litigation and claim files for
any claims made or threatened, the outcome of which might materially affect the
Property or the use and operation of the Property. Seller may make such files
available for inspection and copying by Purchaser at Seller's principal office.
(h) Actual operating statements for the Property or, if the
Property has not been operated by Seller for twelve months prior to the
Effective Date, projected operating results for the Property.
(i) The Certificate of Occupancy, or its equivalent, for the
Property, if construction of the Property has been completed as of the
Effective Date.
4.2 Due Diligence Review. During the Review Period, Purchaser shall
be entitled to review the Due Diligence Materials delivered by Seller to
Purchaser pursuant to the provisions of Section 4.1 above. If Purchaser shall,
for any reason in Purchaser's sole discretion, judgment and
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<PAGE> 13
opinion, disapprove or be dissatisfied with any aspect of such information, or
the Property, then Purchaser shall be entitled to terminate this Agreement by
giving written notice thereof to Seller on or before the expiration of the
Review Period, whereupon this Agreement shall automatically be rendered null
and void, all moneys which have been delivered by Purchaser to Seller or the
Title Company shall be immediately returned to Purchaser and thereafter neither
Party shall have any further obligations or liabilities to the other hereunder.
Alternatively, Purchaser may give written notice setting forth any defect,
deficiency or encumbrance and specify a time within which Seller way remedy or
cure such matter (before or after the expiration of the Review Period), but
Seller shall have no obligation to remedy or cure any such matters objected to
by Purchaser. If any defect, deficiency or encumbrance, so noticed, is not
satisfied or resolved to the satisfaction of Purchaser, in Purchaser's sole
discretion, within the time period specified in the written notice, this
Agreement shall, at the option of Purchaser, terminate as provided in this
Section; said option to terminate to be exercised, if at all, by Purchaser
giving written notice thereof to Seller and simultaneously paying Seller the
sum of One Hundred Dollars ($100.00) within three (3) Business Days after the
expiration of said specified time period. In the event Purchaser fails to
exercise its option to terminate this Agreement within the time and in the
manner set forth in this Section 4.2, then Purchaser shall be deemed to have
accepted and approved the Due Diligence Materials and the Property, and to have
waived any such defect, deficiency or encumbrance.
ARTICLE V
TITLE AND SURVEY
5.1 Title Commitment, Exception Documents and Survey. Within thirty
(30) days after the Effective Date, Seller shall deliver or cause to be
delivered to Purchaser, the Title Commitment, Exception Documents, Survey, and
Search Reports.
5.2 Review Period. Purchaser shall have the right to review the
Title Commitment, Exception Documents, Survey and Search Reports for a period
of thirty (30) days from the date of Purchaser's receipt of the last of such
items. In the event any matters appear therein that are unacceptable to
Purchaser, other than the Permitted Exceptions, Purchaser shall, within said
thirty (30) day period, notify Seller in writing of such fact. Upon the
expiration of said thirty (30) day period, Purchaser shall be deemed to have
accepted all exceptions to title referenced in the Title Commitment and all
matters shown on the Survey except for matters which are the subject of a
notification made under the preceding sentence, and such accepted exceptions
shall be included in the term "Permitted Exceptions" as used herein; provided,
however, in no event shall any of the items listed on Schedule B-1 or C of the
Title Commitment constitute Permitted Exceptions for purposes hereof. In the
event that Purchaser objects to any such matters within the thirty (30) day
Review Period, Seller shall have thirty (30) days from receipt of such notice
within which to eliminate or modify any such unacceptable exceptions or items,
however, Seller shall have no obligation to eliminate or modify any such
unacceptable exceptions or items. In the event that Seller is unable or
unwilling to eliminate or modify such unacceptable items to the satisfaction of
Purchaser
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<PAGE> 14
on or before the expiration of said thirty (30) day period, Purchaser may
either (a) waive such objections and accept title to the Property subject to
such unacceptable items (which items shall then be deemed to constitute part of
the "Permitted Exceptions"), or (b) terminate this Agreement by written notice
to Seller, whereupon this Agreement shall automatically be rendered null and
void, all moneys which have been delivered by Purchaser to Seller or the Title
Company shall be immediately returned to Purchaser, and thereafter neither
Party shall have any further obligations or liabilities to the other hereunder.
5.3 Additional Exceptions. In the event that at any time the Title
Commitment, Exception Documents, Survey or Search Reports are modified (other
than the deletion or elimination of any item as to which Purchaser has made an
objection), Purchaser shall have the right to review and approve or disapprove
any such modification and to terminate this Agreement in the event that Seller
is unwilling or unable to eliminate any such matters to the satisfaction of
Purchaser in accordance with the provisions of Section 5.2 above, except that
Purchaser's Review Period as to such additional items shall be for a period
expiring on the date that is the earlier to occur of (a) fifteen (15) days
following the date of Purchaser's receipt of such modification, and (b) the
date of Closing, and all other time periods referred to in Section 5.2 shall
expire on the date that is the earlier of (i) the final day of the specified
time period as set forth therein, and (ii) the Closing Date.
ARTICLE VI
REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS
6.1 Representations and Warranties of Seller. To induce Purchaser to
enter into this Agreement and to purchase the Property, Seller represents and
warrants to Purchaser as follows;
(a) Seller has the right to acquire and at the Closing, will
have and will convey, transfer and assign to Purchaser, or Seller will cause
the conveyance, transfer and assignment to Purchaser of, good, indefeasible,
marketable and insurable title to the Land, free and clear of any deeds of
trust, mortgages, liens, encumbrances, leases, tenancies, licenses, chattel
mortgages, conditional sales agreements, security interests, covenants,
conditions, restrictions, judgments, rights-of-way, easements, encroachments,
claims and any other matters affecting title or use of the Property, except the
Permitted Exceptions.
(b) Seller has duly and validly authorized and executed this
Agreement, and has full right, title, power and authority to enter into this
Agreement and to consummate the transactions provided for herein, and the
joinder of no person or entity will be necessary to convey the Property fully
and completely to Purchaser at Closing and to lease the Property from Purchaser
following Closing. The consummation of the transactions contemplated herein
does not require the approval of Seller's shareholders or any third party,
except such third party approvals as Seller has obtained or will obtain prior
to the Closing Date. The execution by Seller of this Agreement and the
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consummation by Seller of the transactions contemplated hereby do not, and at
the Closing will not, result in a breach of any of the terms or provisions of,
or constitute a default or a condition which upon notice or lapse of time or
both would ripen into a default under, any indenture, agreement, instrument or
obligation to which Seller is a party or by which the Property or any portion
thereof is bound; and does not, and at the Closing will not, to Seller's
knowledge, constitute a violation of any Laws, order, rule or regulation
applicable to Seller or any portion of the Property of any court or of any
federal, state or municipal regulatory body or administrative agency or other
governmental body having jurisdiction over Seller or any portion of the
Property.
(c) Except as may be disclosed in the Exception Documents,
there are no adverse or other parties in possession of the Property or of any
part thereof and Seller has not granted to any party any license, lease or
other right relating to the use or possession of the Property.
(d) As of the date of this Agreement, no notice has been
received from any insurance company that has issued a policy with respect to
any portion of the Property or from any board of fire underwriters (or other
body exercising similar functions), claiming any defects or deficiencies or
requiring the performance of any repairs, replacements, alterations or other
work and as of the Closing no such notice will have been received which shall
not have been cured. As of the date of this Agreement, no notice has been
received by Seller from any issuing insurance company that any of such policies
will not be renewed, or will be renewed only at a higher premium rate than is
presently payable therefor.
(e) No pending condemnation, eminent domain, assessment or
similar proceeding or charge affecting the Property or any portion thereof
exists as of the date of this Agreement. Seller has not heretofore received any
notice, and has no knowledge, that any such proceeding or charge is
contemplated. Seller, as of the date of this Agreement, has not received any
notice of a proposed increase in the assessed valuation of the Property.
(f) All Improvements (including all utilities) have been, or
as of the Closing will be, completed and installed in accordance with the plans
and specifications approved by the governmental authorities having jurisdiction
to the extent applicable and are transferable to Purchaser without additional
cost. Permanent certificates of occupancy, all licenses, permits,
authorizations and approvals required by all governmental authorities having
jurisdiction, and the requisite certificates of the local board of fire
underwriters (or other body exercising similar functions) have been, or as of
the Closing will be, issued for the Improvements, and, as of the Closing, where
required, all of the same will be in full force and effect. Except as may be
set forth in any of the Due Diligence Materials, the Improvements, as designed
and constructed, comply or will comply with all statutes, restrictions,
regulations and ordinances applicable thereto, including but not limited to the
Americans with Disabilities Act and Section 504 of the Rehabilitation Act of
1973, as applicable.
(g) As of the Closing, the water, sewer, gas and electricity
lines, storm sewer and other utility systems on the Land will be adequate to
serve the utility needs of the Property as
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operated as a correctional/detention facility or such other use specified in
the Permits. All utilities required for the operation of the Improvements will
enter the Land through adjoining public streets or through adjoining private
land in accordance with valid public or private easements that will inure to
the benefit of Purchaser. As of the Closing, all approvals, licenses and
permits required to fully operate said utilities will have been obtained and
will be in force and effect. All of said utilities are installed and operating,
or will be by Closing, and all installation and connection charges have been or
will be paid in full.
(h) Except as my be set forth in any of the Due Diligence
Materials, the location, construction, occupancy, operation and use of the
Property (including the Improvements) do not violate any applicable law,
statute, ordinance, rule, regulation, order or determination of any
governmental authority or any board of fire underwriters (or other body
exercising similar functions), or any restrictive covenant or deed restriction
(recorded or otherwise) affecting the Property or the location, construction,
occupancy, operation or use thereof, including, without limitation, all
applicable zoning ordinances and building codes, flood disaster laws and health
and environmental laws and regulations, the Americans with Disabilities Act and
Section 504 of the Rehabilitation Act of 1973, as applicable.
(i) Except as may be set forth on any of the Due Diligence
Materials, there are not any structural defects in any of the buildings or
other Improvements constituting the Property. The Improvements, all heating,
electrical, plumbing and drainage at, or servicing, the Property and all
facilities and equipment relating thereto, will be, as of the Closing, in good
condition and working order and adequate in quantity and quality for the normal
operation of the Property as operated as a correctional/detention facility or
such other use as may be specified in the Permits. No part of the Property has
been destroyed or damaged by fire or other casualty. There are no unsatisfied
requests for repairs, restorations or alterations with regard to the Property
from any person, entity or authority, including but not limited to any lender,
insurance provider or governmental authority.
(j) There exist no service contracts, management or other
agreements applicable to the Property or amendments, modifications or
terminations thereto, to which Seller is a party or otherwise known to Seller,
other than Seller's Operating and Service Agreements, the Business Agreements
and those agreements furnished to Purchaser pursuant to Section 4.1.
(k) Seller is not in default in any manner which would result
in a material adverse effect on Seller under any of the Business Agreements, or
Seller's Operating and Service Agreements or any of the covenants, conditions,
restrictions, rights-of-way or easements affecting the Property or any portion
thereof and, to Seller's knowledge, no other party to any of the foregoing is
in default thereunder.
(l) There are no actions, suits or proceedings pending or, to
Seller's knowledge, threatened against or affecting the Property or any portion
thereof, or relating to or arising out of the ownership or operation of the
Property, or by any federal, state, county or municipal department, commission,
board, bureau or agency or other governmental instrumentality, other than those
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disclosed to Purchaser pursuant to Section 4.1. All judicial proceedings
concerning the Property" will be finally dismissed and terminated prior to
Closing, excluding inmate lawsuits and other lawsuits in which Seller is
involved in its ordinary course of business.
(m) The Property has free and unimpeded access to presently
existing public highways and/or roads (either directly or by way of perpetual
casements); and all approvals necessary therefor will be in full force and
effect as of the Closing. To the best of Seller's knowledge, no fact or
condition exists which would result in the termination of the current access
from the Property to any presently existing public highways and/or roads
adjoining or situated on the Property.
(n) There are no attachments, executions, assignments for the
benefit of creditors, or voluntary or involuntary proceedings in bankruptcy or
under any other debtor relief laws contemplated by or, to Seller's knowledge,
pending or threatened against Seller or the Property.
(o) Except as may be set forth in any of the Due Diligence
Materials, no Hazardous Materials have been installed, used, generated,
manufactured, treated, handled, refined, produced, processed, stored or
disposed of, or otherwise present in, on or under the Property by Seller or to
Seller's knowledge. No activity has been undertaken on the Property by Seller
or to Seller's knowledge which would cause (i) the Property to become a
hazardous waste treatment, storage or disposal facility within the meaning of,
or otherwise bring the Property within the ambit of RCRA or any Hazardous
Materials Law, (ii) a release or threatened release of Hazardous Materials from
the Property within the meaning of, or otherwise bring the Property within the
ambit of, CERCLA or SARA or any Hazardous Materials Law or (iii) the discharge
of Hazardous Materials into any watercourse, body of surface or subsurface
water or wetland, or the discharge into the atmosphere of any Hazardous
Materials which would require a permit under any Hazardous Materials Law. No
activity has been undertaken with respect to the Property by Seller or to
Seller's knowledge which would cause a violation or support a claim under RCRA,
CERCLA, SARA or any Hazardous Materials Law. No investigation, administrative
order, litigation or settlement with respect to any Hazardous Materials is in
existence with respect to the Property, nor, to Seller's knowledge, is any of
the foregoing threatened. No notice has been received by Seller from any
entity, governmental body or individual claiming any violation of any Hazardous
Materials Law, or requiring compliance with any Hazardous Materials Law, or
demanding payment or contribution for environmental damage or injury to natural
resources. Seller has not obtained and, to Seller's knowledge, is not required
to obtain, and Seller has no knowledge of any reason Purchaser will be required
to obtain, any permits, licenses, or similar authorizations to occupy, operate
or use the Improvements or any part of the Property by reason of any Hazardous
Materials Law. Notwithstanding the representations made herein, such
representations are and shall be deemed to be limited by the matters detailed
in any Phase I Preliminary Site Assessment or other Due Diligence Materials
obtained by or provided to Purchaser in connection herewith.
(p) The Property includes all items of property, tangible and
intangible, currently used by Seller in connection with the operation of the
Property, other than the Excluded Personal
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<PAGE> 18
Property, Seller's Operating and Service Agreements, and property expressly
excluded from the definition of the Property.
(q) To the best of Seller's knowledge, the Due Diligence
Materials delivered to Purchaser are true, correct and complete in all material
respects,
Provided Purchaser shall have first validly exercised the Option,
Seller hereby agrees to indemnify and defend, at its sole cost and expense, and
hold Purchaser, its successors and assigns, harmless from and against and to
reimburse Purchaser with respect to any and all claims, demands, actions,
causes of action, losses, damages, liabilities, costs and expenses (including,
without limitation, reasonable attorney's fees and court costs) actually
incurred of any and every kind or character, known or unknown, fixed or
contingent, asserted against or incurred by Purchaser at any time and from time
to time by reason of or arising out of (a) the material breach of any
representation or warranty of Seller set forth in Section 6.1, (b) the failure
of Seller, in whole or in part, to perform any obligation required to be
performed by Seller pursuant to Section 6.1 or (c) the ownership, construction,
occupancy, operation, use and maintenance by Seller or its agents of the
Property prior to the Closing Date. This indemnity applies, without limitation,
to the violation on or before the Closing Date of any Hazardous Materials Law
in effect on or before the Closing Date and any and all matters arising out of
any act, omission, event or circumstance existing or occurring on or prior to
the Closing Date (including, without limitation, the presence on the Property
or release from the Property of Hazardous Materials disposed of or otherwise
released prior to the Closing Date), regardless of whether the act, omission,
event or circumstance constituted a violation of any Hazardous Materials Law at
the time of its existence or occurrence. Subject to the provisions of Section
11.1, the provisions of this Section 6. 1 shall survive the Closing of the
transaction contemplated by this Agreement and shall continue thereafter in
full force and effect for the benefit of Purchaser, its successors and assigns.
Notwithstanding any provision of this Agreement to the contrary, Purchaser may
exercise any right or remedy Purchaser may have at law or in equity should
Seller fail to meet, comply with or perform its indemnity obligations required
by this Section 6.1. In the event a defect, claim or deficiency is actually
discovered by Purchaser prior to Closing or is noticed in writing by Seller to
Purchaser prior to Closing, Purchaser shall either terminate the Agreement as
provided herein or waive the defect, claim or deficiency and proceed to
Closing.
The representations and warranties of Seller given herein are, and
shall be deemed to be, effective only in the event Purchaser validly exercises
the Option and only following the Effective Date.
6.2 Covenants and Agreements of Seller. Seller covenants and agrees
with Purchaser, from the Effective Date until the Closing or earlier
termination of this Agreement:
(a) Upon Completion of construction of the Improvements, Seller
shall (i) operate the Property in the ordinary course of Seller's business and
in the same manner as currently operated; and (ii) fully maintain and repair
the Improvements, the Fixtures, and the Personal Property in good condition and
repair.
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(b) Purchaser shall be entitled to make all inspections or
investigations desired by Purchaser with respect to the Property or any portion
thereof, and shall have complete physical access to the Property, which access
shall occur at such times and in such manner so as to not unreasonably
interfere with Seller's business operations or constitute a safety hazard, as
reasonably determined by Seller.
(c) Seller shall cause to be maintained in full force and
effect fire and extended coverage insurance upon the Property and public
liability insurance with respect to damage or injury to persons or property
occurring on or relating to operation of the Property in commercially
reasonable amounts, but no less than currently in effect.
(d) Seller shall pay when due all bills and expenses of the
Property. Seller shall not voluntarily enter into or assume any new Business
Agreements or modify, amend or terminate any existing Business Agreements with
regard to the Property which are in addition to or different from those
furnished and disclosed to Purchaser and reviewed and approved pursuant to
Section 4.1.
(e) Seller shall not create or voluntarily permit to be created
any liens, easements or other conditions affecting any portion of the Property
or the uses thereof without the prior written consent of Purchaser.
(f) Seller will pay, as and when due, all interest and
principal and all other charges payable under any indebtedness of Seller
secured by the Property from the date hereof until Closing, and will not suffer
or permit any default or amend or modify the documents evidencing or securing
any such indebtedness without the prior consent of Purchaser.
(g) Seller will, subject to limitations provided by law with
respect to privacy rights of inmates, give to Purchaser, its attorneys,
accountants and other representatives, during normal business hours and as
often as may be reasonably requested, full access to all books, records and
files relating to the Property, so long as the same does not unreasonably
interfere with Seller's business operations.
(h) Seller shall not remove any Personal Property or Fixtures
from the Land or Improvements without replacing same with substantially similar
items of equal or greater value and repairing the damage, if any, to the
Property as a result of such removal.
(i) During the pendency of this Agreement, Seller, its
corporate officers, directors, and agents shall not negotiate the sale or other
disposition of the Property with any person or entity other than Purchaser, and
shall not take any steps to initiate, consummate or document the sale or other
disposition of the Property, or any portion thereof, to any person or entity
other than Purchaser.
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(j) Prior to the Closing Date, Seller agrees to notify
Purchaser in writing within three (3) Business Days of any offer received by,
delivered to or communicated to Seller for the purchase, sale, acquisition or
other disposition of the Property.
(k) Seller shall provide representations, warranties and
consents as may be reasonably required in connection with any public offering
of stock or debt obligations by Purchaser, including but not limited to,
inclusion of financial statements, summary financial information and other
required information concerning Seller, or Seller as lessee under the Lease, in
any Securities and Exchange Commission filings.
6.3 Representations and Warranties of Purchaser. To induce Seller to
enter into this Agreement and to sell the Property, Purchaser represents and
warrants to Seller as follows:
(a) Purchaser has duly and validly authorized and executed
this Agreement, and has full right, title, power and authority to enter into
this Agreement and to consummate the transactions provided for herein, and the
joinder of no person or entity will be necessary to purchase the Property from
Seller at Closing, and to lease the Property to Seller following Closing,
(b) The execution by Purchaser of this Agreement and the
consummation by Purchaser of the transactions contemplated hereby do not, and
at the Closing will not, result in a breach of any of the terms or provisions
of, or constitute a default or a condition which upon notice or lapse of time
or both would ripen into a default under, any indenture, agreement, instrument
or obligation to which Purchaser is a party; and does not, and at the Closing
will not, constitute a violation of any Laws, order, rule or regulation
applicable to Purchaser of any court or of any federal, state or municipal
regulatory body or administrative agency or other governmental body having
jurisdiction over Purchaser.
ARTICLE VII
CONDITIONS TO OBLIGATIONS
7.1 Conditions to the Purchaser's Obligations. The obligations of
Purchaser to purchase the Property from Seller and to consummate the
transactions contemplated by this Agreement are subject to the satisfaction, at
all times following the Effective Date and as of the Closing (or such other
time period specified below), of each of the following conditions:
(a) All of the representations and warranties of Seller set
forth in this Agreement shall be true in all material respects and Seller shall
deliver a Closing Certificate in substantially the same form attached hereto as
Exhibit D updating such representations and warranties.
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(b) Seller shall have delivered, performed, observed and
complied with, all of the items, instruments, documents, covenants, agreements
and conditions required by this Agreement to be delivered, performed, observed
and complied with by it prior to, or as of, the Closing.
(c) Seller shall not be in receivership or dissolution or have
made any assignment for the benefit of creditors, or admitted in writing its
inability to pay its debts as they mature, or have been adjudicated a bankrupt,
or have filed a petition in voluntary bankruptcy, a petition or answer seeking
reorganization or an arrangement with creditors under the federal bankruptcy
law or any other similar law or statute of the United States or any state and
no such petition shall have been filed against it.
(d) No material or substantial adverse change shall have
occurred with respect to the condition, financial or otherwise, of the Seller
or the Property.
(e) Neither the Property nor any part thereof or interest
therein shall have been taken by execution or other process of law in any
action prior to Closing.
(f) Seller shall have obtained and delivered to Purchaser a
current report, dated no more than ten (10) days prior to the Closing Date,
from a licensed pest control company reasonably acceptable to Purchaser, and
which must show the Property to be free of all termite, or other destructive
insect and pest infestation.
(g) During the Review Period, Seller shall have obtained at
Seller's expense and delivered to Purchaser a Phase I environmental site
assessment report, dated no more than 60 days prior to the Closing Date, and
performed by a licensed firm.
(h) During the Review Period, Purchaser shall have
satisfactorily completed an inspection of the Property with respect to the
physical condition thereof by agents or contractors selected by Purchaser.
(i) During the Review Period, Purchaser shall have received, in
form acceptable to Purchaser, evidence of compliance by the Property with all
building codes, zoning ordinances and other governmental entitlements as
necessary for the operation of the Property for the current and intended use,
including, without limitation, certificates of occupancy and such other
permits, licenses, approvals, agreements and authorizations as are required for
the operation of the Property for the current and intended use and acceptable
evidence of no violations of building or other codes or laws.
(j) During the Review Period, all necessary approvals, consents
and the like of third parties to the validity and effectiveness of the
transactions contemplated hereby have been obtained.
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(k) During the Review Period, Purchaser is reasonably satisfied
that the Property is sufficient adequate for Seller to carry on the business
now being conducted thereon and the Property is in good condition and repair as
reasonably required for the proper operation and use thereof in compliance with
applicable laws.
(l) During the Review Period, Purchaser has reviewed and
satisfied itself with respect to the Due Diligence Materials and shall not have
terminated this Agreement pursuant to the provisions of Section 4.2 hereof.
(m) No material portion of the Property shall have been
destroyed by fire or casualty.
(n) No condemnation, eminent domain or similar proceedings
shall have been commenced or threatened with respect to any material portion of
the Property.
(o) Purchaser shall have been successful in causing the
formation of a real estate investment trust whose interests have been sold to
the public and in connection therewith shall have raised capital in an amount
not less than $100,000,000.
7.2 Failure of Conditions to Purchaser's Obligations. In the event
any one or more of the conditions to Purchaser's obligations are not satisfied
or waived in whole or in part at any time prior to or as of the Closing,
Purchaser, at Purchaser's option, shall be entitled to: (a) terminate this
Agreement by giving written notice thereof to Seller, whereupon all moneys, if
any, which have been delivered by Purchaser to Seller or the Title Company
shall be immediately refunded to Purchaser and Purchaser shall have no further
obligations or liabilities hereunder; or (b) proceed to Closing hereunder.
7.3 Conditions to the Seller's Obligations. The obligations of
Seller to sell the Property to Purchaser and to consummate the transactions
contemplated by this Agreement are subject to the satisfaction, at all times
prior to and as of the Closing (or such other time period specified below), of
each of the following conditions:
(a) All of the representations and warranties of Purchaser
set forth in this Agreement shall be true at all times prior to, at and as of,
the Closing in all material respects and Purchaser shall deliver a Closing
Certificate in substantially the same form attached hereto as Exhibit D
updating such representations and warranties.
(b) Purchaser shall have delivered, performed, observed and
complied with, all of the items, instruments, documents, covenants, agreements
and conditions required by this Agreement to be delivered, performed, observed
and complied with by it prior to, or as of, the Closing.
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(c) Purchaser shall not be in receivership or dissolution or
have made any assignment for the benefit of creditors, or admitted in writing
its inability to pay its debts as they mature, or have been adjudicated a
bankrupt, or have filed a petition in voluntary bankruptcy, a petition or
answer seeking reorganization or an arrangement with creditors under the
federal bankruptcy law or any other similar law or statute of the United States
or any state and no such petition shall have been filed against it.
(d) Purchaser shall have been successful in causing the
formation of a real estate investment trust whose interests have been sold to
the public and in connection therewith shall have raised capital in an amount
not less than $100,000,000.
7.4 Failure of Conditions to Seller's Obligations. In the event any
one or more of the conditions to Seller's obligations are not satisfied or
waived in whole or in part at any time prior to or as of the Closing, Seller,
at Seller's option, shall be entitled to: (a) terminate this Agreement by
giving written notice thereof to Purchaser, whereupon all moneys, if any, which
have been delivered by Seller to Purchaser or the Title Company shall be
immediately refunded to Seller and Seller shall have no further obligations or
liabilities hereunder; or (b) proceed to Closing hereunder.
ARTICLE VIII
PROVISIONS WITH RESPECT TO THE CLOSING
8.1 Seller's Closing Obligations. At the Closing, Seller shall
furnish and deliver to the Title Company for delivery to Purchaser, at Seller's
expense, the following:
(a) The Deed, Title Policy (or the Title Commitment marked-up
and initialed by the Title Company), Bill of Sale, Certificate of Non-Foreign
Status, Closing Certificate and Lease, each duly executed and acknowledged by
Seller and, as appropriate, in recordable form acceptable in the state and
county in which the Property is located.
(b) Certificates of casualty and fire insurance for the
Property and satisfactory evidence of all other insurance coverages as required
pursuant to the Lease showing Purchaser as additional insured and loss payee
thereunder, where appropriate, with appropriate provisions for prior notice to
Purchaser in the event of cancellation or termination of such policies and
otherwise in form and substance reasonably satisfactory to Purchaser.
(c) Search Reports, dated not more than five (5) days prior to
Closing, evidencing no UCC-1 Financing Statements or other filings in the name
of Seller with respect to the Property which will remain on the Property after
the Closing.
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(d) Such affidavits or letters of indemnity as the Title
Company shall require in order to omit from the Title Insurance Policy all
exceptions for unfiled mechanic's, materialman's or similar liens.
(e) Any and all transfer declarations or disclosure documents,
duly executed by the appropriate parties, required in connection with the Deed
by any state, county or municipal agency having jurisdiction over the Property
or the transactions contemplated hereby.
(f) An opinion of Seller's counsel, dated as of the Closing
Date, in the form of Exhibit J-1, attached hereto.
(g) Such instruments or documents as are necessary, or
reasonably required by Purchaser or the Title Company, to evidence the status
and capacity of Seller and the authority of the person or persons who are
executing the various documents on behalf of Seller in connection with the
purchase and sale transaction contemplated hereby.
(h) Such other documents as are reasonably required by
Purchaser to carry out the terms and provisions of this Agreement.
(i) Duplicates of keys, combinations, codes and security
information to all locks on the Property in the possession of Seller, but not
to include access to restricted areas, if any or areas with controlled
substances, as such areas are designated in writing by Seller.
8.2 Purchaser's Closing Obligations. At the Closing, Purchaser shall
furnish and deliver to Seller, at Purchaser's expense, the following:
(a) Federal Reserve, wire transfer funds or other immediately
available collected funds, payable to the order, or at the direction, of Seller
representing the cash portion of the Purchase Price due in accordance with
Section 3.1 herein.
(b) The Closing Certificate and Lease, duly executed and
acknowledged by Purchaser.
(c) Such instruments or documents as are necessary, or
reasonably required by Seller or the Title Company, to evidence the status and
capacity of Purchaser and the authority of the person or persons who are
executing the various documents on behalf of Purchaser in connection with the
purchase and sale transaction contemplated hereby.
(d) An Opinion of Purchaser's counsel, dated as of the Closing
Date, in the form of Exhibit J-2, attached hereto.
(e) Such other documents as are reasonably required by Seller
to carry out the terms and provisions of this Agreement.
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(f) All necessary approvals, consents, certificates and the
like of third parties to the validity and effectiveness of the transaction
contemplated hereby.
ARTICLE IX
EXPENSES OF CLOSING
9.1 Adjustments. There shall be no adjustment of taxes, assessments,
water or sewer charges, gas, electric, telephone or other utilities, operating
expenses, employment charges, premiums on insurance policies, rents or other
normally proratable items, it being agreed and understood by the Parties that
the Seller shall be obligated to pay such items under the terms of the Lease.
9.2 Closing Costs. Seller shall pay (a) all title examination fees
and premiums for the Title Policy; (b) the cost of the Search Reports; (c) the
cost of the Survey; (d) any and all state, municipal or other documentary or
transfer taxes payable in connection with the delivery of any instrument or
document provided in or contemplated by this Agreement or any agreement or
commitment described or referred to herein; (e) Seller's legal, accounting and
other professional fees and expenses and the cost of all opinions, certificates,
instruments, documents and papers required to be delivered, or to cause to be
delivered, by Seller hereunder, including without limitation, the cost of
performance by Seller of its obligations hereunder; (f) the charges for or
in connection with the recording and/or filing of any instrument or document
provided herein or contemplated by this Agreement or any agreement or document
described or referred to herein; and (g) all other costs and expenses which are
required to be paid by Seller pursuant to other provisions of this Agreement.
Purchaser shall pay (a) Purchaser's legal, accounting and other professional
fees and expenses and the cost of all opinions, certificates, instruments,
documents and papers required to be delivered, or to cause to be delivered, by
Purchaser hereunder, including, without limitation, the cost of performance by
Purchaser of its obligations hereunder; and (b) all other costs and expenses
which are required to be paid by Purchaser pursuant to other provisions of this
Agreement. Purchaser and Seller shall each be responsible for other costs in the
usual and customary manner for this kind of transaction in the county where the
Property is located.
9.3 Commissions/Broker's Fees. Seller hereby represents and warrants
to Purchaser that it has not contacted any real estate broker, finder or any
other party in connection with this transaction, and that it has not taken any
action which would result in any real estate broker's, finder's or other fees
being due or payable to any party with respect to the transaction contemplated
hereby. Purchaser hereby represents and warrants to Seller that Purchaser has
not contacted any real estate broker, finder or any other party in connection
with this transaction, and that it has not taken any action which would result
in any real estate broker's, finder's or other fees being due or payable to any
party with respect to the transaction contemplated hereby. Each Party hereby
indemnifies and agrees to hold the other Party harmless from any loss,
liability, damage, cost or expenses (including
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reasonable attorneys' fees) resulting to such other Party by reason of a breach
of the representation and warranty made by such Party herein.
ARTICLE X
DEFAULT AND REMEDIES
10.1 Seller's Default; Purchaser's Remedies.
(a) Seller shall be deemed to be in default hereunder upon the
occurrence of one of the following events: (i) any of Seller's warranties or
representations set forth herein shall be untrue in any material respect when
made or at Closing; or (ii) Seller shall fail to meet, comply with, or perform
any covenant, agreement or obligation on its part required within the time
limits and in the manner required in this Agreement, which, in either of such
events, is not cured by Seller within ten (10) days following receipt by Seller
of written notice of default from Purchaser.
(b) In the event Seller shall be deemed to be in default
hereunder Purchaser may, at Purchaser's sole option, do any one or more of the
following: (i) terminate this Agreement by written notice delivered to Seller
on or before the Closing; and/or (ii) enforce specific performance of this
Agreement against Seller including Purchaser's reasonable costs and attorneys
fees in connection therewith; and/or (iii) exercise any other right or remedy
Purchaser may have at law or in equity by reason of such default including, but
not limited to, the recovery of reasonable attorneys' fees incurred by
Purchaser in connection herewith.
(c) Upon the occurrence of any event deemed to be a default by
Seller hereunder, all payments previously made by Purchaser to Seller or the
Title Company hereunder shall be forthwith returned to Purchaser by the Title
Company on receipt of written notice from Purchaser that Seller has defaulted
under this Agreement, which written notice need not be accompanied by any other
document or consent of any other party hereto. If such sums are to be returned
to Purchaser in accordance with this Section 10.1(c), Seller shall promptly, on
written request from Purchaser, execute and deliver such documents as may be
required to cause the Title Company to return such sums to Purchaser.
10.2 Purchaser's Default; Seller's Remedies.
(a) Purchaser shall be deemed to be in default hereunder upon
the occurrence of one of the following events: (i) any of Purchaser's
warranties or representations set forth herein shall be untrue in any material
respect when made or at Closing; or (ii) Purchaser shall fail to meet, comply
with, or perform any covenant, agreement or obligation on its part required
within the time limits and in the manner required in this Agreement, which, in
either of such events, is not cured by Purchaser within ten (10) days following
receipt by Purchaser of written notice of default from Seller.
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(b) In the event Purchaser shall be deemed to be in default
hereunder Seller may, at Seller's sole option, do any one or more of the
following: (i) terminate this Agreement by written notice delivered to
Purchaser on or before the Closing; and/or (ii) enforce specific performance of
this Agreement against Purchaser including Seller's reasonable costs and
attorneys fees in connection therewith; and/or (iii) exercise any other right
or remedy Seller may have at law or in equity by reason of such default
including, but not limited to, the recovery of reasonable attorneys' fees
incurred by Seller in connection herewith.
(c) Upon the occurrence of any event deemed to be a default by
Purchaser hereunder, all payments previously made by Purchaser to Seller or the
Title Company hereunder shall be forthwith paid to Seller by the Title Company
on receipt of written notice from Seller that Purchaser has defaulted under
this Agreement, which written notice need not be accompanied by any other
document or consent of any other party hereto. If such sums are to be paid to
Seller in accordance with this Section 10.1(c), Purchaser shall promptly, on
written request from Seller, execute and deliver such documents as may be
required to cause the Title Company to pay such sums to Seller.
ARTICLE XI
MISCELLANEOUS
11.1 Survival. All of the representations, warranties, covenants,
agreements and indemnities of Seller and Purchaser contained in this Agreement,
to the extent not performed at the Closing, shall survive the Closing for the
period of one (1) year after the Closing Date and shall not be deemed to merge
upon the acceptance of the Deed by Purchaser.
11.2 Right of Assignment. Neither this Agreement nor any interest
herein may be assigned or transferred by Purchaser to any person, firm,
corporation or other entity without the prior written consent of Seller, which
consent may be given or withheld in the sole discretion of Seller.
11.3 Notices. All notices, requests and other communications under
this Agreement shall be in writing and shall be either (a) delivered in person,
(b) sent by certified mail, return-receipt requested or (c) delivered by a
recognized national delivery service and addressed as follows:
If intended for Seller: Wackenhut Corrections Corporation
4200 Wackenhut Drive, Suite 100
Palm Beach Gardens, FL 33410-4243
Phone: (561) 622-5656
Attention: Dr. George C. Zoley
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<PAGE> 28
With a copy to: Akerman, Senterfitt & Eidson, P.A.
One SE Third Avenue
Miami, Florida 33131
Phone: (305) 374-5600
Attention: Bruce I. March, Esq.
If intended for Purchaser: CPT Operating Partnership L.P.
4200 Wackenhut Drive
Palm Beach, FL 33410-4243
Attention: Mr. Charles R. Jones
With a copy to: Josias, Goren, Cherof, Doody & Ezrol, P.A.
3009 East Commercial Blvd., Suite 200
Ft. Lauderdale, FL 33308
Phone: (954) 771-4500
Attention: Donald J. Doody, Esq.
or at such other address, and to the attention of such other person, as the
parties shall give notice as herein provided. A notice, request and other
communication shall be deemed to be duly received if delivered in person or by
a recognized national delivery service, when delivered to the address of the
recipient, if sent by mail, on the date of receipt by the recipient as shown on
the return-receipt card; provided that if a notice, request or other
communication is served by hand on a day which is not a Business Day, or after
5:00 P.M. on any Business Day at the addressee's location, such notice or
communication shall be deemed to be duly received by the recipient at 9:00 a.m.
on the first Business Day thereafter.
11.4 Entire Agreement; Modifications. This Agreement embodies and
constitutes the entire understanding between the Parties with respect to the
transactions contemplated herein, and all prior or contemporaneous agreements,
understandings, representations and statements (oral or written) are merged
into this Agreement. Neither this Agreement nor any provision hereof may be
waived, modified, amended, discharged or terminated except by an instrument in
writing signed by the Party against whom the enforcement of such waiver,
modification, amendment, discharge or termination is sought, and then only to
the extent set forth in such instrument.
11.5 Applicable Law. THIS AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED HEREBY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF FLORIDA. The Parties agree that jurisdiction and venue for
any litigation arising out of this Agreement shall be in the Courts of Palm
Beach County, Florida or the U.S. District Court for the Southern District of
Florida and, accordingly, consent thereto.
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<PAGE> 29
11.6 Captions. The captions in this Agreement are inserted for
convenience of reference only and in no way define, describe, or limit the
scope or intent of this Agreement or any of the provisions hereof.
11.7 Binding Effect. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective heirs,
executors, administrators, legal representatives, successors, and assigns.
11.8 Extension of Dates. Notwithstanding anything to the contrary
contained in this Agreement, if Seller shall fail to deliver any document or
item required pursuant to any of the terms and provisions of Article IV and/or
Article V within the applicable time period required, Purchaser, at its option,
shall have the right to extend the date of expiration of the Review Period and
correspondingly the date of Closing by the number of days elapsing from the
date such items were required to be delivered and the date such items were
actually delivered to Purchaser. Nothing herein shall diminish Seller's
obligation to timely furnish such items.
11.9 Time is of the Essence. With respect to all provisions of this
Agreement, time is of the essence. However, if the first date of any period
which is set out in any provision of this Agreement falls on a day which is not
a Business Day, then, in such event, the time of such period shall be extended
to the next day which is a Business Day.
11.10 Waiver of Conditions. Any Party may at any time or times, at its
election, waive any of the conditions to its obligations hereunder, but any
such waiver shall be effective only if contained in a writing signed by such
Party. No waiver by a Party of any breach of this Agreement or of any warranty
or representation hereunder by the other Party shall be deemed to be a waiver
of any other breach by such other Party (whether preceding or succeeding and
whether or not of the same or similar nature), and no acceptance of payment or
performance by a Party after any breach by the other Party shall be deemed to
be a waiver of any breach of this Agreement or of any representation or
warranty hereunder by such other Party, whether or not the first Party knows of
such breach at the time it accepts such payment or performance. No failure or
delay by a Party to exercise any right it may have by reason of the default of
the other Party shall operate as a waiver of default or modification of this
Agreement or shall prevent the exercise of any right by the first Party while
the other Party continues to be so in default.
11.11 Memorandum of Option. Upon request of Purchaser, Seller agrees
to execute a memorandum of option, in form and substance reasonably
satisfactory to the Parties, suitable for recording, evidencing the granting of
the Option herein contained.
11.12 Liability of General Partner of Purchaser. Seller acknowledges
that Purchaser has disclosed that the general partner of Purchaser (the
"General Partner") is a Maryland business trust formed pursuant to a
Declaration of Trust, as amended, a copy of which is duly filed with the
Department of Assessments and Taxation of the State of Maryland, which provides
that no trustee, officer, shareholder, employee or agent of the General Partner
shall be held personally liable under
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<PAGE> 30
any written instrument creating an obligation of, or claim against, the General
Partner and that all persons dealing with the General Partner, in any way,
shall look only to the assets of the General Partner for the payment of any sum
or the performance of any obligation. Seller agrees that any liability of the
General Partner or any trustee, officer, shareholder, employee or agent acting
on behalf of the General Partner arising out of this Agreement or the
performance by Purchaser of its obligations hereunder is limited to the assets
of the General Partner in accordance with the above Declaration of Trust.
EXECUTED to be effective as of the date shown on the front cover
hereof.
PURCHASER:
CPT OPERATING PARTNERSHIP L.P.
By: Correctional Properties Trust, a Maryland real
estate investment trust, its General Partner
By:
-------------------------------------------
Charles R. Jones, President
Date:
-----------------------------------------
Purchaser's Tax I.D. Number:
------------------
SELLER:
WACKENHUT CORRECTIONS
CORPORATION
By:
------------------------------------------------
George C. Zoley, Vice Chairman of the Board
Date:
----------------------------------------------
Seller's Tax I.D. Number:
--------------------------
27
<PAGE> 31
AGREEMENT OF TITLE COMPANY
By its execution of this Agreement, the Title Company agrees to: (a)
timely file a return with the Internal Revenue Service on Form 1099-B, Form
1099-S and/or such other form or forms as the Internal Revenue Service may by
form or regulation require, and (b) furnish Purchaser with a written statement
showing the name and address of the Title Company and the information shown on
such form or forms with respect to Purchaser, and (c) comply with the
provisions of the Agreement which are applicable to the Title Company. Such
form or forms shall be filed in order that the parties to this transaction will
be in compliance with Section 6045 of the Internal Revenue Code of 1986, as
amended. Purchaser and Seller shall each provide their taxpayer identification
numbers to the Title Company so that such information may be included in the
form or forms filed by the Title Company.
______________ TITLE INSURANCE
CORPORATION
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
28
<PAGE> 32
LIST OF EXHIBITS
<TABLE>
<S> <C> <C>
Exhibit A - Real Property Description
Exhibit B - Bill of Sale and Assignment
Exhibit C - Certificate of Non-Foreign Status
Exhibit D - Closing Certificate
Exhibit E - Deed
Exhibit F - Excluded Personal Property
Exhibit G - Master Agreement to Lease and Lease Agreement
Exhibit H - Personal Property
Exhibit I - Surveyor's Certificate
Exhibit J-1 - Opinion of Seller's Counsel
Exhibit J-2 - Opinion of Purchaser's Counsel
</TABLE>
29
<PAGE> 1
Exhibit 10.6
FORM OF
TRUSTEE AND OFFICER INDEMNIFICATION AGREEMENT
This Trustee and Officer Indemnification Agreement (this
"Indemnification Agreement") is made as of the ____ day of __________, 1998, by
and between Correctional Properties Trust, a Maryland real estate investment
trust (the "Company"), and the undersigned Officer or Trustee of the Company
(the "Indemnitee").
WHEREAS, the Company wishes to retain the services of the Indemnitee as
an Officer or Trustee of the Company;
WHEREAS, Maryland Code Annotated, Courts and Judicial Proceeding,
Article 5-350, provides that a real estate investment trust's Declaration of
Trust may include any provision expanding or limiting the liability of its
officers or trustees to the trust or its shareholders for money damages, except
for liability resulting from (a) actual receipt of an improper benefit or profit
in money, property or services, or (b) active and deliberate dishonesty
established by a final judgment as being material to the cause of action;
WHEREAS, the Company's Declaration of Trust provides that to the
fullest extent allowed by Maryland law, no officer or trustee of the Company
shall be liable to the Company or its shareholders for money damages;
WHEREAS, in addition, the Bylaws of the Company provide that the
officers and trustees of the Company shall be entitled to indemnification on the
terms and conditions set forth therein;
WHEREAS, the Indemnitee has indicated that he or she does not regard
the foregoing provisions of the Company's Declaration of Trust and Bylaws as
adequate to protect him against the risks associated with his service to the
Company and has noted that the Company's directors' and officers' liability
insurance policy has numerous exclusions and a deductible and thus does not
adequately protect the Indemnitee; and
WHEREAS, the Company has agreed to enter into this Indemnification
Agreement in order to provide greater protection to the Indemnitee against such
risks of service to the Company in order to induce the Indemnitee to serve as an
Officer or Trustee of the Company.
<PAGE> 2
NOW, THEREFORE, in order to induce the Indemnitee to serve as an
Officer or Trustee of the Company and in consideration of such service, the
Company hereby agrees to indemnify the Indemnitee as follows:
1. INDEMNITY. The Company will indemnify the Indemnitee, his
executors, administrators, heirs and assigns, for any
Expenses (as defined below) which the Indemnitee is or
becomes legally obligated to pay in connection with any
Proceeding (as defined below). As used in this Agreement,
(a) the term "Proceeding" shall include any threatened,
pending or completed claim, action, suit or proceeding,
whether brought by or in the right of the Company or
otherwise and whether of a civil, criminal, administrative
or investigative nature, in which the Indemnitee may be or
may have been involved as a party or otherwise, by reason of
the fact that Indemnitee is or was a trustee or officer of
the Company, by reason of any actual or alleged error,
misstatement, omission or misleading statement made or
suffered by the Indemnitee, by reason of any action taken by
him or of any inaction on his part while acting as such
trustee or officer, or by reason of the fact that he was
serving at the request of the Company as a director,
trustee, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise;
provided, that in each such case Indemnitee acted in good
faith and in a manner which he reasonably believed to be in
or not opposed to the best interests of the Company, and, in
the case of a criminal proceeding, in addition had no
reasonable cause to believe that the act or omission was
unlawful; (b) the term "other enterprise" shall include
(without limitation) employee benefit plans and
administrative committees thereof; (c) the term "fines"
shall include (without limitation) any excise tax assessed
with respect to any employee benefit plan; and (d) the term
"Expenses" shall include, without limitation, damages,
judgments, fines, penalties, settlements and reasonable
costs, attorneys' fees and disbursements and costs of
attachment or similar bonds, investigations, and any
expenses of establishing a right to indemnification under
this Agreement.
2. ENFORCEMENT. If a claim or request under this Agreement is
not paid by the Company, or on its behalf, within thirty
days after a written claim or request has been received by
the Company, the Indemnitee may at any time thereafter bring
suit against the Company to recover the unpaid amount of the
claim or request and if successful in whole or in part, the
Indemnitee shall be entitled to be paid also the Expenses of
prosecuting such suit. The Company shall have the right to
withhold, or to recoup from, the Indemnitee the amount of
any item or items of Expenses theretofore paid by the
Company pursuant to this Agreement, to the extent such
Expenses are not reasonable in nature or amounts; provided,
however, that the Company shall have the burden of proving
such Expenses to be unreasonable. The burden of proving that
the
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<PAGE> 3
Indemnitee is not entitled to indemnification for any other
reason shall also be upon the Company.
3. SUBROGATION. In the event of payment under this Agreement,
the Company shall be subrogated to the extent of such
payment to all of the rights of recovery of the Indemnitee,
who shall execute all papers required and shall do
everything that may be necessary to secure such rights,
including the execution of such documents necessary to
enable the Company effectively to bring suit to enforce such
rights.
4. EXCLUSIONS. The Company shall not be liable under this
Agreement to pay any Expenses in connection with any claim
made against the Indemnitee:
(a) to the extent that payment is actually made to the
Indemnitee under a valid, enforceable and collectible
insurance policy;
(b) to the extent that the Indemnitee is indemnified and
actually paid otherwise than pursuant to this
Agreement;
(c) in connection with a judicial action by or in the right
of the Company, in respect of any claim, issue or
matter as to which the Indemnitee shall have been
adjudged to be liable for gross negligence or
intentional misconduct in the performance of his duty
to the Company unless and only to the extent that any
court in which such action was brought shall determine
upon application that, despite the adjudication of
liability but in view of all the circumstances of the
case, the Indemnitee is fairly and reasonably entitled
to indemnity for such expenses as such court shall deem
proper.
(d) if it is proved by final judgment in a court of law or
other final adjudication to have been based upon or
attributable to the Indemnitee's personal profit or
advantage to which he or she was not legally entitled;
(e) for a disgorgement of profits made from the purchase
and sale by the Indemnitee of securities pursuant to
Section 16(b) of the Securities Exchange Act of 1934
and amendments thereto or similar provisions of any
state statutory law or common law;
(f) brought about or contributed to by the dishonesty of
the Indemnitee seeking payment hereunder; however,
notwithstanding the foregoing, the Indemnitee shall be
protected under this Agreement as to any claims upon
which suit may be brought against him by reason of any
-3-
<PAGE> 4
alleged dishonesty on his part, unless a judgment or
other final adjudication thereof adverse to the
Indemnitee shall establish that he committed (i) acts
of active and deliberate dishonesty, (ii) with actual
dishonest purpose and intent, and (iii) which acts were
material to the cause of action so adjudicated; or
(g) for any judgment, fine or penalty which the Company is
prohibited by applicable law from paying as indemnity
or for any other reason.
5. INDEMNIFICATION OF EXPENSES OF A SUCCESSFUL PARTY.
Notwithstanding any other provision of this Agreement, to
the extent that the Indemnitee has been successful on the
merits or otherwise in defense of any Proceeding or in
defense of any claim, issue or matter therein, including
dismissal without prejudice, Indemnitee shall be indemnified
against any and all Expenses incurred in connection
therewith.
6. PARTIAL INDEMNIFICATION. If the Indemnitee is entitled under
any provision of this Agreement to the indemnification by
the Company for some or a portion of Expenses, but not for
the total amount thereof, the Company shall nevertheless
indemnify the Indemnitee for the portion of such Expenses to
which the Indemnitee is entitled.
7. ADVANCE OF EXPENSES. Expenses incurred by the Indemnitee in
connection with any Proceeding, except the amount of any
settlement, shall be paid by the Company in advance upon
written request of the Indemnitee that the Company pay such
Expenses and delivery of a written affirmation by the
Indemnitee of the Indemnitee's good faith belief that the
standard of conduct necessary for indemnification under this
Agreement has been met. The Indemnitee hereby undertakes to
repay to the Company the amount of any Expenses theretofore
paid by the Company to the extent that it is ultimately
determined that such Expenses were not reasonable or that
the Indemnitee is not entitled to indemnification.
8. APPROVAL OF EXPENSES. No Expenses for which indemnity shall
be sought under this Agreement, other than those in respect
of judgments and verdicts actually rendered, shall be
incurred without the prior consent of the Company, which
consent shall not be unreasonably withheld or delayed.
9. NOTICE OF CLAIM. The Indemnitee, as a condition precedent to
his right to be indemnified under this Agreement, shall give
to the Company notice in writing as soon as practicable of
any claim made against him for which indemnity will or could
be sought under this Agreement, provided, however, that the
failure to provide such notice shall not eliminate the
Company's obligations
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<PAGE> 5
hereunder unless such failure to provide notice materially
and adversely affects the rights of the Company with respect
thereto. Notice to the Company shall be given at its
principal office and shall be directed to the Secretary (or
such other address as the Company shall designate in writing
to the Indemnitee); notice shall be deemed received if sent
by prepaid mail properly addressed, the date of such notice
being the date postmarked. In addition, the Indemnitee shall
give the Company such information and cooperation as it may
be reasonably require and as shall be within the
Indemnitee's power.
10. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, all of which taken together shall
constitute one instrument.
11. INDEMNIFICATION HEREUNDER NOT EXCLUSIVE. Nothing herein
shall be deemed to diminish or otherwise restrict the
Indemnitee's right to indemnification under any provision of
the Declaration of Trust or Bylaws of the Company and
amendments thereto or under applicable law.
12. EXCULPATION. The Declaration of Trust of the Company, as
amended, a copy of which is duly filed with the Department
of Assessments and Taxation of the State of Maryland,
provides that no trustee, officer, shareholder, employee or
agent of the Company shall be held personally liable under
any written instrument creating an obligation of the
Company, or claim against, the Company. All persons dealing
with the Company, in any way, shall look only to the assets
of the Company for the payment of any sum or the performance
of any obligation.
13. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal laws of the State
of Maryland.
14. SAVING CLAUSE. Whenever there is conflict between any
provision of this Agreement and any applicable present or
future statute, law or regulations contrary to which the
Company and the Indemnitee have no legal right to contract,
the latter shall prevail, but in such event the affected
provisions of this Agreement shall be curtailed and
restricted only to the extent necessary to bring them within
applicable legal requirements.
15. COVERAGE. The provisions of this Agreement shall apply with
respect to the Indemnitee's service as an Officer or Trustee
of the Company prior to the date of this Agreement and with
respect to all periods of such service after the date of
this Agreement, even though the Indemnitee may have ceased
to be an Officer or Trustee of the Company.
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<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and signed as of the day and year first above written.
CORRECTIONAL PROPERTIES TRUST,
a Maryland real estate investment trust
By:
------------------------------------
Name:
------------------------------
Title:
------------------------------
OFFICER OR TRUSTEE:
---------------------------------------
Name:
----------------------------------
Address:
-------------------------------
---------------------------------------
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