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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 28, 1997
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 1-14260
WACKENHUT CORRECTIONS CORPORATION
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(Exact name of registrant as specified in its charter)
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Florida 65-0043078
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(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)
4200 Wackenhut Drive #100, Palm Beach Gardens, Florida 33410-4243
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
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REGISTRANT'S TELEPHONE NUMBER (INCLUDING AREA CODE): (561) 622-5656
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SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
Common Stock $0.01 Par Value
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
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None None
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Indicate by a check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X} No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X}
At January 30, 1998, the aggregate market value of the 10,168,797 shares of
Common Stock held by non-affiliates of the registrant was $259,304,324, At
January 30, 1998, there were outstanding 22,168,797 shares of Common Stock.
DOCUMENTS INCORPORATED BY REFERENCE
Parts of the Registrant's Proxy Statement for its 1998 Annual Meeting of
Shareholders are incorporated by reference in Part III of this Annual Report.
EXHIBIT INDEX IS LOCATED ON PAGE 53
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PART I
ITEM 1. BUSINESS
THE COMPANY
Wackenhut Corrections Corporation is a leading developer and manager of
privatized correctional and detention facilities in the United States, Puerto
Rico, Canada, the United Kingdom and Australia. The Company was founded in 1984
as a division of The Wackenhut Corporation ("TWC"), a leading provider of
professional security services. In 1986, the Company received its first
contract, from the United States Immigration and Naturalization Service (the
"INS"), to design, construct and manage a detention facility with a design
capacity of 150 beds.
The Company offers governmental agencies a comprehensive range of correctional
and detention facility management services from individual consulting projects
to the integrated design, construction and management of such facilities. In
addition to providing the fundamental residential services relating to the
security of facilities and the detention and care of inmates, Wackenhut
Corrections Corporation has built a reputation as an effective provider of a
wide array of in-facility rehabilitative and educational programs. These
programs include chemical dependency counseling and treatment, basic education,
and job and life skills training. Additionally, the Company continuously seeks
to expand into complementary services such as work release programs, youth
detention services and prisoner transport services (known as court escort
services in the United Kingdom). The Company believes that its experience in
delivering governmental agencies high quality cost-effective correctional and
detention facility management services provides such agencies strong incentive
to select the Company when renewing and awarding contracts.
As of January 30, 1998 the Company has 46 correctional and detention facilities
either under contract or award with an aggregate design capacity of 30,144 beds.
Of these 46 facilities, 35 are currently in operation, and 11 are being
developed by the Company. Of the facilities being developed, six are scheduled
to commence operations during 1998 (two in the first quarter, one in the second
quarter, two in the third quarter and one in the fourth quarter)*. In addition,
at January 30, 1998, the Company had outstanding written responses to Requests
for Proposal ("RFPs") for 7 projects with an aggregate design capacity of 1,819
beds.
The Company has obtained and is pursuing construction and management contracts
for correctional and detention facilities outside the United States and
presently operates facilities in the United Kingdom and Australia. Through its
wholly-owned subsidiary, Wackenhut Corrections Corporation Australia Pty Limited
("WCCA"), the Company manages three correctional facilities and four immigration
detention centers. In the United Kingdom, the Company formed two joint ventures
to pursue construction and management contracts for privatized correctional and
detention facilities. Premier Prison Services, Ltd. ("PPS"), a joint venture
with Serco Limited, currently manages one correctional facility and two court
escort contracts and will commence management of a second correctional facility
in 1998. Under court escort contracts, a private company, on behalf of a
governmental agency, transports prisoners between police stations, prisons and
courts and is responsible for the custody of such prisoners during
transportation and court appearances. In February 1994, through Wackenhut
Corrections (UK) Limited, the Company formed Premier Custodial Development
("PCD"), as a joint venture with a wholly-owned subsidiary of Trafalgar House
Limited, for the design, construction and financing of new detention facilities
and prisons. The Company expects that PCD will bid with PPS for the design,
development and management of new correctional and detention facilities in the
United Kingdom.
Generally, the Company manages facilities owned or leased by a governmental
agency. The agency may finance the construction of such facilities through
various methods including, but not limited to, the following: (i) a one time
general revenue appropriation by the governmental agency for the cost of the
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new facility; (ii) general obligation bonds that are secured by either a limited
or unlimited tax levy by the issuing entity; or (iii) lease revenue bonds or
certificates of participation secured by an annual lease payment that is subject
to annual or bi-annual legislative appropriations. In some instances, the
Company may be required to own and/or finance the facility. The construction of
these facilities will be financed through various methods including, but not
limited to the following: (i) funds from equity offerings of the Company's
stock; (ii) borrowing from banks or other institutions; or (iii) lease
arrangements with third parties.
The Company was incorporated in Florida in April 1988. The Company's principal
executive offices are located at 4200 Wackenhut Drive #100, Palm Beach Gardens,
Florida 33410-4243, and its telephone number is (561) 622-5656.
See the Company's Consolidated Financial Statements on pages 24 through 28 and
Note 4 of Notes to Consolidated Financial Statements for financial information
regarding domestic and international operations.
Cautionary Statement for Purposes of the "Safe Harbor" Provisions of the Private
Securities Litigation Reform Act of 1995. Except for historical matters, the
matters discussed in this Form 10-K contain forward-looking statements that are
based on current expectations and are subject to a number of risks and
uncertainties. Actual results could differ materially from current expectations
due to a number of factors, including but not limited to: general economic
conditions; competitive factors and pricing pressures; shifts in market demand;
the performance and needs of clients served by the Company; actual future costs
of operating expenses; self-insurance claims and employee wages and benefits;
possible changes in ownership positions of the Company's subsidiaries; and such
other risks which may be described from time to time in the Company's SEC
filings. These statements are marked with an " * ".
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FACILITIES
The following table summarizes certain information with respect to facilities
currently under management contract or award for management by the Company (or a
subsidiary or joint venture of the Company) at January 30, 1998.
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FACILITY NAME COMPANY DESIGN FACILITY SECURITY COMMENCEMENT TERM RENEWAL
LOCATION ROLE CAPACITY TYPE LEVEL OF CURRENT CONTRACT OPTION
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FEDERAL GOVERNMENT
CONTRACTS:
Aurora INS Processing Construction/ 300 INS Detention Minimum/ January 1998 (7) Ongoing
Center Management Facility Medium basis
Aurora, Colorado
Queens Private Construction/ 200 INS Detention Minimum/ March 1997 1 year Four,
Correctional Facility Management Facility Medium One-year
Queens, New York
Taft Correctional Management 2,048 Federal Low/ August 1997 3 years Seven,
Institution Prison Minimum One-year
Taft, California
STATE GOVERNMENT
CONTRACTS:
Allen Correctional Management 1,474 State Prison Medium/ December 1993 3 years One,
Center Maximum Two-year
Kinder, Louisiana
Bayamon Correctional Design/ 500 State Prison Medium March 1997 5 years One,
Facility Construction/ Five-year
Bayamon, Puerto Rico Consultation/
Management
Bridgeport Pre-Release Construction/ 520 Pre-Release Center Minimum September 1995 5 years None
Center Management (1)
Bridgeport, Texas
Central Texas Parole Renovation/ 623 Parole Violator All levels September 1997 Varies (2) Varies (2)
Violator Facility Management Facility/U.S.
San Antonio, Texas Marshal Detention
Facility/
Out of State
Prison Inmates
Central Valley Design/ 550 State Community Medium December 1997 10 years None
Community Correctional Construction/ Correctional
Facility Management Facility
McFarland, California
Charlotte County Design/ 1,000 State Prison Medium 2000* (3) (3)
Correctional Facility Construction/ (Estimated)
Charlotte County, Management
Virginia
Coke County Juvenile Design/ 104 Juvenile Offender Medium/ October 1996 2 years Automatic,
Justice Facility Construction/ Facility Maximum Unlimited,
Coke County, Texas Management Two-year
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FACILITY NAME COMPANY DESIGN FACILITY SECURITY COMMENCEMENT TERM RENEWAL
LOCATION ROLE CAPACITY TYPE LEVEL OF CONTRACT OPTION
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Desert View Community Design/ 550 State Community Medium December 1997 10 years None
Correctional Facility Construction/ Correctional
Adelanto, California Management Facility
Golden State Community Design/ 550 State Community Medium December 1997 10 years None
Correctional Facility Construction/ Correctional
McFarland, California Management Facility
Guadalupe County Design/ 600 State Prison All levels 4th Quarter 1998* (3) (3)
Correctional Facility Construction/ (Estimated)
Santa Rosa, Management
New Mexico
John R. Lindsey Unit Design/ 1,000 Texas State Jail Medium September 1995 3 years One,
Jack County, Texas Consultation/ Facility Two-year
Management
Karnes County Management 480 State Prison All levels January 1998 Varies Varies
Correctional Center
Karnes City, Texas
Kyle New Vision Construction/ 520 State Prison/ Minimum September 1995 5 years None
Chemical Dependency Management/ In-Prison (1)
Treatment Center (4) Chemical Chemical
Kyle, Texas Dependency Dependency
Treatment Treatment Center
Lea County Design/ 1,200 State Prison All levels 2nd Quarter 1998* (3) (3)
Correctional Facility Construction/ (Estimated)
Hobbs, New Mexico Management
East Mississippi Design/ 500 Mental Health All levels 1st Quarter 1999* 5 years One,
Correctional Facility Construction/ Corrections (Estimated) Two-Year
Lauderdale County, Management
Mississippi
Lawton Correctional Design/ 1,500 State Prison Medium 1st Quarter 1999* (3) (3)
Facility Construction/ (Estimated)
Lawton, Oklahoma Management
Lockhart Renaissance Design/ 500 State Prison Minimum/ August 1997 1 year One,
Facility Construction/ Medium One-year
Lockhart, Texas Management
Lockhart Work Program Construction/ 500 Work Program Minimum September 1997 1 year None
Facility Management Facility
Lockhart, Texas
Marshall County Design/ 1,000 State Prison Medium May 1996 5 years Unlimited,
Correctional Facility Construction/ Two-year
Marshall County, Management
Mississippi
McFarland Community Construction/ 224 State Community Minimum/ February 1994 5 years None
Correctional Facility Management Correctional Medium
McFarland, California Facility
Michigan Youth Design/ 480 Juvenile Maximum 2nd Quarter 1999* (3) (3)
Correctional Facility Construction/ (Estimated)
Baldwin, Michigan Management
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FACILITY NAME COMPANY DESIGN FACILITY SECURITY COMMENCEMENT TERM RENEWAL
LOCATION ROLE CAPACITY TYPE LEVEL OF CONTRACT OPTION
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Moore Haven Design/ 750 State Prison Medium July 1995 3 years Unlimited,
Correctional Facility Construction/ Two-year
Moore Haven, Florida Management
North Texas Renovation/ 400 Intermediate Minimum September 1997 1 year None
Intermediate Sanction Management Sanction Facility
Facility
Fort Worth, Texas
Ronald "Opie" Design/ 600 State Prison All levels January 1998 2 years Unlimited,
McPherson Correctional Construction/ Two-year
Facility Management
Newport, Arkansas
Scott Grimes Design/ 600 State Prison Minimum/ January 1998 2 years Unlimited,
Correctional Facility Construction/ Medium Two-year
Newport, Arkansas Management
South Bay Correctional Design/ 1,318 State Prison Medium/ February 1997 3 years Unlimited,
Facility Construction/ Close Custody Two-year
South Bay, Florida Management
Travis County Design/ 1,000 Texas State Jail Medium March 1997 2 - 1/3 Automatic,
Community Justice Consultation/ Facility years Unlimited,
Center Management (5) Two-year
Travis County, Texas
Willacy County Unit Design/ 1,000 Texas State Jail Medium January 1996 2 - 1/2 One,
Raymondville, Texas Consultation/ Facility years Two-year
Management
LOCAL GOVERNMENT
CONTRACTS:
Broward County Work Design/ 300 Community Work None 1st Quarter 1998* 5 year Unlimited,
Release Center Construction/ Release Center (Estimated) Two-year
Broward County, Management
Florida
Jena Juvenile Justice Design/ 276 City Jail All levels 3rd Quarter 1998* 25 years None
Center Construction/ (Estimated)
Jena, Louisiana Management
San Diego City Jail Construction/ 200 City Jail Facility Minimum May 1997 5 years None
San Diego, California Management
Delaware County Prison Design/ 1,200 County Jail All levels 3rd Quarter 1998* 3 years Unlimited,
Delaware County, Construction/ Facility (Estimated) Two-year
Pennsylvania (6) Management
INTERNATIONAL
CONTRACTS:
Arthur Gorrie Management 608 Remand and All levels August 1997 5 years None
Correctional Centre Reception Center
Wacol,
Australia
Court Escort Management NA Court Custody/ All levels May 1996 7 years Two,
West Midlands Area Transport-Escort Three-year
England
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FACILITY NAME COMPANY DESIGN FACILITY SECURITY COMMENCEMENT TERM RENEWAL
LOCATION ROLE CAPACITY TYPE LEVEL OF CONTRACT OPTION
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Court Escort Management NA Court Custody/ All levels May 1996 7 years Two,
South East Area Transport-Escort Three-year
England
H.M. Prison Doncaster Management 1,111 National Prison All levels June 1994 5 years Three,
and Youth Offender Three-year
Institution
Doncaster, England
Fulham Correctional Design/ 600 State Prison Minimum/ March 1997 5 years Five,
Centre Consultation/ Medium Three-year
Victoria, Australia Management
Junee Correctional Construction/ 600 State Prison Medium April 1993 5 years One,
Centre Management Three-year
Junee, Australia
H.M. Prison Kilmarnock Management 500 National Prison All levels 2nd Quarter 1999* 25 years None
Kilmarnock, Scotland (Estimated)
H.M. Prison Lowdham Management 500 National Prison All levels 1st Quarter 1998* 25 years None
Grange (Estimated)
Nottinghamshire,
England
Maribyrnong Detention Management 80 Immigration All levels December 1997 3 years One to
Centre Detention Three Years
Melbourne, Australia
New Brunswick Youth Design/ 112 Province Juvenile All levels October 1997 25 years None
Centre Consultation/ Facility
New Brunswick, Canada Maintenance
Perth Detention Centre Management 40 Immigration All levels December 1997 3 years One to
Perth, Australia Detention Three Years
Port Hedland Detention Management 700 Immigration All levels December 1997 3 years One to
Centre Detention Three Years
Port Hedland, Australia
Pucklechurch Youth Management 400 Youth Prison All levels 4th Quarter 1999* (3) (3)
Offender Institution (Estimated)
Pucklechurch, UK
Public Corrections Management NA Health Care NA January 1998 3 years One,
Enterprise Services Two-year
Victoria, Australia
Villawood Detention Management 300 Immigration All levels December 1997 3 years One to
Centre Detention Three Years
Sydney, Australia
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(1) Subject to termination option on August 31, 1998.
(2) This facility is occupied by inmates under several contracts with
varying terms and renewal options. The terms of these contracts range
from two weeks to an indefinite period and the renewal option features
range from no option to unlimited renewals.
(3) Contract terms have yet to be negotiated.
(4) The Company operates a chemical dependency treatment center located in
this facility under a separate contract. This contract is for a one-year
term expiring September 30, 1998.
(5) Expires August 31, 1998.
(6) The Company has a contract to manage and operate an existing 1,000 bed
facility in Delaware County, Pennsylvania. This contract will terminate
upon the completion of a new 1,200 bed facility currently being
constructed by the Company. The Company will manage and operate such
facility upon its completion.
(7) Interim contract expires in February 1998. Final contract terms have yet
to be negotiated.
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The Company offers services that go beyond simply housing inmates. The Company's
wide array of in-facility rehabilitative and educational programs differentiates
it from many competitors who lack the experience or resources to provide such
programs. Inmates at most facilities managed by the Company can also receive
basic education through academic programs designed to improve inmates' literacy
levels and to offer the opportunity to acquire General Education Development
("GED") certificates. Most Company-managed facilities also offer vocational
training for in-demand occupations to inmates who lack marketable job skills. In
addition, most Company-managed facilities offer life skills/transition planning
programs that provide inmates job search training and employment skills, anger
management skills, health education, financial responsibility training,
parenting skills and other skills associated with becoming productive citizens.
For example, at the Lockhart Work Program Facility, Lockhart, Texas, the
Company, as part of its job training program, recruited firms from private
industry to employ inmates at the facility. Inmates who participate in such
programs receive job skills training and are paid at least the minimum wage. The
inmates earnings are used to compensate victims, defray the inmates' housing
costs and support their dependents. The Company also offers counseling,
education and/or treatment to inmates with alcohol and drug abuse problems at
twenty-four of the facilities it manages. The Company believes that its program
at the Kyle New Vision Chemical Dependency Treatment Center is the largest
privately managed in-prison program of this nature in the United States.
The Company operates each facility in accordance with the Company-wide policies
and procedures and with the standards and guidelines required under the relevant
contract. For many facilities, the standards and guidelines include those
established by the American Correctional Association ("ACA"). The ACA, an
independent organization of corrections professionals, establishes correctional
facility standards and guidelines that are generally acknowledged as a benchmark
by governmental agencies responsible for correctional facilities. Many of the
Company's contracts for facilities in the United States require the Company to
seek accreditation of the facility. The Company has sought and received ACA
accreditation for ten of the facilities it manages and has always received ACA
accreditation when sought.
Contracts to design and construct or to redesign and renovate facilities may be
financed in a variety of ways. See "Business -- Facility Design, Construction
and Finance." If the project is financed using direct governmental
appropriations, using proceeds of the sale of bonds or other obligations issued
prior to the award of the project or by the Company directly, then financing is
in place when the contract relating to the construction or renovation project is
executed. If the project is financed using project-specific tax-exempt bonds or
other obligations, the construction contract is generally subject to the sale of
such bonds or obligations. Generally, substantial expenditures for construction
will not be made on such a project until the tax-exempt bonds or other
obligations are sold; and, if such bonds or obligations are not sold,
construction and, therefore, management of the facility may either be delayed
until alternative financing is procured or development of the project will be
entirely suspended. If the project is self-financed by the Company, then
financing is in place prior to the commencement of construction. When the
Company is awarded a facility management contract, appropriations for the first
annual or bi-annual period of the contract's term have generally already been
approved, and the contract is subject to governmental appropriations for
subsequent annual or bi-annual periods.
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FACILITY MANAGEMENT CONTRACTS
Other than listed in the following table, no other single customer accounted for
10% or more of the Company's total revenues for Fiscal 1997, 1996, and 1995.
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CUSTOMER 1997 1996 1995
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Various agencies of the State of Texas 32% 39% 37%
Louisiana Department of Public Safety
and Corrections 6% 9% 11%
State of Florida Correctional
Privatization Committee 13% 9% 8%
New South Wales Department of
Corrective Services 7% 10% 13%
Queensland Corrective Services 7% 11% 13%
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Except for its contract for the Taft Correctional Institution, San Diego City
Jail facility and the facilities in the United Kingdom and Australia, all of
which provide for fixed monthly rates, the Company's facility management
contracts provide that the Company will be compensated at an inmate per diem
rate based upon actual or guaranteed occupancy levels. Such compensation is
invoiced in accordance with applicable law and is paid on a monthly basis. All
of the Company's contracts are subject to either annual or bi-annual legislative
appropriations. A failure by a governmental agency to receive appropriations
could result in termination of the contract by such agency or a reduction of the
management fee payable to the Company. To date, the Company has not encountered
a situation where appropriations have not been made to a governmental agency
with regard to the Company's contracts, although no assurance can be given that
the governmental agencies will continue to receive appropriations in all cases.
The Company's facility management contracts typically have original terms
ranging from one to ten years and give the governmental agency at least one
renewal option, generally for a term ranging from one to five years. Some of the
Company's management contracts fall within the definition of "qualified
management contracts" under the rules of the Internal Revenue Service.
Therefore, such contracts are for one five-year term with the power to terminate
for convenience at the end of three years. The Company has: (i) eleven contracts
expiring in 1998 (one with automatic unlimited two-year extensions, two with a
single two-year renewal option, one with unlimited two-year renewal options, one
with a single three-year renewal option, four with no renewal options, one with
four one-year renewal options, and one with a one-year renewal option); (ii) two
contracts expiring in 1999 (one with no renewal option and one with three,
three-year renewal options); (iii) six expiring in 2000 (two with no renewal
option, three with unlimited two-year renewal options and one with seven,
one-year renewal options); (iv) three expiring in 2001 (one with a single
five-year renewal option and two with unlimited, two-year renewal options); (v)
three expiring in 2002 (two with no renewal options and one with automatic,
unlimited, two-year renewal options); (vi) and three expiring in 2003 (two with
a single, four-year renewal option and one with unlimited two-year renewal
options). Except as described below, to date, all renewal options under the
Company's management contracts have been exercised. However, in connection with
the exercise of the renewal option, the contracting government agency or the
Company typically has requested changes or adjustments to the contract terms.
The Company's management contract for the New York INS facility expired
effective March 31, 1995, and was not renewed by the INS due to the closure of
the facility. The INS subsequently awarded the Company a contract to construct
and manage
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a New York facility called the Queens Privatized Correctional Facility. This
facility opened in March, 1997.
The Company's contracts typically allow a contracting governmental agency to
terminate a contract for cause by giving the Company written notice ranging from
30 to 180 days. No contracts have been terminated prior to the end of the
contract term. To date, the only Company contract that did not extend for the
full term was for the management of the Monroe County, Florida jail. By mutual
agreement of the Company and the Monroe County Board of Commissioners the
contract was discontinued in 1990 on an amicable basis.
In addition, in connection with the Company's management of such facilities, the
Company is required to comply with all applicable local, state and federal laws
and related rules and regulations. The Company's contracts typically require it
to maintain certain levels of insurance coverage for general liability, workers'
compensation, vehicle liability, and property loss or damage. If the Company
does not maintain the required categories and levels of coverage, the
contracting governmental agency may be permitted to terminate the contract.
Presently, the Company, through TWC, has general liability insurance coverage of
$55 million per occurrence and in the aggregate. See "Business -- Insurance." In
addition, the Company is required under its contracts to indemnify the
contracting governmental agency for all claims and costs arising out of the
Company's management of facilities and in some instances require the Company to
maintain performance bonds.
FACILITY DESIGN, CONSTRUCTION AND FINANCE
The Company provides governmental agencies consultation and management services
relating to the design and construction of new correctional and detention
facilities and the redesign and renovation of older facilities. Through January
30, 1998, the Company has provided service for the design and construction of
twenty-one facilities and for the redesign and renovation of two facilities and
has contracts to design and construct nine new facilities. It has been the
Company's experience that it typically takes 9 to 24 months to construct a
facility after the contract is executed and financing approved. In addition, the
Company has provided consulting services in connection with the construction of
three new facilities in Texas.
The Company has consulted on and/or managed the design and construction of the
following facilities: (i) Aurora INS Processing Center; (ii) McFarland Community
Correctional Facility; (iii) Bridgeport Pre-Release Center; (iv) Kyle New Vision
Chemical Dependency Treatment Center; (v) Junee Correctional Centre; (vi) San
Diego City Jail; (vii) Lockhart Work Program Facility; (viii) Lockhart
Renaissance Facility; (ix) Moore Haven Correctional Facility; (x) Coke County
Juvenile Justice Facility; (xi) South Bay Correctional Facility; (xii) Marshall
County Correctional Facility; (xiii) Bayamon Regional Detention Center; (xiv)
Ronald "Opie" McPherson Correctional Facility; (xv) Scott Grimes Correctional
Facility; (xvi) Queens Private Correctional Facility; (xvii) Fulham Correctional
Centre; (xviii) Central Valley Community Correctional Facility; (xix) Desert
View Community Correctional Facility; (xx) Golden State Community Correctional
Facility; and (xxi) New Brunswick Youth Centre. The Company is currently
consulting on and/or managing the design and construction of the following
facilities: (i) Broward County Work Release Center; (ii) Michigan Youth
Correctional Facility; (iii) Lawton Correctional Facility; (iv) East Mississippi
Correctional Facility; (v) the new Delaware County Prison; (vi) Charlotte County
Correctional Facility; (vii) Jena Juvenile Justice Center; (viii) Guadalupe
County Correctional Facility; and (ix) Lea County Correctional Facility. The
Company also has provided consultation and management services in connection
with the redesign and renovation of the following facilities: (i) North Texas
Intermediate Sanction Facility; and (ii) Central Texas Parole Violator Facility.
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The Company is willing to perform consultation and management services for the
design and construction or redesign and renovation of a facility regardless of
whether it has been awarded the contract for the management of such facility.
Under its construction and design management contracts, the Company agrees to be
responsible for overall project development and completion. The Company makes
use of an in-house staff of architects and operational experts from various
corrections disciplines (e.g., security, medical service, food service, inmate
programs and facility maintenance) as part of the decision team that
participates from conceptual design through final construction of the project.
When designing a facility, the Company's architects seek to utilize, with
appropriate modifications, prototype designs the Company has used in developing
prior projects. The Company believes that the use of such proven designs allows
it to reduce cost overruns and construction delays and to reduce the number of
guards required to staff a facility, thus controlling costs both to construct
and to manage the facility. Security is maintained because the Company's
facility designs increase the area of vision under surveillance by guards and
make use of additional electronic surveillance.
The Company typically acts as the primary developer on construction contracts
for facilities and subcontracts with local general contractors. Where possible,
the Company subcontracts with construction companies with which it has
previously worked. The Company has an in-house team of design, construction and
prison security experts that coordinate all aspects of the development with
subcontractors and provide site-specific services.
The Company may also propose to contracting governmental agencies various
financing structures for construction finance. The governmental agency may
finance the construction of such facilities through various methods including,
but not limited to, the following: (i) a one time general revenue appropriation
by the government agency for the cost of the new facility, (ii) general
obligation bonds that are secured by either a limited or unlimited tax levy by
the issuing governmental entity, or (iii) lease revenue bonds or certificates of
participation secured by an annual lease payment that is subject to annual or
bi-annual legislative appropriations. The Company may also act as a source of
financing or as a broker in any regard with respect to any financing. In these
cases, the construction of such facilities may be financed through various
methods including, but not limited to, the following: (i) funds from equity
offerings of the Company's stock; (ii) borrowing from banks or other
institutions; or (iii) lease arrangements with third parties. Of the 46
facilities managed or contracted to be managed by the Company, 31 are funded
using one of the above-described financing vehicles, twelve are or will be
directly leased and three are owned. However, alternative financing arrangements
may be required for certain facilities. A growing trend in the correctional and
detention industry requires private operators to make capital investments in new
facilities and enter into direct financing arrangements in connection with the
development of such facilities. By participating in such projects, private
operators achieve economic benefits and tax advantages that are not typically
available in connection with more traditional arrangements.
MARKETING
The Company views governmental agencies responsible for state correctional
facilities in the United States and governmental agencies responsible for
correctional facilities in the United Kingdom and Australia as its primary
potential customers. The Company's secondary customers include the INS, other
federal and local agencies in the United States and other foreign governmental
agencies.
PAGE 11 of 60
<PAGE> 12
Governmental agencies responsible for correctional and detention facilities
generally procure goods and services through RFPs. A typical RFP requires
bidders to provide detailed information, including, but not limited to,
descriptions of the following: the services to be provided by the bidder, its
experience and qualifications, and the price at which the bidder is willing to
provide the services (which services may include the renovation; improvement or
expansion of an existing facility; or the planning, design and construction of a
new facility). As part of the Company's process of responding to RFPs,
management meets with appropriate personnel from the requesting agency to best
determine the prospective client's distinct needs.
If the project fits within the Company's strategy, the Company then will submit
a written response to the RFP. The Company estimates that it typically spends
between $10,000 and $150,000 when responding to an RFP. The Company has engaged
and intends in the future to engage independent consultants. Activities of the
independent consultants include assisting the Company in developing
privatization opportunities and in responding to RFPs, monitoring the
legislative and business climate and maintaining relationships with existing
clients.
There are several critical events in the marketing process. These include
issuance of an RFP by a governmental agency, submission of a response to the RFP
by the Company, the award of a contract by a governmental agency and the
commencement of construction or management of a facility. The Company's
experience has been that a period of approximately five to ten weeks is
generally required from the issuance of an RFP to the submission of the
Company's response to the RFP; that between one and four months elapse between
the submission of the Company's response and the agency's award for a contract;
and that between one and four months elapse between the award of a contract and
the commencement of construction or management of the facility. If the facility
for which an award has been made must be constructed, the Company's experience
is that construction usually takes between 9 and 24 months; therefore,
management of a newly constructed facility typically commences between 10 and 28
months after the governmental agency's award.
BUSINESS PROPOSALS
The Company pursues both domestic and international projects. At January 30,
1998, the Company had outstanding written responses to RFPs for 7 projects with
a total of 1,819 beds. The Company also is pursuing prospects for other projects
for which it has not yet submitted, and may not submit, a response to an RFP. No
assurance can be given that the Company will be successful in its efforts to
receive additional awards with respect to any proposals submitted.
INSURANCE
Presently, the Company is named insured under a liability insurance program (the
"Insurance Program") maintained by TWC. The Insurance Program includes general
comprehensive liability, automobile liability and workers' compensation coverage
for TWC and all of its domestic subsidiaries. The Insurance Program consists of
primary and excess insurance coverage. The primary coverage consists of up to $5
million of coverage per occurrence with no aggregate coverage limit. The excess
coverage consists of up to $55 million of coverage per occurrence and in the
aggregate. The Company believes such limits are adequate to insure against the
various liability risks of its business. The premium to be paid by the Company
to TWC for coverage under the Insurance Program in 1997 was approximately
$4,957,000, representing premiums paid to a captive reinsurance company that is
wholly owned by TWC. The Company believes that the premiums it is charged under
the Insurance Program are less than those that would be charged by a third party
insurer. The facility management contracts and various state
PAGE 12 of 60
<PAGE> 13
statutes require the Company to maintain such insurance and the management
contracts provide that the contracting agency may terminate the contract if the
Company fails to maintain the required insurance coverages. Under the Insurance
Program, the first $2 million of costs, expenses and losses per occurrence are
reinsured by a captive reinsurance company that is wholly owned by TWC.
EMPLOYEES AND EMPLOYEE TRAINING
At January 30, 1998, the Company had 6,301 full-time employees. Of such
full-time employees, 64 were employed at the Company's headquarters and 6,237
were employed at facilities. The Company employs management, administrative and
clerical, security, educational services, health services and general
maintenance personnel. The Company's correctional officer employees at Junee
Correctional Centre, Arthur Gorrie Correctional Centre, Fulham Correctional
Centre, Maribyrnong Detention Centre, Perth Detention Centre, Port Hedland
Detention Centre, and Villawood Detention Centre in Australia are members of
unions. The Company has entered into a contract with the union for the
correctional officers at these facilities. Other than the contracts described
above, the Company has no union contracts or collective bargaining agreements.
The Company believes its relations with its employees are good.
Under the laws applicable to most of the Company's operations, and internal
Company policy, the Company's corrections officers are required to complete a
minimum amount of training prior to employment. At least 160 hours of training
by the Company is required under most state laws before an employee is allowed
to work in a position that will bring him or her in contact with inmates.
Florida law requires that the corrections officers receive 520 hours of
training. The Company's training programs meet or exceed all applicable
requirements.
The Company's training begins with approximately 40 hours of instruction
regarding Company policies, operational procedures and management philosophy.
Training continues with an additional 120 hours of instruction covering legal
issues, rights of inmates, techniques of communication and supervision,
interpersonal skills and job training relating to the particular position to be
held. Each Company employee who has contact with inmates receives a minimum of
40 hours of additional training each year, and each manager receives at least 24
hours of training each year.
At least 222 hours of training is required for United Kingdom employees and 240
hours of training is required for Australian employees before such employees are
allowed to work in positions that will bring them into contact with inmates.
Company employees in the United Kingdom and Australia receive a minimum of 40
hours of additional training each year.
COMPETITION
The Company competes primarily on the basis of the quality and range of services
offered, its experience (both domestically and internationally) in the design,
construction and management of privatized correctional and detention facilities,
and its reputation. The Company competes with a number of companies, including,
but not limited to, Corrections Corporation of America, Correctional Services
Corporation, Group 4 International Corrections Service, U.K. Detention Services,
Ltd., Cornell Corrections Corporation and United States Corrections Corporation.
Some of the Company's competitors are larger and have greater resources than the
Company. The Company also competes in some markets with small local companies
that may have a better knowledge of the local conditions and may be better able
to gain political and public acceptance. Potential competitors can enter the
Company's business without substantial capital investment or experience in
management of correctional or detention facility
PAGE 13 of 60
<PAGE> 14
experience. In addition, in some markets, the Company may compete with
governmental agencies that are responsible for correctional facilities.
NON-U.S. OPERATIONS
Although most of the operations of the Company are within the United States, its
international operations make a significant contribution to income.
International operations of the Company provide correctional and detention
facilities management in Australia and the United Kingdom.
A summary of domestic and international operations is presented below:
<TABLE>
<CAPTION>
------------ ------------- ------------
1997 1996 1995
------------ ------------- ------------
<S> <C> <C> <C>
REVENUES
Domestic operations $ 167,223 $ 108,245 $ 72,852
International operations 39,707 29,539 26,579
------------ ------------- ------------
Total revenues 206,930 137,784 99,431
============ ============= ============
OPERATING INCOME
Domestic operations 12,388 7,087 4,501
International operations 4,157 2,644 2,728
------------ ------------- -----------
Total operating income 16,545 9,731 7,229
============ ============= ===========
ASSETS
Domestic operations 120,538 96,872 0,641
International operations 18,665 9,939 8,199
------------ ------------- -----------
Total assets $ 139,203 $ 106,811 $ 38,840
============ ============= ===========
</TABLE>
PAGE 14 of 60
<PAGE> 15
The Company has affiliates (50% or less owned) that provide correctional and
detention facilities management in the United Kingdom. The following table (in
thousands) summarizes certain financial information pertaining to these
unconsolidated foreign affiliates, on a combined basis, for the last three
fiscal years.
<TABLE>
<CAPTION>
1997 1996 1995
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA
Revenues $ 51,009 $ 28,953 $ 17,705
Operating income (loss) 3,884 1,764 (357)
Net income (loss) 2,209 1,208 (225)
BALANCE SHEET DATA
Current Assets 14,595 13,145 1,783
Noncurrent Assets 517 538 509
Current liabilities 8,115 8,518 3,702
Noncurrent liabilities 4,029 5,075 --
Stockholders' equity/(deficit) $ 2,968 $ 90 $ (1,410)
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
BUSINESS REGULATIONS AND LEGAL CONSIDERATIONS
The industry in which the Company operates is subject to national, federal,
state, and local regulations in the United States, United Kingdom, Australia and
Puerto Rico which are administered by a variety of regulatory authorities.
Generally, prospective providers of corrections services must be able to detail
their readiness to, and must comply with, a variety of applicable state and
local regulations, including education, health care and safety regulations. The
Company's contracts frequently include extensive reporting requirements and
require supervision and on-site monitoring by representatives of contracting
governmental agencies. The Company's Kyle New Vision Chemical Dependency
Treatment Center is licensed by the Texas Commission on Alcohol and Drug Abuse
to provide substance abuse treatment. Certain states, such as Florida and Texas,
deem correctional officers to be peace officers and require Company personnel to
be licensed and subject to background investigation. State law also typically
requires corrections officers to meet certain training standards.
In addition, many state and local governments are required to enter into a
competitive bidding procedure before awarding contracts for products or
services. The laws of certain jurisdictions may also require the Company to
award subcontracts on a competitive basis or to subcontract with businesses
owned by women or members of minority groups.
The failure to comply with any applicable laws, rules or regulations or the loss
of any required license could have a material adverse effect on the Company's
business, financial condition and results of operations. Furthermore, the
current and future operations of the Company may be subject to additional
regulations as a result of, among other factors, new statutes and regulations
and changes in the manner in which existing statutes and regulations are or may
be interpreted or applied. Any such additional
PAGE 15 of 60
<PAGE> 16
regulations could have a material adverse effect on the Company's business,
financial condition and results of operations.
ITEM 2. PROPERTIES
The Company leases its corporate headquarters office space in Palm Beach
Gardens, Florida, from TWC. In addition, the Company leases office space for its
regional offices in Austin, Texas and Costa Mesa , California, and for a local
office in Fort Lauderdale, Florida.
The Company also leases the space for the following facilities it manages: (i)
North Texas Intermediate Sanction Facility; (ii) Central Texas Parole Violator
Facility; (iii) San Diego City Jail; (iv) Central Valley Community Correctional
Facility; (v) Desert View Community Correctional Facility; (vi) Golden State
Community Correctional Facility; and (vii) Broward County Work Release Center.
The Company owns the land and a 66,000 square foot building for the Aurora INS
Processing Center and the land and a 61,400 square foot building for the Queens
Private Correctional Facility that the Company manages under contracts with the
U.S. Government. The Company also owns the land and a 35,000 square foot
building for the McFarland Community Correctional Facility that the Company
manages under a contract with the State of California.
ITEM 3. LEGAL PROCEEDINGS
On August 31, 1995, the Company was joined as an indispensable party in an
action filed by the Delaware County Prison Employees Independent Union (the
"Union") in the Court of Common Pleas of Delaware County, Pennsylvania. The
action questions the Delaware County Board of Prison Inspectors' (the "Board")
authority under a contract between the Union and the Board to award the contract
to manage the existing Delaware County Prison to the Company. An adverse
determination in this action could result in the loss of the Company's contract
to manage the existing facility, although the Company does not believe that such
a loss would have a material adverse effect on the Company. The Company does not
expect that this action would have an adverse impact on the Company's new
Delaware County Prison constructed by the Company. The Company has not commenced
operations at the new facility.
Except for the litigation set forth above and routine litigation incidental to
the business of the Company, there are no pending material legal proceedings to
which the Company or any of its subsidiaries is a party or to which any of their
property is subject. The Company believes that the outcome of the proceedings to
which it is currently a party will not have a material adverse effect upon its
operations or financial condition. The nature of the Company's business results
in claims or litigation against the Company for damages arising from the conduct
of its employee or others.
PAGE 16 of 60
<PAGE> 17
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth
quarter of the fiscal year covered by this report.
EXECUTIVE OFFICERS OF THE COMPANY
The executive officers of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
George R. Wackenhut 78 Chairman of the Board and Director
George C. Zoley 48 Vice Chairman of the Board, Chief Executive Officer, and Director
Wayne H. Calabrese 47 President and Chief Operating Officer
John G. O'Rourke 47 Senior Vice President, Chief Financial Officer, and Treasurer
Charles R. Jones 49 Senior Vice President, Business Development
Carol M. Brown 43 Senior Vice President, Health Services
Robert W. Mianowski 47 Senior Vice President, Operations
Patricia McNair Persante 48 Senior Vice President, Contract Compliance
David N.T. Watson 32 Controller, Chief Accounting Officer, and Assistant Treasurer
</TABLE>
GEORGE R. WACKENHUT has served as a director of The Company since it
was incorporated in 1988 and has been the Chairman of the Board of The Company
since July 1996. Mr. Wackenhut is the Chairman of the Board, Chief Executive
Officer and founder of The Wackenhut Corporation, the parent of The Company.
Mr. Wackenhut was President of The Wackenhut Corporation from the time of its
founding in 1955 until 1986. Prior to that, Mr. Wackenhut had been a Special
Agent of the Federal Bureau of Investigation from 1950 to 1954. He received a
Bachelor of Science Degree from the University of Hawaii and a Masters of
Education Degree from Johns Hopkins University. Mr. Wackenhut is on the Dean's
Advisory Board of the University of Miami School of Business, the National
Council of Trustees, Freedom Foundation at Valley Forge, the President's
Advisory Council for the Small Business Administration, Region IV, and a member
of the National Board of the National Soccer Hall of Fame. Mr. Wackenhut is a
past member of the Law Enforcement Council, National Council on Crime and
Delinquency, and the Board of Visitors of the United States Army Military
Police School. His son, Richard R. Wackenhut, is a director of the Company.
GEORGE C. ZOLEY has served as Vice Chairman of the Board since January,
1997, has served as President and a Director of the Company since it was
incorporated in 1988, and Chief Executive Officer since April, 1994. Dr. Zoley
established the correctional division for TWC in 1984 and was, and continues to
be, a major factor in the company's development of its privatized correctional
and detention facility business. Dr. Zoley is also a director of each of the
entities through which the Company conducts its international operations. From
1981 through 1988, as manager, director, and then Vice President of Government
Services of WSI, Dr. Zoley was responsible for the development of opportunities
in the privatization of government services by WSI. Currently Dr. Zoley serves
as a Senior Vice President of TWC. Prior to joining WSI, Dr. Zoley held various
administrative and management positions for city and county governments in South
Florida.
WAYNE H. CALABRESE has served as President since January 1997, Chief
Operating Officer since January 1996 and as Executive Vice President of the
Company from 1994 to 1996. Mr. Calabrese is also a director of each of the
entities through which the Company conducts its international operations. Mr.
Calabrese served as Chief Executive Officer of Australasian Correctional
Management, Pty Ltd., a subsidiary of the Company, from 1991 until he returned
to the United States in 1994. Mr. Calabrese joined the Company as Vice
President, Business Development in 1989, became Executive Vice President in 1994
and became Chief Operating Officer in 1996. Mr. Calabrese's prior experience in
the public sector includes positions as Assistant City Law Director in Akron,
Ohio; and Assistant County Prosecutor, and later, Chief of the County Bureau of
Support for Summit County, Ohio. Mr. Calabrese was also Legal Counsel and
Director of Development for the Akron Metropolitan Housing Authority. Prior to
joining the Company, Mr. Calabrese was engaged in the private practice of law as
a partner in the Akron law firm of Calabrese, Dobbins and Kepple.
JOHN G. O'ROURKE has served as Chief Financial Officer and Treasurer of
the Company since April, 1994, and has been the Senior Vice President, Finance
of the Company since June, 1991. Prior to
PAGE 17 of 60
<PAGE> 18
joining the Company Mr. O'Rourke spent twenty years as an officer in the United
States Air Force where his most recent position was as the Strategic Division
Chief in the Office of the Secretary of the Air Force, responsible for
acquisitions and procurement matters for strategic bomber aircraft.
CHARLES R. JONES has served as Senior Vice President, Business
Development since January 1997 after serving as Vice President, Business
Development since joining the Company in June 1996. Previously, Mr. Jones was a
senior investment banker specializing in structured finance and privatization
consulting for the corrections industry with Rauscher, Pierce, Refsnes, Inc. in
Dallas Texas, where he was Chairman of the firm's Banking Advisory Counsel. From
1973 to 1980 Mr. Jones, a CPA, practiced with Peat, Marwick, Mitchell & Co.
specializing in the taxation of commercial real estate and financial
institutions.
CAROL M. BROWN has served as Senior Vice President, Health Services of
the Company since August, 1990. Ms. Brown is a certified specialist in
correctional health care management. From 1988 until joining the Company Ms.
Brown was a Consultant for medical case management and workers' compensation in
South Florida for Health and Rehabilitation Management, Inc. From 1987 to 1988,
Ms. Brown was Medical Manager for Metlife Healthcare of South Florida. Ms. Brown
was an Administrator for health care services for Medical Personnel Pool, Inc.
from 1985 to 1987 and for Upjohn Healthcare from 1981 to 1985.
ROBERT W. MIANOWSKI has served as the Senior Vice President, Operations
of the Company since May, 1990. From May, 1988, until joining the Company, Mr.
Mianowski was Criminal Prosecuting Attorney for the City of Cuyahoga Falls,
Ohio, Department of Law, and was in private law practice for the prior two
years. Mr. Mianowski's career as practicing attorney was preceded by fourteen
(14) years in the field of law enforcement, having served as a law enforcement
officer in several Ohio municipalities, and as Chief of Police of Boston
Heights, Ohio, from 1984 to 1986.
PATRICIA MCNAIR PERSANTE has served as Senior Vice President, Contract
Compliance of the Company since February, 1995 and was Vice President, Contract
Compliance of the Company from 1990 to February 1995. From 1988 until joining
the Company, Ms. Persante was engaged in private law practice with the San
Antonio law firm of Smith, Barshop, Stoffer & Millsap. From 1983 to 1988, Ms.
Persante was Assistant Criminal District Attorney for Bexar County, Texas.
DAVID N.T. WATSON has served as Controller and Assistant Treasurer of
the Company since November, 1994 and also serves as the Company's Chief
Accounting Officer. From 1989 until joining the Company, Mr. Watson was with the
Miami office of Arthur Andersen LLP where his most recent position was Manager,
in the Audit and Business Advisory Services Group. Mr. Watson is a member of the
American Institute of Certified Public Accountants and the Florida Institute of
Certified Public Accountants.
PAGE 18 of 60
<PAGE> 19
PART II
ITEM 5. MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
In March 1996, the Company changed its listing from WCCX on the Nasdaq Stock
Market's National Market to WHC on the New York Stock Exchange.
The ensuing table shows the high and low prices for the Company's common stock,
as reported on the Nasdaq Stock Market's National Market and New York Stock
Exchange, for each of the four quarters of Fiscal 1997 and 1996. All price data
have been restated for the 100% stock dividend (treated as a stock split) paid
on June 4, 1996. The approximate number of shareholders of record, as of January
30, 1998, was 298.
<TABLE>
<CAPTION>
1997 1996
--------------------------------------- ----------------------------------
High Low High Low
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
First Quarter $ 22-1/4 $ 15-3/4 $ 20-7/8 $ 12-3/16
Second Quarter 29-9/16 15-7/8 44-3/4 19-7/8
Third Quarter 30 24-1/8 35-3/4 19-3/4
Fourth Quarter 35-1/4 21-13/16 24-3/8 16
</TABLE>
The Company intends to retain its earnings to finance the growth and development
of its business and does not anticipate paying cash dividends on its capital
stock in the foreseeable future. Future dividends, if any, will depend, among
other things, on the future earnings, capital requirements and financial
condition of the Company, and on such other factors as the Company's Board of
Directors may consider relevant.
PAGE 19 of 60
<PAGE> 20
ITEM 6. SELECTED FINANCIAL DATA
The selected consolidated financial data should be read in conjunction with the
Company's consolidated financial statements and the notes thereto.
<TABLE>
<CAPTION>
FISCAL YEARS ENDED: (A) 1997 1996 1995 1994 1993
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS:
Revenues $ 206,930 $ 137,784 $ 99,431 $ 84,026 $ 58,784
Operating expenses 172,031 115,848 82,285 70,670 50,573
Depreciation and amortization 6,303 3,532 2,303 2,287 2,101
-------------------------------------------------------------------------------
Contribution from operations 28,596 18,404 14,843 11,069 6,110
General and administrative expenses 12,051 8,673 7,614 6,623 4,664
-------------------------------------------------------------------------------
Operating Income 16,545 9,731 7,229 4,446 1,446
Interest income (expense) 1,451 2,195 186 (261) (544)
-------------------------------------------------------------------------------
Income before income taxes and
equity income (loss) of affiliates 17,996 11,926 7,415 4,185 902
Provision for income taxes 7,226 4,269 2,862 1,661 368
-------------------------------------------------------------------------------
Income before equity income (loss)
of affiliates 10,770 7,657 4,553 2,524 534
Equity income (loss) of affiliates,
net of income taxes 1,105 604 (113) (331) 261
-------------------------------------------------------------------------------
Net Income $ 11,875 $ 8,261 $ 4,440 $ 2,193 $ 795
Basic earnings per share $ 0.54 $ 0.39 $ 0.26 $ 0.15 $ 0.06
Diluted earnings per share $ 0.52 $ 0.37 $ 0.25 $ 0.15 $ 0.06
FINANCIAL CONDITION:
Working capital $ 48,576 $ 62,130 $ 13,455 $ 10,194 $ 5,032
Total assets 139,203 106,811 38,840 30,333 19,148
Long-term debt 213 225 980 1,412 ---
Total debt 225 237 991 1,422 ---
Shareholders' equity $ 102,295 $ 87,969 $ 25,229 $ 19,727 $ 4,212
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
(A) The Company's fiscal year ends on the Sunday closest to the calendar
year end. Fiscal 1997, 1996 and 1995 each included 52 weeks.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
FINANCIAL CONDITION
LIQUIDITY AND CAPITAL RESOURCES
Cash provided by operating activities amounted to $21,377,000 in 1997 versus
$9,128,000 in 1996. The Company's primary capital requirements are for working
capital; furniture, fixtures, equipment, and supply purchases; investments in
joint ventures; and investments in facilities. Some of the Company's management
contracts require the Company to make substantial initial expenditures of cash
in connection with opening or renovating a facility. The initial expenditures
subsequently are fully or partially recoverable as pass-through costs or are
billable to the contracting agency over the original term of the contract. The
cash required for these needs will be derived from internally generated funds,
the proceeds from public stock offerings, and additional borrowings, if
necessary.*
PAGE 20 of 60
<PAGE> 21
The Company anticipates making cash investments in connection with future
acquisitions. In addition, in line with a developing industry trend toward
requiring private operators to make capital investments in facilities and to
enter into direct financing arrangements in connection with the development of
such facilities, the Company anticipates utilizing cash to finance start-up
costs, leasehold improvements and equity investments in facilities, if
appropriate, in connection with undertaking new contracts.*
Prior to the initial public offering (IPO) in July 1994, the Company financed
its operations through borrowing from TWC. Interest on intercompany indebtedness
was computed at rates which reflected TWC's average interest costs on long-term
debt, exclusive of mortgage financing. Subsequent to the IPO and through Fiscal
1997, financing was obtained from internally generated funds, third-party
borrowings, or proceeds from public stock offerings.
In January 1996, the Company sold 4,600,000 shares of its common stock in
connection with a second offering at a price of $12.00 per share, before
deducting underwriting discounts and commissions and estimated offering
expenses. Net proceeds from the offering were approximately $51,581,000. In
1996, the Company used $5.7 million of the proceeds to acquire the McFarland
Community Correctional Facility.
In 1997, the Company also purchased the Queens Private Correctional Facility for
$6.6 million and spent another $4.7 million to renovate the building.
Additionally, the Company invested $7.0 million to purchase and renovate an
86-bed psychiatric hospital.
In June 1997, the Company entered into a $30,000,000 multi-currency revolving
credit facility with a syndicate of banks, the proceeds of which may be used for
working capital, acquisitions and general corporate purposes. The credit
facility also includes a letter of credit of up to $5,000,000 for the issuance
of standby letters of credit. Indebtedness under this facility will bear
interest at the alternate base rate (defined as the higher of prime rate or
federal funds plus 1/2 of 1%) or LIBOR plus 150 to 250 basis points, depending
upon fixed charge coverage ratios. The facility requires the Company to, among
other things, maintain a maximum leverage ratio; minimum fixed charge coverage
ratio; and a minimum tangible net worth. The facility also limits certain
payments and distributions. As of December 28, 1997, no amounts were outstanding
under this facility. However, at December 28, 1997, the Company had outstanding
four standby letters of credit outstanding with a bank in an aggregate amount of
approximately $222,000.
In December 1997, the Company also entered into an $220 million operating lease
facility that has been established to acquire and develop new correctional
institutions used in its business. As a condition of this facility, the Company
unconditionally agreed to guarantee certain obligations of First Security Bank,
National Association, a party to the aforementioned operating lease facility. As
of December 28, 1997, approximately $69 million of properties were under
development.
The ratio of total debt to total capitalization was 0.2% at the end of Fiscal
1997 and 0.3% at the end of Fiscal 1996. Management is unaware of any other
evident trends that are likely to result in material increases or decreases in
the liquidity of the Company other than those factors mentioned above.*
Management is constantly reviewing matters that could require significant
outlays of cash with respect to corporate growth strategies; however, these
matters are always reviewed in the light of appropriateness and availability of
financing.
PAGE 21 of 60
<PAGE> 22
There are no other known material trends, favorable or unfavorable, in the
capital resources of the Company. In the event that the Company would have any
significant requirement beyond the matters discussed above, capital resources
are available under its revolving line of credit with a bank, and management
believes that additional resources may be available to the Company through a
variety of other methods of financing.*
YEAR 2000
The Company has several information system improvement initiatives under way
that will require increased expenditures during the next few years. These
initiatives include the replacement of certain Company computer systems to be
Year 2000 compliant.
The Year 2000 issue exists because many computer systems and applications
currently use two-digit date fields to designate a year. As the century date
change occurs, date-sensitive systems will recognize the year 2000 as 1900, or
not at all. This inability to recognize or properly treat the Year 2000 may
cause systems to process critical financial and operational information
incorrectly. Anticipated spending for this modification will be expensed as
incurred and is not expected to have a significant impact on the Company's
ongoing results of operations.
INTEREST RATE SENSITIVITY
The Company is exposed to market risks arising from changes in interest rates
with respect to a $220 million operating lease facility. Monthly lease payments
under this facility are indexed to a variable interest rate. Management has
determined that a 10% change in the current lease rate would have an immaterial
effect on the Company's pre-tax earnings over the next fiscal year.
PAGE 22 of 60
<PAGE> 23
RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the Company's
consolidated financial statements and notes thereto.
The following table sets forth certain Statements of Income data expressed as
percentages of total revenues for the following fiscal years:
<TABLE>
<CAPTION>
1997 1996 1995
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues 100.0% 100.0% 100.0%
Operating expenses 83.1 84.1 82.8
Depreciation and amortization 3.1 2.5 2.3
------------------------------------------------------------------------------
Contribution from operations 13.8 13.4 14.9
General and administrative expenses 5.8 6.3 7.6
------------------------------------------------------------------------------
Operating income 8.0 7.1 7.3
Interest income 0.7 1.6 0.2
------------------------------------------------------------------------------
Income before income taxes and
equity income (loss) of
affiliates 8.7 8.7 7.5
Provision for income taxes 3.5 3.1 2.9
Equity income (loss) of affiliates,
net of income taxes 0.5 0.4 (0.1)
Net income 5.7% 6.0% 4.5%
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
FISCAL 1997 COMPARED WITH FISCAL 1996
Revenues increased by 50.2% to $206.9 million in 1997 from $137.8 million in
1996. The increase in revenues in 1997 compared with 1996 is primarily
attributable to increased compensated resident days resulting from the opening
of the following ten facilities in 1997 (South Bay Correctional Facility, South
Bay, Florida in February 1997, Travis County Community Justice Center, Travis
County, Texas in March 1997; Bayamon Regional Detention Center, Bayamon, Puerto
Rico in March 1997; Queens Private Correctional Facility, Queens, New York in
March 1997; Fulham Correctional Centre, Victoria, Australia in March 1997; Taft
Correctional Institution, Taft, California in December 1997; Maribyrnong
Detention Centre, Melbourne, Australia in December 1997; Perth Detention Centre,
Perth, Australia in December 1997; Port Hedland Detention Centre, Port Hedland,
Australia in December 1997 and Villawood Detention Center, Sydney, Australia in
October 1997); and increased compensated resident days at three facilities that
opened in the first half of 1996 (Willacy County Unit, Willacy, Texas in January
1996, Delaware County Prison in April 1996, and Marshall County Correctional
Facility, Marshall County, Mississippi in June 1996).
PAGE 23 of 60
<PAGE> 24
The following table sets forth the number of facilities under contract or award
at the end of the following fiscal years:
<TABLE>
<CAPTION>
1997 1996 1995
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Contracts (1) 46 34 24
Facilities in operation 32 19 16
Design capacity of contracts 30,144 24,371 16,054
Design capacity of facilities
in operation 20,720 12,235 9,135
Compensated resident
days (2) 5,192,614 3,585,100 2,350,843
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Comprised of facilities in operation, facilities under development and
facilities for which awards have been obtained.
(2) Compensated resident days are calculated as follows, (a) per diem rate
facilities - the number of beds occupied by residents on a daily basis
during the fiscal year and, (b) fixed rate facilities - the design capacity
of the facility multiplied by the number of days the facility was in
operation during the fiscal year. Amounts exclude compensated resident days
for H.M. Prison Doncaster, England.
The number of compensated resident days in domestic and Australian facilities
increased to 5.2 million in 1997 from 3.6 million in 1996. As a result of the
increase in compensated resident days and minimum occupancy guarantees at
several of the new facilities that opened in 1997, average facility occupancy in
domestic and Australian facilities increased to 97.2% of capacity in 1997
compared to 96.8% in 1996.
Operating expenses increased by 48.5% to $172.0 million in 1997 from $115.8
million in 1996 resulting from ten new facilities that opened in 1997 and three
facilities that opened in 1996. As a percentage of revenues, operating expenses
decreased to 83.1% from 84.1% due to improving margins from the Company's
Australian operations.
Depreciation and amortization increased by 78.4% to $6.3 million in 1997 from
$3.5 million in 1996. This increase is due to capital and deferred charge
expenditures incurred by the thirteen facilities that opened in 1997, a full
year of depreciation and amortization for the facilities that opened in 1996,
and depreciation associated with the purchase of two facilities in 1997.
Contribution from operations increased 55.4% to $28.6 million in 1997 from $18.4
million in 1996. This increase is due to ten new facilities discussed above that
opened in 1997. As a percentage of revenues, contribution from operations
increased to 13.8% from 13.4%.
General and administrative expenses increased by 38.9% to $12.1 million in 1997
from $8.7 million in 1996. This reflects increased business development
activities in response to additional interest in the Company's services and
increased additional infrastructure to support the Company's expanded
operations. General and administrative expenses decreased to 5.8% of total
revenues in 1997 from 6.3% in 1996.
Operating income increased by 70.0% to $16.5 million in 1997 from $9.7 million
in 1996 as result of the factors described above. As a percentage of revenue,
operating income increased to 8.0% from 7.1% due primarily to the continued
leveraging of overhead.
PAGE 24 of 60
<PAGE> 25
Interest income was $1.4 million in 1997 compared to interest income of $2.2
million in 1996, resulting from a decrease in average invested cash as the
Company had deployed cash to select project opportunities and operations.
Income before income taxes and equity income of affiliates increased to $18.0
million in 1997 from $11.9 million in 1996 due to the factors described above.
Provision for income taxes increased to $7.2 million in 1997 from $4.3 million
in 1996 due to higher taxable income and an increase in the Company's effective
tax rate.
Equity income of affiliates increased to $1,105,000 in 1997 from $604,000 in
1996. This increase is due to three expansions of the H.M. Prison Doncaster
(Doncaster, England) in November 1996, March 1997 and July 1997, and a full year
of operations for the two court escort contracts that commenced in May 1996.
Net income increased by 43.8% to $11.9 million in 1997 from $8.3 million in 1996
as a result of the factors described above.
FISCAL 1996 COMPARED WITH FISCAL 1995
Revenues increased by 38.6% to $137.8 million in 1996 from $99.4 million in
1995. The increase in revenues in 1996 compared with 1995 is primarily
attributable to increased compensated resident days resulting from the
increasing occupancy of two facilities that opened in the second half of 1995
(Moore Haven Correctional Facility, Moore Haven, Florida in July 1995 and John
R. Lindsey Unit, Jack County, Texas in September 1995), the opening of two
facilities in the first half of 1996 (Willacy County Unit, Willacy County, Texas
in January 1996 and Marshall County Correctional Facility, Marshall County,
Mississippi in June 1996), the assumption of operational responsibility for an
existing facility (Delaware County Prison, Delaware County, Pennsylvania in
April 1996) the expansion on one facility (Allen Correctional Center, Kinder,
Louisiana) and the temporary double up at another facility (Arthur Gorrie
Correctional Centre, Wacol, Australia).
The number of compensated resident days in domestic and Australian facilities
increased to 3.6 million in 1996 from 2.4 million in 1995. As a result of the
increase in compensated resident days, average facility occupancy in domestic
and Australian facilities increased to 96.8% of capacity in 1996 compared to
94.8% in 1995.
Operating expenses increased by 40.8% to $115.8 million in 1996 from $82.3
million in 1995. As a percentage of revenues, operating expenses increased to
84.1%. This increase is primarily attributable to higher operating expenses at
the Company's Australian facilities.
Depreciation and amortization increased by 53.4% to $3.5 million in 1996 from
$2.3 million in 1995. This increase is due to the increase in capital and
deferred charge expenditures resulting from the opening of the new facilities,
the assumption of correctional services, the purchase of one facility and the
expansions discussed above.
Contribution from operations increased 24.0% to $18.4 million in 1996 from $14.8
million in 1995. As a percentage of revenues, contribution from operations
decreased to 13.4% from 14.9%. As discussed above, this decrease is due
primarily to the Company's Australian operations.
PAGE 25 of 60
<PAGE> 26
General and administrative expenses increased by 13.9% to $8.7 million in 1996
from $7.6 million in 1995. This reflects increased business development
activities in response to additional interest in the Company's services and
increased infrastructure related to current and future corporate growth. General
and administrative expenses decreased to 6.3% of total revenues in 1996 from
7.7% in 1995.
Operating income increased by 34.6% to $9.7 million in 1996 from $7.2 million in
1995 as a result of the factors described above. As a percentage of revenue,
operating income decreased to 7.1% from 7.3%.
Interest income was $2.2 million in 1996 compared to interest income of $186,000
in 1995. The increase is attributable to interest earned on the proceeds of the
January 1996 stock offering.
Income before income taxes and equity (loss) income of affiliates increased to
$11.9 million in 1996 from $7.4 million in 1995 due to the factors described
above.
Provision for income taxes increased to $4.3 million in 1996 from $2.9 million
in 1995 due to higher taxable income.
Equity income (loss) of affiliates increased to $604,000 in 1996 from ($113,000)
in 1995. Current and prior year performance reflects the activities of Premier
Prison Services, a U.K. joint venture. The increase in current year income
results from three expansion at the H.M. Prison Doncaster (Doncaster, England)
in November 1995, June 1996 and November 1996, respectively, and income earned
from two court escort contracts that were awarded in December 1995 and commenced
operations in May 1996.
INFLATION
Management believes that inflation has not had a material effect on the
Company's results of operations during the past three fiscal years. While some
of the Company's contracts include provisions for inflationary indexing, since
personnel costs represent the Company's largest expense in the facilities it
manages, inflation could have a substantial adverse effect on the Company's
results of operations in the future to the extent that wages and salaries
increase at a faster rate than the per diem or fixed rates received by the
Company for its management services.*
PAGE 26 of 60
<PAGE> 27
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
WACKENHUT CORRECTIONS CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
FOR THE FISCAL YEARS ENDED
DECEMBER 28, 1997, DECEMBER 29, 1996, AND DECEMBER 31, 1995
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
1997 1996 1995
-----------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues $ 206,930 $ 137,784 $ 99,431
Operating expenses (including amounts
related to The Wackenhut Corporation
("TWC") of $5,337, $3,693 and $6,008) 172,031 115,848 82,285
Depreciation and amortization 6,303 3,532 2,303
-----------------------------------------------------------------------------
Contribution from operations 28,596 18,404 14,843
General and administrative expenses (including
amounts related to TWC of $1,566, $1,432 and
$1,264) 12,051 8,673 7,614
-----------------------------------------------------------------------------
Operating income 16,545 9,731 7,229
Interest income (including amounts
related to TWC of ($10), ($40) and
$172) 1,451 2,195 186
-----------------------------------------------------------------------------
Income before income taxes and equity
income (loss) of affiliate 17,996 11,926 7,415
Provision for income taxes 7,226 4,269 2,862
-----------------------------------------------------------------------------
Income before equity income (loss) of affiliate 10,770 7,657 4,553
Equity income (loss) of affiliate, net of
income taxes (benefit) of $692, $378 and ($70) 1,105 604 (113)
-----------------------------------------------------------------------------
Net income $ 11,875 $ 8,261 $ 4,440
==============================================================================
Basic earnings per share (Note 9) $ 0.54 $ 0.39 $ 0.26
==============================================================================
Diluted earnings per share (Note 9) $ 0.52 $ 0.37 $ 0.25
==============================================================================
Basic weighted average shares outstanding 22,015 21,361 16,850
==============================================================================
Diluted weighted average shares outstanding 22,697 22,128 17,708
==============================================================================
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these statements.
PAGE 27 of 60
<PAGE> 28
WACKENHUT CORRECTIONS CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(IN THOUSANDS)
FISCAL YEARS ENDED DECEMBER 28, 1997, DECEMBER 29, 1996, AND DECEMBER 31, 1995
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL CUMULATIVE TOTAL
NUMBER PAID-IN RETAINED TRANSLATION SHAREHOLDERS'
OF SHARES AMOUNT CAPITAL EARNINGS ADJUSTMENT EQUITY
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1995 16,370 $ 164 $ 17,720 $ 1,647 $ 196 $ 19,727
TRANSLATION ADJUSTMENT -- -- -- -- (85) (85)
PROCEEDS FROM STOCK
OPTION EXERCISES 709 7 970 -- -- 977
TAX BENEFIT RELATED TO
EMPLOYEE STOCK
OPTIONS -- -- 170 -- -- 170
NET INCOME -- -- -- 4,440 -- 4,440
-----------------------------------------------------------------------------------------
BALANCE,
DECEMBER 31,1995 17,079 171 18,860 6,087 111 25,229
TRANSLATION
ADJUSTMENT -- -- -- -- 305 305
PROCEEDS FROM STOCK
OFFERING 4,600 46 51,535 -- -- 51,581
PROCEEDS FROM STOCK
OPTION EXERCISES 259 2 764 -- -- 766
TAX BENEFIT RELATED TO
EMPLOYEE STOCK
OPTIONS -- -- 1,827 -- -- 1,827
NET INCOME -- -- -- 8,261 -- 8,261
-----------------------------------------------------------------------------------------
BALANCE,
DECEMBER 29, 1996 21,938 219 72,986 14,348 416 87,969
TRANSLATION ADJUSTMENT -- -- -- -- (2,572) (2,572)
PROCEEDS FROM STOCK
OPTION EXERCISES 231 3 1,757 -- -- 1,760
TAX BENEFIT RELATED TO
EMPLOYEE STOCK -- -- 3,263 -- -- 3,263
OPTIONS
NET INCOME -- -- -- 11,875 -- 11,875
-----------------------------------------------------------------------------------------
BALANCE
DECEMBER 28, 1997 22,169 $ 222 $ 78,006 $26,223 $ (2,156) $ 102,295
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these statements.
PAGE 28 of 60
<PAGE> 29
WACKENHUT CORRECTIONS CORPORATION
CONSOLIDATED BALANCE SHEETS
DECEMBER 28, 1997 AND DECEMBER 29, 1996
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
1997 1996
---------------------------------------------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 28,960 $ 44,368
Accounts receivable, net 36,755 24,879
Other 9,457 6,066
---------------------------------------------------
Total current assets 75,172 75,313
Property and equipment, net 38,754 18,975
Investments in and advances to affiliates 7,325 1,810
Deferred charges, net 14,218 7,522
Unamortized cost in excess of net assets of
acquired companies, net 2,359 2,224
Other 1,375 967
---------------------------------------------------
$ 139,203 $ 106,811
===================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 6,160 $ 4,020
Accrued payroll and related taxes 8,316 4,558
Accrued expenses 11,717 3,717
Current portion of long-term debt 12 12
Deferred income tax liability, net 391 876
---------------------------------------------------
Total current liabilities 26,596 13,183
---------------------------------------------------
Deferred income tax liability, net 10,099 5,434
---------------------------------------------------
Long-term debt 213 225
---------------------------------------------------
Commitments and contingencies (Note 7)
Shareholders' equity:
Preferred stock, $.01 par value,
10,000,000 shares authorized --- ---
Common stock, $.01 par value,
60,000,000 shares authorized,
22,168,542 and 21,937,992 shares
issued and outstanding 222 219
Additional paid-in capital 78,006 72,986
Retained earnings 26,223 14,348
Cumulative translation adjustment (2,156) 416
---------------------------------------------------
Total shareholders' equity 102,295 87,969
---------------------------------------------------
$ 139,203 $ 106,811
===================================================
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these balance sheets.
PAGE 29 of 60
<PAGE> 30
WACKENHUT CORRECTIONS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE FISCAL YEARS ENDED
DECEMBER 28, 1997, DECEMBER 29, 1996, AND DECEMBER 31, 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
1997 1996 1995
---------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 11,875 $ 8,261 $ 4,440
Adjustments to reconcile net income to net cash
provided by operating activities--
Depreciation and amortization expense 6,303 3,532 2,303
Equity (income) loss of affiliates (1,797) (982) 183
Changes in assets and liabilities -
(Increase) decrease in assets:
Accounts receivable (12,623) (6,943) (7,355)
Other current assets (3,606) (2,384) (1,966)
Other assets (201) 34 (76)
Deferred income tax asset -- ` 51 20
Unamortized cost in excess of net assets
acquired (782) -- --
Increase (decrease) in liabilities:
Accounts payable and accrued expenses 10,739 2,003 (238)
Accrued payroll and related taxes 4,027 1,152 1,293
Deferred income taxes, net 7,442 4,404 2,741
---------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 21,377 9,128 1,345
---------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investments in affiliates (3,718) (428) (372)
Capital expenditures (23,965) (12,476) (2,720)
Deferred charge expenditures (9,625) (4,505) (3,693)
---------------------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES (37,308) (17,409) (6,785)
---------------------------------------------------------
</TABLE>
(Continued)
The accompanying notes to consolidated financial statements are an integral
part of these statements.
PAGE 30 of 60
<PAGE> 31
WACKENHUT CORRECTIONS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE FISCAL YEARS ENDED
DECEMBER 28, 1997, DECEMBER 29, 1996, AND DECEMBER 31, 1995
(IN THOUSANDS)
(Continued)
<TABLE>
<CAPTION>
1997 1996 1995
---------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of common stock $ -- $ 51,581 $ --
Proceeds from exercise of stock options 1,760 766 977
Retirement of debt (12) (792) (381)
Advances from TWC 116,019 102,431 66,502
Repayments to TWC (116,019) (102,431) (66,629)
---------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 1,748 51,555 469
---------------------------------------------------------
Effect of exchange rate changes on cash (1,225) 185 (101)
---------------------------------------------------------
Net (decrease) increase in cash (15,408) 43,459 (5,072)
Cash, beginning of period 44,368 909 5,981
---------------------------------------------------------
CASH, END OF PERIOD $ 28,960 $ 44,368 $ 909
=========================================================
SUPPLEMENTAL DISCLOSURES:
Cash paid during the year for:
Income taxes $ 100 $ 976 $ 1,156
Interest $ 59 $ 114 $ 20
Non-cash activities:
Impact on equity from tax benefit related to the
exercise of options issued under the company's
non-qualified stock option plan $ 3,263 $ 1,827 $ 170
=========================================================
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these statements.
PAGE 31 of 60
<PAGE> 32
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (TABULAR INFORMATION: IN
THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
FOR THE FISCAL YEARS ENDED DECEMBER 28, 1997, DECEMBER 29, 1996, AND DECEMBER
31, 1995
(1) GENERAL
Wackenhut Corrections Corporation, a Florida corporation, and subsidiaries
(Company), a majority owned subsidiary of The Wackenhut Corporation (TWC), is a
leading developer and manager of privatized correctional and detention
facilities located in the United States, the United Kingdom and Australia.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
FISCAL YEAR
The Company's fiscal year ends on the Sunday closest to the calendar year end.
Fiscal 1997, 1996 and 1995 each included 52 weeks.
BASIS OF FINANCIAL STATEMENT PRESENTATION
The consolidated financial statements include the accounts of the Company and
its subsidiaries. Investments in 20 percent to 50 percent owned affiliates are
accounted for under the equity method. All significant intercompany transactions
and balances between the Company and its subsidiaries have been eliminated in
consolidation. Certain prior year amounts have been reclassified to conform with
current year presentation.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost, less accumulated depreciation.
Maintenance and repairs are expensed as incurred. Depreciation is computed using
the straight-line method over the estimated useful lives of related assets.
Accelerated methods of depreciation are generally used for income tax purposes.
Leasehold improvements are amortized on a straight-line basis over the shorter
of the useful life of the improvement or the term of the lease.
UNAMORTIZED COST IN EXCESS OF NET ASSETS OF ACQUIRED COMPANIES (GOODWILL)
Goodwill represents the cost of an acquired enterprise in excess of the fair
market value of the net tangible and identifiable intangible assets acquired.
Goodwill is amortized on a straight-line basis over the period which represents
management's estimation of the related benefit to be derived from the acquired
business, not to exceed twenty-five years. Accumulated amortization totaled
approximately $1.1 million and $969,000 at December 28, 1997 and December 29,
1996, respectively.
PAGE 32 of 60
<PAGE> 33
DEFERRED CHARGES
Facility start-up costs, which consist of costs of initial employee training,
travel and other direct expenses incurred in connection with the opening of new
facilities, are capitalized and amortized on a straight-line basis over the
lesser of the initial term of the contract plus renewals or five years.
Project development costs consisting of direct and incremental costs paid to
unrelated third parties that can be directly associated with a specific
anticipated contract are deferred until the anticipated contract has been
awarded. At the time the contract is awarded to the Company, the deferred
project development costs are either capitalized as part of property and
equipment or are amortized over five years as project development costs.
Internal costs associated with securing new contracts are expensed as incurred.
Project development costs are charged to general and administrative expenses
when the success of obtaining a new contract is considered doubtful. Accumulated
amortization totaled $7,332,000 and $4,440,000 in Fiscal 1997 and 1996,
respectively.
In April 1997, the Financial Accounting Standards Board issued an Exposure Draft
that proposed the issuance of a Statement of Position (SOP) on Accounting for
the Costs of Start-up Activities. If adopted, this SOP would require the
expensing of start-up costs, defined as pre-opening, pre-operating and
pre-contract type costs, as incurred. Management expects the effects of adoption
would be reported as a cumulative change in accounting principle; thus, any
costs previously capitalized would be written off at the time the SOP is
adopted. If this SOP is adopted in 1998, the Company anticipates a pre-tax
write-off of approximately $18.2 million (or $10.9 million after-tax) to record
the cumulative effect of the change in accounting principle.
REVENUES AND OPERATING PROFIT
Facility management revenues are recognized as services are provided based on a
net rate per day per inmate or on a fixed monthly rate. Project development and
design revenues are recognized as earned on a percentage of completion basis.
Except for the major customers noted in the following table, no single customer
provided more than 10% of consolidated revenues during Fiscal 1997, 1996 and
1995:
<TABLE>
<CAPTION>
CUSTOMER 1997 1996 1995
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Various agencies of the State of Texas 32% 39% 37%
Louisiana Department of Public Safety
and Corrections 6% 9% 11%
State of Florida Correctional
Privatization Committee 13% 9% 8%
New South Wales Department of
Corrective Services 7% 10% 13%
Queensland Corrective Services 7% 11% 13%
Commission
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
Concentration of credit risk related to accounts receivable is reflective of the
related revenues.
INCOME TAXES
The Company accounts for income taxes in accordance with Statement of Financial
Accounting Standards (SFAS) No. 109, Accounting for Income Taxes. Under this
method, deferred income taxes are determined on the estimated future tax effects
of differences between the financial reporting and tax
PAGE 33 of 60
<PAGE> 34
basis of assets and liabilities given the provisions of enacted tax laws.
Deferred income tax provisions and benefits are based on changes to the asset or
liability from year to year.
EARNINGS PER SHARE
In 1997, the Company adopted Statement of Financial Accounting Standards No.
128, "Earnings per Share" ("SFAS 128"). SFAS 128 requires the disclosure of
basic and diluted earnings per share for periods ending after December 15, 1997
and restatement of prior periods to conform with the new disclosure format. The
computation under SFAS 128 differs from the primary and fully diluted earnings
per share computed under APB Opinion No. 15 primarily in the manner in which
potential common stock is treated. Basic earnings per share is computed by
dividing net income by the weighted-average number of common shares outstanding.
In the computation of diluted earnings per share, the weighted-average number of
common shares outstanding is adjusted for the effect of all potential common
stock.
CASH AND CASH EQUIVALENTS
The Company classifies as cash equivalents all interest-bearing deposits or
investments with original maturities of three months or less.
FOREIGN CURRENCY TRANSLATION
The Company's foreign operations use the local currency as their functional
currency. Assets and liabilities of the operations are translated at the
exchange rates in effect on the balance sheet date. Income statement items are
translated at the average exchange rates for the year. The impact of currency
fluctuation is included in shareholders' equity as a translation adjustment.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying value of cash, accounts receivable, accounts payable, and long-term
debt approximates fair value.
INTEREST RATE SENSITIVITY
The Company is exposed to market risks arising from changes in interest rates
with respect to a $220 million operating lease facility (Note 7). Monthly lease
payments under this facility are indexed to a variable interest rate. Management
has determined that a 10% change in the current lease rate would have an
immaterial effect on the Company's pre-tax earnings over the next fiscal year.
STOCK-BASED COMPENSATION PLANS
In 1995 the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS
123"). SFAS 123 allows either adoption of a fair value based method of
accounting for stock-based compensation or continuation under Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees"
("APB 25"). The Company has chosen to continue to account for stock-based
compensation using the intrinsic value based method prescribed in APB 25.
Accordingly, compensation cost for stock options is measured as the excess, if
any, of the quoted market price of the corporation's stock at the date of the
PAGE 34 of 60
<PAGE> 35
grant over the amount an employee must pay to acquire the stock. Pro forma
disclosures of net income and earnings per share as if the fair value method had
been adopted are presented in Note 11.
LONG-LIVED ASSETS
In 1995, the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 121 ("SFAS 121") "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed of." SFAS 121
requires that long-lived assets, including certain identifiable intangibles, and
the goodwill related to those assets, be reviewed for impairment whenever events
or changes in circumstances indicate that the carrying amount of the asset in
question may not be recoverable. Management has reviewed the Company's
long-lived assets and has determined that there are no events requiring
impairment loss recognition.
ACCOUNTING PRONOUNCEMENTS
In June 1997, the FASB issued Statement of Financial Accounting Standard No.
130, "Reporting Comprehensive Income" which requires adoption in Fiscal 1998.
This statement establishes standards for reporting and display of comprehensive
income and its components in a full set of general-purpose financial statements.
This statement requires that an enterprise (a) classify items of other
comprehensive income by their nature in financial statements and (b) display the
accumulated balance of other comprehensive income separately from retained
earnings and additional paid-in capital in the equity section of statements of
financial position. Comprehensive income is defined as the change in equity
during the financial reporting period of a business enterprise resulting from
non-owner sources.
In June 1997, the FASB issued Statement of Financial Accounting Standard No.
131, "Disclosures about Segments of an Enterprise and Related Information" which
requires adoption in Fiscal 1998. This statement requires that a public business
enterprise report financial and descriptive information about its reportable
operating segments including, among other things, a measure of segment profit or
loss, certain specific revenue and expense items, and segment assets.
PAGE 35 of 60
<PAGE> 36
(3) PROPERTY AND EQUIPMENT
Property and equipment consist of the following at fiscal year end:
(In Thousands)
<TABLE>
<CAPTION>
YEARS 1997 1996
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Land -- $ 4,527 $ 1,698
Building and improvements 20 - 40 34,107 16,430
Equipment 3 - 20 2,786 2,677
Furniture and fixtures 3 - 20 2,307 1,251
--------------------------------------------------
43,727 22,056
Less - accumulated depreciation (4,973) (3,081)
--------------------------------------------------
$ 38,754 $ 18,975
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
(4) DOMESTIC AND INTERNATIONAL OPERATIONS
A summary of domestic and international operations is presented below:
(In Thousands)
<TABLE>
<CAPTION>
1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues
Domestic operations $ 167,223 $ 108,245 $ 72,852
International operations 39,707 29,539 26,579
-----------------------------------------------------------------------------
Total revenues 206,930 137,784 99,431
perating Income
Domestic operations 12,388 7,087 4,501
International operations 4,157 2,644 2,728
-----------------------------------------------------------------------------
Total operating income 16,545 9,731 7,229
Assets
Domestic operations 120,538 96,872 30,641
International operations 18,665 9,939 8,199
-----------------------------------------------------------------------------
Total assets $ 139,203 $ 106,811 $ 38,840
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
The Company's international operations represent its wholly-owned Australian
subsidiaries which are pursuing construction and management contracts for
correctional and detention facilities. Through its wholly-owned subsidiary,
Wackenhut Corrections Corporation Australia Pty. Limited, the Company currently
manages three correctional facilities, four immigration detention centers, and
the State of Victoria's Correctional health care services.
The Company's 50% owned United Kingdom joint venture (Premier Prison Services,
Ltd.), accounted for under the equity method, commenced management of a
correctional facility in Fiscal 1994 and two court escort and transport
contracts in Fiscal 1996. Equity in the undistributed income (loss) for Fiscal
1997, 1996, and 1995 was $1,797,000, $982,000, and ($183,000), respectively.
PAGE 36 of 60
<PAGE> 37
A summary of financial data for the Company's equity affiliate is as follows:
(In Thousands)
<TABLE>
<CAPTION>
1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA
Revenues $ 51,009 $ 28,953 $ 17,705
Operating income (loss) 3,884 1,764 (357)
Net income (loss) 2,209 1,208 (225)
BALANCE SHEET DATA
Current Assets 14,595 13,145 1,783
Noncurrent Assets 517 538 509
Current liabilities 8,115 8,518 3,702
Noncurrent liabilities 4,029 5,075 --
Stockholders' equity/(deficit) $ 2,968 $ 90 $ (1,410)
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
The Company provided management services to the U.K. affiliate in Fiscal 1997
and 1996. The management fees for such services totaled $484,000 and $450,000
for Fiscal 1997 and 1996, respectively.
(5) INCOME TAXES
The provision for income taxes in the consolidated statements of income consists
of the following components:
(In Thousands)
<TABLE>
<CAPTION>
1997 1996 1995
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Federal Income Taxes:
Current $ 175 $ -- $ --
Deferred 6,131 3,588 2,497
----------------------------------------------------------------
6,306 3,588 2,497
----------------------------------------------------------------
State Income Taxes:
Current 300 30 30
Deferred 620 488 335
----------------------------------------------------------------
920 518 365
Foreign Income Taxes -- 163 --
----------------------------------------------------------------
Total $ 7,226 $ 4,269 $ 2,862
----------------------------------------------------------------
</TABLE>
Deferred income taxes result from temporary differences in the recognition of
revenue and expense for tax and financial reporting purposes.
PAGE 37 of 60
<PAGE> 38
The principal temporary differences and their tax effects are summarized as
follows:
(In Thousands)
<TABLE>
<CAPTION>
1997 1996 1995
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Amortization of deferred charges $ 2,921 $ 1,561 $ 1,605
Income of foreign subsidiary 1,681 617 1,062
Accrued liabilities (1,136)
NSO benefit, booked to equity 3,263 1,827 170
Other, net 22 71 (5)
-------------------------------------------------------------------------
$ 6,751 $ 4,076 $ 2,832
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
A reconciliation of the statutory U.S. federal tax rate (35.0% in 1997, 34.0% in
1996 and 1995) and the effective income tax rate is as follows:
(In Thousands)
<TABLE>
<CAPTION>
1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Provision using statutory
federal income tax rate $ 6,299 $ 4,054 $ 2,521
State income tax 818 508 354
Effect of foreign operations, net
of foreign income tax provision -- (264) --
Other, net 109 (29) (13)
--------------------------------------------------------------------
$ 7,226 $ 4,269 $ 2,862
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
The components of the net current deferred income tax liability/ (asset) at
fiscal year end are as follows:
(In Thousands)
<TABLE>
<CAPTION>
1997 1996
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Uniforms $ 244 $ 160
Accrued vacation (291) (123)
Deferred charges 1,630 895
Accrued liabilities (1,192) (56)
-------------------------------------------------------------
$ 391 $ 876
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
The components of the net non-current deferred income tax liability at fiscal
year end are as follows:
(In Thousands)
<TABLE>
<CAPTION>
1997 1996
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Deferred charges $ 4,909 $ 2,724
Income of foreign subsidiaries
and affiliates 5,284 2,911
Other, net (94) (201)
-------------------------------------------------------------
$ 10,099 $ 5,434
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
As of December 28, 1997, the Company had federal and state net operating loss
carryforwards of approximately $4,616,000, and $4,051,000, respectively. The
federal net operating losses will expire between 2010 and 2011, while certain
state net operating losses will expire between 2000 and 2011.
PAGE 38 of 60
<PAGE> 39
Utilization of net operating losses in future years may be subject to annual
limitations due to the ownership change limitations provided by the Internal
Revenue Code of 1986 and similar state provisions. Such limitations, if any, are
not expected to impact the ultimate utilization of the carryforwards.
The Company's loss carryforwards are attributable to compensation deductions on
its income tax return which were not recognized for financial accounting
purposes. The exercise of non-qualified stock options which have been granted
under the Company's stock option plans give rise to compensation which is
includable in the taxable income of the applicable employees and deducted by the
Company for federal and state income tax purposes. Such compensation results
from increases in the fair market value of the Company's common stock subsequent
to the date of grant. In accordance with Accounting Principles Board Opinion No.
25, such compensation is not recognized as an expense for financial accounting
purposes and related tax benefits are credited directly to additional
paid-in-capital. In the years ended December 28, 1997 and December 29, 1996,
such deductions resulted in significant federal and state deductions which may
be carried forward. Utilization of such deductions will increase additional
paid-in-capital.
(6) LONG-TERM DEBT
Long-term debt consists of the following:
(In Thousands)
<TABLE>
<CAPTION>
1997 1996
- ------------------------------------------------------------------------------
<S> <C> <C>
Note payable for property - 8% $ 225 $ 237
Less - current portion 12 12
-----------------------------------------
$ 213 $ 225
- -------------------------------------------------------------------------------
</TABLE>
In June 1994, the Company signed an unsecured note payable in the amount of
$262,000 for the purchase of land for the construction of a correctional
facility. The note bears interest at 8.0% and matures in July 2009. The Company
makes monthly principal and interest payments of $2,504.
In June 1997, the Company entered into a $30,000,000 multi-currency revolving
credit facility with a syndicate of banks, the proceeds of which may be used for
working capital, acquisitions and general corporate purposes. The credit
facility also includes a letter of credit facility of up to $5,000,000 for the
issuance of standby letters of credit. Indebtedness under this facility will
bear interest at the alternate base rate (defined as the higher of prime rate or
federal funds plus 1/2 of 1%) or LIBOR plus 150 to 250 basis points, depending
upon fixed charge coverage ratios. The facility requires the Company to, among
other things, maintain a maximum leverage ratio; minimum fixed charge coverage
ratio; and a minimum tangible net worth. The facility also limits certain
payments and distributions. As of December 28, 1997, no amounts were outstanding
under this facility. However, at December 28, 1997, the Company had four standby
letters of credit outstanding with a bank in an aggregate amount of
approximately $222,000.
PAGE 39 of 60
<PAGE> 40
Aggregate annual maturities of long-term debt are as follows:
(In Thousands)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FISCAL YEAR ANNUAL MATURITY
- --------------------------------------------------------------------------------
<S> <C>
1998 $ 12
1999 13
2000 15
2001 16
2002 17
Thereafter 152
----------------------------
$ 225
- --------------------------------------------------------------------------------
</TABLE>
(7) COMMITMENTS AND CONTINGENCIES
The nature of the Company's business results in claims for damages arising from
the conduct of its employees or others. In the opinion of management, there are
no pending legal proceedings that would have a material effect on the
consolidated financial statements of the Company.
The Company leases correctional facility office space, computers and vehicles
under non-cancelable operating leases expiring between 1998 and 2002. The future
minimum commitments under these leases are as follows:
(In Thousands)
<TABLE>
<CAPTION>
FISCAL YEAR ANNUAL RENTAL
- --------------------------------------------------------------------------------
<S> <C>
1998 $ 5,544
1999 5,307
2000 4,820
2001 4,517
2002 4,093
------------------------------
$ 24,281
- --------------------------------------------------------------------------------
</TABLE>
In December 1997, the Company also entered into an $220 million operating lease
facility that has been established to acquire and develop new correctional
institutions used in its business. As a condition of this facility, the Company
unconditionally agreed to guarantee certain obligations of First Security Bank,
National Association, a party to the aforementioned operating lease facility. As
of December 28, 1997, approximately $69 million of properties were under
development under this facility.
Rent expense was approximately $3,351,000, $2,143,000 and $1,512,000 for Fiscal
1997, 1996, and 1995 respectively.
The Company contracted with third parties to provide meals for inmates at two
correctional facilities operated by the Company under agreements expiring in
1995 and 1996. Food service expense related to these agreements was $53,000 and
$580,000 in Fiscal 1996 and 1995 respectively.
(8) COMMON AND PREFERRED STOCK
On April 25, 1996, the Company's Board of Directors declared a two-for-one split
effected in the form of a 100% common stock dividend paid on June 4, 1996.
Except as otherwise noted, all share data relating to the Company's common stock
has been restated to reflect the two-for-one stock split.
In April 1994, the Company's Board of Directors authorized 10,000,000 shares of
"blank check" preferred stock. The Board of Directors is authorized to determine
the rights and privileges of any future
PAGE 40 of 60
<PAGE> 41
issuance of preferred stock such as voting and dividend rights, liquidation
privileges, redemption rights and conversion privileges.
The Company follows the practice of recording amounts received upon the exercise
of stock options by crediting common stock and additional paid-in-capital. No
charges are reflected in the consolidated statements of income as a result of
the grant of stock options, since all grants under the Company's stock option
plans (Note 11) have been made at not more than the fair value at the date of
grant. The Company realizes an income tax benefit from the exercise of certain
stock options of the Company's non-qualified stock options. Since no
compensation cost resulted from the grant of stock options in Fiscal 1997 and
1996, this benefit results in a decrease in current income taxes payable and an
increase in additional paid-in capital.
(9) EARNINGS PER SHARE
The following table shows the amounts used in computing earnings per share in
accordance with SFAS 128 and the effects on income and the weighted average
number of shares of potential dilutive common stock. The number of shares used
in the calculations for 1996 and 1995 reflect a 100% common stock dividend paid
on June 4, 1996.
(In Thousands, except per share data)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
1997 1996 1995
-----------------------------------------------------------------------------------------
INCOME SHARES INCOME SHARES INCOME SHARES
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET INCOME $ 11,875 $ 8,261 $ 4,440
BASIC EPS:
Income available to common
shareholders $ 11,875 22,015 $ 8,261 21,361 $ 4,440 16,850
Per share amount $ 0.54 $ 0.39 $ 0.26
EFFECT OF DILUTIVE SECURITIES: $ (0.02) 682 $ (0.02) 767 $ (0.01) 858
DILUTED EPS:
Income available to common
shareholders $ 11,875 22,697 $ 8,261 22,128 $ 4,440 17,708
Per share amount $ 0.52 $ 0.37 $ 0.25
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(10) RELATED PARTY TRANSACTIONS
Related party transactions occur in the normal course of business between the
Company and TWC. Such transactions include the purchase of goods and services
and corporate costs for management support, office space, insurance and interest
expense.
PAGE 41 of 60
<PAGE> 42
The Company incurred the following expenses related to transactions with TWC in
the following years:
(In Thousands)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Description 1997 1996 1995
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Food services $ 461 $ 450 $ 3,903
General and administrative expenses 1,200 1,100 1,093
Casualty insurance premiums 4,957 3,306 2,169
Interest (income) charges 10 40 (172)
Rent 285 269 106
-------------------------------------------------------------------------
$ 6,913 $ 5,165 $ 7,099
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
Food services represent charges for meals for inmates at certain correctional
facilities operated by the Company. In third quarter 1995, the Company began to
provide its own in-house food services at all but one of its facilities. General
and administrative expenses represent charges for management and support
services. Beginning in Fiscal 1994, TWC provided various general and
administrative services to the Company under a Services Agreement. The Agreement
expired December 31, 1997 and provides for one year renewal periods at the
Company's option. Expenses under the Agreement for Fiscal 1997, Fiscal 1996 and
Fiscal 1995 were $1,200,000, $1,100,000 and $1,093,000, respectively. Casualty
insurance premiums related to workers' compensation, general liability and
automobile insurance coverage are provided through an insurance subsidiary of
TWC. In addition, the Company is charged or charges interest on intercompany
indebtedness at rates which reflect TWC's average interest costs on long-term
debt, exclusive of mortgage financing. For purposes of computing interest
expense (income) is calculated based on the average intercompany indebtedness.
The Company's corporate offices are located in TWC's corporate office building
for which it is allocated rent based upon space occupied under separate lease
agreements.
Management believes that the difference between these expenses and those that
would have been incurred on a stand alone basis is not material.
(11) STOCK OPTIONS
The Company has three stock option plans, the Wackenhut Corrections Corporation
1994 Stock Option Plan (First Plan), the Wackenhut Corrections Corporation Stock
Option Plan (Second Plan) and the 1995 Non-Employee Director Stock Option Plan
(Third Plan).
Under the First Plan, the Company may grant up to 897,600 shares of common stock
to key employees and consultants. All options granted under this plan are
exercisable at the fair market value of the common stock at date of grant, vest
100% after a minimum of six months and no later than ten years after the date of
grant.
Under the Second Plan, the Company may grant options to key employees for up to
1,500,000 shares of common stock. Under the terms of this plan, the exercise
price per share and vesting period is determined at the sole discretion of the
Board of Directors. All options that have been granted under this plan are
exercisable at the fair market value of the common stock at date of grant.
Generally, the options vest and become exercisable ratably over a five-year
period, beginning immediately on the date of grant. However, the Board of
Directors has exercised its discretion and has granted options that vest 100%
after a minimum of six months. All options under the Second Plan expire no later
than ten years after the date of grant.
Under the Third Plan, the Company may grant up to 60,000 shares of common stock
to non-employee directors of the Company. Under the terms of this plan, options
are granted at the fair market value of the common stock at date of grant,
become 100% exercisable immediately, and expire ten years after the date of
grant.
PAGE 42 of 60
<PAGE> 43
A summary of the status of the Company's three stock option plans as of December
31, 1995, December 29, 1996, and December 28, 1997, and changes during the years
then ended is presented below:
<TABLE>
<CAPTION>
1997 1996 1995
------------------------ ------------------------ -----------------------
WTD. AVG. WTD. AVG. WTD. AVG.
SHARES EXERCISE SHARES EXERCISE SHARES EXERCISE
PRICE PRICE PRICE
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of year
987,534 $ 7.13 1,210,132 $ 5.58 1,595,726 $ 2.32
Granted 156,500 21.03 60,000 22.63 343,000 11.90
Exercised 230,550 7.16 258,598 2.96 709,394 1.38
Forfeited/Canceled 22,000 11.88 24,000 12.77 19,200 2.32
------------- ------------- -------------
Options outstanding at end of
year 891,484 9.44 987,534 7.13 1,210,132 5.58
============= ============= =============
Options exercisable at year end 629,084 -- 744,734 -- 939,732 --
============= ============= =============
</TABLE>
The following table summarizes information about the stock options outstanding
at December 28, 1997:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
--------------------------------------------------- ------------------------------------
Number Wtd Avg Wtd Avg Number Wtd Avg
Outstanding Remaining Exercise Exercisable Exercise
RANGE OF EXERCISE PRICES at 12/28/97 Contractual Life Price at 12/28/97 Price
- ---------------------------- --------------- ------------------- ------------ ----------------- ---------------
<S> <C> <C> <C> <C> <C>
$1.20 - $3.75 496,984 6.3 $ 3.54 496,984 $ 3.54
$11.88 - $13.75 189,600 7.9 11.91 77,600 11.97
$16.63 - $16.88 15,000 9.2 16.77 7,000 16.86
$20.25 - $29.56 189,900 8.9 21.84 47,500 22.12
--------------- --------------
891,484 629,084
=============== ==============
</TABLE>
The Company accounts for these plans under APB Opinion No. 25, under which no
compensation cost has been recognized. Had compensation cost for these plans
been determined based on the fair value at date of grant in accordance with FASB
Statement No. 123, the Company's net income and earnings per share would have
been reduced to the pro forma amounts as follows:
<TABLE>
<CAPTION>
PRO FORMA DISCLOSURES 1997 1996
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Pro forma net earnings $11,197 $7,750
Pro forma basic net earnings per share 0.51 0.37
Pro forma diluted net earnings per share 0.49 0.35
Pro forma weighted average fair
value of options granted $11.07 $11.80
Risk free interest rates 5.52% - 5.70% 6.25% - 6.55%
Expected lives 4 -8 years 4 - 8 years
Expected volatility 48% 46%
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
Because the Statement 123 method of accounting has not been applied to options
granted prior to January 1, 1995, the resulting pro forma compensation cost may
not be representative of that to be expected in future years.
(12) SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
PAGE 43 of 60
<PAGE> 44
Selected quarterly financial data for the Company and its subsidiaries for the
fiscal years ended December 28, 1997 and December 29, 1996 is as follows:
(In Thousands, except per share data)
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1997
REVENUES $ 41,227 $ 51,509 $ 55,104 $ 59,090
OPERATING INCOME 3,272 3,789 4,801 4,683
NET INCOME 2,581 2,723 3,188 3,383
BASIC EARNINGS PER SHARE 0.12 0.12 0.14 0.15
DILUTED EARNINGS PER SHARE 0.11 0.12 0.14 0.15
1996
REVENUES $ 29,433 $ 33,416 $ 36,785 $ 38,149
OPERATING INCOME 1,719 1,913 2,939 3,160
NET INCOME 1,468 1,814 2,411 2,568
BASIC EARNINGS PER SHARE 0.07 0.08 0.11 0.12
DILUTED EARNINGS PER SHARE 0.07 0.08 0.11 0.11
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
PAGE 44 of 60
<PAGE> 45
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
TO THE SHAREHOLDERS OF WACKENHUT CORRECTIONS CORPORATION:
We have audited the accompanying consolidated balance sheets of Wackenhut
Corrections Corporation (a Florida corporation) and subsidiaries as of December
28, 1997 and December 29, 1996, and the related consolidated statements of
income, shareholders' equity and cash flows for each of the three fiscal years
in the period ended December 28, 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Wackenhut Corrections
Corporation and subsidiaries as of December 28, 1997 and December 29, 1996, and
the results of their operations and their cash flows for each of the three
fiscal years in the period ended December 28, 1997, in conformity with generally
accepted accounting principles.
ARTHUR ANDERSEN LLP
West Palm Beach, Florida,
February 6, 1998.
PAGE 45 of 60
<PAGE> 46
MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL STATEMENTS
To the Shareholders of Wackenhut Corrections Corporation:
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principals. They include amounts based on
judgments and estimates.
Representation in the financial statements and the fairness and integrity of
such statements are the responsibility of management. In order to meet
management's responsibility, the Company maintains a system of internal controls
and procedures and a program of internal audits designed to provide reasonable
assurance that the Company's assets are controlled and safeguarded, that
transactions are executed in accordance with management's authorization and
properly recorded, and that accounting records may be relied upon in the
preparation of financial statements.
The financial statements have been audited by Arthur Andersen LLP, independent
public accountants, whose appointment was ratified by shareholders. Their report
expresses a professional opinion as to whether management's financial statements
considered in their entirety present fairly, in conformity with generally
accepted accounting principles, the Company's financial position and results of
operations. Their audit was conducted in accordance with generally accepted
auditing standards. As part of this audit, Arthur Andersen LLP considered the
Company's system of internal controls to the degree they deemed necessary to
determine the nature, timing, and extent of their audit tests which support
their opinion on the financial statements.
The Audit Committee of the Board of Directors meets periodically with
representatives of management, the independent public accounts and the Company's
internal auditors to review matters relating to financial reporting, internal
accounting controls and auditing. Both the internal auditors and the independent
public accountants have unrestricted access to the Audit Committee to discuss
the results of their reviews.
George R. Wackenhut John G. O'Rourke
Chairman Senior Vice President
Chief Financial Officer
and Treasurer
PAGE 46 of 60
<PAGE> 47
PART III
The information required by Items 10, 11, 12, and 13 of Form 10-K (except such
information as is furnished in a separate caption "Executive Officers of the
Company" and included in Part I, hereto) will be contained in, and is
incorporated by reference from, the proxy statement (with the exception of the
Board Compensation Committee Report and the Performance Graph) for the Company's
1998 Annual Meeting of Shareholders, which will be filed with the Securities and
Exchange Commission pursuant to Regulation 14A within 120 days after the end of
the fiscal year covered by this Annual Report.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K
1. Financial Statements.
Report of Independent Certified Public Accountants - Page 46
Consolidated Balance Sheets - December 28, 1997 and December
29, 1996 - Page 29
Consolidated Statements of Income - Fiscal years ended
December 28, 1997 December 29, 1996 and December 31, 1995 -
Page 27
Consolidated Statements of Cash Flows - Fiscal years ended
December 28, 1997, December 29, 1996 and December 31, 1995
- Pages 30 - 31
Consolidated Statements of Shareholders' Equity - Fiscal years
ended December 28, 1997, December 29, 1996 and December 31,
1995 - Page 28
Notes to Consolidated Financial Statements - Pages 32 - 45
2. Financial Statement Schedules.
Schedule II - Valuation and Qualifying Accounts - Page 52
All schedules specified in the accounting regulations of the
Securities and Exchange Commission have been omitted because
they are either inapplicable or not required.
Page 47 of 60
<PAGE> 48
3. Exhibits. The following exhibits are filed as part of this
Annual Report:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
3.1** Amended and Restated Articles of Incorporation of the Company dated May 16, 1994.
3.2** Bylaws of the Company.
4.1* Amended and Restated Credit Agreement, dated December 18, 1997, by and among Wackenhut Corrections Corporation,
Nations Bank, National Association, Scotia Banc Inc. and the Leders Party thereto from time to time.
4.2* Amended and Restated Participation Agreement, dated June 19, 1997, among Wackenhut Corrections Corporation, First
Security Bank, National Association, the Various Bank and other Lending Institutions which are Partners thereto
from time to time, Scotia Banc Inc., and Nations Bank, National Association.
4.3* Amended and Restated Lease Agreement, dated as of June 19, 1997, between First Security Bank, National Association
and Wackenhut Correction Corporation.
4.4* Guaranty and Suretyship Agreement, dated December 18, 1997, by and among the Guarantors parties thereto and
Nations Bank, National Association.
4.5* Third Amended and Restated Trust Agreement, dated as of June 19, 1997, among, Nations Bank, National Association,
and the other financial institutions parties thereto and First Security Bank, National Association.
10.1+** Wackenhut Corrections Corporation Stock Option Plan.
10.2+** Wackenhut Corrections Corporation 1994 Stock Option Plan.
10.3+** Form of Indemnification Agreement between the Company and its Officers and Directors.
10.4+*** Wackenhut Corrections Corporation Senior Officer Retirement Plan.
10.5+*** Wackenhut Corrections Corporation Director Deferral Plan.
10.6+*** Wackenhut Corrections Corporation Senior Officer Incentive Plan.
10.7 Services Agreement dated as of January 3, 1994 between the Company and TWC (incorporated by reference to Exhibit
10.4 of the Company's Registration Statement on Form S-1, as amended, Registration Number 33-79264).
10.8*** Services Agreement effective as of January 1, 1996 between the Company and TWC.
10.9 Lease Agreement effective as of January 3, 1994 between the Company and TWC (incorporated by reference to Exhibit
10.5 of the Company's Registration Statement on Form S-1, as amended, Registration Number 33-79264)
10.10 Revolving Credit Facility Agreement dated December 12, 1994 between the Company and Barnett Bank of South Florida,
N.A. (incorporated by reference to Exhibit 10.106 of the Company's Annual Report on Form 10-K for the Fiscal Year
ended January 1, 1995).
21.1*** Subsidiaries of the Company.
24.1* Powers of Attorney. (Included as part of the signature page hereto.)
27.1 Financial Date Schedule (for SEC use only).
</TABLE>
- ----------
* Filed herewith.
** Incorporated herein by reference to exhibit of the same number filed in
the Company's Registration Statement, as amended, on Form S-1
(Registration Number 33-79264)
*** Incorporated herein by reference to exhibit of the same number filed in
the Company's Registration Statement, as amended, on Form S-1
(Registration Number 33-80785)
+ Management contract or compensatory plan, contract or agreement as
defined in Item 402(a) (3) of Regulation S-K.
(b) Reports on Form 8-K. The Company did not file a current
report on Form 8-K during the fourth quarter of fiscal year 1997.
PAGE 48 of 60
<PAGE> 49
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Company has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
WACKENHUT CORRECTIONS CORPORATION
Date: February 20, 1998 /s/ John G. O'Rourke
-------------------------------------
JOHN G. O'ROURKE
Senior Vice President - Finance, Treasurer
and Chief Financial Officer
Each person whose signature appears below hereby constitutes and appoints
George C. Zoley, John G. O'Rourke and David N.T. Watson and each of them, the
true and lawful attorneys-in-fact and agents of the undersigned, with full power
of substitution and resubstitution, for and in the name, place and stead of the
undersigned, in any and all capacities, to sign any and all amendments to this
Annual Report on Form 10-K and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, and hereby grants to such attorneys-in-fact and agents, and each of
them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as the
undersigned might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or any of them, or their or his
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Company and in
the capacities and on the dates indicated.
Date: February 20, 1998 /s/ George C. Zoley
------------------------------------------
GEORGE C. ZOLEY
Vice Chairman of the Board and Chief
Executive Officer
(principal executive officer)
Date: February 20, 1998 /s/ John G. O'Rourke
------------------------------------------
JOHN G. O'ROURKE
Senior Vice President - Finance, Treasurer
and Chief Financial Officer
(principal financial officer)
Date: February 20, 1998 /s/ David N.T. Watson
------------------------------------------
DAVID N.T. WATSON
Controller, Chief Accounting Officer, and
Assistant Treasurer
(principal accounting officer)
Date: February 20, 1998 /s/ George R. Wackenhut
------------------------------------------
GEORGE R. WACKENHUT
Director
PAGE 49 of 60
<PAGE> 50
/s/ Richard R. Wackenhut
------------------------------------------
Date: February 20, 1998 RICHARD R. WACKENHUT
Director
/s/Norman A. Carlson
-----------------------------
Date: February 20, 1998 NORMAN A. CARLSON
Director
/s/Benjamin R. Civiletti
-----------------------------
Date: February 20, 1998 BENJAMIN R. CIVILETTI
Director
/s/Manuel J. Justiz
-----------------------------
Date: February 20, 1998 MANUEL J. JUSTIZ
Director
/s/John F. Ruffle
-----------------------------
Date: February 20, 1998 JOHN F. RUFFLE
Director
/s/Anthony P. Travisono
-----------------------------
Date: February 20, 1998 ANTHONY P. TRAVISONO
Director
PAGE 50 of 60
<PAGE> 51
SCHEDULE II
WACKENHUT CORRECTIONS CORPORATION
VALUATION AND QUALIFYING ACCOUNTS
FOR THE FISCAL YEARS ENDED, DECEMBER 28, 1997, DECEMBER 29, 1996 AND
DECEMBER 31, 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
BALANCE AT CHARGED TO CHARGED DEDUCTIONS, BALANCE AT
BEGINNING COST AND TO OTHER ACTUAL END OF
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS CHARGE-OFFS PERIOD
----------- -------------- ------------- ------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 28, 1997:
Allowance for doubtful accounts $ -- $ 1,745 $ -- $ (1,118) $ 627
YEAR ENDED DECEMBER 29, 1996:
Allowance for doubtful accounts $ $ $ $ $
YEAR ENDED DECEMBER 31, 1995:
Allowance for doubtful $ $ $ $ $
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
PAGE 51 of 60
<PAGE> 52
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
-------- -----------
<S> <C>
3.1** Amended and Restated Articles of Incorporation of the Company dated May 16, 1994.
3.2** Bylaws of the Company.
4.1* Amended and Restated Credit Agreement, dated December 18, 1997, by and among Wackenhut Corrections Corporation,
Nations Bank, National Association, Scotia Banc Inc. and the Leders Party thereto from time to time.
4.2* Amended and Restated Participation Agreement, dated June 19, 1997, among Wackenhut Corrections Corporation, First
Security Bank, National Association, the Various Bank and other Lending Institutions which are Partners thereto
from time to time, Scotia Banc Inc., and Nations Bank, National Association.
4.3* Amended and Restated Lease Agreement, dated as of June 19, 1997, between First Security Bank, National Association
and Wackenhut Correction Corporation.
4.4* Guaranty and Suretyship Agreement, dated December 18, 1997, by and among the Guarantors parties thereto and
Nations Bank, National Association.
4.5* Third Amended and Restated Trust Agreement, dated as of June 19, 1997, among, Nations Bank, National Association,
and the other financial institutions parties thereto and First Security Bank, National Association.
10.1+** Wackenhut Corrections Corporation Stock Option Plan.
10.2+** Wackenhut Corrections Corporation 1994 Stock Option Plan.
10.3+** Form of Indemnification Agreement between the Company and its Officers and Directors.
10.4+*** Wackenhut Corrections Corporation Senior Officer Retirement Plan.
10.5+*** Wackenhut Corrections Corporation Director Deferral Plan.
10.6+*** Wackenhut Corrections Corporation Senior Officer Incentive Plan.
10.7 Services Agreement dated as of January 3, 1994 between the Company and TWC (incorporated by reference to Exhibit
10.4 of the Company's Registration Statement on Form S-1, as amended, Registration Number 33-79264).
10.8*** Services Agreement effective as of January 1, 1996 between the Company and TWC.
10.9 Lease Agreement effective as of January 3, 1994 between the Company and TWC (incorporated by reference to Exhibit
10.5 of the Company's Registration Statement on Form S-1, as amended, Registration Number 33-79264)
10.10 Revolving Credit Facility Agreement dated December 12, 1994 between the Company and Barnett Bank of South Florida,
N.A. (incorporated by reference to Exhibit 10.106 of the Company's Annual Report on Form 10-K for the Fiscal Year
ended January 1, 1995).
21.1*** Subsidiaries of the Company.
24.1* Powers of Attorney. (Included as part of the signature page hereto.)
27.1 Financial Date Schedule (for SEC use only).
</TABLE>
PAGE 52 of 60
<PAGE> 1
- --------------------------------------------------------------------------------
AMENDED AND RESTATED
CREDIT AGREEMENT
by and among
WACKENHUT CORRECTIONS CORPORATION
as Borrower,
NATIONSBANK, NATIONAL ASSOCIATION,
as Administrative Agent and as Lender,
SCOTIABANC INC.,
as Documentation Agent and as a Lender,
and
THE LENDERS PARTY HERETO FROM TIME TO TIME
December 18, 1997
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
ARTICLE I
Definitions and Terms
<S> <C> <C>
1.1. Amendment and Restatement................................................................................2
1.2. Definitions..............................................................................................2
1.3. Rules of Interpretation.................................................................................26
1.4. Accounting Principles...................................................................................27
ARTICLE II
The Revolving Credit Facility
2.1. Revolving Loans.........................................................................................28
2.2. Payment of Interest.....................................................................................31
2.3. Payment of Principal....................................................................................32
2.4. Non-Conforming Payments.................................................................................32
2.5. Notes...................................................................................................33
2.6. Pro Rata Payments.......................................................................................33
2.7. Reductions..............................................................................................33
2.8. Conversions and Elections of Subsequent Interest Periods................................................34
2.9. Increase and Decrease in Amounts........................................................................34
2.10. Facility Fees...........................................................................................34
2.11. Deficiency Advances.....................................................................................35
2.12. Use of Proceeds.........................................................................................35
2.13. Extension of Stated Termination Date....................................................................35
2.14. Swing Line..............................................................................................36
ARTICLE III
Letters of Credit
3.1. Letters of Credit.......................................................................................38
3.2. Reimbursement...........................................................................................38
3.3. Letter of Credit Facility Fees..........................................................................42
3.4. Administrative Fees.....................................................................................42
ARTICLE IV
Security
4.1. Security................................................................................................43
4.2. Further Assurances......................................................................................43
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
4.3. Information Regarding Collateral........................................................................43
ARTICLE V
Change in Circumstances
5.1. Increased Cost and Reduced Return.......................................................................44
5.2. Limitation on Types of Loans............................................................................45
5.3. Illegality..............................................................................................45
5.4. Treatment of Affected Loans.............................................................................46
5.5. Compensation............................................................................................46
5.6. Taxes...................................................................................................47
5.7. Replacement Banks.......................................................................................48
5.8. Lending Office..........................................................................................49
ARTICLE VI
Conditions to Making Loans and Issuing Letters of Credit
6.1. Conditions of Initial Advance..........................................................................50
6.2. Conditions of Revolving Loans and Letter of Credit......................................................52
ARTICLE VII
Representations and Warranties
7.1. Organization and Authority..............................................................................54
7.2. Loan Documents..........................................................................................54
7.3. Solvency................................................................................................55
7.4. Subsidiaries and Stockholders...........................................................................55
7.5. Ownership Interests.....................................................................................55
7.6. Financial Condition.....................................................................................55
7.7. Title to Properties.....................................................................................56
7.8. Taxes...................................................................................................56
7.9. Other Agreements........................................................................................56
7.10. Litigation..............................................................................................56
7.11. Margin Stock............................................................................................56
7.12. Investment Company......................................................................................57
7.13. Patents, Etc............................................................................................57
7.14. No Untrue Statement.....................................................................................57
7.15. No Consents, Etc........................................................................................57
7.16. Employee Benefit Plans..................................................................................58
7.17. No Default..............................................................................................59
7.18. Hazardous Materials.....................................................................................59
7.19. Employment Matters......................................................................................59
7.20. RICO....................................................................................................59
</TABLE>
<PAGE> 4
ARTICLE VIII
Affirmative Covenants
<TABLE>
<S> <C> <C>
8.1. Financial Reports, Etc..................................................................................60
8.2. Maintain Properties.....................................................................................61
8.3. Existence, Qualification, Etc...........................................................................61
8.4. Regulations and Taxes...................................................................................61
8.5. Insurance...............................................................................................62
8.6. True Books..............................................................................................62
8.7. Right of Inspection.....................................................................................62
8.8. Observe all Laws........................................................................................62
8.9. Governmental Licenses...................................................................................62
8.10. Covenants Extending to Other Persons....................................................................62
8.11. Officer's Knowledge of Default..........................................................................62
8.12. Suits or Other Proceedings..............................................................................63
8.13. Notice of Discharge of Hazardous Material or Environmental Complaint....................................63
8.14. Environmental Compliance................................................................................63
8.15. Indemnification.........................................................................................63
8.16. Further Assurances......................................................................................63
8.17. Employee Benefit Plans..................................................................................64
8.18. Continued Operations....................................................................................64
8.19. Additional Support Documents............................................................................64
ARTICLE IX
Negative Covenants
9.1. Financial Covenants.....................................................................................66
9.2. Acquisitions............................................................................................67
9.3. Capital Expenditures....................................................................................67
9.4. Liens...................................................................................................68
9.5. Indebtedness............................................................................................69
9.6. Transfer of Assets......................................................................................69
9.7. Investments.............................................................................................69
9.8. Merger or Consolidation.................................................................................70
9.9. Restricted Payments.....................................................................................70
9.10. Transactions with Affiliates............................................................................70
9.11. Compliance with ERISA...................................................................................71
9.12. Fiscal Year.............................................................................................71
9.13. Dissolution, etc........................................................................................71
9.14. Limitations on Sales and Leasebacks.....................................................................71
9.15. Change in Control.......................................................................................72
9.16. Negative Pledge Clauses.................................................................................72
</TABLE>
<PAGE> 5
<TABLE>
<S> <C> <C>
9.17. Prepayments, Etc. of Indebtedness.......................................................................72
9.18. Rate Hedging Obligations. .............................................................................72
ARTICLE X
Events of Default and Acceleration
10.1. Events of Default.......................................................................................73
10.2. Agent to Act............................................................................................76
10.3. Cumulative Rights.......................................................................................76
10.4. No Waiver...............................................................................................76
10.5. Allocation of Proceeds..................................................................................76
10.6. Limitation..............................................................................................77
ARTICLE XI
The Agent
11.1. Appointment, Powers, and Immunities.....................................................................78
11.2. Reliance by Agent.......................................................................................78
11.3. Defaults................................................................................................79
11.4. Rights as Lender........................................................................................79
11.5. Indemnification.........................................................................................79
11.6. Non-Reliance on Agent and Other Lenders.................................................................80
11.7. Resignation of Agent....................................................................................80
11.8. Sharing of Payments, etc................................................................................80
11.9. Fees....................................................................................................81
ARTICLE XII
Miscellaneous
12.1. Assignments and Participations..........................................................................82
12.2. Notices.................................................................................................83
12.3. Right of Set-off; Adjustments...........................................................................85
12.4. Survival................................................................................................85
12.5. Expenses................................................................................................85
12.6. Amendments and Waivers..................................................................................86
12.7. Counterparts............................................................................................86
12.8. Termination.............................................................................................86
12.9. Indemnification.........................................................................................87
12.10. Severability............................................................................................87
12.11. Entire Agreement........................................................................................87
12.12. Agreement Controls......................................................................................87
12.13. Usury Savings Clause....................................................................................88
12.14. GOVERNING LAW; WAIVER OF JURY TRIAL.....................................................................88
</TABLE>
<PAGE> 6
<TABLE>
<S> <C> <C>
12.15. Judgment Currency.......................................................................................89
12.16. Economic and Monetary Union in the European Community...................................................90
12.17. Confidentiality.........................................................................................91
</TABLE>
<TABLE>
<S> <C> <C>
EXHIBIT A Applicable Revolving Credit Commitment Percentages............................A-1
EXHIBIT B Form of Assignment and Acceptance.............................................B-1
EXHIBIT C Notice of Appointment (or Revocation) of Authorized Representative............C-1
EXHIBIT D-1 Form of Borrowing Notice....................................................D-1-1
EXHIBIT D-2 Form of Borrowing Notice--Swing Line Loans..................................D-2-1
EXHIBIT E Form of Interest Rate Selection Notice........................................E-1
EXHIBIT F-1 Form of Revolving Note......................................................F-1-1
EXHIBIT F-2 Form of Swing Line Note.....................................................F-2-1
EXHIBIT G Form of Opinion of Borrower's Counsel.........................................G-1
EXHIBIT H Compliance Certificate........................................................H-1
EXHIBIT I Form of Facility Guaranty.....................................................I-1
EXHIBIT J Form of LC Account Agreement..................................................J-1
Schedule 1.1 Existing Letters of Credit....................................................S-1
Schedule 4.3 Location of Collateral........................................................S-2
Schedule 7.4 Subsidiaries and Investments in Other Persons.................................S-3
Schedule 7.6 Indebtedness..................................................................S-4
Schedule 7.7 Liens.........................................................................S-5
Schedule 7.10 Litigation....................................................................S-6
Schedule 8.5 Insurance.....................................................................S-7
</TABLE>
<PAGE> 7
AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT, dated as of December 18, 1997
(the "Agreement"), is made by and among WACKENHUT CORRECTIONS CORPORATION, a
Florida corporation having its principal place of business in Palm Beach
Gardens, Florida (the "Borrower"), NATIONSBANK, NATIONAL ASSOCIATION, a national
banking association organized and existing under the laws of the United States,
in its capacity as a Lender ("NationsBank"), and each other financial
institution executing and delivering a signature page hereto and each other
financial institution which may hereafter execute and deliver an instrument of
assignment with respect to this Agreement pursuant to Section 12.1 (hereinafter
such financial institutions may be referred to individually as a "Lender" or
collectively as the "Lenders"), and NATIONSBANK, NATIONAL ASSOCIATION, a
national banking association organized and existing under the laws of the United
States, in its capacity as agent for the Lenders (in such capacity, and together
with any successor agent appointed in accordance with the terms of Section 11.7,
the "Agent");
W I T N E S S E T H:
WHEREAS, the Borrower is presently a party to a Credit Agreement dated June
19, 1997 with NationsBank, as agent and various lenders (the "Existing
Lenders"), and various other lenders party thereto (the "Existing Agreement");
and
WHEREAS, the Borrower has requested that the Lenders party hereto amend and
restate the Existing Agreement in its entirety in the manner set forth herein;
and
WHEREAS, the Lenders are willing to amend and restate the Existing
Agreement and to make such revolving credit and letter of credit facilities
available to the Borrower upon the terms and conditions set forth herein;
NOW, THEREFORE, the Borrower, the Lenders and the Agent hereby agree as
follows:
<PAGE> 8
ARTICLE I
Definitions and Terms
1.1. Amendment and Restatement. The Borrower, the Agent and the Lenders
hereby agree that upon the effectiveness of this Agreement, the terms and
provisions of the Existing Agreement shall be and hereby are amended and
restated in their entirety by the terms and conditions of this Agreement and the
terms and provisions of the Existing Agreement, except as otherwise provided
herein, shall be superseded by this Agreement.
Notwithstanding the amendment and restatement of the Existing Agreement by
this Agreement, the Borrower shall continue to be liable to the Agent and the
Existing Lenders with respect to (and to the extent of) agreements on the part
of the Borrower under the Existing Agreement to indemnify and hold harmless the
Agent and the Existing Lenders from and against all claims, demands,
liabilities, damages, losses, costs, charges and expenses to which the Agent and
the Existing Lenders may be subject arising in connection with the Existing
Agreement. This Agreement is given as a substitution of, and not as a payment
of, the obligations of Borrower under the Existing Agreement and is not intended
to constitute a novation of the Existing Agreement. Except as otherwise selected
by the Borrower by delivery of a Borrowing Notice or Interest Rate Selection
Notice prior to the Closing Date in accordance with the terms hereof, upon the
effectiveness of this Agreement all amounts outstanding and owing by Borrower
under the Existing Agreement as of the Closing Date, as determined by the
Lenders, shall constitute Advances hereunder accruing interest with respect to
the Base Rate Loans under the Existing Agreement, at the Base Rate hereunder.
The parties hereto agree that the Interest Periods for all Eurodollar Loans
outstanding under the Existing Agreement on the Closing Date shall be
terminated, the Borrower shall make any payments required under Section 5.5
hereof to the Lenders. The Borrower shall furnish to the Agent Interest Rate
Selection Notices for existing Loans and Borrowing Notices for additional Loans
as may be required in connection with the allocation of Loans among Lenders in
accordance with their Applicable Commitment Percentages. Except as otherwise
provided for by the Borrower by delivery to NationsBank of an Application and
Agreement for Letters of Credit prior to the Closing Date in accordance with the
terms hereof, upon the effectiveness of this Agreement, all Letters of Credit
issued for the account of the Borrower under the Existing Agreement as of the
Closing Date shall constitute Letters of Credit hereunder.
1.2. Definitions. For the purposes of this Agreement, in addition to the
definitions set forth above, the following terms shall have the respective
meanings set forth below:
"Acquisition" means the acquisition of (i) a controlling equity
interest in another Person (including the purchase of an option, warrant or
convertible or similar type security to acquire such a controlling interest
at the time it becomes exercisable by the holder thereof), whether by
purchase of such equity interest or upon exercise of an option or warrant
for, or conversion of securities into, such equity interest, or (ii) assets
of another Person
2
<PAGE> 9
which constitute all or substantially all of the assets of such Person or
of a line or lines of business conducted by such Person.
"Advance" means a borrowing under the Revolving Credit Facility
consisting of a Base Rate Loan or a Eurodollar Rate Loan.
"Advance Date Exchange Rate" means, with respect to a specified
Advance or Loan in an Alternative Currency, the Spot Rate of Exchange as of
the date two Business Days preceding the date such Advance is originally
made, provided that, if such Advance or Loan is Continued for a subsequent
Interest Period or Converted pursuant to Section 2.8, the Advance Date
Exchange Rate with respect to such Loan shall be the Spot Rate of Exchange
two Business Days preceding the effective date of the latest Continuation
or Conversion of such Advance or Loan, and the Dollar Value of such Advance
or Loan shall be adjusted as set forth in Section 2.1(b).
"Adjusted Consolidated EBITDA" means, the sum of Annualized
Consolidated EBITDA plus Contract EBITDA.
"Adjusted Consolidated Leverage Ratio" means the ratio of (i)
Consolidated Indebtedness as at the Determination Date to (ii) Adjusted
Consolidated EBITDA.
"Affiliate" means any Person (i) which directly or indirectly through
one or more intermediaries controls, or is controlled by, or is under
common control with the Borrower; or (ii) which beneficially owns or holds
5% or more of any class of the outstanding voting stock (or in the case of
a Person which is not a corporation, 5% or more of the equity interest) of
the Borrower; or 5% or more of any class of the outstanding voting stock
(or in the case of a Person which is not a corporation, 5% or more of the
equity interest) of which is beneficially owned or held by the Borrower.
The term "control" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of a
Person, whether through ownership of voting stock, by contract or
otherwise.
"Alternative Currency" means Pounds Sterling, Australian Dollars,
Canadian Dollars, Euro Currency and with the prior written consent of all
Lenders and the Agent, any other lawful currency other than Dollars which
is freely transferable and convertible into Dollars in the United States
currency market; provided, however, that an Alternative Currency shall only
be available to the Borrower if each Lender shall have determined (which
determination shall be conclusive) that it has access to such Alternative
Currency on terms reasonably acceptable to such Lender and that the
Alternative Currency is freely transferable and convertible into Dollars.
"Alternative Currency Equivalent Amount" means with respect to a
specified Alternative Currency and a specified Dollar amount, the amount of
such Alternative Currency into which such Dollar amount would be Converted,
based on the applicable Advance Date Exchange Rate.
3
<PAGE> 10
"Annualized Consolidated EBITDA" means, with respect to the Borrower
and its Subsidiaries for any fiscal quarter period ending on the date of
computation thereof, Consolidated EBITDA for such quarter period multiplied
by four (4).
"Annualized Consolidated Senior Leverage Ratio" means the ratio of (i)
Consolidated Senior Indebtedness to (ii) Annualized Consolidated EBITDA.
"Applicable Commitment Percentage" means, with respect to each Lender
at any time, a fraction, the numerator of which shall be such Lender's
Revolving Credit Commitment and the denominator of which shall be the Total
Revolving Credit Commitment, which Applicable Commitment Percentage for
each Lender as of the Closing Date is as set forth in Exhibit A; provided
that the Applicable Commitment Percentage of each Lender shall be increased
or decreased to reflect any assignments to or by such Lender effected in
accordance with Section 12.1.
"Applicable Lending Office" means, for each Lender and for each Type
of Loan, the "Lending Office" of such Lender (or of an affiliate of such
Lender) designated for such Type of Loan on the signature pages hereof or
such other office of such Lender (or an affiliate of such Lender) as such
Lender may from time to time specify to the Agent and the Borrower by
written notice in accordance with the terms hereof as the office by which
its Loans of such Type are to be made and maintained.
"Applicable Margin" means for each Eurodollar Rate Loan, or Swing Line
Loan, that percent per annum set forth below, which shall be based upon the
(i) Annualized Consolidated Senior Leverage Ratio and (ii) Consolidated
Fixed Charge Ratio as specified below:
<TABLE>
<CAPTION>
Tier Annualized Consolidated Senior Consolidated Fixed Charge Ratio
Leverage Ratio
- ----------------------------------------------------------------------------------------------------------
1.50 to 1.00 or 2.00 to 1.00 or
Greater But Greater
Less Than 2.00
to 1.00
- ----------------------------------------------------------------------------------------------------------
Applicable Margin
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
I Greater than 5.00 to 1.00 2-1/2% 2-1/4%
- ----------------------------------------------------------------------------------------------------------
II Equal to or less than 5.00 to 1.00 and 2-1/4% 2%
more than 4.00 to 1.00
- ----------------------------------------------------------------------------------------------------------
III Equal to or less than 4.00 to 1.00 and 2% 1-3/4%
more than 3.00 to 1.00
- ----------------------------------------------------------------------------------------------------------
IV Equal to or less than 3.00 to 1.00 1-3/4% 1-1/2%
- ----------------------------------------------------------------------------------------------------------
</TABLE>
4
<PAGE> 11
The Applicable Margin shall be established at the end of each fiscal
quarter of the Borrower (each, a "Determination Date"). Any change in the
Applicable Margin following each Determination Date shall be determined
based upon the computations set forth in the certificate furnished to the
Agent pursuant to Section 8.1(a)(ii) and Section 8.1(b)(ii), subject to
review and approval of such computations by the Agent, and shall be
effective commencing on the date following the date such certificate is
received (or, if earlier, the date such certificate was required to be
delivered) until the date following the date on which a new certificate is
delivered or is required to be delivered, whichever shall first occur;
provided however, if the Borrower shall fail to deliver any such
certificate within five (5) days after the time period required by Section
8.1, then the Applicable Margin shall be Tier I and as if the Consolidated
Fixed Charge Ratio is less than 2.00 to 1.00 from the date such certificate
was required to be delivered until the appropriate certificate is so
delivered. From the Closing Date to the date following the date on which
the compliance certificate required by Section 8.1(b)(ii) is delivered for
Fiscal Year 1997, the Applicable Margin shall be Tier III.
"Applicable Unused Fee" means that percent per annum set forth below,
which shall be based upon the (i) Annualized Consolidated Senior Leverage
Ratio and (ii) Consolidated Fixed Charge Ratio as specified below:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Tier Annualized Consolidated Senior Consolidated Fixed Charge Ratio
Leverage Ratio
- ----------------------------------------------------------------------------------------------------------
1.50 to 1.00 or 2.00 to 1.00 or
Greater But Greater
Less Than 2.00
to 1.00
- ----------------------------------------------------------------------------------------------------------
Applicable Margin
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
I Greater than 5.00 to 1.00 1/2% 1/2%
- ----------------------------------------------------------------------------------------------------------
II Equal to or less than 5.00 to 1.00 and 1/2% 1/2%
more than 4.00 to 1.00
- ----------------------------------------------------------------------------------------------------------
III Equal to or less than 4.00 to 1.00 and 1/2% 3/8%
more than 3.00 to 1.00
- ----------------------------------------------------------------------------------------------------------
IV Equal to or less than 3.00 to 1.00 3/8% 3/8%
- ----------------------------------------------------------------------------------------------------------
</TABLE>
The Applicable Unused Fee shall be established on each Determination Date.
Any change in the Applicable Unused Fee following each Determination Date
shall be determined based
5
<PAGE> 12
upon the computations set forth in the certificate furnished to the Agent
pursuant to Section 8.1(a)(ii) and Section 8.1(b)(ii), subject to review
and approval of such computations by the Agent and shall be effective
commencing on the date following the date such certificate is received (or,
if earlier, the date such certificate was required to be delivered) until
the date following the date on which a new certificate is delivered or is
required to be delivered, whichever shall first occur; provided however, if
the Borrower shall fail to deliver any such certificate within five (5)
days after the time period required by Section 8.1, then the Applicable
Unused Fee shall be Tier I and as if the Consolidated Fixed Charge Ratio is
less than 2.00 to 1.00 from the date such certificate was required to be
delivered until the appropriate certificate is so delivered. From the
Closing Date to the date following the date on which the compliance
certificate required by Section 8.1(b)(ii) is delivered for Fiscal Year
1997, the Applicable Margin shall be Tier III.
"Applications and Agreements for Letters of Credit" means,
collectively, the Applications and Agreements for Letters of Credit, or
similar documentation, executed by the Borrower from time to time and
delivered to the Issuing Bank to support the issuance of Letters of Credit.
"Assessment Rate" means, for any day, the annual assessment rate
(rounded upwards, if necessary, to the nearest 1/100 of 1%) which is
payable by the Agent (in its individual capacity) to the Federal Deposit
Insurance Corporation (or any successor) for deposit insurance for Dollar
time deposits with the Agent (in its individual capacity) at its Principal
Office as determined by the Agent. The CD Rate shall be adjusted
automatically on and as of the effective date of any change in the
Assessment Rate.
"Assignment and Acceptance" shall mean an Assignment and Acceptance in
the form of Exhibit B (with blanks appropriately filled in) executed and
delivered to the Agent by the parties thereto in connection with an
assignment of a Lender's interest under this Agreement pursuant to Section
12.1.
"Australian Dollars" means the official currency of Australia.
"Authorized Representative" means any of the Chief Executive Officer,
President, any Senior Vice President or Controller of the Borrower or, with
respect to financial matters, the chief financial officer or Controller of
the Borrower, or any other Person expressly designated by the Board of
Directors of the Borrower (or the appropriate committee thereof) as an
Authorized Representative of the Borrower, as set forth from time to time
in a certificate in the form of Exhibit C.
"Base Rate" means, for any day, the rate per annum equal to the sum of
(i) the higher of (a) the Federal Funds Rate for such day plus one-half of
one percent (0.5%) and (b) the Prime Rate for such day plus (ii) the Base
Rate Margin. Any change in the Base Rate due to a change in the Prime Rate
or the Federal Funds Rate shall be effective on the effective date of such
change in the Prime Rate or Federal Funds Rate.
6
<PAGE> 13
"Base Rate Loan" means a Dollar denominated Loan for which the rate of
interest is determined by reference to the Base Rate.
"Base Rate Margin" means the Applicable Margin minus one and one-half
percent (1- 1/2%).
"Base Rate Refunding Loan" means a Base Rate Loan made either to (i)
satisfy Reimbursement Obligations arising from a drawing under a Letter of
Credit or (ii) pay NationsBank in respect of Swing Line Outstandings.
"Board" means the Board of Governors of the Federal Reserve System (or
any successor body).
"Borrower's Account" means a demand deposit account number
[_____________________] or any successor account with the Agent, which may
be maintained at one or more offices of the Agent or an agent of the Agent.
"Borrowing Notice" means the notice delivered by an Authorized
Representative in connection with an Advance under the Revolving Credit
Facility or a Swing Line Loan, in the forms of Exhibits D-1 and D-2,
respectively.
"Business Day" means, (i) with respect to any Floating Rate Loan, any
day which is not a Saturday, Sunday or a day on which banks in the States
of New York and North Carolina are authorized or obligated by law,
executive order or governmental decree to be closed, and (ii) with respect
to any Eurodollar Rate Loan, any day which is a Business Day, as described
above, and on which the relevant international financial markets are open
for the transaction of business contemplated by this Agreement in London,
England, New York, New York and Charlotte, North Carolina.
"Canadian Dollar" means the official currency of Canada.
"Capital Expenditures" means, with respect to the Borrower and its
Subsidiaries, for any period the sum of (without duplication) (i) all
expenditures (whether paid in cash or accrued as liabilities) by the
Borrower or any Subsidiary during such period for items that would be
classified as "property, plant or equipment" or comparable items on the
consolidated balance sheet of the Borrower and its Subsidiaries, including
without limitation all transactional costs incurred in connection with such
expenditures provided the same have been capitalized and including all TROL
Indebtedness, excluding, however, the amount of any Capital Expenditures
paid for with proceeds of casualty insurance as evidenced in writing and
submitted to the Agent together with any compliance certificate delivered
pursuant to Section 8.1(a) or (b), and (ii) with respect to any Capital
Lease entered into by the Borrower or its Subsidiaries during such period,
the present value of the lease payments due under such Capital Lease over
the term of such Capital Lease applying a discount rate equal to the
interest rate provided in such Capital Lease (or in the absence of a stated
interest
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<PAGE> 14
rate, that rate used in the preparation of the financial statements
described in Section 8.1(a)), all the foregoing in accordance with GAAP
applied on a Consistent Basis.
"Capital Leases" means all leases which have been or should be
capitalized in accordance with GAAP as in effect from time to time
including Statement No. 13 of the Financial Accounting Standards Board and
any successor thereof.
"CD Rate" means the interest rate per annum calculated according to
the following formula:
CD = Floating CD Rate + Assessment + Applicable
Rate -------------------------- Rate Margin
1 - Reserve Requirement
"CD Rate Loans" means Loans that bear interest at rates based upon the
CD Rate.
"Change of Control" means, at any time:
(i) any "person" or "group" (each as used in Sections 13(d)(3)
and 14(d)(2) of the Exchange Act) either (A) becomes the "beneficial
owner" (as defined in Rule 13d-3 of the Exchange Act), directly or
indirectly, of Voting Stock of the Borrower (or securities convertible
into or exchangeable for such Voting Stock) representing 20% or more
of the combined voting power of all Voting Stock of the Borrower (on a
fully diluted basis) or (B) otherwise has the ability, directly or
indirectly, to elect a majority of the board of directors of the
Borrower; provided, however, that this subsection shall apply only to
any "person" or "group" (each as used in Sections 13(d)(3) and
14(d)(2) of the Exchange Act) who does not qualify hereunder as of the
Closing Date.
(ii) during any period of up to 24 consecutive months,
commencing on the Closing Date, individuals who at the beginning of
such 24-month period were directors of the Borrower shall cease for
any reason (other than the death, disability or retirement of an
officer of the Borrower that is serving as a director at such time so
long as another officer of the Borrower replaces such Person as a
director) to constitute a majority of the board of directors of the
Borrower; or
(iii) any Person or two or more Persons acting in concert shall
have acquired by contract or otherwise, or shall have entered into a
contract or arrangement that, upon consummation thereof, will result
in its or their acquisition of the power to exercise, directly or
indirectly, a controlling influence on the management or policies of
the Borrower.
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<PAGE> 15
"Closing Date" means the date as of which this Agreement is executed
by the Borrower, the Lenders and the Agent and on which the conditions set
forth in Section 6.1 have been satisfied.
"Code" means the Internal Revenue Code of 1986, as amended, and any
regulations promulgated thereunder.
"Collateral" means, collectively, all property of the Borrower or any
Subsidiary in which the Agent or any Lender is granted a Lien as security
for all or any portion of the Obligations under any of the Security
Instruments.
"Consistent Basis" in reference to the application of GAAP means the
accounting principles observed in the period referred to are comparable in
all material respects to those applied in the preparation of the audited
financial statements of the Borrower referred to in Section 7.6(a).
"Consolidated EBITDA" means, with respect to the Borrower and its
Subsidiaries for the period ending on the date of computation thereof, the
sum of, without duplication, (i) Consolidated Net Income, (ii) Consolidated
Interest Expense, (iii) taxes on income, (iv) amortization, and (v)
depreciation, all determined on a consolidated basis in accordance with
GAAP applied on a Consistent Basis.
"Consolidated Fixed Charge Coverage Ratio" means, with respect to the
Borrower and its Subsidiaries for any Four-Quarter Period ending on the
date of computation thereof, the ratio of (i) Consolidated EBITDA plus
Consolidated Lease Payments for such period to (ii) Consolidated Fixed
Charges for such period.
"Consolidated Fixed Charges" means, with respect to Borrower and its
Subsidiaries for any Four-Quarter Period ending on the date of computation
thereof, the sum of, without duplication, (i) Consolidated Interest
Expense, (ii) required principal payments of Consolidated Indebtedness,
(iii) Consolidated Lease Payments for such period and (iv) all Restricted
Payments, all determined on a consolidated basis in accordance with GAAP
applied on a Consistent Basis.
"Consolidated Indebtedness" means all Indebtedness of the Borrower and
its Subsidiaries plus all TROL Indebtedness, all determined on a
consolidated basis.
"Consolidated Interest Expense" means, with respect to any period of
computation thereof, the gross interest expense of the Borrower and its
Subsidiaries, including without limitation (i) the current amortized
portion of debt discounts to the extent included in gross interest expense,
(ii) the current amortized portion of all fees (including fees payable in
respect of any Swap Agreement and Letters of Credit) payable in connection
with the incurrence of Indebtedness to the extent included in gross
interest expense and (iii) the
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<PAGE> 16
portion of any payments made in connection with Capital Leases allocable to
interest expense, in each of the foregoing cases determined on a
consolidated basis in accordance with GAAP applied on a Consistent Basis;
provided that Consolidated Interest Expense shall not include payments with
respect to the TROL Leases.
"Consolidated Lease Payments" means the gross amount of all lease or
rental payments, whether or not characterized as rent, including rental
payments under TROL Leases of the Borrower and its Subsidiaries, excluding
payments in respect of Capital Leases constituting Indebtedness, all
determined on a consolidated basis in accordance with GAAP applied on a
Consistent Basis.
"Consolidated Net Income" means, for any period of computation
thereof, the gross revenues from operations of the Borrower and its
Subsidiaries (including payments received by the Borrower and its
Subsidiaries of (a) interest income, and (b) dividends and distributions,
including management fees, made in the ordinary course of their businesses
by a Special Purpose Subsidiary or other Persons in which investment is
permitted pursuant to this Agreement), less all operating and non-operating
expenses of the Borrower and its Subsidiaries including taxes on income,
all determined on a consolidated basis in accordance with GAAP applied on a
Consistent Basis; but excluding (for all purposes other than compliance
with Section 9.1(a) hereof) as income: (i) net gains or losses on the sale,
conversion or other disposition of capital assets, (ii) net gains or losses
on the acquisition, retirement, sale or other disposition of capital stock
and other securities of the Borrower or its Subsidiaries, (iii) net gains
or losses on the collection of proceeds of life insurance policies, (iv)
any write-up of any asset, and (v) any other net gain or loss or credit or
debit of an extraordinary nature as determined in accordance with GAAP
applied on a Consistent Basis.
"Consolidated Net Worth" means, as of any date on which the amount
thereof is to be determined, Consolidated Shareholders' Equity minus
(without duplication of deductions in respect of items already deducted in
arriving at surplus and retained earnings) all reserves (other than
contingency reserves not allocated to any particular purpose), including
without limitation reserves for depreciation, depletion, amortization,
obsolescence, deferred income taxes, insurance and inventory valuation all
as determined on a consolidated basis in accordance with GAAP applied on a
Consistent Basis.
"Consolidated Senior Indebtedness" means Consolidated Indebtedness
minus Subordinated Indebtedness.
"Consolidated Shareholders' Equity" means, as of any date on which the
amount thereof is to be determined, the sum of the following in respect of
the Borrower and its Subsidiaries (determined on a consolidated basis and
excluding any upward adjustment after the Closing Date due to revaluation
of assets): (i) the amount of issued and outstanding share capital, plus
(ii) the amount of additional paid-in capital and retained earnings (or, in
the case
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<PAGE> 17
of a deficit, minus the amount of such deficit), plus (iii) the amount of
any foreign currency translation adjustment (if positive, or, if negative,
minus the amount of such translation adjustment), minus (iv) the amount of
any treasury stock, all as determined in accordance with GAAP applied on a
Consistent Basis.
"Consolidated Total Assets" means, as of the date on which the amount
thereof is to be determined, the net book value of all assets of the
Borrower and its Subsidiaries as determined on a consolidated basis in
accordance with GAAP applied on a Consistent Basis.
"Contingent Obligation" means any agreement, undertaking or
arrangement by which any Person guarantees, endorses or otherwise becomes
or is contingently liable upon (by direct or indirect agreement to provide
funds for payment, to supply funds to, or otherwise to invest in, a debtor,
or otherwise to assure a creditor against loss) the Indebtedness of any
other Person (other than by endorsements of instruments in the course of
collection), or guarantees the payment of dividends or other distributions
upon the shares of any other Person. The amount of any Person's obligation
under any Contingent Obligation shall (subject to any limitation set forth
therein) be deemed to be the outstanding principal amount (or maximum
principal amount, if larger) of the Indebtedness guaranteed thereby).
"Continue", "Continuation", and "Continued" shall refer to the
continuation pursuant to Section 2.8 hereof of a Eurodollar Rate Loan of
one Type as a Eurodollar Rate Loan of the same Type from one Interest
Period to the next Interest Period.
"Contract EBITDA" means the Dollar amount of Consolidated EBITDA for a
Four-Quarter Period which the Borrower can project to be received from the
operation of a Qualifying Property based upon the pricing proposal which
forms the basis, as amended from time to time, for the award of a contract
or which is otherwise acceptable to the Agent, and with respect to which
Qualifying Property debt for construction of improvements thereon has been
incurred.
"Convert", "Conversion", and "Converted" shall refer to a conversion
pursuant to Section 2.8 or Article IV of one Type of Loan into another Type
of Loan.
"Cost of an Acquisition" means, with respect to any Acquisition, as at
the date of entering into any agreement therefor, the sum of the following
(without duplication): (i) the value of the capital stock, warrants or
options to acquire capital stock of Borrower or any Subsidiary to be
transferred in connection therewith, (ii) the amount of any cash and fair
market value of other property (excluding property described in clause (i)
and the unpaid principal amount of any debt instrument) given as
consideration, (iii) the amount (determined by using the face amount or the
amount payable at maturity, whichever is greater) of any Indebtedness
incurred, assumed or acquired by the Borrower or any Subsidiary in
connection with such Acquisition, (iv) all additional purchase price
amounts in the form of earnouts and other contingent obligations that
should be recorded on the financial statements of the Borrower and its
Subsidiaries in accordance with GAAP, (v) all amounts paid in respect of
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<PAGE> 18
covenants not to compete, consulting agreements that should be recorded on
financial statements of the Borrower and its Subsidiaries in accordance
with GAAP, (vi) the aggregate fair market value of all other consideration
given by the Borrower or any Subsidiary in connection with such
Acquisition, and (vii) out of pocket transaction costs for the services and
expenses of attorneys, accountants and other consultants incurred in
effecting such transaction, and other similar transaction costs so
incurred.
"Default" means any event or condition which, with the giving or
receipt of notice or lapse of time or both, would constitute an Event of
Default hereunder.
"Default Rate" means (i) with respect to each Eurodollar Rate Loan,
until the end of the Interest Period applicable thereto, a rate of two
percent (2%) above the Eurodollar Rate applicable to such Loan, and
thereafter at a rate of interest per annum which shall be two percent (2%)
above the Base Rate, (ii) with respect to Floating Rate Loans, at a rate of
interest per annum which shall be two percent (2%) above the Base Rate, and
(iii) in any case, the maximum rate permitted by applicable law, if lower.
"Determination Date" has the meaning set forth in the definition
"Applicable Margin".
"Direct Foreign Subsidiary" means any Subsidiary of the Borrower that
is not a Domestic Subsidiary a majority of whose outstanding Voting Stock
is owned by the Borrower or a Domestic Subsidiary.
"Dollar Equivalent Amount" means, with respect to a specified
Alternative Currency amount, the amount of Dollars into which the
Alternative Currency amount would be converted, based on the applicable
Advance Date Exchange Rate.
"Dollar Value" of an Advance or a Loan in an Alternative Currency
means the Dollar Equivalent Amount of the principal amount of such Advance
or Loan based on the Advance Date Exchange Rate with respect to such
Advance or Loan, as recorded in the Agent's records pursuant to Section
2.1.
"Dollars" and the symbol "$" means dollars constituting legal tender
for the payment of public and private debts in the United States of
America.
"Domestic Subsidiary" means any Subsidiary of the Borrower organized
under the laws of the United States of America or a state or territory
thereof.
"Eligible Assignee" means (i) a Lender; (ii) an affiliate of a Lender;
and (iii) any other Person approved by the Agent and, unless an Event of
Default has occurred and is continuing at the time any assignment is
effected in accordance with Section 12.1; the Borrower, such approval not
to be unreasonably withheld or delayed by the Borrower, it
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<PAGE> 19
being agreed that Borrower may withhold its approval if as a result of such
assignment the Borrower incurs increased cost under Section 5.6; provided,
however, that neither the Borrower nor an affiliate of the Borrower shall
qualify as an Eligible Assignee.
"Eligible Securities" means the following obligations and any other
obligations previously approved in writing by the Agent:
(a) Government Securities;
(b) obligations of any corporation organized under the laws of
any state of the United States of America or under the laws of any
other nation, payable in the United States of America, expressed to
mature not later than 270 days following the date of issuance thereof
and rated in an investment grade rating category by S&P and Moody's;
(c) interest bearing demand or time deposits issued by any Lender
or certificates of deposit maturing within one year from the date of
issuance thereof and issued by a bank or trust company organized under
the laws of the United States or of any state thereof having capital
surplus and undivided profits aggregating at least $400,000,000 and
being rated "A-" or better by S&P or "A-3" or better by Moody's;
(d) Repurchase Agreements;
(e) Municipal Obligations;
(f) Pre-Refunded Municipal Obligations;
(g) shares of mutual funds which invest in obligations described
in paragraphs (a) through (f) above, the shares of which mutual funds
are at all times rated "AAA" by S&P;
(h) tax-exempt or taxable adjustable rate preferred stock issued
by a Person having a rating of its long term unsecured debt of "A-" or
better by S&P or "A-3" or better by Moody's; and
(i) asset-backed remarketed certificates of participation
representing a fractional undivided interest in the assets of a trust,
which certificates are rated at least "A-1" by S&P and "P-1" by
Moody's.
"Employee Benefit Plan" means any employee benefit plan within the
meaning of Section 3(3) of ERISA which (i) is maintained for employees of
the Borrower or any of its ERISA Affiliates or is assumed by the Borrower
or any of its ERISA Affiliates in connection with any Acquisition or (ii)
has at any time been maintained for the employees of the Borrower or any
current or former ERISA Affiliate.
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"Environmental Laws" means any federal, state or local statute, law,
ordinance, code, rule, regulation, order, decree, permit or license
regulating, relating to, or imposing liability or standards of conduct
concerning, any environmental matters or conditions, environmental
protection or conservation, including without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended;
the Superfund Amendments and Reauthorization Act of 1986, as amended; the
Resource Conservation and Recovery Act, as amended; the Toxic Substances
Control Act, as amended; the Clean Air Act, as amended; the Clean Water
Act, as amended; together with all regulations promulgated thereunder, and
any other "Superfund" or "Superlien" law."
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute and all rules and
regulations promulgated thereunder.
"ERISA Affiliate", as applied to the Borrower, means any Person or
trade or business which is a member of a group which is under common
control with the Borrower, who together with the Borrower, is treated as a
single employer within the meaning of Section 414(b) and (c) of the Code.
"Euro Currency" means the official currency, if any, of the European
Union.
"Eurodollar Rate Loan" means Loans that bear interest at rates based
upon the Eurodollar Rate.
"Eurodollar Rate" means the interest rate per annum calculated
according to the following formula:
Eurodollar = Interbank Offered Rate + Applicable
Rate ----------------------- Margin
1 - Reserve Requirement
"Event of Default" means any of the occurrences set forth as such in
Section 10.1.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the regulations promulgated thereunder.
"Existing Letters of Credit" means those Letters of Credit issued by
NationsBank described on Schedule 1.1 hereto.
"Facility Guaranty" means each Guaranty and Suretyship Agreement
between one or more Guarantors and the Agent for the benefit of the
Lenders, delivered as of the Closing Date and otherwise pursuant to Section
8.19, as the same may be amended, modified or supplemented.
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<PAGE> 21
"Facility Termination Date" means the date on which the Revolving
Credit Termination Date shall have occurred, no Letters of Credit shall
remain outstanding and the Borrower shall have fully, finally and
irrevocably paid and satisfied all Obligations.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members
of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business
Day next succeeding such day; provided that (a) if such day is not a
Business Day, the Federal Funds Rate for such day shall be such rate on
such transactions on the next preceding Business Day as so published on the
next succeeding Business Day, and (b) if no such rate is so published on
such next succeeding Business Day, the Federal Funds Rate for such day
shall be the average rate charged to the Agent (in its individual capacity)
on such day on such transactions as determined by the Agent.
"Fiscal Year" means the twelve month fiscal period of the Borrower and
its Subsidiaries commencing on the Monday after the Sunday closest to the
calendar year end of each calendar year and ending on the Sunday closest to
the calendar year end of each calendar year.
"Floating CD Rate" means, for any CD Rate Loan, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) determined by
the Agent to be the average of the bid rates quoted to the Agent at
approximately 10:00 a.m. (or as soon thereafter as practicable) by two (2)
or more certificate of deposit dealers of recognized national standing
selected by the Agent for the purchase at face value of certificates of
deposit of the Agent having a term of ninety (90) days and in an amount
comparable to the principal amount of the CD Loan to be made by the Agent.
"Floating Rate Loan" means Base Rate Loans or CD Rate Loans or both.
"Foreign Benefit Law" means any applicable statute, law, ordinance,
code, rule, regulation, order or decree of any foreign nation or any
province, state, territory, protectorate or other political subdivision
thereof regulating, relating to, or imposing liability or standards of
conduct concerning, any Employee Benefit Plan.
"Four-Quarter Period" means a period of four full consecutive fiscal
quarters of the Borrower and its Subsidiaries, taken together as one
accounting period.
"Funding Bank" means any banking institution approved by the Agent
located within a country which country's currency has been approved by the
Lenders as an Alternative Currency.
"GAAP" or "Generally Accepted Accounting Principles" means generally
accepted accounting principles, being those principles of accounting set
forth in pronouncements of the Financial Accounting Standards Board, the
American Institute of Certified Public Accountants or which have other
substantial authoritative support and are applicable in the circumstances
as of the date of a report.
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<PAGE> 22
"Government Securities" means direct obligations of, or obligations
the timely payment of principal and interest on which are fully and
unconditionally guaranteed by, the United States of America.
"Governmental Authority" shall mean any Federal, state, municipal,
national or other governmental department, commission, board, bureau,
court, agency or instrumentality or political subdivision thereof or any
entity or officer exercising executive, legislative, judicial, regulatory
or administrative functions of or pertaining to any government or any
court, in each case whether associated with a state of the United States,
the United States, or a foreign entity or government.
"Guarantors" means, at any date, the Subsidiaries who are required to
be parties to a Facility Guaranty at such date.
"Hazardous Material" means and includes any pollutant, contaminant, or
hazardous, toxic or dangerous waste, substance or material (including
without limitation petroleum products, asbestos-containing materials and
lead), the generation, handling, storage, transportation, disposal,
treatment, release, discharge or emission of which is subject to any
Environmental Law.
"Indebtedness" means with respect to any Person, without duplication,
all Indebtedness for Money Borrowed, all indebtedness of such Person for
the acquisition of property or arising under Rate Hedging Obligations, all
indebtedness secured by any Lien on the property of such Person whether or
not such indebtedness is assumed, all liability of such Person by way of
endorsements (other than for collection or deposit in the ordinary course
of business), all Contingent Obligations, including letters of credit, that
portion of obligations with respect to Capital Leases and other items which
in accordance with GAAP is required to be classified as a liability on a
balance sheet; but excluding all accounts payable and accruals in the
ordinary course of business so long as payment therefor is due within one
year; provided that in no event shall the term Indebtedness include surplus
and retained earnings, lease obligations (other than pursuant to Capital
Leases), reserves for deferred income taxes and investment credits, other
deferred credits or reserves.
"Indebtedness for Money Borrowed" means with respect to any Person,
without duplication, all indebtedness in respect of money borrowed,
including without limitation all Capital Leases and the deferred purchase
price of any property or asset, evidenced by a promissory note, bond,
debenture or similar written obligation for the payment of money (including
conditional sales or similar title retention agreements), other than trade
payables and short-term accounts payable incurred in the ordinary course of
business.
"Interbank Offered Rate" means, for any Eurodollar Rate Loan for any
Interest Period therefor, the rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) appearing on Telerate Page 3750 (or
any successor page) as the London interbank offered
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<PAGE> 23
rate for deposits in Dollars at approximately 11:00 a.m. (London time) two
Business Days prior to the first day of such Interest Period for a term
comparable to such Interest Period. If for any reason such rate is not
available, the term "Eurodollar Rate" shall mean, for any Eurodollar Rate
Loan for any Interest Period therefor, the rate per annum (rounded upwards,
if necessary, to the nearest 1/100 of 1%) appearing on Reuters Screen LIBO
Page as the London interbank offered rate for deposits in Dollars at
approximately 11:00 a.m. (London time) two Business Days prior to the first
day of such Interest Period for a term comparable to such Interest Period;
provided, however, if more than one rate is specified on Reuters Screen
LIBO Page, the applicable rate shall be the arithmetic mean of all such
rates (rounded upwards, if necessary, to the nearest 1/100 of 1%).
"Interest Period" means, for each Eurodollar Rate Loan, a period
commencing on the date such Eurodollar Rate Loan is made or Converted and
ending, at the Borrower's option, on the date one, two, three or six months
and nine months, if available, thereafter as notified to the Agent by the
Authorized Representative three (3) Business Days prior to the beginning of
such Interest Period; provided, that,
(i) if the Authorized Representative fails to notify the Agent
of the length of an Interest Period three (3) Business Days prior to
the first day of such Interest Period, the Loan for which such
Interest Period was to be determined shall be deemed to be a Base Rate
Loan as of the first day thereof;
(ii) if an Interest Period for a Eurodollar Rate Loan would end
on a day which is not a Business Day, such Interest Period shall be
extended to the next Business Day (unless such extension would cause
the applicable Interest Period to end in the succeeding calendar
month, in which case such Interest Period shall end on the next
preceding Business Day);
(iii) any Interest Period which begins on the last Business Day
of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of a calendar month;
(iv) no Interest Period shall extend past the Stated Termination
Date; and
(v) there shall not be more than seven (7) Interest Periods in
effect on any day.
"Interest Rate Selection Notice" means the written notice delivered by
an Authorized Representative in connection with the election of a
subsequent Interest Period for any Eurodollar Rate Loan or the Conversion
of any Eurodollar Rate Loan into a Base Rate Loan or the Conversion of any
Base Rate Loan into a Eurodollar Rate Loan, in the form of Exhibit E.
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<PAGE> 24
"Issuing Bank" means initially NationsBank and thereafter any Lender
which is successor to NationsBank as issuer of Letters of Credit under
Article III.
"LC Account Agreement" means the LC Account Agreement dated as of the
date hereof between the Borrower and the Agent, as amended, modified or
supplemented from time to time.
"Letter of Credit" means a standby or commercial letter of credit
issued by the Issuing Bank for the account of the Borrower in favor of a
Person advancing credit or securing an obligation on behalf of the Borrower
including the Existing Letters of Credit.
"Letter of Credit Commitment" means, with respect to each Lender, the
obligation of such Lender to acquire Participations in respect of Letters
of Credit and Reimbursement Obligations up to an aggregate amount at any
one time outstanding equal to such Lender's Applicable Commitment
Percentage of the Total Letter of Credit Commitment as the same may be
increased or decreased from time to time pursuant to this Agreement.
"Letter of Credit Facility" means the facility described in Article
III hereof providing for the issuance by the Issuing Bank for the account
of the Borrower of Letters of Credit in an aggregate stated amount at any
time outstanding not exceeding the Total Letter of Credit Commitment.
"Letter of Credit Outstandings" means, as of any date of
determination, the aggregate amount remaining undrawn under all Letters of
Credit plus Reimbursement Obligations then outstanding.
"Lien" means any interest in property securing any obligation owed to,
or a claim by, a Person other than the owner of the property, whether such
interest is based on the common law, statute or contract, and including but
not limited to the lien or security interest arising from a mortgage,
encumbrance, pledge, security agreement, conditional sale or trust receipt
or a lease, consignment or bailment for security purposes. For the purposes
of this Agreement, the Borrower and any Subsidiary shall be deemed to be
the owner of any property which it has acquired or holds subject to a
conditional sale agreement, financing lease, or other arrangement pursuant
to which title to the property has been retained by or vested in some other
Person for security purposes.
"Loan" or "Loans" means any borrowing pursuant to an Advance under the
Revolving Credit Facility.
"Loan Documents" means this Agreement, the Notes, the Security
Instruments, the Facility Guaranties, the LC Account Agreement, the
Applications and Agreements for Letter of Credit, and all other instruments
and documents heretofore or hereafter executed or delivered to or in favor
of any Lender or the Agent in connection with the Loans made and
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transactions contemplated under this Agreement, as the same may be amended,
supplemented or replaced from time to time.
"Loan Parties" means the Borrower and the Guarantors.
"Material Adverse Effect" means a material adverse effect on (i) the
business, properties, operations or condition, financial or otherwise, of
the Borrower and any of its Subsidiaries, taken as a whole, (ii) the
ability of the Loan Parties to pay or perform their respective obligations,
liabilities and indebtedness under the Loan Documents as such payment or
performance becomes due in accordance with the terms thereof, or (iii) the
rights, powers and remedies of the Agent or any Lender under any Loan
Document or the validity, legality or enforceability thereof.
"Material Subsidiary" means Domestic Subsidiaries and Direct Foreign
Subsidiaries of Borrower existing on the Closing Date and in the case of
any Domestic Subsidiary or Direct Foreign Subsidiary acquired or created
after the Closing Date any direct or indirect Domestic Subsidiary or Direct
Foreign Subsidiary of the Borrower which (i) has total assets equal to or
greater than 5% of Consolidated Total Assets (calculated as of the most
recent fiscal period with respect to which the Agent shall have received
financial statements required to be delivered pursuant to Sections 9.01(a)
or (b) (or if prior to delivery of any financial statements pursuant to
such Sections, then calculated with respect to the Fiscal Year end
financial statements referred in Section 8.01(f) (the "Required Financial
Information")) or (ii) has revenues equal to or greater than 5% of total
revenues of the Borrower and its Subsidiaries (calculated for the most
recent period for which the Agent has received the Required Financial
Information); provided, however, that notwithstanding the foregoing, the
term "Material Subsidiaries" shall mean Domestic Subsidiaries and Direct
Foreign Subsidiaries of the Borrower that together with the Borrower have
assets equal to not less than 80% of Consolidated Total Assets (calculated
as described above) and revenues of not less than 80% of total revenues of
the Borrower and its Subsidiaries (calculated as described above); provided
further that if more than one combination of Domestic Subsidiaries and
Direct Foreign Subsidiaries satisfies such threshold, then those Domestic
Subsidiaries and Direct Foreign Subsidiaries determined by the Borrower to
be "Material Subsidiaries" shall be specified by the Borrower.
"Moody's" means Moody's Investors Service, Inc.
"Mortgage" means, collectively, all Mortgages, Deeds of Trust and
Deeds to Secure Debt granting a Lien to the Agent (or a trustee for the
benefit of the Agent) for the benefit of the Lenders in Collateral
constituting real property, as such documents may be amended, modified or
supplemented from time to time.
"Mortgage Properties" means the real property and improvements thereon
described in the Mortgage.
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"Multiemployer Plan" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate is
making, or is accruing an obligation to make, contributions or has made, or
been obligated to make, contributions within the preceding six (6) Fiscal
Years.
"Municipal Obligations" means general obligations issued by, and
supported by the full taxing authority of, any state of the United States
of America or of any municipal corporation or other public body organized
under the laws of any such state which are rated in the highest investment
rating category by both S&P and Moody's.
"NationsBank" means NationsBank, National Association.
"NMSI" means NationsBanc Montgomery Securities, Inc. and its
successors.
"Non-Recourse Indebtedness" means Indebtedness of a Special Purpose
Subsidiary the source of payment of which as it relates to such Special
Purpose Subsidiary is limited to the assets of such Special Purpose
Subsidiary or any other Special Purpose Subsidiary.
"Notes" means, collectively, the promissory notes of the Borrower
evidencing (i) Revolving Loans executed and delivered to the Lenders
substantially in the form of Exhibit F- 1, and (ii) Swing Line Loans
executed and delivered to the NationsBank substantially in the form of
Exhibit F-2.
"Obligations" means the obligations, liabilities and Indebtedness of
the Borrower with respect to (i) the principal and interest on the Loans as
evidenced by the Notes, (ii) the Reimbursement Obligations and otherwise in
respect of the Letters of Credit, (iii) all liabilities of Borrower to any
Lender which arise under a Swap Agreement, and (iii) the payment and
performance of all other obligations, liabilities and Indebtedness of the
Borrower to the Lenders, the Agent or NMSI hereunder, under any one or more
of the other Loan Documents or with respect to the Loans.
"Outstandings" means, collectively, at any date, the Letter of Credit
Outstandings, Swing Line Outstandings, and Revolving Credit Outstandings on
such date.
"Participation" means, (i) with respect to any Lender (other than the
Issuing Bank) and a Letter of Credit, the extension of credit represented
by the participation of such Lender hereunder in the liability of the
Issuing Bank in respect of a Letter of Credit issued by the Issuing Bank in
accordance with the terms hereof and (ii) with respect to any Lender (other
than NationsBank) and a Swing Line Loan, the extension of credit
represented by the participation of such Lender hereunder in the liability
of NationsBank in respect of a Swing Line Loan made by NationsBank in
accordance with the terms hereof.
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"PBGC" means the Pension Benefit Guaranty Corporation and any
successor thereto.
"Pension Plan" means any employee pension benefit plan within the
meaning of Section 3(2) of ERISA, other than a Multiemployer Plan, which is
subject to the provisions of Title IV of ERISA or Section 412 of the Code
and which (i) is maintained for employees of the Borrower or any of its
ERISA Affiliates or is assumed by the Borrower or any of its ERISA
Affiliates in connection with any Acquisition or (ii) has at any time been
maintained for the employees of the Borrower or any current or former ERISA
Affiliate.
"Person" means an individual, partnership, corporation, trust, limited
liability company, unincorporated organization, association, joint venture
or a government or agency or political subdivision thereof.
"Pledge Agreement" means a Pledge Agreement, Share Charge, Debenture
or similar instrument whereby the Borrower or Domestic Subsidiary creates a
security interest in favor of the Agent in 65% of the outstanding capital
stock of a Material Subsidiary that is a Direct Foreign Subsidiary.
"Pledged Stock" means the ownership interest in a Direct Foreign
Subsidiary which is pledged to the Agent pursuant to a Pledge Agreement.
"Pounds Sterling" means the official currency of the United Kingdom.
"Pre-Refunded Municipal Obligations" means obligations of any state of
the United States of America or of any municipal corporation or other
public body organized under the laws of any such state which are rated,
based on the escrow, in the highest investment rating category by both S&P
and Moody's and which have been irrevocably called for redemption and
advance refunded through the deposit in escrow of Government Securities or
other debt securities which are (i) not callable at the option of the
issuer thereof prior to maturity, (ii) irrevocably pledged solely to the
payment of all principal and interest on such obligations as the same
becomes due, and (iii) in a principal amount and bear such rate or rates of
interest as shall be sufficient to pay in full all principal of, interest,
and premium, if any, on such obligations as the same becomes due as
verified by a nationally recognized firm of certified public accountants.
"Prime Rate" means the per annum rate of interest established from
time to time by NationsBank as its prime rate, which rate may not be the
lowest rate of interest charged by NationsBank to its customers.
"Principal Office" means the principal office of NationsBank,
presently located at, Independence Center, 15th Floor, NC1 001-15-04,
Charlotte, North Carolina 28255, Attention: Agency Services.
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"Qualifying Property" means real property and the improvements to be
constructed thereon which is the subject of a valid, binding and
enforceable contract, lease or other arrangement in favor of the Borrower
or a Subsidiary whereby the Borrower or a Subsidiary shall operate such
property and the other party to such contract being a governmental agency
or instrumentality reasonably acceptable to the Agent.
"Rate Hedging Obligations" means any and all obligations of the
Borrower or any Subsidiary, whether absolute or contingent and howsoever
and whensoever created, arising, evidenced or acquired (including all
renewals, extensions and modifications thereof and substitutions therefor),
under (i) any and all agreements, devices or arrangements designed to
protect at least one of the parties thereto from the fluctuations of
interest rates, exchange rates or forward rates applicable to such party's
assets, liabilities or exchange transactions, including, but not limited
to, Dollar-denominated or cross-currency interest rate exchange agreements,
forward currency exchange agreements, interest rate cap or collar
protection agreements, forward rate currency or interest rate options,
puts, warrants and those commonly known as interest rate "swap" agreements;
and (ii) any and all cancellations, buybacks, reversals, terminations or
assignments of any of the foregoing.
"Regulation D" means Regulation D of the Board as the same may be
amended or supplemented from time to time.
"Reimbursement Obligation" shall mean at any time, the obligation of
the Borrower with respect to any Letter of Credit to reimburse the Issuing
Bank and the Lenders to the extent of their respective Participations
(including by the receipt by the Issuing Bank of proceeds of Loans pursuant
to Section 3.2) for amounts theretofore paid by the Issuing Bank pursuant
to a drawing under such Letter of Credit.
"REIT Event" means the date of the completion of the transfer of
income generating property and improvements of the Borrower or a Subsidiary
to a real estate investment trust.
"Repurchase Agreement" means a repurchase agreement entered into with
any financial institution whose debt obligations or commercial paper are
rated "A" by either of S&P or Moody's or "A-1" by S&P or "P-1" by Moody's.
"Required Lenders" means, as of any date, Lenders on such date having
Credit Exposures (as defined below) aggregating at least 51% of the
aggregate Credit Exposures of all Lenders on such date; provided, however,
that to the extent NationsBank has more than 51% of the aggregate Credit
Exposures, Required Lenders means Lenders on such date having Credit
Exposures of 80% of the aggregate Credit Exposures of all Lenders. For
purposes of the preceding sentence, the amount of the "Credit Exposure" of
each Lender shall be equal to the aggregate principal amount of the Loans
owing to such Lender plus the aggregate unutilized amounts of such Lender's
Revolving Credit Commitment (without regard to any Swing Line Outstandings)
plus the amount of such Lender's Applicable Commitment Percentage of Letter
of Credit Outstandings; provided that, (i) if any Lender
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shall have failed to pay to the Issuing Bank its Applicable Commitment
Percentage of any drawing under any Letter of Credit resulting in an
outstanding Reimbursement Obligation, such Lender's Credit Exposure
attributable to Letters of Credit and Reimbursement Obligations shall be
deemed to be held by the Issuing Bank for purposes of this definition and
(ii) if any Lender shall have failed to pay to NationsBank its Applicable
Commitment Percentage of any Swing Line Loan, such Lender's Credit Exposure
attributable to all Swing Line Outstandings shall be deemed to be held by
NationsBank for purposes of this definition.
"Reserve Requirement" means, at any time, the maximum rate at which
reserves (including, without limitation, any marginal, special,
supplemental, or emergency reserves) are required to be maintained under
regulations issued from time to time by the Board of Governors of the
Federal Reserve System (or any successor) by member banks of the Federal
Reserve System against (a) in the case of Eurodollar Rate Loans,
"Eurocurrency liabilities" (as such term is used in Regulation D) or (b) in
the case of CD Rate Loans, non-personal Dollar time deposits in an amount
of $100,000 or more. Without limiting the effect of the foregoing, the
Reserve Requirement shall reflect any other reserves required to be
maintained by such member banks with respect to (i) any category of
liabilities which includes deposits by reference to which the Eurodollar
Rate or CD Rate (as the case may be) is to be determined, or (ii) any
category of extensions of credit or other assets which include Eurodollar
Rate Loans or CD Rate Loans. The Eurodollar Rate and the CD Rate shall be
adjusted automatically on and as of the effective date of any change in the
Reserve Requirement.
"Restricted Payment" means (a) any dividend or other distribution,
direct or indirect, on account of any shares of any class of stock of
Borrower or any of its Subsidiaries (other than those payable or
distributable solely to the Borrower) now or hereafter outstanding, except
a dividend payable solely in shares of a class of stock to the holders of
that class; (b) any redemption, conversion, exchange, retirement or similar
payment, purchase or other acquisition for value, direct or indirect, of
any shares of any class of stock of Borrower or any of its Subsidiaries
(other than those payable or distributable solely to the Borrower) now or
hereafter outstanding; (c) any payment made to retire, or to obtain the
surrender of, any outstanding warrants, options or other rights to acquire
shares of any class of stock of Borrower or any of its Subsidiaries now or
hereafter outstanding; and (d) any issuance and sale of capital stock of
any Subsidiary of the Borrower (or any option, warrant or right to acquire
such stock) other than to the Borrower.
"Revolving Credit Commitment" means, with respect to each Lender, the
obligation of such Lender to make Revolving Loans to the Borrower up to an
aggregate principal amount at any one time outstanding equal to such
Lender's Applicable Commitment Percentage of the Total Revolving Credit
Commitment.
"Revolving Credit Facility" means the facility described in Article II
hereof providing for Loans to the Borrower by the Lenders in the aggregate
principal amount of the Total Revolving Credit Commitment.
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"Revolving Credit Outstandings" means, as of any date of
determination, the aggregate principal amount of all Revolving Loans made
pursuant to Section 2.1 then outstanding.
"Revolving Credit Termination Date" means (i) the Stated Termination
Date or (ii) such earlier date of termination of Lenders' obligations
pursuant to Section 10.1 upon the occurrence of an Event of Default, or
(iii) such date as the Borrower may voluntarily and permanently terminate
the Revolving Credit Facility by payment in full of all Revolving Credit
Outstandings, Swing Line Outstandings and Letter of Credit Outstandings and
cancellation of all Letters of Credit.
"Revolving Loan" means any borrowing pursuant to an Advance under the
Revolving Credit Facility in accordance with Article II.
"S&P" means Standard & Poor's Ratings Group, a division of
McGraw-Hill.
"Security Agreement" means, collectively (or individually as the
context may indicate), (i) the Security Agreement dated as of the date
hereof by the Borrower and Guarantors to the Agent, and (ii) any additional
Security Agreement delivered to the Agent pursuant to Section 8.19, as
hereafter modified, amended or restated from time to time.
"Security Instruments" means, collectively, the Pledge Agreement, the
Security Agreement, the Mortgage, and all other agreements, instruments and
other documents, whether now existing or hereafter in effect, pursuant to
which the Borrower or any Subsidiary shall grant or convey to the Agent or
the Lenders a Lien in property as security for all or any portion of the
Obligations, as any of them may be amended, modified or restated from time
to time.
"Single Employer Plan" means any employee pension benefit plan covered
by Title IV of ERISA in respect of which the Borrower or any Subsidiary is
an "employer" as described in Section 4001(b) of ERISA and which is not a
Multiemployer Plan.
"Solvent" means, when used with respect to any Person, that at the
time of determination:
(i) the fair value of its assets (both at fair valuation and at
present fair saleable value on an orderly basis) is in excess of the
total amount of its liabilities, including Contingent Obligations; and
(ii) it is then able and expects to be able to pay its debts as
they mature; and
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(iii) it has capital sufficient to carry on its business as
conducted and as proposed to be conducted.
"Special Purpose Subsidiary" means a Subsidiary of the Borrower or
another Subsidiary no portion of whose obligations or liabilities are
payable, directly or indirectly by the Borrower or any other Subsidiary.
"Spot Rate of Exchange" means (i) in determining the Dollar Equivalent
Amount of a specified Alternative Currency amount as of any date, the spot
exchange rate determined by the Agent in accordance with its usual
procedures for the purchase by the Agent of Dollars with such Alternative
Currency at approximately 10:00 A.M. on the business Day that is two (2)
Business Days prior to such date, and (ii) in determining the Alternative
Currency Equivalent Amount of a specified Dollar amount on any date, the
spot exchange rate determined by the Agent in accordance with its usual
procedures for the purchase by the Agent of such Alternative Currency with
Dollars at approximately 10:00 A.M. on the Business Day that is two (2)
Business Days prior to such date.
"Stated Termination Date" means December 18, 2002 or such later date
as the parties may agree pursuant to Section 2.13.
"Subordinated Indebtedness" means Indebtedness subordinated to the
Obligations in accordance with such subordination terms as shall be
acceptable to the Required Lenders and other terms which are reasonably
acceptable to the Required Lenders.
"Subsidiary" means any corporation or other entity, other than a
Special Purpose Subsidiary, in which more than 50% of its outstanding
voting stock or more than 50% of all equity interests is owned directly or
indirectly by the Borrower and/or by one or more of the Borrower's
Subsidiaries.
"Swap Agreement" means one or more agreements between the Borrower and
any Person with respect to Indebtedness evidenced by any or all of the
Notes, on terms mutually acceptable to Borrower and such Person and
approved by the Agent, which agreements create Rate Hedging Obligations;
provided, however, that no such approval of the Agent shall be required to
the extent such agreements are entered into between the Borrower and any
Lender.
"Swing Line" means the revolving line of credit established by
NationsBank in favor of the Borrower pursuant to Section 2.14.
"Swing Line Loans" means loans made by NationsBank to the Borrower
pursuant to Section 2.14.
"Swing Line Outstandings" means, as of any date of determination, the
aggregate principal amount of all Swing Line Loans then outstanding.
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"Termination Event" means: (i) a "Reportable Event" described in
Section 4043 of ERISA and the regulations issued thereunder (unless the
notice requirement has been waived by applicable regulation); or (ii) the
withdrawal of the Borrower or any ERISA Affiliate from a Pension Plan
during a plan year in which it was a "substantial employer" as defined in
Section 4001(a)(2) of ERISA or was deemed such under Section 4068(f) of
ERISA; or (iii) the termination of a Pension Plan, the filing of a notice
of intent to terminate a Pension Plan or the treatment of a Pension Plan
amendment as a termination under Section 4041 of ERISA; or (iv) the
institution of proceedings to terminate a Pension Plan by the PBGC; or (v)
any other event or condition which would constitute grounds under Section
4042(a) of ERISA for the termination of, or the appointment of a trustee to
administer, any Pension Plan; or (vi) the partial or complete withdrawal of
the Borrower or any ERISA Affiliate from a Multiemployer Plan; or (vii) the
imposition of a Lien pursuant to Section 412 of the Code or Section 302 of
ERISA; or (viii) any event or condition which results in the reorganization
or insolvency of a Multiemployer Plan under Section 4241 or Section 4245 of
ERISA, respectively; or (ix) any event or condition which results in the
termination of a Multiemployer Plan under Section 4041A of ERISA or the
institution by the PBGC of proceedings to terminate a Multiemployer Plan
under Section 4042 of ERISA.
"Total Letter of Credit Commitment" means an amount not to exceed
$5,000,000.
"Total Revolving Credit Commitment" means a principal amount equal to
$30,000,000, as reduced from time to time in accordance with Section 2.7.
"TROL Indebtedness" means the aggregate amount of liabilities
(including obligations to purchase or repurchase or other Contingent
Obligations) arising under TROL Leases.
"TROL Leases" means all tax retention operating lease agreements
between the Borrower or any Subsidiary, as Lessee, and First Security Bank,
N.A., as Lessor, as amended, supplemented or modified from time to time.
"Type" shall mean any type of Loan (i.e., a Base Rate Loan, CD Rate
Loan, or Eurodollar Rate Loan).
"Voting Stock" means shares of capital stock issued by a corporation,
or equivalent interests in any other Person, the holders of which are
ordinarily, in the absence of contingencies, entitled to vote for the
election of directors (or persons performing similar functions) of such
Person, even if the right so to vote has been suspended by the happening of
such a contingency.
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1.3. Rules of Interpretation.
(a) All accounting terms not specifically defined herein shall have
the meanings assigned to such terms and shall be interpreted in accordance
with GAAP applied on a Consistent Basis.
(b) Each term defined in Article 1 or 9 of the Florida Uniform
Commercial Code shall have the meaning given therein unless otherwise
defined herein, except to the extent that the Uniform Commercial Code of
another jurisdiction is controlling, in which case such terms shall have
the meaning given in the Uniform Commercial Code of the applicable
jurisdiction.
(c) The headings, subheadings and table of contents used herein or in
any other Loan Document are solely for convenience of reference and shall
not constitute a part of any such document or affect the meaning,
construction or effect of any provision thereof.
(d) Except as otherwise expressly provided, references herein to
articles, sections, paragraphs, clauses, annexes, appendices, exhibits and
schedules are references to articles, sections, paragraphs, clauses,
annexes, appendices, exhibits and schedules in or to this Agreement.
(e) All definitions set forth herein or in any other Loan Document
shall apply to the singular as well as the plural form of such defined
term, and all references to the masculine gender shall include reference to
the feminine or neuter gender, and vice versa, as the context may require.
(f) used herein or in any other Loan Document, words such as
"hereunder", "hereto", "hereof" and "herein" and other words of like import
shall, unless the context clearly indicates to the contrary, refer to the
whole of the applicable document and not to any particular article,
section, subsection, paragraph or clause thereof.
(g) References to "including" means including without limiting the
generality of any description preceding such term, and for purposes hereof
the rule of ejusdem generis shall not be applicable to limit a general
statement, followed by or referable to an enumeration of specific matters,
to matters similar to those specifically mentioned.
(h) All dates and times of day specified herein shall refer to such
dates and times at Charlotte, North Carolina.
(i) Each of the parties to the Loan Documents and their counsel have
reviewed and revised, or requested (or had the opportunity to request)
revisions to, the Loan Documents, and any rule of construction that
ambiguities are to be resolved against the drafting party shall be
inapplicable in the construing and interpretation of the Loan Documents and
all exhibits, schedules and appendices thereto.
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(j) Any reference to an officer of the Borrower or any other Person by
reference to the title of such officer shall be deemed to refer to each
other officer of such Person, however titled, exercising the same or
substantially similar functions.
(k) All references to any agreement or document as amended, modified
or supplemented, or words of similar effect, shall mean such document or
agreement, as the case may be, as amended, modified or supplemented from
time to time only as and to the extent permitted therein and in the Loan
Documents.
1.4. Accounting Principles. Unless the context otherwise clearly requires,
all accounting terms not expressly defined herein shall be construed, and all
financial computations required under this Agreement shall be made, in
accordance with GAAP, consistently applied as utilized by the Borrower. If any
change after the Closing Date in GAAP as in effect on the Closing Date shall
result in a change in any calculation required to determine compliance with any
provision contained in this Agreement, the Borrower and the Required Lenders
will negotiate in good faith to amend such provision in a manner to reflect such
change such that the determination of compliance with such provision shall yield
the same substantive result as would have obtained prior to such change in GAAP.
Until such an amendment is entered into, covenants shall be calculated in
accordance with GAAP as in effect immediately preceding such change.
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ARTICLE II
The Revolving Credit Facility
2.1 Revolving Loans.
(a) Commitment. Subject to the terms and conditions of this Agreement, each
Lender severally agrees to make Advances in Dollars or an Alternative Currency
(as specified in the respective Borrowing Notice) to the Borrower under the
Revolving Credit Facility from time to time from the Closing Date until the
Revolving Credit Termination Date on a pro rata basis as to the total borrowing
requested by the Borrower on any day determined by such Lender's Applicable
Commitment Percentage up to but not exceeding a Dollar Value equal to the
Revolving Credit Commitment of such Lender, provided, however, that the Lenders
will not be required and shall have no obligation to make any such Advance (i)
so long as a Default or an Event of Default has occurred and is continuing or
(ii) if the Agent has accelerated the maturity of any of the Notes as a result
of an Event of Default; provided further, however, that immediately after giving
effect to each such Advance, the Dollar Value of the principal amount of
Revolving Credit Outstandings plus Letter of Credit Outstandings plus Swing Line
Outstandings shall not exceed the Total Revolving Credit Commitment. Within such
limits, the Borrower may borrow, repay and reborrow under the Revolving Credit
Facility on a Business Day from the Closing Date until, but (as to borrowings
and reborrowings) not including, the Revolving Credit Termination Date;
provided, however, that (y) no Eurodollar Rate Loan shall be made which has an
Interest Period that extends beyond the Stated Termination Date and (z) each
Eurodollar Rate Loan may, subject to the provisions of Section 2.7, be repaid
only on the last day of the Interest Period with respect thereto unless such
payment is accompanied by the additional payment, if any, required by Section
5.5. The Borrower agrees that if at any time the Outstandings shall exceed the
Total Revolving Credit Commitment, the Borrower shall immediately reduce the
outstanding principal amount of the Loans such that, as a result of such
reduction, the Outstandings shall not exceed the Total Revolving Credit
Commitment.
(b) Amounts. (i) Each request for an Advance of an Alternative Currency
under a Borrowing Notice shall constitute the Borrower's request for a Loan of
the Dollar Value of the amount of the Alternative Currency specified in such
Borrowing Notice and for such Loan to be made available by the Lenders to the
Borrower in the Alternative Currency Equivalent Amount of such Dollar Value
(determined based on the Advance Date Exchange Rate applicable to such Advance).
The principal amount outstanding on any Loan shall be recorded in the Agent's
records in Dollars (in the case of an Advance of an Alternative Currency as if
the Loan had initially been made in Dollars), based on the amount of any
Eurodollar Rate Loan Advance and on the Dollar Value of the initial Advance of
an Alternative Currency, as reduced from time to time by the Dollar Equivalent
Amount (based on the Advance Date Exchange Rate applicable to such Advance) of
any principal payments with respect to such Advance. Advances in an Alternative
Currency shall be limited to Eurodollar Rate Loans. In the event a Eurodollar
Rate Loan of an Alternative Currency is Continued, such election to Continue the
Eurodollar Rate Loan shall be treated as an Advance and the Agent shall notify
the Borrower and the Lenders of the Advance Date Exchange Rate, Interest
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<PAGE> 36
Period and the Eurodollar Rate for such Continued Eurodollar Rate Loan. The
Lenders shall each be deemed to have made an Advance to the Borrower of its
Applicable Commitment Percentage of such Loan of an Alternative Currency and the
Agent shall apply the Advance Date Exchange Rate for such new Interest Period to
such Continued Alternative Currency Equivalent Amount to determine the new
Dollar Value of such Eurodollar Rate Loan and shall adjust its books and the
Revolving Credit Outstandings. In the event that such adjustment with respect to
a Continued Loan would cause the total Dollar Value of Outstandings to exceed
the Total Revolving Credit Commitment, the Borrower shall, immediately on the
effective date of such Continuation, repay (a "Rate Adjustment Payment") the
portion of such Continued Loan (applying the new Advance Date Exchange Rate)
necessary to ensure that the total Dollar Value of all Outstandings does not
exceed the Total Revolving Credit Commitment, provided, however, that the
Borrower shall not be required to pay any additional compensation pursuant to
Section 5.5 with respect to a prepayment of a Loan required by this sentence if
such prepayment is made immediately on the effective date of the Continuation
giving rise to such prepayment and no notice of such prepayment shall be
required. For the purposes of determining the maximum amount of Outstandings
hereunder, it is intended by the parties that all Loans shall be the functional
equivalent of Loans made and repaid (based on the applicable Advance Date
Exchange Rate for each Advance) in Dollars. It is recognized that one or more
Lenders may elect to record Loans or Advances in Alternative Currencies. The
Agent shall maintain records sufficient to identify at any time, (A) the Advance
Date Exchange Rate with respect to each Advance, and (B) the portion of the
Revolving Credit Outstanding attributable to each Advance.
(ii) Except as otherwise permitted by the Lenders from time to time, the
aggregate unpaid principal amount (including with respect to Loans of
Alternative Currencies the total Dollar Value) of the Revolving Credit
Outstandings plus Letter of Credit Outstandings plus Swing Line Outstandings
shall not exceed at any time the Total Revolving Credit Commitment, and, in the
event there shall be outstanding any such excess, the Borrower shall immediately
make such payments and prepayments as shall be necessary to comply with this
restriction. Each Loan hereunder, other than Base Rate Refunding Loans, and each
Conversion under Section 2.8, shall be (A) in the case of Loans made in Dollars,
in an amount of at least $2,000,000, and, if greater than $2,000,000, an
integral multiple of $100,000, and (B) in the case of Loans made in an
Alternative Currency, in an amount of at least $2,000,000 (or the equivalent
thereof in any Alternative Currency), and, if greater than $2,000,000, an
integral multiple of $100,000 (or the equivalent thereof if in any Alternative
Currency).
(c) Advances and Rate Selection. (i) An Authorized Representative shall
give the Agent (A) at least three (3) Business Days' irrevocable written notice
by telefacsimile transmission of a Borrowing Notice or Interest Rate Selection
Notice (as applicable) with appropriate insertions, effective upon receipt, of
each Eurodollar Rate Loan (whether representing an additional borrowing
hereunder or the Conversion of a borrowing hereunder) prior to 11:00 A.M. and
(B) irrevocable written notice by telefacsimile transmission of a Borrowing
Notice or Interest Rate Selection Notice (as applicable) with appropriate
insertions, effective upon receipt, of each Revolving Loan (other than Base Rate
Refunding Loans to the extent the same are effected without notice pursuant to
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Section 2.1(c)(iv)) that is a Base Rate Loan (whether representing an additional
borrowing hereunder or the Conversion of borrowing hereunder) prior to 11:00
A.M. on the day of such proposed Base Rate Loan. Each such notice shall specify
the amount of the borrowing, whether Dollar or Alternative Currency, the type of
Loan (Base Rate or Eurodollar Rate), the date of borrowing and, if a Eurodollar
Rate Loan, the Interest Period to be used in the computation of interest. Notice
of receipt of such Borrowing Notice or Interest Rate Selection Notice, as the
case may be, together with the amount of each Lender's portion of an Advance
requested thereunder, shall be promptly provided by the Agent to each Lender by
telefacsimile transmission, but (provided the Agent shall have received such
notice by 11:00 A.M.) not later than 1:00 P.M. on the same day as the Agent's
receipt of such notice. At approximately 10:00 A.M. two (2) Business Days
preceding the date specified for an Advance of an Alternative Currency, the
Agent shall determine the Advance Date Exchange Rate and the applicable
Eurodollar Rate. Not later than 10:45 A.M. two (2) Business Days preceding the
date specified for each Advance of an Alternative Currency, the Agent shall
provide the Borrower and each Lender notice by telefacsimile transmission of the
Advance Date Exchange Rate applicable to such Advance, and the applicable
Alternative Currency Equivalent Amount of the Loan or Loans required to be made
by each Lender on such date, and the Dollar Value of such Loan or Loans and the
applicable Eurodollar Rate.
(ii) (A) In the case of Advances in Dollars, not later than 2:00 P.M. on
the date specified for each borrowing under this Section 2.1, each Lender
shall, pursuant to the terms and subject to the conditions of this
Agreement, make the amount of the Advance or Advances to be made by it on
such day available by wire transfer to the Agent in the amount of its pro
rata share, determined according to such Lender's Applicable Commitment
Percentage of the Revolving Loan or Revolving Loans to be made on such day.
Such wire transfer shall be directed to the Agent at the Principal Office
and shall be in the form of Dollars constituting immediately available
funds. The amount so received by the Agent shall, subject to the terms and
conditions of this Agreement, be made available to the Borrower by delivery
of the proceeds thereof to the Borrower's Account or otherwise as shall be
directed in the applicable Borrowing Notice by the Authorized
Representative and reasonably acceptable to the Agent.
(B) In the case of Advances of an Alternative Currency, not later than
10:00 A.M. on the date specified for each Advance, each Lender shall,
pursuant to the terms and subject to the conditions of this Agreement, make
the amount of the Loan or Loans to be made by it on such day available to
the Borrower at the Funding Bank, to the account of the Agent with the
Funding Bank. The amount so received by the Funding Bank shall, subject to
the terms and conditions of the Loan Documents and upon instruction from
the Agent to the Funding Bank on the same day or immediately preceding day
but no later than 10:00 A.M., be made available to the Borrower by delivery
of the Alternative Currency Equivalent Amount to the Borrower's account
with the Funding Bank.
(iii) The Borrower shall have the option to elect the duration of the
initial and any subsequent Interest Periods and to Convert the Loans in
accordance with Section 2.8. Eurodollar Rate Loans and Base Rate Loans may be
outstanding at the same time, provided, however, there shall not be outstanding
at any one time Eurodollar Rate Loans having more than seven (7) different
Interest Periods. If the Agent does not receive a Borrowing Notice or an
Interest Rate Selection
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Notice giving notice of election of the duration of an Interest Period or of
Conversion of any Loan to or Continuation of a Loan as a Eurodollar Rate Loan by
the time prescribed by Section 2.1(c) or 2.8, the Borrower shall be deemed to
have elected to Convert such Loans to (or continue such Loan as) a Base Rate
Loan until the Borrower notifies the Agent in accordance with Section 2.8.
(iv) Notwithstanding the foregoing, if a drawing is made under any Letter
of Credit, such drawing is honored by the Issuing Bank prior to the Stated
Termination Date, and the Borrower shall not immediately fully reimburse the
Issuing Bank in respect of such drawing, (A) provided that the conditions to
making a Loan as herein provided shall then be satisfied, the Reimbursement
Obligation arising from such drawing shall be paid to the Issuing Bank by the
Agent without the requirement of notice to or from the Borrower from immediately
available funds which shall be advanced as a Base Rate Refunding Loan by each
Lender under the Revolving Credit Facility in an amount equal to such Lender's
Applicable Commitment Percentage of such Reimbursement Obligation, and (B) if
the conditions to making a Revolving Loan as herein provided shall not then be
satisfied, each of the Lenders shall fund by payment to the Agent (for the
benefit of the Issuing Bank) in immediately available funds the purchase from
the Issuing Bank of their respective Participations in the related Reimbursement
Obligation based on their respective Applicable Commitment Percentages of the
Total Letter of Credit Commitment. If a drawing is presented under any Letter of
Credit in accordance with the terms thereof and the Borrower shall not
immediately reimburse the Issuing Bank in respect thereof, then notice of such
drawing or payment shall be provided promptly by the Issuing Bank to the Agent
and the Agent shall promptly provide notice to each Lender by telephone or
telefacsimile transmission. If notice to the Lenders of a drawing under any
Letter of Credit is given by the Agent at or before 12:00 noon on any Business
Day, each Lender shall, pursuant to the conditions specified in this Section
2.1(c)(iv), either make a Base Rate Refunding Loan or fund the purchase of its
Participation in the amount of such Lender's Applicable Commitment Percentage of
such drawing or payment and shall pay such amount to the Agent for the account
of the Issuing Bank at the Principal Office in Dollars and in immediately
available funds before 2:30 P.M. on the same Business Day. If notice to the
Lenders of a drawing under a Letter of Credit is given by the Agent after 12:00
noon on any Business Day, each Lender shall, pursuant to the conditions
specified in this Section 2.1(c)(iv), either make a Base Rate Refunding Loan or
fund the purchase of its Participation in the amount of such Lender's Applicable
Commitment Percentage of such drawing or payment and shall pay such amount to
the Agent for the account of the Issuing Bank at the Principal Office in Dollars
and in immediately available funds before 12:00 noon on the next following
Business Day. Any such Base Rate Refunding Loan shall be advanced as, and shall
continue as, a Base Rate Loan unless and until the Borrower Converts such Base
Rate Loan in accordance with the terms of Section 2.8.
(d) Availability of Alternative Currency. If any Lender shall notify
the Borrower and the Agent of its election not to fund in any Alternative
Currency in accordance with the terms of this Agreement on or prior to two (2)
Business Days preceding the first day of an Interest Period for which a
Borrowing Notice or an Interest Rate Selection Notice, as the case may be, has
been delivered to the Agent requesting an Advance in an Alternative Currency or
a Continuation or Conversion of an Advance in an Alternative Currency, then such
Lender shall be obligated to fund the requested Advance, Continuation or
Conversion, as the case may be, in the Dollar Equivalent
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Amount of the amount of the Alternative Currency specified in such Borrowing
Notice or Interest Rate Selection Notice and at the Eurodollar Rate specified by
the Agent for such request.
2.2. Payment of Interest. (a) The Borrower shall pay interest to the Agent
for the account of each Lender on the outstanding and unpaid principal amount of
each Revolving Loan made by such Lender for the period commencing on the date of
such Revolving Loan until such Revolving Loan shall be due (i) in the case of
Loans made in Dollars, at the then applicable Base Rate for Base Rate Loans or
applicable Eurodollar Rate for Eurodollar Rate Loans, as designated by the
Authorized Representative pursuant to Section 2.1, such payments to be made in
Dollars, and (ii) in the case of Loans made in Alternative Currencies, at the
applicable Eurodollar Rate, such payments to be made in the appropriate
Alternative Currency; provided, however, that if any amount shall not be paid
when due (at maturity, by acceleration or otherwise), all amounts outstanding
hereunder shall bear interest thereafter at the Default Rate.
(b) Interest on each Revolving Loan shall be computed on the basis of a
year of 360 days and calculated in each case for the actual number of days
elapsed. Interest on each Revolving Loan shall be paid (i) quarterly in arrears
on the last Business Day of each March, June, September and December, commencing
December 31, 1997 for each Base Rate Loan, (ii) on the last day of the
applicable Interest Period for each Eurodollar Rate Loan and, if such Interest
Period extends for more than three (3) months, at intervals of three (3) months
after the first day of such Interest Period, and (iii) upon payment in full of
the principal amount of such Revolving Loan.
2.3. Payment of Principal. The principal amount of the Revolving Credit
Outstandings shall be due and payable to the Agent for the benefit of each
Lender in full on the Revolving Credit Termination Date, or earlier as
specifically provided herein. Such principal amount shall be recorded in Dollars
as set forth in Section 2.1. The repayment of such principal amount shall be
made in the in Dollars if the Revolving Loan was made in Dollars or in the
appropriate Alternative Currency, if made in an Alternative Currency, as
follows: the portion of the Revolving Credit Outstandings attributable to each
specified Advance (or the Continuation or Conversion thereof) (as determined
from the Agent's records) shall be repaid in the same Alternative Currency as
such Advance. The principal amount of any Base Rate Loan may be prepaid in
Dollars in whole or in part at any time. The principal amount of any Eurodollar
Rate Loan may be prepaid only at the end of the applicable Interest Period
unless the Borrower shall pay to the Agent for the account of the Lenders the
additional amount, if any, required under Section 5.5. All prepayments of
Revolving Loans made by the Borrower shall be in the amount of $1,000,000 (or
the equivalent thereof in any Alternative Currency) or such greater amount which
is an integral multiple of $100,000 (or the equivalent thereof in any
Alternative Currency), or the amount equal to all Revolving Credit Outstandings,
or such other amount as necessary to comply with Section 2.1(b) or Section 2.8.
2.4. Non-Conforming Payments. (a) Each payment of principal (including any
prepayment) and payment of interest and fees, and any other amount required to
be paid to the Lenders with respect to the Revolving Loans, shall be made to the
Agent at the Principal Office, for the account of each Lender, in Dollars in the
case Loans made in Dollars and in the same Alternative
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Currency in the case of Loans made in Alternative Currencies, in immediately
available funds before 12:30 P.M. on the date such payment is due. The Borrower
shall give the Agent one (1) Business Days prior written notice of any payment
of principal, such notice to be given prior to 10:00 A.M. and to specify (i) the
date the payment will be made and (ii) the Loan to which payment relates. The
Agent may, at the election of the Borrower, but shall not be obligated to, debit
the amount of any such payment which is not made by such time to any ordinary
deposit account, if any, of the Borrower with the Agent.
(b) The Agent shall deem any payment made by or on behalf of the Borrower
hereunder that is not made both (i) in Dollars in the case of Loans made in
Dollars and in the required Alternative Currency in the case of Loans made in
Alternative Currencies in immediately available funds and (ii) prior to 12:30
P.M. on the date payment is due to be a non-conforming payment. Any such payment
shall not be deemed to be received by the Agent until the later of (i) the time
such funds become available funds and (ii) the next Business Day. Any
non-conforming payment may constitute or become a Default or Event of Default at
the determination of the Agent. The Agent shall give prompt telephonic or
telefacsimile notice to the Borrower if a non-conforming payment constitutes a
Default or an Event of Default. Interest shall continue to accrue on any
principal as to which a non-conforming payment is made until the later of (x)
the date such funds become available funds or (y) the next Business Day at the
Default Rate from the date such amount was due and payable.
(c) In the event that any payment hereunder or under the Notes becomes due
and payable on a day other than a Business Day, then such due date shall be
extended to the next succeeding Business Day unless provided otherwise under
clause (ii) of the definition of "Interest Period"; provided that interest shall
continue to accrue during the period of any such extension and provided further,
that in no event shall any such due date be extended beyond the Revolving Credit
Termination Date.
2.5. Notes. Revolving Loans made by each Lender shall be evidenced by Notes
in substantially the form set forth as Exhibit F-1 payable to the order of such
Lender in the respective amount of its Applicable Commitment Percentage of the
Revolving Credit Commitment, which Note shall be dated the Closing Date or a
later date pursuant to an Assignment and Acceptance and shall be duly completed,
executed and delivered by the Borrower. Swing Line Loans made by NationsBank
shall be evidenced by a Note in substantially the form as set forth as Exhibit
F-2 payable to the order of NationsBank.
2.6. Pro Rata Payments. Except as otherwise provided herein, (a) each
payment on account of the principal of and interest on the Revolving Loans and
the fees described in Section 2.10 shall be made to the Agent for the account of
the Lenders pro rata based on their Applicable Commitment Percentages, (b) all
payments to be made by the Borrower for the account of each of the Lenders on
account of principal, interest and fees, shall be made without diminution,
setoff, recoupment or counterclaim, and (c) the Agent will promptly distribute
to the Lenders in
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immediately available funds payments received in fully collected, immediately
available funds from the Borrower.
2.7. Reductions. The Borrower shall, by notice from an Authorized
Representative, have the right from time to time but not more frequently than
once each calendar month, upon not less than three (3) Business Days' written
notice to the Agent, effective upon receipt, to reduce the Total Revolving
Credit Commitment. The Agent shall give each Lender, within one (1) Business Day
of receipt of such notice, telefacsimile notice, or telephonic notice (confirmed
in writing), of such reduction. Each such reduction shall be in the aggregate
amount of $5,000,000 or such greater amount which is in an integral multiple of
$1,000,000, or the entire remaining Total Revolving Credit Commitment, and shall
permanently reduce the Total Revolving Credit Commitment. Each reduction of the
Total Revolving Credit Commitment shall be accompanied by payment of the
Revolving Loans to the extent that the principal amount of Revolving Credit
Outstandings plus Letter of Credit Outstandings plus Swing Line Outstandings
exceeds the Total Revolving Credit Commitment after giving effect to such
reduction, together with accrued and unpaid interest on the amounts prepaid. No
such reduction shall result in the payment of any Eurodollar Rate Loan other
than on the last day of the Interest Period of such Eurodollar Rate Loan unless
such prepayment is accompanied by amounts due, if any, under Section 5.5.
2.8. Conversions and Elections of Subsequent Interest Periods. Provided
that no Default or Event of Default shall have occurred and be continuing and
subject to the limitations set forth below and in Article V, the Borrower may:
(a) upon delivery, effective upon receipt, of a properly completed Interest
Rate Selection Notice to the Agent on or before 10:30 A.M. on any Business Day,
Convert all or a part of Eurodollar Rate Loans to Base Rate Loans on the last
day of the Interest Period for such Eurodollar Rate Loans; and
(b) upon delivery, effective upon receipt, of a properly completed Interest
Rate Selection Notice to the Agent on or before 11:00 A.M. three (3) Business
Days' prior to the date of such election or Conversion:
(i) elect a subsequent Interest Period for all or a portion of
Eurodollar Rate Loans to begin on the last day of the then current
Interest Period for such Eurodollar Rate Loans; and
(ii) Convert Base Rate Loans to Eurodollar Rate Loans on any
Business Day;
(iii) elect that any Eurodollar Rate Loan be converted from an
Alternative Currency into another Alternative Currency on the last day
of the Interest Period for any Eurodollar Rate Loan.
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Each election and Conversion pursuant to this Section 2.8 shall be subject
to the limitations on Eurodollar Rate Loans set forth in the definition of
"Interest Period" herein and in Sections 2.1, 2.3 and Article V. The Agent shall
give written notice to each Lender of such notice of election or Conversion
prior to 3:00 P.M. on the day such notice of election or Conversion is received.
All such Continuations or Conversions of Loans shall be effected pro rata based
on the Applicable Commitment Percentages of the Lenders.
2.9. Increase and Decrease in Amounts. The amount of the Total Revolving
Credit Commitment which shall be available to the Borrower as Advances shall be
reduced by the aggregate amount of Outstanding Letters of Credit and Outstanding
Swing Line Loans.
2.10. Facility Fees.
Unused Fee. For the period beginning on the Closing Date and ending on the
Revolving Credit Termination Date, the Borrower agrees to pay to the Agent, for
the pro rata benefit of the Lenders based on their Applicable Commitment
Percentages, an unused fee equal to the Applicable Unused Fee multiplied by the
average daily amount by which the Total Revolving Credit Commitment exceeds the
sum of (i) Revolving Credit Outstandings without giving effect to Swing Line
Outstandings plus (ii) Letter of Credit Outstandings. Such fees shall be due in
arrears on the last Business Day of each March, June, September and December
commencing December 31, 1997 to the Revolving Credit Termination Date (but
excluding such day for the purpose of computing such fee). Notwithstanding the
foregoing, so long as any Lender fails to make available any portion of its
Revolving Credit Commitment when requested, such Lender shall not be entitled to
receive payment of its pro rata share of such fee until such Lender shall make
available such portion. Such fee shall be calculated on the basis of a year of
360 days for the actual number of days elapsed.
2.11. Deficiency Advances. No Lender shall be responsible for any default
of any other Lender in respect to such other Lender's obligation to make any
Loan or fund its purchase of any Participation hereunder nor shall the Revolving
Credit Commitment of any Lender hereunder be increased as a result of such
default of any other Lender. Without limiting the generality of the foregoing,
in the event any Lender shall fail to advance funds to the Borrower as herein
provided, the Agent may in its discretion, but shall not be obligated to,
advance under the Note in its favor as a Lender all or any portion of such
amount or amounts (each, a "deficiency advance") and shall thereafter be
entitled to payments of principal of and interest on such deficiency advance in
the same manner and at the same interest rate or rates to which such other
Lender would have been entitled had it made such advance under its Note;
provided that, upon payment to the Agent from such other Lender of the entire
outstanding amount of each such deficiency advance, together with accrued and
unpaid interest thereon, from the most recent date or dates interest was paid to
the Agent by the Borrower on each Revolving Loan comprising the deficiency
advance at the interest rate per annum for overnight borrowing by the Agent from
the Federal Reserve Bank, then such payment shall be credited against the
applicable Note of the Agent in full payment of such deficiency advance and the
Borrower shall be deemed to have borrowed the amount of such deficiency advance
from such other
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Lender as of the most recent date or dates, as the case may be, upon which any
payments of interest were made by the Borrower thereon.
2.12. Use of Proceeds. The proceeds of the Loans made pursuant to the
Revolving Credit Facility hereunder shall be used by the Borrower to repay
Indebtedness under the Existing Agreement, for general working capital needs and
other corporate purposes, including the making of Acquisitions and Capital
Expenditures permitted hereunder.
2.13. Extension of Stated Termination Date. At the request of the Borrower
the Lenders may, in their sole discretion, elect to extend the Stated
Termination Date then in effect for additional periods of one year upon each of
the first and second anniversary of the Closing Date. The Borrower shall notify
the Lenders of its request for such an extension by delivering to the Agent and
the Lenders notice of such request signed by an Authorized Representative not
more than ninety (90) days nor less than sixty (60) days prior to either the
first or second anniversary of the Closing Date, as the case may be. If all the
Lenders shall elect to so extend, the Agent shall notify the Borrower in writing
within sixty (60) days of its receipt of such request for extension of the
decision of the Lenders as to whether to extend the Stated Termination Date.
Failure by any Lender to respond to a request for an extension shall constitute
a refusal of such Lender to give its consent to such extension. Failure by the
Agent to give such notice shall constitute refusal by the Lenders to extend the
Stated Termination Date.
2.14. Swing Line. (a) Notwithstanding any other provision of this Agreement
to the contrary, in order to administer the Revolving Credit Facility in an
efficient manner and to minimize the transfer of funds between the Agent and the
Lenders, NationsBank shall make available Swing Line Loans to the Borrower prior
to the Revolving Credit Termination Date. NationsBank shall not make any Swing
Line Loan pursuant hereto (i) if to the actual knowledge of NationsBank the
Borrower is not in compliance with all the conditions to the making of Revolving
Loans set forth in this Agreement, (ii) if after giving effect to such Swing
Line Loan, the Swing Line Outstandings exceed $5,000,000, or (iii) if after
giving effect to such Swing Line Loan, the sum of the Swing Line Outstandings,
the Revolving Credit Outstandings and Letter of Credit Outstandings exceeds the
Total Revolving Credit Commitment. Swing Line Loans shall be limited to CD Rate
Loans. The Company may borrow, repay and reborrow under this Section 2.14.
Unless notified to the contrary by NationsBank, borrowings under the Swing Line
shall be made in the minimum amount of $200,000 or in the amount necessary to
effect a Base Rate Refunding Loan, upon written request by telefacsimile
transmission, effective upon receipt, by an Authorized Representative of the
Borrower made to NationsBank not later than 12:30 P.M. on the Business Day of
the requested borrowing. Each such Borrowing Notice shall specify the amount of
the borrowing and the date of borrowing, and shall be in the form of Exhibit
D-2, with appropriate insertions. If the Borrower instructs NationsBank to debit
any demand deposit account of the Borrower in the amount of any payment with
respect to a Swing Line Loan, or NationsBank otherwise receives repayment, after
1:00 P.M. on a Business Day, such payment shall be deemed received on the next
Business Day.
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(b) Swing Line Loans shall bear interest at the CD Rate, the interest
payable on Swing Line Loans is solely for the account of NationsBank, and all
accrued and unpaid interest on Swing Line Loans shall be payable on the dates
and in the time provided in Sections 2.2(b) and 2.4 with respect to interest on
Base Rate Loans. The Swing Line Outstandings shall be evidenced by the Note
delivered to NationsBank pursuant to Section 2.5.
(c) Upon the making of a Swing Line Loan, each Lender shall be deemed to
have purchased from NationsBank a Participation therein in an amount equal to
that Lender's Applicable Commitment Percentage of such Swing Line Loan. Upon
demand made by NationsBank, each Lender shall, according to its Applicable
Commitment Percentage of such Swing Line Loan, promptly provide to NationsBank
its purchase price therefor in an amount equal to its Participation therein. Any
Advance made by a Lender pursuant to demand of NationsBank of the purchase price
of its Participation shall be deemed (i) provided that the conditions to making
Revolving Loans shall be satisfied, a Base Rate Refunding Loan under Section 2.1
until the Borrower Converts such Base Rate Loan in accordance with the terms of
Section 2.8, and (ii) in all other cases, the funding by each Lender of the
purchase price of its Participation in such Swing Line Loan. The obligation of
each Lender to so provide its purchase price to NationsBank shall be absolute
and unconditional and shall not be affected by the occurrence of an Event of
Default or any other occurrence or event.
The Borrower, at its option and subject to the terms hereof, may request an
Advance pursuant to Section 2.1 in an amount sufficient to repay Swing Line
Outstandings on any date and the Agent shall provide from the proceeds of such
Advance to NationsBank the amount necessary to repay such Swing Line
Outstandings (which NationsBank shall then apply to such repayment) and credit
any balance of the Advance in immediately available funds in the manner directed
by the Borrower pursuant to Section 2.1(c)(ii). The proceeds of such Advances
shall be paid to NationsBank for application to the Swing Line Outstandings and
the Lenders shall then be deemed to have made Loans in the amount of such
Advances. The Swing Line shall continue in effect until the Revolving Credit
Termination Date, at which time all Swing Line Outstandings and accrued interest
thereon shall be due and payable in full.
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ARTICLE III
Letters of Credit
3.1. Letters of Credit. (a) The Issuing Bank agrees, subject to the terms
and conditions of this Agreement, upon request of the Borrower to issue from
time to time for the account of the Borrower Letters of Credit upon delivery to
the Issuing Bank of an Application and Agreement for Letter of Credit relating
thereto in form and content acceptable to the Issuing Bank; provided, that (i)
the Letter of Credit Outstandings shall not exceed the Total Letter of Credit
Commitment and (ii) no Letter of Credit shall be issued if, after giving effect
thereto, Letter of Credit Outstandings plus the Revolving Credit Outstandings
plus Swing Line Outstandings shall exceed the Total Revolving Credit Commitment.
No Letter of Credit shall have an expiry date (including all rights of the
Borrower or any beneficiary named in such Letter of Credit to require renewal)
or payment date occurring later than the earlier to occur of one year after the
date of its issuance or the fifth Business Day prior to the Stated Termination
Date.
(b) Subject to the approval by the Lenders of the making available of an
Alternative Currency not otherwise provided for herein, upon completion of a
proper Application and Agreement for Letter of Credit, NationsBank may issue
upon request and for the account of Borrower Letters of Credit payable in such
Alternative Currency. For purposes of determining Outstanding Letters of Credit,
any Letter of Credit issued in an Alternative Currency shall be recorded in the
Agent's account in Dollars based on the Alternative Currency Equivalent Amount
on the date of issuance of such Letter of Credit; provided, however, that the
Agent shall determine the Dollar Equivalent Amount of any Letter of Credit
issued in an Alternative Currency on the date of any Advance or Conversion for
the purpose of determining the amount of Outstandings. Any draw on a Letter of
Credit issued in an Alternative Currency shall be repaid in the same Alternative
Currency Equivalent Amount (determined based on the Spot Rate of Exchange on the
date of drawing under the Letter of Credit). To the extent that the Agent shall
determine at any time that the sum of (i) the Dollar Value of outstanding Loans
and Outstanding Letters of Credit, in each case determined on the date of each
Advance or issuance of a Letter of Credit, made or issued in Alternative
Currencies and (ii) outstanding Loans and Outstanding Letters of Credit made or
issued in Dollars exceeds the Total Revolving Credit Commitment, the Borrower
shall immediately repay Loans so that after giving effect to such payment the
outstanding Loans plus Outstanding Letters of Credit do not exceed the Total
Revolving Credit Commitment.
3.2. Reimbursement.
(a) The Borrower hereby unconditionally agrees to pay to the Issuing Bank
immediately on demand at the Principal Office all amounts required to pay all
drafts drawn or purporting to be drawn under the Letters of Credit and all
reasonable expenses incurred by the Issuing Bank in connection with the Letters
of Credit, and in any event and without demand to place in possession of the
Issuing Bank (which shall include Advances under the Revolving Credit Facility
if permitted by Section 2.1 and Swing Line Loans if permitted by Section 2.14)
sufficient funds to pay all debts
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and liabilities arising under any Letter of Credit. The Issuing Bank agrees to
give the Borrower prompt notice of any request for a draw under a Letter of
Credit. The Issuing Bank may, at the request of the Borrower, charge any account
the Borrower may have with it for any and all amounts the Issuing Bank pays
under a Letter of Credit, plus charges and reasonable expenses as from time to
time agreed to by the Issuing Bank and the Borrower; provided that to the extent
permitted by Section 2.1(c)(iv) and Section 2.14, amounts shall be paid pursuant
to Advances under the Revolving Credit Facility or, if the Borrower shall elect,
by Swing Line Loans. The Borrower agrees to pay the Issuing Bank interest on any
Reimbursement Obligations not paid when due hereunder at the Base Rate plus two
percent (2.0%), or the maximum rate permitted by applicable law, if lower, such
rate to be calculated on the basis of a year of 360 days for actual days
elapsed.
(b) In accordance with the provisions of Section 2.1(c), the Issuing Bank
shall notify the Agent of any drawing under any Letter of Credit promptly
following the receipt by the Issuing Bank of such drawing.
(c) Each Lender (other than the Issuing Bank) shall automatically acquire
on the date of issuance thereof, a Participation in the liability of the Issuing
Bank in respect of each Letter of Credit in an amount equal to such Lender's
Applicable Commitment Percentage of such liability, and to the extent that the
Borrower is obligated to pay the Issuing Bank under Section 3.2(a), each Lender
(other than the Issuing Bank) thereby shall absolutely, unconditionally and
irrevocably assume, and shall be unconditionally obligated to pay to the Issuing
Bank as hereinafter described, its Applicable Commitment Percentage of the
liability of the Issuing Bank under such Letter of Credit.
(i) Each Lender (including the Issuing Bank in its capacity as
a Lender) shall, subject to the terms and conditions of Article II,
pay to the Agent for the account of the Issuing Bank at the Principal
Office in Dollars and in immediately available funds, an amount equal
to its Applicable Commitment Percentage of any drawing under a Letter
of Credit, such funds to be provided in the manner described in
Section 2.1(c)(iv).
(ii) Simultaneously with the making of each payment by a Lender
to the Issuing Bank pursuant to Section 2.1(c)(iv)(B), such Lender
shall, automatically and without any further action on the part of the
Issuing Bank or such Lender, acquire a Participation in an amount
equal to such payment (excluding the portion thereof constituting
interest accrued prior to the date the Lender made its payment) in the
related Reimbursement Obligation of the Borrower. The Reimbursement
Obligations of the Borrower shall be immediately due and payable
whether by Advances made in accordance with Section 2.1(c)(iv), Swing
Line Loans made in accordance with Section 2.14, or otherwise.
(iii) Each Lender's obligation to make payment to the Agent for
the account of the Issuing Bank pursuant to Section 2.1(c)(iv) and
this Section 3.2(c), and the right of the Issuing Bank to receive the
same, shall be absolute and
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unconditional, shall not be affected by any circumstance whatsoever
and shall be made without any offset, abatement, withholding or
reduction whatsoever. If any Lender is obligated to pay but does not
pay amounts to the Agent for the account of the Issuing Bank in full
upon such request as required by Section 2.1(c)(iv) or this Section
3.2(c), such Lender shall, on demand, pay to the Agent for the account
of the Issuing Bank interest on the unpaid amount for each day during
the period commencing on the date of notice given to such Lender
pursuant to Section 2.1(c) until such Lender pays such amount to the
Agent for the account of the Issuing Bank in full at the interest rate
per annum for overnight borrowing by the Agent from the Federal
Reserve Bank.
(iv) In the event the Lenders have purchased Participations in
any Reimbursement Obligation as set forth in clause (ii) above, then
at any time payment (in fully collected, immediately available funds)
of such Reimbursement Obligation, in whole or in part, is received by
the Issuing Bank from the Borrower, the Issuing Bank shall promptly
pay to each Lender an amount equal to its Applicable Commitment
Percentage of such payment from the Borrower.
(d) Promptly following the end of each calendar quarter, the Issuing Bank
shall deliver to the Agent a notice describing the aggregate undrawn amount of
all Letters of Credit at the end of such quarter. Upon the request of any Lender
from time to time, the Issuing Bank shall deliver to the Agent, and the Agent
shall deliver to such Lender, any other information reasonably requested by such
Lender with respect to each outstanding Letter of Credit.
(e) The issuance by the Issuing Bank of each Letter of Credit shall, in
addition to the conditions precedent set forth in Article VI, be subject to the
conditions that such Letter of Credit be in such form and contain such terms as
shall be reasonably satisfactory to the Issuing Bank consistent with the then
current practices and procedures of the Issuing Bank with respect to similar
letters of credit, and the Borrower shall have executed and delivered such other
instruments and agreements relating to such Letters of Credit as the Issuing
Bank shall have reasonably requested consistent with such practices and
procedures and shall not be in conflict with any of the express terms herein
contained. All Letters of Credit shall be issued pursuant to and subject to the
Uniform Customs and Practice for Documentary Credits, 1993 revision,
International Chamber of Commerce Publication No. 500 and all subsequent
amendments and revisions thereto.
(f) The Borrower agrees that the Issuing Bank may, in its sole discretion,
accept or pay, as complying with the terms of any Letter of Credit, any drafts
or other documents otherwise in order which may be signed or issued by an
administrator, executor, trustee in bankruptcy, debtor in possession, assignee
for the benefit of creditors, liquidator, receiver, attorney in fact or other
legal representative of a party who is authorized under such Letter of Credit to
draw or issue any drafts or other documents.
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(g) Without limiting the generality of the provisions of Section 12.9, the
Borrower hereby agrees to indemnify and hold harmless the Issuing Bank, each
other Lender and the Agent from and against any and all claims and damages,
losses, liabilities, reasonable costs and expenses which the Issuing Bank, such
other Lender or the Agent may incur (or which may be claimed against the Issuing
Bank, such other Lender or the Agent) by any Person by reason of or in
connection with the issuance or transfer of or payment or failure to pay under
any Letter of Credit; provided that the Borrower shall not be required to
indemnify the Issuing Bank, any other Lender or the Agent for any claims,
damages, losses, liabilities, costs or expenses to the extent, but only to the
extent, (i) caused by the willful misconduct or gross negligence of the party to
be indemnified or (ii) caused by the failure of the Issuing Bank to pay under
any Letter of Credit after the presentation to it of a request for payment
strictly complying with the terms and conditions of such Letter of Credit,
unless such payment is prohibited by any law, regulation, court order or decree.
The indemnification and hold harmless provisions of this Section 3.2(g) shall
survive repayment of the Obligations, occurrence of the Revolving Credit
Termination Date and expiration or termination of this Agreement.
(h) Without limiting the Borrower's rights as set forth in Section 3.2(g),
the obligation of the Borrower to immediately reimburse the Issuing Bank for
drawings made under Letters of Credit and the Issuing Bank's right to receive
such payment shall be absolute, unconditional and irrevocable, and such
obligations of the Borrower shall be performed strictly in accordance with the
terms of this Agreement and such Letters of Credit and the related Applications
and Agreement for any Letter of Credit, under all circumstances whatsoever,
including the following circumstances:
(i) any lack of validity or enforceability of the Letter of
Credit, the obligation supported by the Letter of Credit or any other
agreement or instrument relating thereto (collectively, the "Related
LC Documents");
(ii) any amendment or waiver of or any consent to or departure
from all or any of the Related LC Documents;
(iii) the existence of any claim, setoff, defense (other than the
defense of payment in accordance with the terms of this Agreement) or
other rights which the Borrower may have at any time against any
beneficiary or any transferee of a Letter of Credit (or any persons or
entities for whom any such beneficiary or any such transferee may be
acting), the Agent, the Lenders or any other Person, whether in
connection with the Loan Documents, the Related LC Documents or any
unrelated transaction;
(iv) any breach of contract or other dispute between the
Borrower and any beneficiary or any transferee of a Letter of Credit
(or any persons or entities for whom such beneficiary or any such
transferee may be acting), the Agent, the Lenders or any other Person;
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(v) any draft, statement or any other document presented under
the Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect whatsoever;
(vi) any delay, extension of time, renewal, compromise or other
indulgence or modification granted or agreed to by the Agent, with or
without notice to or approval by the Borrower in respect of any of
Borrower's Obligations under this Agreement; or
(vii) any other circumstance or happening whatsoever, whether or
not similar to any of the foregoing.
Nothing contained in this clause (h) shall relieve the Issuing Bank of liability
for its gross negligence or willful misconduct.
3.3. Letter of Credit Facility Fees. The Borrower shall pay to the Agent,
(i) for the pro rata benefit of the Lenders based on their Applicable Commitment
Percentages, a fee on the aggregate amount available to be drawn on each
outstanding Letter of Credit at a rate equal to the Applicable Margin, and (ii)
for the Issuing Bank, 0.125% based on the aggregate amount available to be drawn
on each outstanding Letter of Credit. Such fees shall be due with respect to
each Letter of Credit quarterly in arrears on the last day of each March, June,
September and December, the first such payment to be made on the date of
issuance of a Letter of Credit. The fees described in this Section 3.3 shall be
calculated on the basis of a year of 360 days for the actual number of days
elapsed.
3.4. Administrative Fees. The Borrower shall pay to the Issuing Bank such
administrative fee and other fees, if any, in connection with the Letters of
Credit in such amounts and at such times as the Issuing Bank and the Borrower
shall agree from time to time.
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ARTICLE IV
Security
4.1. Security. As security for the full and timely payment and performance
of all Obligations, the Loan Parties shall on or before the Closing Date do or
cause to be done all things necessary in the opinion of the Agent and its
counsel to grant to the Agent for the benefit of the Lenders a duly perfected
first priority security interest in all Collateral subject to no prior Lien or
other encumbrance or restriction on transfer (other than restrictions on
transfer imposed by applicable securities laws and Liens permitted under Section
9.4 hereof).
4.2. Further Assurances. At the request of the Agent, the Borrower will or
will cause its Subsidiaries, as the case may be to execute, by its duly
authorized officers, alone or with the Agent, any certificate, instrument,
statement or document, or to procure any such certificate, instrument, statement
or document, or to take such other action (and pay all connected costs) which
the Agent reasonably deems necessary from time to time to create, continue or
preserve the liens and security interests in Collateral (and the perfection and
priority thereof) of the Agent contemplated hereby and by the other Loan
Documents.
4.3. Information Regarding Collateral. The Borrower represents, warrants
and covenants that (i) the chief executive office of the Borrower and each other
Person providing Collateral pursuant to a Security Instrument (each, a
"Grantor") at the Closing Date is located at the address or addresses specified
on Schedule 4.3, and (ii) Schedule 4.3 contains a true and complete list of (a)
the name and address of each Grantor and of each other Person that has effected
any merger or consolidation with a Grantor or contributed or transferred to a
Grantor any property constituting Collateral at any time since January 1, 1992
(excluding Persons making sales in the ordinary course of their businesses to a
Grantor of property constituting inventory in the hands of such seller), (b)
each location of the chief executive office of each Grantor at any time since
January 1, 1992, (c) each location in which goods constituting Collateral are or
have been located since January 1, 1992 (together with the name of each owner of
the property located at such address if not the applicable Grantor, and a
summary description of the relationship between the applicable Grantor and such
Person), and (d) each trade style used by any Grantor since January 1, 1992 and
the purposes for which it was used. Borrower shall not change, and shall not
permit any other Grantor to change, the location of its chief executive office
or any location specified in clause (c) of the immediately preceding sentence,
or use or permit any other Grantor to use, any additional trade style, except
upon giving not less than thirty (30) days' prior written notice to the Agent
and taking or causing to be taken all such action at Borrower's or such other
Grantor's expense as may be reasonably requested by the Agent to perfect or
maintain the perfection of the Lien of the Agent in Collateral.
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ARTICLE V
Change in Circumstances
5.1. Increased Cost and Reduced Return. (a) If, after the date hereof, the
adoption of any applicable law, rule, or regulation, or any change in any
applicable law, rule, or regulation, or any change in the interpretation or
administration thereof by any governmental authority, central bank, or
comparable agency charged with the interpretation or administration thereof, or
compliance by any Lender (or its Applicable Lending Office) with any request or
directive (whether or not having the force of law) of any such governmental
authority, central bank, or comparable agency:
(i) shall subject such Lender (or its Applicable Lending Office) to
any tax, duty, or other charge with respect to any Eurodollar Rate Loans,
its Note, or its obligation to make Eurodollar Rate Loans, or change the
basis of taxation of any amounts payable to such Lender (or its Applicable
Lending Office) under this Agreement or its Note in respect of any
Eurodollar Rate Loans (other than taxes imposed on the overall net income
of such Lender by the jurisdiction in which such Lender has its principal
office or such Applicable Lending Office and franchise taxes);
(ii) shall impose, modify, or deem applicable any reserve, special
deposit, assessment, or similar requirement (other than the Reserve
Requirement utilized in the determination of the Eurodollar Rate and the CD
Rate) relating to any extensions of credit or other assets of, or any
deposits with or other liabilities or commitments of, such Lender (or its
Applicable Lending Office), including the Revolving Credit Commitment of
such Lender hereunder; or
(iii) shall impose on such Lender (or its Applicable Lending Office)
or on the United States market for certificates of deposit or the London
interbank market any other condition affecting this Agreement or its Note
or any of such extensions of credit or liabilities or commitments;
and the result of any of the foregoing is to increase the cost to such Lender
(or its Applicable Lending Office) of making, Converting into, Continuing, or
maintaining any Eurodollar Rate Loans or to reduce any sum received or
receivable by such Lender (or its Applicable Lending Office) under this
Agreement or its Note with respect to any Eurodollar Rate Loans, then the
Borrower shall pay to such Lender on demand such amount or amounts as will
compensate such Lender for such increased cost or reduction. If any Lender
requests compensation by the Borrower under this Section 5.1(a), the Borrower
may, by notice to such Lender (with a copy to the Agent), suspend the obligation
of such Lender to make or Continue Loans of the Type with respect to which such
compensation is requested, or to Convert Loans of any other Type into Loans of
such Type, until the event or condition giving rise to such request ceases to be
in effect (in which case the provisions of Section 5.4 shall be applicable);
provided that such suspension shall not affect the right of such Lender to
receive the compensation so requested.
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(b) If, after the date hereof, any Lender shall have determined that the
adoption of any applicable law, rule, or regulation regarding capital adequacy
or any change therein or in the interpretation or administration thereof by any
governmental authority, central bank, or comparable agency charged with the
interpretation or administration thereof, or any request or directive regarding
capital adequacy (whether or not having the force of law) of any such
governmental authority, central bank, or comparable agency, has or would have
the effect of reducing the rate of return on the capital of such Lender or any
corporation controlling such Lender as a consequence of such Lender's
obligations hereunder to a level below that which such Lender or such
corporation could have achieved but for such adoption, change, request, or
directive (taking into consideration its policies with respect to capital
adequacy), then from time to time upon demand the Borrower shall pay to such
Lender such additional amount or amounts as will compensate such Lender for such
reduction.
(c) Each Lender shall promptly notify the Borrower and the Agent of any
event of which it has actual knowledge, occurring after the date hereof, which
will entitle such Lender to compensation pursuant to this Section and will
designate a different Applicable Lending Office if such designation will avoid
the need for, or reduce the amount of, such compensation and will not, in the
reasonable judgment of such Lender, be otherwise disadvantageous to it. Any
Lender claiming compensation under this Section shall furnish to the Borrower
and the Agent a statement setting forth the additional amount or amounts to be
paid to it hereunder which shall be conclusive in the absence of manifest error.
In determining such amount, such Lender may use any reasonable averaging and
attribution methods.
5.2. Limitation on Types of Loans. If on or prior to the first day of any
Interest Period for any Eurodollar Rate Loan:
(a) the Agent determines (which determination shall be conclusive)
that by reason of circumstances affecting the relevant market, adequate and
reasonable means do not exist for ascertaining the Eurodollar Rate for such
Interest Period; or
(b) the Required Lenders determine (which determination shall be
conclusive) and notify the Agent that the Eurodollar Rate will not
adequately and fairly reflect the cost to the Lenders of funding Eurodollar
Rate Loans for such Interest Period;
then the Agent shall give the Borrower prompt notice thereof specifying the
relevant Type of Loans and the relevant amounts or periods, and so long as such
condition remains in effect, the Lenders shall be under no obligation to make
additional Loans of such Type, Continue Loans of such Type, or to Convert Loans
of any other Type into Loans of such Type and the Borrower shall, on the last
day(s) of the then current Interest Period(s) for the outstanding Loans of the
affected Type, either prepay such Loans or Convert such Loans into another Type
of Loan in accordance with the terms of this Agreement.
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5.3. Illegality. Notwithstanding any other provision of this Agreement, in
the event that it becomes unlawful for any Lender or its Applicable Lending
Office to make, maintain, or fund Eurodollar Rate Loans hereunder, then such
Lender shall promptly notify the Borrower thereof and such Lender's obligation
to make or Continue Eurodollar Rate Loans and to Convert other Types of Loans
into Eurodollar Rate Loans shall be suspended until such time as such Lender may
again make, maintain, and fund Eurodollar Rate Loans (in which case the
provisions of Section 5.4 shall be applicable).
5.4. Treatment of Affected Loans. If the obligation of any Lender to make a
particular Type of Eurodollar Rate Loan or to Continue, or to Convert Loans of
any other Type into, Loans of a particular Type shall be suspended pursuant to
Section 5.1 or 5.3 hereof (Loans of such Type being herein called "Affected
Loans" and such Type being herein called the "Affected Type"), such Lender's
Affected Loans shall be automatically Converted into Base Rate Loans on the last
day(s) of the then current Interest Period(s) for Affected Loans (or, in the
case of a Conversion required by Section 5.3 hereof, on such earlier date as
such Lender may specify to the Borrower with a copy to the Agent) and, unless
and until such Lender gives notice as provided below that the circumstances
specified in Section 5.1 or 5.3 hereof that gave rise to such Conversion no
longer exist:
(a) to the extent that such Lender's Affected Loans have been so
Converted, all payments and prepayments of principal that would otherwise
be applied to such Lender's Affected Loans shall be applied instead to its
Base Rate Loans; and
(b) all Loans that would otherwise be made or Continued by such Lender
as Loans of the Affected Type shall be made or Continued instead as Base
Rate Loans, and all Loans of such Lender that would otherwise be Converted
into Loans of the Affected Type shall be Converted instead into (or shall
remain as) Base Rate Loans.
If such Lender gives notice to the Borrower (with a copy to the Agent) that the
circumstances specified in Section 5.1 or 5.3 hereof that gave rise to the
Conversion of such Lender's Affected Loans pursuant to this Section 5.4 no
longer exist (which such Lender agrees to do promptly upon such circumstances
ceasing to exist) at a time when Loans of the Affected Type made by other
Lenders are outstanding, such Lender's Base Rate Loans shall be automatically
Converted, on the first day(s) of the next succeeding Interest Period(s) for
such outstanding Loans of the Affected Type, to the extent necessary so that,
after giving effect thereto, all Loans held by the Lenders holding Loans of the
Affected Type and by such Lender are held pro rata (as to principal amounts,
Types, and Interest Periods) in accordance with their respective Revolving
Credit Commitments.
5.5. Compensation. Upon the request of any Lender, the Borrower shall pay
to such Lender such amount or amounts as shall be sufficient (in the reasonable
opinion of such Lender) to compensate it for any loss, cost, or expense
(including loss of anticipated profits) incurred by it as a result of:
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(a) any payment, prepayment, or Conversion of a Eurodollar Rate Loan
for any reason (including, without limitation, the acceleration of the
Loans pursuant to Section 10.1) on a date other than the last day of the
Interest Period for such Loan; or
(b) any failure by the Borrower for any reason (including, without
limitation, the failure of any condition precedent specified in Article VI
to be satisfied) to borrow (other than by reason of the failure of a Lender
or Lenders to make funds available without cause), Convert, Continue, or
prepay a Eurodollar Rate Loan on the date for such borrowing, Conversion,
Continuation, or prepayment specified in the relevant notice of borrowing,
prepayment, Continuation, or Conversion under this Agreement.
Any Lender claiming compensation under this Section 5.5 shall furnish the
Borrower and the Agent a statement setting forth in reasonable detail the
amounts to be paid to it hereunder and the determination thereof shall be
conclusive absent manifest error.
5.6. Taxes. (a) Any and all payments by the Borrower to or for the account
of any Lender or the Agent hereunder or under any other Loan Document shall be
made free and clear of and without deduction for any and all present or future
taxes, duties, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, excluding, in the case of each Lender and the
Agent, taxes imposed on its income, and franchise taxes imposed on it, by the
jurisdiction under the laws of which such Lender (or its Applicable Lending
Office) or the Agent (as the case may be) is organized or any political
subdivision thereof, except withholding taxes applicable to a Lender, (all such
non-excluded taxes, duties, levies, imposts, deductions, charges, withholdings,
and liabilities being hereinafter referred to as "Taxes"). If the Borrower or
the Lender shall be required by law to deduct any Taxes from or in respect of
any sum payable under this Agreement or any other Loan Document to any Lender or
the Agent, (i) the sum payable shall be increased as necessary so that after
making all required deductions (including deductions applicable to additional
sums payable under this Section 5.6) such Lender or the Agent receives an amount
equal to the sum it would have received had no such deductions been made, (ii)
the Borrower shall make such deductions, (iii) the Borrower shall pay the full
amount deducted to the relevant taxation authority or other authority in
accordance with applicable law, and (iv) the Borrower shall furnish to the
Agent, at its address referred to in Section 12.2, the original or a certified
copy of a receipt evidencing payment thereof.
(b) In addition, the Borrower agrees to pay any and all present or future
stamp or documentary taxes and any other excise or property taxes or charges or
similar levies which arise from any payment made under this Agreement or any
other Loan Document or from the execution or delivery of, or otherwise with
respect to, this Agreement or any other Loan Document (hereinafter referred to
as "Other Taxes").
(c) The Borrower agrees to indemnify each Lender and the Agent for the full
amount of Taxes and Other Taxes (including, without limitation, any Taxes or
Other Taxes imposed or asserted by any jurisdiction on amounts payable under
this Section 5.6) paid by such Lender or the Agent (as
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the case may be) and any liability (including penalties, interest, and expenses)
arising therefrom or with respect thereto.
(d) Each Lender organized under the laws of a jurisdiction outside the
United States, on or prior to the date of its execution and delivery of this
Agreement in the case of each Lender listed on the signature pages hereof and on
or prior to the date on which it becomes a Lender in the case of each other
Lender, and from time to time thereafter if requested in writing by the Borrower
or the Agent (but only so long as such Lender remains lawfully able to do so),
shall provide the Borrower and the Agent with (i) Internal Revenue Service Form
1001 or 4224, as appropriate, or any successor form prescribed by the Internal
Revenue Service, certifying that such Lender is entitled to benefits under an
income tax treaty to which the United States is a party which reduces the rate
of withholding tax on payments of interest or certifying that the income
receivable pursuant to this Agreement is effectively connected with the conduct
of a trade or business in the United States, (ii) Internal Revenue Service Form
W-8 or W-9, as appropriate, or any successor form prescribed by the Internal
Revenue Service, and (iii) any other form or certificate required by any taxing
authority (including any certificate required by Sections 871(h) and 881(c) of
the Internal Revenue Code), certifying that such Lender is entitled to an
exemption from or a reduced rate of tax on payments pursuant to this Agreement
or any of the other Loan Documents.
(e) For any period with respect to which a Lender has failed to provide the
Borrower and the Agent with the appropriate form pursuant to Section 5.6(d)
(unless such failure is due to a change in treaty, law, or regulation occurring
subsequent to the date on which a form originally was required to be provided),
such Lender shall not be entitled to indemnification under Section 5.6(a) or
5.6(b) with respect to Taxes imposed by the United States; provided, however,
that should a Lender, which is otherwise exempt from or subject to a reduced
rate of withholding tax, become subject to Taxes because of its failure to
deliver a form required hereunder, the Borrower shall take such steps as such
Lender shall reasonably request to assist such Lender to recover such Taxes at
such Lender's expense.
(f) If the Borrower is required to pay additional amounts to or for the
account of any Lender pursuant to this Section 5.6, then such Lender will agree
to use reasonable efforts to change the jurisdiction of its Applicable Lending
Office so as to eliminate or reduce any such additional payment which may
thereafter accrue if such change, in the judgment of such Lender, is not
otherwise disadvantageous to such Lender.
(g) Within thirty (30) days after the date of any payment of Taxes, the
Borrower shall furnish to the Agent evidence of such payment and the Agent shall
provide a copy of such evidence to the applicable Lender.
(h) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
this Section 5.6 shall survive the termination of the Revolving Credit
Commitments and the payment in full of the Notes.
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5.7. Replacement Banks. The Borrower may, in its sole discretion, on ten
(10) Business Days' prior written notice to the Agent and a Lender, cause a
Lender who has either (a) incurred increased costs or is unable to make
Eurodollar Rate Loans, (b) failed to fund any requested Advance, (c) made any
claim for taxes under Section 5.6, or (d) assigned a portion or all of its
Revolving Credit Commitment and not assigned a pro rata portion of the TROL
Indebtedness held by it, to (and such Lender shall) assign, pursuant to Section
12.1, all of its rights and obligations under this Agreement to an Eligible
Assignee designated by the Borrower which is willing to become a Lender for a
purchase price equal to the outstanding principal amount of the Loans payable to
such Lender plus any accrued but unpaid interest on such Loans, any accrued but
unpaid fees with respect to such Lender's Revolving Credit Commitment and any
other amount payable to such Lender under this Agreement; provided, however,
that any expenses or other amounts which would be owing to such Lender pursuant
to any indemnification provision hereof (including, if applicable, Section 5.5)
shall be payable by the Borrower as if the Borrower had prepaid the Loans of
such Lender rather than such Lender having assigned its interest hereunder. The
Borrower or the assignee shall pay the applicable processing fee under Section
12.1.
5.8. Lending Office. Without affecting its rights under this Article V or
any other provision of this Agreement, each Lender agrees that if there is any
increase in cost to or reduction in an amount receivable by such Lender with
respect to which the Borrower would be obligated to compensate such Lender
pursuant to this Article V, such Lender shall use reasonable efforts to elect an
alternative lending office (to the extent such Lender has available to it such
an office) which would not result in any such increase in any cost to or
reduction in any amount receivable by such Lender; provided, however, that no
Lender shall be obligated to select an alternative lending office if such Lender
determines, in its sole discretion, that (i) as a result of such selection such
Lender would be in violation of any applicable law, regulation, treaty, or
guideline, or would incur additional costs or expenses or (ii) such selection
would be inadvisable for regulatory reasons or would impose an unreasonable
burden or additional costs on such Lender.
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ARTICLE VI
Conditions to Making Loans and Issuing Letters of Credit
6.1. Conditions of Initial Advance. The obligation of the Lenders to make
the initial Advance under the Revolving Credit Facility, and of the Issuing Bank
to issue any Letter of Credit, and of NationsBank to make any Swing Line Loan,
is subject to the conditions precedent that:
(a) the Agent shall have received on the Closing Date, in form and
substance satisfactory to the Agent and Lenders, the following:
(i) executed originals of each of this Agreement, the Notes,
the initial Facility Guaranties, the Security Instruments, the LC
Account Agreement and the other Loan Documents, together with all
schedules and exhibits thereto;
(ii) the favorable written opinion or opinions with respect to
the Loan Documents and the transactions contemplated thereby of
special counsel to the Loan Parties dated the Closing Date, addressed
to the Agent and the Lenders and satisfactory to Smith Helms Mulliss &
Moore, L.L.P., special counsel to the Agent, substantially in the form
of Exhibit G;
(iii) resolutions of the boards of directors or other
appropriate governing body (or of the appropriate committee thereof)
of each of the Loan Parties certified by its secretary or assistant
secretary as of the Closing Date, approving and adopting the Loan
Documents to be executed by such Person, and authorizing the execution
and delivery thereof;
(iv) specimen signatures of officers of each of the Loan
Parties executing the Loan Documents on behalf of such Person,
certified by the secretary or assistant secretary of such Person;
(v) the charter documents of each of the Loan Parties
certified as of a recent date by the Secretary of State of its state
of organization;
(vi) the bylaws of each of the Loan Parties certified as of the
Closing Date as true and correct by its secretary or assistant
secretary;
(vii) certificates issued as of a recent date by the Secretaries
of State of the respective jurisdictions of formation of each of the
Loan Parties as to the due existence and good standing of such Person;
(viii) appropriate certificates of qualification to do business,
good standing and, where appropriate, authority to conduct business
under assumed name,
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issued in respect of each of the Loan Parties as of a recent date by
the Secretary of State or comparable official of each jurisdiction in
which the failure to be qualified to do business or authorized so to
conduct business could have a Material Adverse Effect;
(ix) notice of appointment of the initial Authorized
Representative(s);
(x) certificate of an Authorized Representative dated the
Closing Date demonstrating compliance with the financial covenants
contained in Sections 9 .1(a) through 9.1(d) and Section 9.3 as of the
most recent fiscal quarter ended, substantially in the form of Exhibit
H;
(xi) evidence of all insurance required by the Loan Documents;
(xii) an initial Borrowing Notice, if any;
(xiii) evidence that all fees payable by the Borrower on the
Closing Date to the Agent, NMSI and the Lenders have been paid in
full;
(xiv) copies of all surveys, environmental assessments,
appraisals, title insurance policies in the possession of the Borrower
and its Subsidiaries relating to the Mortgage Properties, if any;
(xv) certifications reasonably acceptable to the Agent to the
effect that no portion of the improvements located on any of the
Mortgage Properties are located within a flood hazard area;
(xvi) such other documents, instruments, certificates and
opinions as the Agent or any Lender may reasonably request on or prior
to the Closing Date in connection with the consummation of the
transactions contemplated hereby; and
(b) In the good faith judgment of the Agent and the Lenders:
(i) there shall not have occurred or become known to the Agent
or the Lenders any event, condition, situation or status since the
date of the information contained in the financial and business
projections, budgets, pro forma data and forecasts concerning the
Borrower and its Subsidiaries delivered to the Agent prior to the
Closing Date that has had or could reasonably be expected to result in
a Material Adverse Effect;
(ii) no litigation, action, suit, investigation or other
arbitral, administrative or judicial proceeding shall be pending or
threatened which could reasonably be likely to result in a Material
Adverse Effect; and
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(iii) the Loan Parties shall have received all approvals,
consents and waivers, and shall have made or given all necessary
filings and notices as shall be required to consummate the
transactions contemplated hereby without the occurrence of any default
under, conflict with or violation of (A) any applicable law, rule,
regulation, order or decree of any Governmental Authority or arbitral
authority or (B) any agreement, document or instrument to which any of
the Loan Parties is a party or by which any of them or their
properties is bound.
6.2. Conditions of Revolving Loans and Letter of Credit. The obligations of
the Lenders to make any Revolving Loans, and the Issuing Bank to issue Letters
of Credit and NationsBank to make Swing Line Loans, hereunder on or subsequent
to the Closing Date are subject to the satisfaction of the following conditions:
(a) the Agent or, in the case of Swing Line Loans, NationsBank shall
have received a Borrowing Notice if required by Article II;
(b) the representations and warranties of the Loan Parties set forth
in Article VII and in each of the other Loan Documents shall be true and
correct in all material respects on and as of the date of such Advance,
Swing Line Loan or Letter of Credit issuance or renewal, with the same
effect as though such representations and warranties had been made on and
as of such date, except to the extent that such representations and
warranties expressly relate to an earlier date and except that the
financial statements referred to in Section 7.6(a) shall be deemed to be
those financial statements most recently delivered to the Agent and the
Lenders pursuant to Section 8.1 from the date financial statements are
delivered to the Agent and the Lenders in accordance with such Section;
(c) in the case of the issuance of a Letter of Credit, the Borrower
shall have executed and delivered to the Issuing Bank an Application and
Agreement for Letter of Credit in form and content acceptable to the
Issuing Bank together with such other instruments and documents as it shall
request;
(d) at the time of (and after giving effect to) each Advance, Swing
Line Loan or the issuance of a Letter of Credit, no Default or Event of
Default specified in Article X shall have occurred and be continuing; and
(e) immediately after giving effect to:
(i) a Revolving Loan, the aggregate principal balance of all
outstanding Revolving Loans for each Lender shall not exceed such
Lender's Revolving Credit Commitment;
(ii) a Letter of Credit or renewal thereof, the aggregate
principal balance of all outstanding Participations in Letters of
Credit and Reimbursement Obligations
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(or in the case of the Issuing Bank, its remaining interest after
deduction of all Participations in Letters of Credit and Reimbursement
Obligations of other Lenders) for each Lender and in the aggregate
shall not exceed, respectively, (X) such Lender's Letter of Credit
Commitment or (Y) the Total Letter of Credit Commitment;
(iii) a Swing Line Loan, the Swing Line Outstandings shall not
exceed $5,000,000; and
(iv) a Revolving Loan, Swing Line Loan or a Letter of Credit or
renewal thereof, the sum of Letter of Credit Outstandings plus
Revolving Credit Outstandings plus Swing Line Outstandings shall not
exceed the Total Revolving Credit Commitment.
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ARTICLE VII
Representations and Warranties
The Borrower represents and warrants with respect to itself and to its
Subsidiaries (which representations and warranties shall survive the delivery of
the documents mentioned herein and the making of Loans), that:
7.1. Organization and Authority.
(a) The Borrower and each Subsidiary is a corporation or partnership
duly organized and validly existing under the laws of the jurisdiction of
its formation;
(b) The Borrower and each Subsidiary (x) has the requisite power and
authority to own its properties and assets and to carry on its business as
now being conducted and as contemplated in the Loan Documents, and (y) is
qualified to do business in every jurisdiction in which failure so to
qualify would have a Material Adverse Effect;
(c) The Borrower has the power and authority to execute, deliver and
perform this Agreement and the Notes, and to borrow hereunder, and to
execute, deliver and perform each of the other Loan Documents to which it
is a party;
(d) Each Guarantor has the power and authority to execute, deliver and
perform the Facility Guaranty and each of the other Loan Documents to which
it is a party; and
(e) When executed and delivered, each of the Loan Documents to which
any Loan Party is a party will be the legal, valid and binding obligation
or agreement of such Loan Party, enforceable against such Loan Party in
accordance with its terms, subject to the effect of any applicable
bankruptcy, moratorium, insolvency, reorganization or other similar law
affecting the enforceability of creditors' rights generally and to the
effect of general principles of equity (whether considered in a proceeding
at law or in equity);
7.2. Loan Documents. The execution, delivery and performance by each Loan
Party of each of the Loan Documents to which it is a party:
(a) have been duly authorized by all requisite corporate action
(including any required shareholder or partner approval) of such Loan Party
required for the lawful execution, delivery and performance thereof;
(b) do not violate any provisions of (i) applicable law, rule or
regulation, (ii) any judgment, writ, order, determination, decree or
arbitral award of any Governmental Authority or arbitral authority binding
on such Loan Party or its properties, or (iii) the charter documents,
partnership agreement or bylaws of such Loan Party;
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(c) does not and will not be in conflict with, result in a breach of
or constitute an event of default, or an event which, with notice or lapse
of time or both, would constitute an event of default, under any contract,
indenture, agreement or other instrument or document to which such Loan
Party is a party, or by which the properties or assets of such Loan Party
are bound; and
(d) does not and will not result in the creation or imposition of any
Lien upon any of the properties or assets of such Loan Party or any
Subsidiary;
7.3. Solvency. Each Loan Party is Solvent after giving effect to the
transactions contemplated by the Loan Documents;
7.4. Subsidiaries and Stockholders. The Borrower has no Subsidiaries other
than those Persons listed as Subsidiaries in Schedule 7.4 and additional
Subsidiaries created or acquired after the Closing Date in compliance with
Section 8.19; Schedule 7.4 states as of the date hereof the organizational form
of each entity, the authorized and issued capitalization of each Subsidiary
listed thereon, the number of shares or other equity interests of each class of
capital stock or interest issued and outstanding of each such Subsidiary and the
number and/or percentage of outstanding shares or other equity interest
(including options, warrants and other rights to acquire any interest) of each
such class of capital stock or other equity interest owned by Borrower or by any
such Subsidiary; the outstanding shares or other equity interests of each such
Subsidiary have been duly authorized and validly issued and are fully paid and
nonassessable; and Borrower and each such Subsidiary owns beneficially and of
record all the shares and other interests it is listed as owning in Schedule
7.4, free and clear of any Lien;
7.5. Ownership Interests. Borrower owns no interest in any Person other
than the Persons listed in Schedule 7.4, equity investments in Persons not
constituting Subsidiaries permitted under Section 9.7 and additional
Subsidiaries created or acquired after the Closing Date in compliance with
Section 8.19;
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7.6 Financial Condition.
(a) The Borrower has heretofore furnished to each Lender an audited
consolidated balance sheet of the Borrower and its Subsidiaries as at
December 29, 1996 and the notes thereto and the related consolidated
statements of income, stockholders' equity and cash flows for the Fiscal
Year then ended as examined and certified by Arthur Andersen LLP, and
unaudited consolidated interim financial statements of the Borrower and its
Subsidiaries consisting of a consolidated balance sheet and related
consolidated statements of income and cash flows, in each case without
notes, for and as of the end of the nine month period ending September 28,
1997. Except as set forth therein, such financial statements (including the
notes thereto) present fairly the financial condition of the Borrower and
its Subsidiaries as of the end of such Fiscal Year and the nine month
period and results of their operations and the changes in its stockholders'
equity for the Fiscal Year and interim period then ended, all in conformity
with GAAP applied on a Consistent Basis, subject however, in the case of
unaudited interim statements to year end audit adjustments;
(b) since December 29, 1996 there has been no material adverse change
in the condition, financial or otherwise, of the Borrower or any of its
Subsidiaries or in the businesses, properties, performance, prospects or
operations of the Borrower or its Subsidiaries, nor have such businesses or
properties been materially adversely affected as a result of any fire,
explosion, earthquake, accident, strike, lockout, combination of workers,
flood, embargo or act of God; and
(c) except as set forth in the financial statements referred to in
Section 7.6(a) or in Schedule 7.6 or permitted by Section 9.5, neither
Borrower nor any Subsidiary has incurred, other than in the ordinary course
of business, any material Indebtedness, Contingent Obligation or other
commitment or liability which remains outstanding or unsatisfied;
7.7. Title to Properties. The Borrower and each of its Subsidiaries has
title to all its real and personal properties, subject to no transfer
restrictions or Liens of any kind, except for the transfer restrictions and
Liens described in Schedule 7.7 and Liens permitted by Section 9.4;
7.8. Taxes. The Borrower and each of its Subsidiaries has filed or caused
to be filed all federal, state and local tax returns which are required to be
filed by it and, except for taxes and assessments being contested in good faith
by appropriate proceedings diligently conducted and against which reserves
reflected in the financial statements described in Section 7.6(a) and
satisfactory to the Borrower's independent certified public accountants have
been established, have paid or caused to be paid all taxes as shown on said
returns or on any assessment received by it, to the extent that such taxes have
become due;
7.9. Other Agreements. No Loan Party nor any Subsidiary is
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(a) a party to or subject to any judgment, order, decree, agreement,
lease or instrument, or subject to other restrictions, which individually
or in the aggregate could reasonably be expected to have a Material Adverse
Effect; or
(b) in default in the performance, observance or fulfillment of any of
the obligations, covenants or conditions contained in any agreement or
instrument to which the Borrower or any Subsidiary is a party, which
default has, or if not remedied within any applicable grace period could
reasonably be likely to have, a Material Adverse Effect;
7.10. Litigation. Except as set forth in Schedule 7.10, there is no action,
suit, investigation or proceeding at law or in equity or by or before any
governmental instrumentality or agency or arbitral body pending, or, to the best
knowledge of the Borrower, threatened by or against the Borrower or any
Subsidiary or affecting the Borrower or any Subsidiary or any properties or
rights of the Borrower or any Subsidiary, which could reasonably be expected to
have a Material Adverse Effect;
7.11. Margin Stock. The proceeds of the borrowings made hereunder will be
used by the Borrower only for the purposes expressly authorized herein. None of
such proceeds will be used, directly or indirectly, for the purpose of
purchasing or carrying any margin stock or for the purpose of reducing or
retiring any Indebtedness which was originally incurred to purchase or carry
margin stock or for any other purpose which might constitute any of the Loans
under this Agreement a "purpose credit" within the meaning of said Regulation U
or Regulation X (12 C.F.R. Part 224) of the Board. Neither the Borrower nor any
agent acting in its behalf has taken or will take any action which might cause
this Agreement or any of the documents or instruments delivered pursuant hereto
to violate any regulation of the Board or to violate the Securities Exchange Act
of 1934, as amended, or the Securities Act of 1933, as amended, or any state
securities laws, in each case as in effect on the date hereof;
7.12. Investment Company. No Loan Party is an "investment company," or an
"affiliated person" of, or "promoter" or "principal underwriter" for, an
"investment company", as such terms are defined in the Investment Company Act of
1940, as amended (15 U.S.C. ss. 80a-1, et seq.). The application of the proceeds
of the Loans and repayment thereof by the Borrower and the performance by the
Loan Parties of the transactions contemplated by the Loan Documents will not
violate any provision of said Act, or any rule, regulation or order issued by
the Securities and Exchange Commission thereunder, in each case as in effect on
the date hereof;
7.13. Patents, Etc. The Borrower and each Subsidiary owns or has the right
to use, under valid license agreements or otherwise, all material patents,
licenses, franchises, trademarks, trademark rights, trade names, trade name
rights, trade secrets and copyrights necessary to or used in the conduct of its
businesses as now conducted and as contemplated by the Loan Documents, in all
cases without known conflict with any patent, license, franchise, trademark,
trade secret, trade name, copyright, other proprietary right of any other
Person, which conflict is reasonably likely to have a Material Adverse Effect;
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7.14. No Untrue Statement. Neither (a) this Agreement nor any other Loan
Document or certificate or document executed and delivered by or on behalf of
the Borrower or any Subsidiary in accordance with or pursuant to any Loan
Document nor (b) any statement, representation, or warranty provided to the
Agent in connection with the negotiation or preparation of the Loan Documents
contains any misrepresentation or untrue statement of material fact or omits to
state a material fact necessary, in light of the circumstance under which it was
made, in order to make any such warranty, representation or statement contained
therein not misleading;
7.15. No Consents, Etc. Neither the respective businesses or properties of
the Loan Parties or any Subsidiary, nor any relationship among the Loan Parties
or any Subsidiary and any other Person, nor any circumstance in connection with
the execution, delivery and performance of the Loan Documents and the
transactions contemplated thereby, is such as to require a consent, approval or
authorization of, or filing, registration or qualification with, any
Governmental Authority or any other Person on the part of any Loan Party or any
Subsidiary as a condition to the execution, delivery and performance of, or
consummation of the transactions contemplated by the Loan Documents, which, if
not obtained or effected, would be reasonably likely to have a Material Adverse
Effect, or if so, such consent, approval, authorization, filing, registration or
qualification has been duly obtained or effected, as the case may be;
7.16. Employee Benefit Plans.
(a) The Borrower and each ERISA Affiliate is in compliance with all
applicable provisions of ERISA and the regulations and published
interpretations thereunder and in compliance with all Foreign Benefit Laws
with respect to all Employee Benefit Plans except for any required
amendments for which the remedial amendment period as defined in Section
401(b) of the Code has not yet expired. Each Employee Benefit Plan that is
intended to be qualified under Section 401(a) of the Code has been
determined by the Internal Revenue Service to be so qualified, and each
trust related to such plan has been determined to be exempt under Section
501(a) of the Code. No material liability has been incurred by the Borrower
or any ERISA Affiliate which remains unsatisfied for any taxes or penalties
with respect to any Employee Benefit Plan or any Multiemployer Plan;
(b) Neither the Borrower nor any ERISA Affiliate has (i) engaged in a
nonexempt prohibited transaction described in Section 4975 of the Code or
Section 406 of ERISA affecting any of the Employee Benefit Plans or the
trusts created thereunder which could subject any such Employee Benefit
Plan or trust to a material tax or penalty on prohibited transactions
imposed under Internal Revenue Code Section 4975 or ERISA, (ii) incurred
any accumulated funding deficiency with respect to any Employee Benefit
Plan, whether or not waived, or any other material liability to the PBGC
which remains outstanding other than the payment of premiums and there are
no premium payments which are due and unpaid, (iii) failed to make a
required contribution or payment to a Multiemployer Plan, or (iv) failed to
make a required installment or other required payment
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under Section 412 of the Code, Section 302 of ERISA or the terms of such
Employee Benefit Plan;
(c) No Termination Event has occurred or is reasonably expected to
occur with respect to any Pension Plan or Multiemployer Plan, and neither
the Borrower nor any ERISA Affiliate has incurred any unpaid withdrawal
liability with respect to any Multiemployer Plan;
(d) The present value of all vested accrued benefits under each
Employee Benefit Plan which is subject to Title IV of ERISA, did not, as of
the most recent valuation date for each such plan, exceed the then current
value of the assets of such Employee Benefit Plan allocable to such
benefits;
(e) To the best of the Borrower's knowledge, each Employee Benefit
Plan subject to Title IV of ERISA, maintained by the Borrower or any ERISA
Affiliate, has been adminis tered in accordance with its terms in all
material respects and is in compliance in all material respects with all
applicable requirements of ERISA and other applicable laws, regulations and
rules;
(f) The consummation of the Loans and the issuance of the Letters of
Credit provided for herein will not involve any prohibited transaction
under ERISA which is not subject to a statutory or administrative
exemption; and
(g) No material proceeding, claim, lawsuit and/or investigation exists
or, to the best knowledge of the Borrower after due inquiry, is threatened
concerning or involving any Employee Benefit Plan or Foreign Benefit Laws;
7.17. No Default. As of the date hereof, there does not exist any Default
or Event of Default hereunder;
7.18. Hazardous Materials. The Borrower and each Subsidiary is in
compliance with all applicable Environmental Laws in all material respects.
Neither the Borrower nor any Subsidiary has been notified of any action, suit,
proceeding or investigation which, and neither the Borrower nor any Subsidiary
is aware of any facts which, (i) calls into question, or could reasonably be
expected to call into question, compliance by the Borrower or any Subsidiary
with any Environmental Laws, (ii) which seeks, or could reasonably be expected
to form the basis of a meritorious proceeding, to suspend, revoke or terminate
any license, permit or approval necessary for the generation, handling, storage,
treatment or disposal of any Hazardous Material, or (iii) seeks to cause, or
could reasonably be expected to form the basis of a meritorious proceeding to
cause, any property of the Borrower or any Subsidiary to be subject to any
restrictions on ownership, use, occupancy or transferability under any
Environmental Law;
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7.19. Employment Matters. (a) Except as set forth in Schedule 7.19, none of
the employees of the Borrower or any Subsidiary is subject to any collective
bargaining agreement and there are no strikes, work stoppages, election or
decertification petitions or proceedings, unfair labor charges, equal
opportunity proceedings, or other material labor/employee related controversies
or proceedings pending or, to the best knowledge of the Borrower, threatened
against the Borrower or any Subsidiary or between the Borrower or any Subsidiary
and any of its employees, other than employee grievances arising in the ordinary
course of business which could not reasonably be expected, individually or in
the aggregate, to have a Material Adverse Effect; and
(b) Except to the extent a failure to maintain compliance would not have a
Material Adverse Effect, the Borrower and each Subsidiary is in compliance in
all material respects with all applicable laws, rules and regulations pertaining
to labor or employment matters, including without limitation those pertaining to
wages, hours, occupational safety and taxation and there is neither pending or,
to the knowledge of the Borrower, threatened any litigation, administrative
proceeding nor, to the knowledge of the Borrower, any investigation, in respect
of such matters which, if decided adversely, could reasonably be likely,
individually or in the aggregate, to have a Material Adverse Effect; and
7.20. RICO. Neither the Borrower nor any Subsidiary is engaged in or has
engaged in any course of conduct that could subject any of their respective
properties to any Lien, seizure or other forfeiture under any criminal law,
racketeer influenced and corrupt organizations law, civil or criminal, or other
similar laws.
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ARTICLE VIII
Affirmative Covenants
Until the Facility Termination Date, unless the Required Lenders shall
otherwise consent in writing, the Borrower will, and where applicable will
cause each Subsidiary to:
8.1. Financial Reports, Etc. (a) As soon as practical and in any
event within 90 days after the end of each Fiscal Year of the Borrower, deliver
or cause to be delivered to the Agent and each Lender (i) a consolidated
balance sheet of the Borrower and its Subsidiaries as at the end of such Fiscal
Year, and the notes thereto, and the related consolidated statements of income,
stockholders' equity and cash flows, and the respective notes thereto, for such
Fiscal Year, setting forth comparative financial statements for the preceding
Fiscal Year, all prepared in accordance with GAAP applied on a Consistent Basis
and containing opinions of Arthur Andersen LLP, or other such independent
certified public accountants selected by the Borrower and approved by the
Agent, which are unqualified as to the scope of the audit performed and as to
the "going concern" status of the Borrower and its Subsidiaries and without any
exception not acceptable to the Lenders, and (ii) a certificate of an
Authorized Representative demonstrating compliance with Sections 9.1(a) through
8.1(d) and 8.3, which certificate shall be in the form of Exhibit H;
(b) as soon as practical and in any event within 45 days after the
end of each fiscal quarter (except the last fiscal quarter of the Fiscal Year),
deliver to the Agent and each Lender (i) a consolidated balance sheet of the
Borrower and its Subsidiaries as at the end of such fiscal quarter, and the
related consolidated statements of income and cash flows for such fiscal
quarter and for the period from the beginning of the then current Fiscal Year
through the end of such reporting period, and accompanied by a certificate of
an Authorized Representative to the effect that such financial statements
present fairly the financial position of the Borrower and its Subsidiaries as
of the end of such fiscal period and the results of their operations and the
changes in their financial position for such fiscal period, in conformity with
the standards set forth in Section 7.6(a) with respect to interim financial
statements, and (ii) a certificate of an Authorized Representative containing
computations for such quarter comparable to that required pursuant to Section
8.1(a)(ii);
(c) together with each delivery of the financial statements
required by Section 8.1(a)(i), deliver to the Agent and each Lender a letter
from the Borrower's accountants specified in Section 8.1(a)(i) stating that in
performing the audit necessary to render an opinion on the financial statements
delivered under Section 8.1(a)(i), they obtained no knowledge of any Default or
Event of Default by the Borrower in the fulfillment of the terms and provisions
of this Agreement insofar as they relate to financial matters (which at the
date of such statement remains uncured); or if the accountants have obtained
knowledge of such Default or Event of Default, a statement specifying the
nature and period of existence thereof;
(d) promptly upon their becoming available to the Borrower, the
Borrower shall deliver to the Agent and each Lender a copy of (i) all regular
or special reports or effective registration
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statements which Borrower or any Subsidiary shall file with the Securities and
Exchange Commission (or any successor thereto) or any securities exchange, (ii)
any proxy statement distributed by the Borrower or any Subsidiary to its
shareholders, bondholders or the financial community in general, and (iii) any
management letter or other report submitted to the Borrower or any Subsidiary
by independent accountants in connection with any annual, interim or special
audit of the Borrower or any Subsidiary; and
(e) not later than the last Business Day of each Fiscal Year,
deliver to the Agent and each Lender a consolidated operating budget for the
Borrower and its Subsidiaries for the next Fiscal Year, prepared in accordance
with GAAP applied on a Consistent Basis;
(f) promptly, from time to time, deliver or cause to be delivered
to the Agent and each Lender such other information regarding Borrower's and
any Subsidiary's operations, business affairs and financial condition as the
Agent or such Lender may reasonably request;
The Agent and the Lenders are hereby authorized to deliver a copy of
any such financial or other information delivered hereunder to the Lenders (or
any affiliate of any Lender) or to the Agent, to any Governmental Authority
having jurisdiction over the Agent or any of the Lenders pursuant to any
written request therefor or in the ordinary course of examination of loan
files, or to any other Person who shall acquire or consider the assignment of,
or acquisition of any participation interest in, any Obligation permitted by
this Agreement;
8.2. Maintain Properties. Maintain all properties necessary to its
operations in good working order and condition, ordinary wear and tear
excepted, make all needed repairs, replacements and renewals to such
properties, and maintain free from Liens all trademarks, trade names, patents,
copyrights, trade secrets, know-how, and other intellectual property and
proprietary information (or adequate licenses thereto), in each case as are
reasonably necessary to conduct its business as currently conducted or as
contemplated hereby, all in accordance with customary and prudent business
practices, except where such failure could not be reasonably expected to have a
Material Adverse Effect;
8.3. Existence, Qualification, Etc. Except as otherwise expressly
permitted under Section 9.8, do or cause to be done all things necessary to
preserve and keep in full force and effect its existence and all material
rights and franchises, and, except to the extent conveyed in connection with a
transaction permitted under Section 9.6 hereof, maintain its license or
qualification to do business as a foreign corporation and good standing in each
jurisdiction in which its ownership or lease of property or the nature of its
business makes such license or qualification necessary;
8.4. Regulations and Taxes. Comply in all material respects with
or contest in good faith all statutes and governmental regulations and pay all
taxes, assessments, governmental charges, claims for labor, supplies, rent and
any other obligation which, if unpaid, would become a Lien against any of its
properties except liabilities being contested in good faith by appropriate
proceedings diligently conducted and against which adequate reserves acceptable
to the Borrower's
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independent certified public accountants have been established unless and until
any Lien resulting therefrom attaches to any of its property and becomes
enforceable against its creditors;
8.5. Insurance. (a) Keep all of its insurable properties
adequately insured at all times with responsible insurance carriers against
loss or damage by fire and other hazards, (b) maintain general public liability
insurance at all times with responsible insurance carriers against liability on
account of damage to persons and property and (c) maintain insurance under all
applicable workers' compensation laws (or in the alternative, maintain required
reserves if self-insured for workers' compensation purposes) and against loss
by reason of business interruption such policies of insurance to have such
limits, deductibles, exclusions, co-insurance and other provisions providing no
less coverages than that specified in Schedule 8.5. Each of the policies of
insurance described in this Section 8.5 shall provide that the insurer shall
give the Agent not less than thirty (30) days' prior written notice before any
such policy shall be terminated, lapse or be altered in any manner;
8.6. True Books. Keep true books of record and account in which
full, true and correct entries will be made of all of its dealings and
transactions, and set up on its books such reserves as may be required by GAAP
with respect to doubtful accounts and all taxes, assessments, charges, levies
and claims and with respect to its business in general, and include such
reserves in interim as well as year-end financial statements;
8.7. Right of Inspection. Permit any Person designated by the
Agent, at the Agent's expense, to visit and inspect any of the properties,
corporate books and financial reports of the Borrower or any Subsidiary and to
discuss its affairs, finances and accounts with its principal officers and
independent certified public accountants, all at reasonable times, at
reasonable intervals and with reasonable prior notice and permit any Lender to
discuss the Borrower's affairs, finances and accounts with its principal
officers all at reasonable times, at reasonable intervals and with reasonable
prior notice;
8.8. Observe all Laws. Conform to and duly observe in all material
respects all laws, rules and regulations and all other valid requirements of
any Governmental Authority with respect to the conduct of its business;
8.9. Governmental Licenses. Obtain and maintain all licenses,
permits, certifications and approvals of all applicable Governmental
Authorities as are required for the conduct of its business as currently
conducted and as contemplated by the Loan Documents;
8.10. Covenants Extending to Other Persons. Cause each of its
Subsidiaries to do with respect to itself, its business and its assets, each of
the things required of the Borrower in Sections 8.2 through 8.9, and 8.18
inclusive;
8.11. Officer's Knowledge of Default. Upon any officer of the
Borrower obtaining knowledge of any Default or Event of Default hereunder or
under any other obligation of the Borrower or any Subsidiary to any Lender, or
any event, development or occurrence which could
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reasonably be expected to have a Material Adverse Effect, cause such officer or
an Authorized Representative to promptly notify the Agent of the nature
thereof, the period of existence thereof, and what action the Borrower or such
Subsidiary proposes to take with respect thereto;
8.12. Suits or Other Proceedings. Upon any officer of the Borrower
obtaining knowledge of any litigation or other proceedings being instituted
against the Borrower or any Subsidiary or any attachment, levy, execution or
other process being instituted against any assets of the Borrower or any
Subsidiary making a claim or claims which is likely to result in damages in an
aggregate amount greater than $1,000,000 not otherwise covered by insurance,
promptly deliver to the Agent written notice thereof stating the nature and
status of such litigation, dispute, proceeding, levy, execution or other
process;
8.13. Notice of Discharge of Hazardous Material or Environmental
Complaint. Promptly provide to the Agent true, accurate and complete copies of
any and all notices, complaints, orders, directives, claims, or citations
received by the Borrower or any Subsidiary relating to any (a) violation or
alleged violation by the Borrower or any Subsidiary of any applicable
Environmental Law; (b) release or threatened release by the Borrower or any
Subsidiary, or at any facility or property owned or leased or operated by the
Borrower or any Subsidiary, of any Hazardous Material, except where occurring
legally; or (c) liability or alleged liability of the Borrower or any
Subsidiary for the costs of cleaning up, removing, remediating or responding to
a release of Hazardous Materials;
8.14. Environmental Compliance. If the Borrower or any Subsidiary
shall receive any letter, notice, complaint, order, directive, claim or
citation alleging that the Borrower or and Subsidiary has violated any
Environmental Law or is liable for the costs of cleaning up, removing,
remediating or responding to a release of Hazardous Materials, the Borrower
shall, within the time period permitted by the applicable Environmental Law or
the Governmental Authority responsible for enforcing such Environmental Law,
either (i) remove or remedy, or cause the applicable Subsidiary to remove or
remedy, such violation or release or satisfy such liability or (ii) contest in
good faith such violation so long as no remedial action shall be required to be
taken during the period of such contest;
8.15. Indemnification. Without limiting the generality of Section
12.9, the Borrower hereby agrees to indemnify and hold the Agent, the Lenders
and NMSI, and their respective officers, directors, employees and agents,
harmless from and against any and all claims, losses, penalties, liabilities,
damages and expenses (including assessment and cleanup costs and reasonable
attorneys' fees and disbursements) arising directly or indirectly from, out of
or by reason of (a) the violation of any Environmental Law by the Borrower or
any Subsidiary or with respect to any property owned, operated or leased by the
Borrower or any Subsidiary or (b) the handling, storage, treatment, emission or
disposal of any Hazardous Materials by or on behalf of the Borrower or any
Subsidiary or on or with respect to property owned or leased or operated by the
Borrower or any Subsidiary. The provisions of this Section 8.15 shall survive
the Facility Termination Date and expiration or termination of this Agreement;
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8.16. Further Assurances. At the Borrower's cost and expense, upon
request of the Agent, duly execute and deliver or cause to be duly executed and
delivered, to the Agent such further instruments, documents, certificates,
financing and continuation statements, and do and cause to be done such further
acts that may be reasonably necessary or advisable in the reasonable opinion of
the Agent to carry out more effectively the provisions and purposes of this
Agreement and the other Loan Documents;
8.17. Employee Benefit Plans.
(a) With reasonable promptness, and in any event within thirty
(30) days thereof, give notice to the Agent of (a) the establishment of any new
Pension Plan (which notice shall include a copy of such plan), (b) the
commencement of contributions to any Employee Benefit Plan to which the
Borrower or any of its ERISA Affiliates was not previously contributing, (c)
any material increase in the benefits of any existing Employee Benefit Plan,
(d) each funding waiver request filed with respect to any Employee Benefit Plan
and all communications received or sent by the Borrower or any ERISA Affiliate
with respect to such request and (e) the failure of the Borrower or any ERISA
Affiliate to make a required installment or payment under Section 302 of ERISA
or Section 412 of the Code by the due date;
(b) Promptly and in any event within fifteen (15) days of becoming
aware of the occurrence or forthcoming occurrence of any (a) Termination Event
or (b) nonexempt "prohibited transaction," as such term is defined in Section
406 of ERISA or Section 4975 of the Code, in connection with any Pension Plan
or any trust created thereunder, deliver to the Agent a notice specifying the
nature thereof, what action the Borrower or any ERISA Affiliate has taken, is
taking or proposes to take with respect thereto and, when known, any action
taken or threatened by the Internal Revenue Service, the Department of Labor or
the PBGC with respect thereto; and
(c) With reasonable promptness but in any event within fifteen
(15) days for purposes of clauses (a), (b) and (c), deliver to the Agent copies
of (a) any unfavorable determination letter from the Internal Revenue Service
regarding the qualification of an Employee Benefit Plan under Section 401(a) of
the Code, (b) all notices received by the Borrower or any ERISA Affiliate of
the PBGC's intent to terminate any Pension Plan or to have a trustee appointed
to administer any Pension Plan, (c) each Schedule B (Actuarial Information) to
the annual report (Form 5500 Series) filed by the Borrower or any ERISA
Affiliate with the Internal Revenue Service with respect to each Pension Plan
and (d) all notices received by the Borrower or any ERISA Affiliate from a
Multiemployer Plan sponsor concerning the imposition or amount of withdrawal
liability pursuant to Section 4202 of ERISA. The Borrower will notify the
Agent in writing within five (5) Business Days of the Borrower or any ERISA
Affiliate obtaining knowledge or reason to know that the Borrower or any ERISA
Affiliate has filed or intends to file a notice of intent to terminate any
Pension Plan under a distress termination within the meaning of Section 4041(c)
of ERISA;
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8.18. Continued Operations. Continue at all times to conduct its
business and engage principally in the same or complementary line or lines of
business substantially as heretofore conducted;
8.19. Additional Support Documents. The Borrower will cause (i)
every Material Subsidiary, whether on the Closing Date or thereafter, to
execute and deliver, as promptly as practicable but in any event within 30 days
after the creation or Acquisition of any such Subsidiary, or such Subsidiary
becoming a Material Subsidiary, (a) in the case of a Material Subsidiary that
is a Domestic Subsidiary a Guaranty of such Subsidiary and a Security Agreement
and (b) in the case of a Material Subsidiary that is a Direct Foreign
Subsidiary 65% of the issued and outstanding capital stock of such Subsidiary
together with stock powers (to the extent certificates exist) executed in blank
and a Pledge Agreement covering such stock duly executed by the owner of such
stock, (ii) to be delivered to the Agent an opinion of counsel to the Material
Subsidiary dated as of the date of delivery of the Facility Guaranty and
Security Agreement or Pledged Stock addressed to the Agent and the Lenders, in
form and substance reasonably acceptable to the Agent (which opinion may
include assumptions and qualifications of similar effect to those contained in
the opinions of counsel delivered pursuant to Section 6.1(a) and such others
that are appropriate at the time such opinion is to be given, to the effect)
that:
(A) such Material Subsidiary is duly organized,
validly existing and in good standing in the jurisdiction of
its formation, has the requisite power and authority to own
its properties and conduct its business as then owned and then
conducted and proposed to be conducted, and is duly qualified
to transact business and is in good standing as a foreign
corporation or partnership in each other jurisdiction in which
the character of the properties owned or leased, or the
business carried on by it, requires such qualification and the
failure to be so qualified would reasonably be likely to
result in a Material Adverse Effect;
(B) the execution, delivery and performance of
the Facility Guaranty and Security Agreement or Pledge
Agreement, as the case may be, described in this Section 8.19
to which such Material Subsidiary, Borrower or Domestic
Subsidiary is a signatory have been duly authorized by all
requisite corporate or partnership action (including any
required shareholder or partner approval), such agreements or
agreement have or has been duly executed and delivered and
constitute(s) the valid and binding agreement or agreements of
such Material Subsidiary, Borrower or Domestic Subsidiary,
enforceable against such Material Subsidiary, Borrower or
Domestic Subsidiary in accordance with their or its terms,
subject to the effect of any applicable bankruptcy,
moratorium, insolvency, reorganization or other similar law
affecting the enforceability of creditors' rights generally
and to the effect of general principles of equity (whether
considered in a proceeding at law or in equity); and
(iii) current copies of the charter documents, including partnership
agreements and certificate of limited partnership, if applicable, and bylaws of
such Material Subsidiary, minutes of duly called
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and conducted meetings (or duly effected consent actions) of the Board of
Directors, partners, or appropriate committees thereof (and, if required by
such charter documents, bylaws or by applicable law, of the shareholders) of
such Material Subsidiary authorizing the actions and the execution and delivery
of documents described in this Section 8.19.
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ARTICLE IX
Negative Covenants
Until the Obligations have been paid and satisfied in full, no Letters
of Credit remain outstanding and this Agreement has been terminated in
accordance with the terms hereof, unless the Required Lenders shall otherwise
consent in writing, the Borrower will not, nor will it permit any Subsidiary
to:
9.1. Financial Covenants.
(a) Consolidated Net Worth. Permit Consolidated Net
Worth to be less than (i) $82,000,000 at September 29, 1997 and (ii) as at the
last day of each succeeding fiscal quarter of the Borrower and until (but
excluding) the last day of the next following fiscal quarter of the Borrower,
the sum of (A) the amount of Consolidated Net Worth required to be maintained
pursuant to this Section 9.1(a) as at the end of the immediately preceding
fiscal quarter, plus (B) 75% of Consolidated Net Income (with no reduction for
net losses during any period) for the fiscal quarter of the Borrower ending on
such day (including within "Consolidated Net Income" certain items otherwise
excluded, as provided for in the definition of "Consolidated Net Income") plus
(c) 100% of the net proceeds of the issuance of any capital stock of the
Borrower.
(b) Annualized Consolidated Senior Leverage Ratio.
Permit at any time (i) prior to the earlier to occur of the REIT Event or
Fiscal Year end 1998 the Annualized Consolidated Senior Leverage Ratio to be
greater than 6.00 to 1.00, and (ii) thereafter to be greater than that set
forth below opposite the periods set forth below:
<TABLE>
<CAPTION>
Annualized Consolidated Senior
Period Ending Leverage Ratio
------------- ------------------------------
<S> <C>
The Earlier of Fourth Quarter of
Fiscal Year 1998 or the REIT Event 5.00 to 1.00
Second Quarter of Fiscal Year 1999 4.50 to 1.00
Third Quarter Fiscal Year 1999
through First Quarter of Fiscal
Year 2000 4.00 to 1.00
Second Quarter Fiscal Year 2000
and Thereafter 3.50 to 1.00
</TABLE>
(c) Adjusted Consolidated Leverage Ratio. Permit at any
time during the periods ending set forth below the Adjusted Consolidated
Leverage Ratio to be greater than that set forth opposite such period:
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<TABLE>
Annualized Consolidated Leverage
Periods Ratio
------------- ------------------------------
<S> <C>
Closing Date through Second
Quarter of Fiscal year 1998 8.00 to 1.00
Third Quarter of Fiscal Year
1998 through Third Quarter of
Fiscal Year 1999 7.00 to 1.00
Fourth Quarter of Fiscal Year
1999 through First Quarter of
Fiscal Year 2000 6.00 to 1.00
Thereafter 5.50 to 1.00
</TABLE>
(d) Consolidated Fixed Charge Coverage Ratio. Permit the
Consolidated Fixed Charge Coverage Ratio as of the end of any
Four-Quarter Period to be less than 1.50 to 1.00.
9.2. Acquisitions. Enter into any agreement, contract, binding
commitment or other arrangement providing for any Acquisition, or take any
action to solicit the tender of securities or proxies in respect thereof in
order to effect any Acquisition, unless (i) the Person to be (or whose assets
are to be) acquired does not oppose such Acquisition and the line or lines of
business of the Person to be acquired are substantially the same as one or more
line or lines of business conducted by the Borrower and its Subsidiaries, (ii)
no Default or Event of Default shall have occurred and be continuing either
immediately prior to or immediately after giving effect to such Acquisition,
(iii) the Cost of an Acquisition does not exceed 15% of Consolidated Net Worth,
(iv) the Borrower shall have furnished to the Agent (A) pro forma historical
financial statements as of the end of the most recently completed Fiscal Year
of the Borrower and most recent interim fiscal quarter, if applicable, giving
effect to such Acquisition and (B) a certificate in the form of Exhibit H
prepared on a historical pro forma basis giving effect to such Acquisition,
which certificate shall demonstrate that no Default or Event of Default would
exist immediately after giving effect thereto, (v) the Person acquired shall be
a wholly-owned Subsidiary, or be merged into the Borrower or a wholly-owned
Subsidiary, immediately upon consummation of the Acquisition (or if assets are
being acquired, the acquiror shall be the Borrower or a wholly-owned
Subsidiary), and (vi) if the Cost of Acquisition shall exceed 15% of
Consolidated Net Worth, the Required Lenders shall consent to such Acquisition
in their discretion;
9.3. Capital Expenditures. Make Capital Expenditures, which exceed
in the aggregate in any Fiscal Year of the Borrower described below (on a
limited cumulative basis, with the effect that amounts not expended in the
Fiscal Year set forth below may be carried forward to the next Fiscal Year),
the amount set forth opposite each such period:
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<TABLE>
<CAPTION>
Capital Expenditures
Fiscal Year Ending: Not to Exceed:
------------------- -------------
<S> <C>
January 2, 1999 $300,000,000
January 1, 2000 $415,000,000
Each Fiscal Year
ending on or after
December 31, 2000 $350,000,000
</TABLE>
9.4. Liens. Incur, create or permit to exist any Lien, charge or
other encumbrance of any nature whatsoever with respect to any property or
assets now owned or hereafter acquired by the Borrower or any Subsidiary, other
than
(a) Liens existing as of the date hereof and as set forth
in Schedule 7.7;
(b) Liens imposed by law for taxes, assessments or
charges of any Governmental Authority for claims not yet due or which
are being contested in good faith by appropriate proceedings
diligently conducted and with respect to which adequate reserves or
other appropriate provisions are being maintained in accordance with
GAAP.
(c) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other Liens imposed by law or
created in the ordinary course of business and in existence less than
90 days from the date of creation thereof for amounts not yet due or
which are being contested in good faith by appropriate proceedings
diligently conducted and with respect to which adequate reserves or
other appropriate provisions are being maintained in accordance with
GAAP.
(d) Liens incurred or deposits made in the ordinary
course of business (including, without limitation, surety bonds and
appeal bonds) in connection with workers' compensation, unemployment
insurance and other types of social security benefits or to secure the
performance of tenders, bids, leases, contracts (other than for the
repayment of Indebtedness), statutory obligations and other similar
obligations or arising as a result of progress payments under
government contracts;
(e) easements (including reciprocal easement agreements
and utility agreements), rights-of-way, covenants, consents,
reservations, encroachments, variations and zoning and other
restrictions, charges or encumbrances (whether or not recorded), which
do not interfere materially with the ordinary conduct of the business
of the Borrower or any Subsidiary and which do not materially detract
from the value of the property to which they attach or materially
impair the use thereof to the Borrower or any Subsidiary; and
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(f) Liens on assets of a Special Purpose Subsidiary
securing Non-Recourse Indebtedness;
9.5. Indebtedness. Incur, create, assume or permit to exist any
Indebtedness of the Borrower, howsoever evidenced, except:
(a) Indebtedness existing as of the Closing Date as set
forth in Schedule 7.6; provided, none of the instruments and
agreements evidencing or governing such Indebtedness shall be amended,
modified or supplemented after the Closing Date to change any terms of
subordination, repayment or rights of conversion, put, exchange or
other rights from such terms and rights as in effect on the Closing
Date;
(b) Indebtedness owing to the Agent or any Lender in
connection with this Agreement, any Note or other Loan Document;
(c) the endorsement of negotiable instruments for deposit
or collection or similar transactions in the ordinary course of
business;
(d) up to $175,000,000 of Subordinated Indebtedness;
(e) additional unsecured Indebtedness for Money Borrowed
not otherwise covered by clauses (a) through (c) above, provided that
the aggregate outstanding principal amount of all such other
Indebtedness permitted under this clause (d) shall in no event exceed
$10,000,000 at any time;
(f) TROL Indebtedness; and
(g) Non-Recourse Indebtedness;
9.6. Transfer of Assets. Sell, lease, transfer or otherwise dispose
of any assets of Borrower or any Subsidiary other than (a) dispositions of
assets in the ordinary course of business, (b) dispositions of property that is
substantially worn, damaged, obsolete or, in the judgment of the Borrower, no
longer best used or useful in its business or that of any Subsidiary, (c)
transfers of assets necessary to give effect to merger or consolidation
transactions permitted by Section 9.8, (d) the disposition of Eligible
Securities in the ordinary course of management of the investment portfolio of
the Borrower and its Subsidiaries, (e) the transfer of assets other than
pursuant to a REIT Event to any Person during any Fiscal Year which assets have
a net book value not exceeding five percent (5%) of Consolidated Total Assets so
long as Borrower or its Subsidiary shall be paid not less than the net book
value of such asset in cash and (f) the transfer of real property and
improvements, including the Mortgage Property, for not less than book value
pursuant to a REIT Event (provided that upon any such transfer, the Agent shall,
upon the Borrower's request and at the Borrower's expense, execute and deliver
any documents (including any appropriate releases of or amendments to financing
statements) necessary to release the lien of the Agent on such property);
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9.7. Investments. Purchase, own, invest in or otherwise acquire,
directly or indirectly, any stock or other securities, or make or permit to
exist any interest whatsoever in any other Person or permit to exist any loans
or advances to any Person, except that Borrower may maintain investments or
invest in:
(a) of any Person acquired in an Acquisition permitted
hereunder;
(b) Eligible Securities;
(c) investments existing as of the date hereof and as set
forth in Schedule 7.4;
(d) accounts receivable arising and trade credit granted
in the ordinary course of business and any securities received in
satisfaction or partial satisfaction thereof in connection with
accounts of financially troubled Persons to the extent reasonably
necessary in order to prevent or limit loss;
(e) investments in Domestic Subsidiaries which are
Guarantors or Direct Foreign Subsidiaries who have complied with
Section 8.19; and
(f) other investments, loans or advances (including,
without limitation, loans or advances in or to Special Purpose
Subsidiaries) not exceeding in the aggregate at any time 8% of
Consolidated Total Assets;
9.8. Merger or Consolidation. (a) Consolidate with or merge into
any other Person, or (b) permit any other Person to merge into it, or (c)
liquidate, wind-up or dissolve or sell, transfer or lease or otherwise dispose
of all or a substantial part of its assets (other than sales permitted under
Section 7.6); provided, however, (i) any Subsidiary of the Borrower may merge or
transfer all or substantially all of its assets into or consolidate with the
Borrower or any wholly-owned Subsidiary of the Borrower, and (ii) any other
Person may merge into or consolidate with the Borrower or any wholly-owned
Subsidiary and any Subsidiary may merge into or consolidate with any other
Person in order to consummate an Acquisition permitted by Section 9.2, provided
further, that any resulting or surviving entity shall execute and deliver such
agreements and other documents, including a Facility Guaranty and Security
Instruments, and take such other action as the Agent may require to evidence or
confirm its express assumption of the obligations and liabilities of its
predecessor entities under the Loan Documents;
9.9. Restricted Payments. Make any Restricted Payment or apply or
set apart any of their assets therefor or agree to do any of the foregoing;
9.10. Transactions with Affiliates. Other than transactions
permitted under Sections 9.7 and 9.8, and transactions with Subsidiaries enter
into any transaction after the Closing Date, including, without limitation, the
purchase, sale, lease or exchange of property, real or personal, or the
rendering of any service, with any Affiliate of the Borrower, except (a) that
such Persons may render services to the Borrower or its Subsidiaries for
compensation at the same rates generally paid
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<PAGE> 80
by Persons engaged in the same or similar businesses for the same or similar
services, (b) that the Borrower or any Subsidiary may render services to such
Persons for compensation at the same rates generally charged by the Borrower or
such Subsidiary and (c) in either case in the ordinary course of business and
pursuant to the reasonable requirements of the Borrower's (or any Subsidiary's)
business consistent with past practice of the Borrower and its Subsidiaries and
upon fair and reasonable terms no less favorable to the Borrower (or any
Subsidiary) than would be obtained in a comparable arm's-length transaction
with a Person not an Affiliate;
9.11. Compliance with ERISA. With respect to any Pension Plan,
Employee Benefit Plan or Multiemployer Plan:
(a) permit the occurrence of any Termination Event which
would result in a liability on the part of the Borrower or any ERISA
Affiliate to the PBGC; or
(b) permit the present value of all benefit liabilities
under all Pension Plans to exceed the current value of the assets of
such Pension Plans allocable to such benefit liabilities; or
(c) permit any accumulated funding deficiency (as defined
in Section 302 of ERISA and Section 412 of the Code) with respect to
any Pension Plan, whether or not waived; or
(d) fail to make any contribution or payment to any
Multiemployer Plan which the Borrower or any ERISA Affiliate may be
required to make under any agreement relating to such Multiemployer
Plan, or any law pertaining thereto; or
(e) engage, or permit any Borrower or any ERISA Affiliate
to engage, in any prohibited transaction under Section 406 of ERISA or
Sections 4975 of the Code for which a civil penalty pursuant to
Section 502(I) of ERISA or a tax pursuant to Section 4975 of the Code
may be imposed; or
(f) permit the establishment of any Employee Benefit Plan
providing post-retirement welfare benefits or establish or amend any
Employee Benefit Plan which establishment or amendment could result in
liability to the Borrower or any ERISA Affiliate or increase the
obligation of the Borrower or any ERISA Affiliate to a Multiemployer
Plan; or
(g) fail, or permit the Borrower or any ERISA Affiliate
to fail, to establish, maintain and operate each Employee Benefit Plan
in compliance in all material respects with the provisions of ERISA,
the Code, all applicable Foreign Benefit Laws and all other applicable
laws and the regulations and interpretations thereof;
9.12. Fiscal Year. Change its Fiscal Year other than to a calendar
year;
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9.13. Dissolution, etc. Wind up, liquidate or dissolve (voluntarily
or involuntarily) or commence or suffer any proceedings seeking any such
winding up, liquidation or dissolution, except in connection with a merger or
consolidation permitted pursuant to Section 9.8;
9.14. Limitations on Sales and Leasebacks. Except to the extent
permitted under Section 9.6(e), enter into any arrangement with any Person
providing for the leasing by the Borrower or any Subsidiary of real or personal
property, whether now owned or hereafter acquired in a related transaction or
series of related transactions, which has been or is to be sold or transferred
by the Borrower or any Subsidiary to such Person or to any other Person to whom
funds have been or are to be advanced by such Person on the security of such
property or rental obligations of the Borrower or any Subsidiary;
9.15. Change in Control. Cause, suffer or permit to exist or occur
any Change of Control;
9.16. Negative Pledge Clauses. Enter into or cause, suffer or permit
to exist any agreement with any Person other than the Agent and the Lenders
pursuant to this Agreement or any other Loan Documents which prohibits or
limits the ability of any of the Borrower or any Subsidiary to create, incur,
assume or suffer to exist any Lien upon any of its property, assets or
revenues, whether now owned or hereafter acquired, provided that the Borrower
and any Subsidiary may enter into such an agreement in connection with property
acquired with the proceeds of purchase money Indebtedness permitted hereunder;
9.17. Prepayments, Etc. of Indebtedness. (a) Prepay, redeem,
purchase, defease or otherwise satisfy prior to the scheduled maturity thereof
in any manner, or make any payment in violation of any subordination terms of,
any Indebtedness; or
(b) amend, modify or change in any manner any term or condition of
any Indebtedness described in Section 9.5(a) or any lease so that the terms and
conditions thereof are less favorable to the Agent and the Lenders than the
terms of such Indebtedness or leases as of the Closing Date;
9.18. Rate Hedging Obligations. Incur any Rate Hedging Obligations
or enter into any agreements, arrangements, devices or instruments relating to
Rate Hedging Obligations, except for Swap Agreements.
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ARTICLE X
Events of Default and Acceleration
10.1. Events of Default. If any one or more of the following events
(herein called "Events of Default") shall occur for any reason whatsoever (and
whether such occurrence shall be voluntary or involuntary or come about or be
effected by operation of law or pursuant to or in compliance with any judgment,
decree or order of any court or any order, rule or regulation of any
Governmental Authority), that is to say:
(a) if default shall be made in the due and punctual
payment of the principal of any Loan, Reimbursement Obligation or
other Obligation, when and as the same shall be due and payable
whether pursuant to any provision of Article II or Article III, at
maturity, by acceleration or otherwise and; or
(b) if default shall be made in the due and punctual
payment of any amount of interest on any Loan, Reimbursement
Obligation or other Obligation or of any fees or other amounts payable
to any of the Lenders or the Agent on the date on which the same shall
be due and payable and such default shall continue for three (3) or
more days; or
(c) if default shall be made in the performance or
observance of any covenant set forth in Section 8.7, 8.11, 8.12, 8.19
or Article IX (other than Section 9.4 and 9.11;
(d) if a default shall be made in the performance or
observance of, or shall occur under, any covenant, agreement or
provision contained in this Agreement or the Notes (other than as
described in clauses (a), (b) or (c) above) and such default shall
continue for thirty (30) or more days after the earlier of receipt of
notice of such default by the Authorized Representative from the Agent
or an Authorized Representative of the Borrower becomes aware of such
default, or if a default shall be made in the performance or
observance of, or shall occur under, any covenant, agreement or
provision contained in any of the other Loan Documents (beyond any
applicable grace period, if any, contained therein) or in any
instrument or document evidencing or creating any obligation,
guaranty, or Lien in favor of the Agent or any of the Lenders or
delivered to the Agent or any of the Lenders in connection with or
pursuant to this Agreement or any of the Obligations, or if any Loan
Document ceases to be in full force and effect (other than by reason
of any action by the Agent or any Lender), or if without the written
consent of the Lenders, this Agreement or any other Loan Document
shall be disaffirmed or shall terminate, be terminable or be
terminated or become void or unenforceable for any reason whatsoever
(other than in accordance with its terms in the absence of default or
by reason of any action by the Lenders or the Agent); or
(e) if there shall occur (i) a default, which is not
waived, in the payment of any principal, interest, premium or other
amount with respect to any Indebtedness or Rate Hedging Obligation
(other than the Loans and other Obligations) of the Borrower or any
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Subsidiary in an amount not less than $1,000,000 in the aggregate
outstanding, or (ii) a default, which is not waived, in the
performance, observance or fulfillment of any term or covenant
contained in any agreement or instrument under or pursuant to which
any such Indebtedness or Rate Hedging Obligation referred to in clause
(i) may have been issued, created, assumed, guaranteed or secured by
the Borrower or any Subsidiary, or (iii) any other event of default as
specified in any agreement or instrument under or pursuant to which
any such Indebtedness or Rate Hedging Obligation may have been issued,
created, assumed, guaranteed or secured by the Borrower or any
Subsidiary, and any such default or event of default specified in
clauses (i), (ii) or (iii) shall continue for more than the period of
grace, if any, therein specified, or such default or event of default
shall permit the holder of any such Indebtedness (or any agent or
trustee acting on behalf of one or more holders) to accelerate the
maturity thereof; or
(f) if any representation, warranty or other statement of
fact contained in any Loan Document or in any writing, certificate,
report or statement at any time furnished to the Agent or any Lender
by or on behalf of the Borrower pursuant to or in connection with any
Loan Document, or otherwise, shall be false or misleading in any
material respect when given; or
(g) if the Borrower or any Subsidiary shall be unable to
pay its debts generally as they become due; file a petition to take
advantage of any insolvency statute; make an assignment for the
benefit of its creditors; commence a proceeding for the appointment of
a receiver, trustee, liquidator or conservator of itself or of the
whole or any substantial part of its property; file a petition or
answer seeking liquidation, reorganization or arrangement or similar
relief under the federal bankruptcy laws or any other applicable law
or statute; or
(h) if a court of competent jurisdiction shall enter an
order, judgment or decree appointing a custodian, receiver, trustee,
liquidator or conservator of the Borrower or any Subsidiary or of the
whole or any substantial part of its properties and such order,
judgment or decree continues unstayed and in effect for a period of
sixty (60) days, or approve a petition filed against the Borrower or
any Subsidiary seeking liquidation, reorganization or arrangement or
similar relief under the federal bankruptcy laws or any other
applicable law or statute of the United States of America or any
state, which petition is not dismissed within sixty (60) days; or if,
under the provisions of any other law for the relief or aid of
debtors, a court of competent jurisdiction shall assume custody or
control of the Borrower or any Subsidiary or of the whole or any
substantial part of its properties, which control is not relinquished
within sixty (60) days; or if there is commenced against the Borrower
or any Subsidiary any proceeding or petition seeking reorganization,
arrangement or similar relief under the federal bankruptcy laws or any
other applicable law or statute of the United States of America or any
state which proceeding or petition remains undismissed for a period of
sixty (60) days; or if the Borrower or any Subsidiary takes any action
to indicate its consent to or approval of any such proceeding or
petition; or
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(i) if (i) one or more judgments or orders where the
amount not covered by insurance (or the amount as to which the insurer
is found not to be liable for) is in excess of $1,000,000 is rendered
against the Borrower or any Subsidiary, or (ii) there is any
attachment, injunction or execution against any of the Borrower's or
Subsidiaries' properties for any amount in excess of $1,000,000 in the
aggregate; and such judgment, attachment, injunction or execution
remains unpaid, unstayed, undischarged, unbonded or undismissed for a
period of thirty (30) days; or
(j) if the Borrower or any Material Subsidiary shall,
other than in the ordinary course of business (as determined by past
practices), suspend all or any part of its operations material to the
conduct of the business of the Borrower or such Material Subsidiary
for a period of more than sixty (60) days; or
(k) if at any time less than 80% of Consolidated Total
Assets are attributable to the operations and assets of the Borrower,
Guarantors and Direct Foreign Subsidiaries who have complied with the
requirements of Section 8.19; or
(l) if there shall occur and not be waived an Event of
Default as defined in any of the other Loan Documents;
then, and in any such event and at any time thereafter, if such Event of
Default or any other Event of Default shall have not been waived,
(A) either or both of the following actions may
be taken: (i) the Agent, may, and at the direction of the
Required Lenders shall, declare any obligation of the Lenders
and the Issuing Bank to make further Revolving Loans and Swing
Line Loans or to issue additional Letters of Credit
terminated, whereupon the obligation of each Lender to make
further Revolving Loans, of NationsBank to make further Swing
Line Loans, and of the Issuing Bank to issue additional
Letters of Credit, hereunder shall terminate immediately, and
(ii) the Agent shall at the direction of the Required Lenders,
at their option, declare by notice to the Borrower any or all
of the Obligations to be immediately due and payable, and the
same, including all interest accrued thereon and all other
obligations of the Borrower to the Agent and the Lenders,
shall forthwith become immediately due and payable without
presentment, demand, protest, notice or other formality of any
kind, all of which are hereby expressly waived, anything
contained herein or in any instrument evidencing the
Obligations to the contrary notwithstanding; provided,
however, that notwithstanding the above, if there shall occur
an Event of Default under clause (g) or (h) above, then the
obligation of the Lenders to make Revolving Loans, of
NationsBank to make Swing Line Loans, and of the Issuing Bank
to issue Letters of Credit hereunder shall automatically
terminate and any and all of the Obligations shall be
immediately due and payable without the necessity of any
action by the Agent or the Required Lenders or notice to the
Agent or the Lenders;
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(B) The Borrower shall, upon demand of the Agent
or the Required Lenders, deposit cash with the Agent in an
amount equal to the amount of any Letter of Credit
Outstandings, as collateral security for the repayment of any
future drawings or payments under such Letters of Credit, and
such amounts shall be held by the Agent pursuant to the terms
of the LC Account Agreement; and
(C) the Agent and each of the Lenders shall have
all of the rights and remedies available under the Loan
Documents or under any applicable law.
10.2. Agent to Act. In case any one or more Events of Default shall
occur and not have been waived or cured, the Agent may, and at the direction of
the Required Lenders shall, proceed to protect and enforce their rights or
remedies either by suit in equity or by action at law, or both, whether for the
specific performance of any covenant, agreement or other provision contained
herein or in any other Loan Document, or to enforce the payment of the
Obligations or any other legal or equitable right or remedy.
10.3. Cumulative Rights. No right or remedy herein conferred upon
the Lenders or the Agent is intended to be exclusive of any other rights or
remedies contained herein or in any other Loan Document, and every such right
or remedy shall be cumulative and shall be in addition to every other such
right or remedy contained herein and therein or now or hereafter existing at
law or in equity or by statute, or otherwise.
10.4. No Waiver. No course of dealing between the Borrower and any
Lender or the Agent or any failure or delay on the part of any Lender or the
Agent in exercising any rights or remedies under any Loan Document or otherwise
available to it shall operate as a waiver of any rights or remedies and no
single or partial exercise of any rights or remedies shall operate as a waiver
or preclude the exercise of any other rights or remedies hereunder or of the
same right or remedy on a future occasion.
10.5. Allocation of Proceeds. If an Event of Default has occurred
and not been waived, and the maturity of the Notes has been accelerated
pursuant to Article X hereof, all payments received by the Agent hereunder, in
respect of any principal of or interest on the Obligations or any other amounts
payable by the Borrower hereunder, shall be applied by the Agent in the
following order:
(a) amounts due to the Lenders pursuant to Sections 2.10,
3.3, 3.4 and 12.5;
(b) amounts due to the Agent pursuant to Section 11.9;
(c) payments of interest on Loans, Swing Line Loans and
Reimbursement Obligations, to be applied for the ratable benefit of
the Lenders (with amounts payable in respect of Swing Line
Outstandings being included in such calculation and paid to
NationsBank);
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(d) payments of principal of Loans, Swing Line Loans and
Reimbursement Obligations, to be applied for the ratable benefit of
the Lenders (with amounts payable in respect of Swing Line
Outstandings being included in such calculation and paid to
NationsBank);
(e) payments of cash amounts to the Agent in respect of
outstanding Letters of Credit pursuant to Section 10.1(l)(B);
(f) amounts due to the Lenders pursuant to Sections
3.2(g), 8.15 and 12.9;
(g) payments of all other amounts due under any of the
Loan Documents, if any, to be applied for the ratable benefit of the
Lenders;
(h) amounts due to any of the Lenders in respect of
Obligations consisting of liabilities under any Swap Agreement with
any of the Lenders on a pro rata basis according to the amounts owed;
and
(i) any surplus remaining after application as provided
for herein, to the Borrower or otherwise as may be required by
applicable law.
10.6. Limitation. The Agent and the Lenders shall have no right
to accelerate any of the Loans upon, or to institute any action or proceeding
before any court to realize upon collateral as a result of, the occurrence of
any Default which shall not also constitute an Event of Default; provided
however, nothing contained in this sentence shall in any respect impair or
adversely affect the right, power and authority of the Agent and the Lenders
(i) to take any action expressly required or permitted to be taken under the
Loan Documents upon the occurrence of any Default; and (ii) to take any action
provided under the Loan Documents or otherwise available by statute, at law or
in equity upon the occurrence of any Default.
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ARTICLE XI
The Agent
11.1. Appointment, Powers, and Immunities. Each Lender hereby
irrevocably appoints and authorizes the Agent to act as its agent under this
Agreement and the other Loan Documents with such powers and discretion as are
specifically delegated to the Agent by the terms of this Agreement and the
other Loan Documents, together with such other powers as are reasonably
incidental thereto. The Agent (which term as used in this sentence and in
Section 11.5 and the first sentence of Section 11.6 hereof shall include its
affiliates and its own and its affiliates' officers, directors, employees, and
agents): (a) shall not have any duties or responsibilities except those
expressly set forth in this Agreement and shall not be a trustee or fiduciary
for any Lender; (b) shall not be responsible to the Lenders for any recital,
statement, representation, or warranty (whether written or oral) made in or in
connection with any Loan Document or any certificate or other document referred
to or provided for in, or received by any of them under, any Loan Document, or
for the value, validity, effectiveness, genuineness, enforceability, or
sufficiency of any Loan Document, or any other document referred to or provided
for therein or for any failure by any Loan Party or any other Person to perform
any of its obligations thereunder; (c) shall not be responsible for or have any
duty to ascertain, inquire into, or verify the performance or observance of any
covenants or agreements by any Loan Party or the satisfaction of any condition
or to inspect the property (including the books and records) of any Loan Party
or any of its Subsidiaries or affiliates; (d) shall not be required to initiate
or conduct any litigation or collection proceedings under any Loan Document;
and (e) shall not be responsible for any action taken or omitted to be taken by
it under or in connection with any Loan Document, except for its own gross
negligence or willful misconduct. The Agent may employ agents and
attorneys-in-fact and shall not be responsible for the negligence or misconduct
of any such agents or attorneys-in-fact selected by it with reasonable care.
Each Lender hereby irrevocably designates and appoints NationsBank as the Agent
for the Lenders under this Agreement, and each of the Lenders hereby
irrevocably authorizes NationsBank as the Agent for such Lender, to take such
action on its behalf under the provisions of this Agreement and the other Loan
Documents and to exercise such powers as are expressly delegated to the Agent
by the terms of this Agreement and such other Loan Documents, together with
such other powers as are reasonably incidental thereto. The Agent shall not
have any duties or responsibilities, except those expressly set forth herein,
or any fiduciary relationship with any of the Lenders, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities
shall be read into this Agreement or any other Loan Document or otherwise exist
against the Agent.
11.2. Reliance by Agent. The Agent shall be entitled to rely upon
any certification, notice, instrument, writing, or other communication
(including, without limitation, any thereof by telephone or telefacsimile)
believed by it to be genuine and correct and to have been signed, sent or made
by or on behalf of the proper Person or Persons, and upon advice and statements
of legal counsel (including counsel for any Loan Party), independent
accountants, and other experts selected by the Agent. The Agent may deem and
treat the payee of any Note as the holder thereof for all purposes hereof
unless and until the Agent receives and accepts an Assignment and Acceptance
executed in
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accordance with Section 12.1 hereof. As to any matters not expressly provided
for by this Agreement, the Agent shall not be required to exercise any
discretion or take any action, but shall be required to act or to refrain from
acting (and shall be fully protected in so acting or refraining from acting)
upon the instructions of the Required Lenders, and such instructions shall be
binding on all of the Lenders; provided, however, that the Agent shall not be
required to take any action that exposes the Agent to personal liability or
that is contrary to any Loan Document or applicable law or unless it shall
first be indemnified to its satisfaction by the Lenders against any and all
liability and expense which may be incurred by it by reason of taking any such
action.
11.3. Defaults. The Agent shall not be deemed to have knowledge or
notice of the occurrence of a Default or Event of Default unless the Agent has
received written notice from a Lender or the Borrower specifying such Default
or Event of Default and stating that such notice is a "Notice of Default". In
the event that the Agent receives such a notice of the occurrence of a Default
or Event of Default, the Agent shall give prompt notice thereof to the Lenders.
The Agent shall (subject to Section 11.2 hereof) take such action with respect
to such Default or Event of Default as shall reasonably be directed by the
Required Lenders, provided that, unless and until the Agent shall have received
such directions, the Agent may (but shall not be obligated to) take such
action, or refrain from taking such action, with respect to such Default or
Event of Default as it shall deem advisable in the best interest of the
Lenders.
11.4. Rights as Lender. With respect to its Revolving Credit
Commitment and the Loans made by it, NationsBank (and any successor acting as
Agent) in its capacity as a Lender hereunder shall have the same rights and
powers hereunder as any other Lender and may exercise the same as though it
were not acting as the Agent, and the term "Lender" or "Lenders" shall, unless
the context otherwise indicates, include the Agent in its individual capacity.
NationsBank (and any successor acting as Agent) and its affiliates may (without
having to account therefor to any Lender) accept deposits from, lend money to,
make investments in, provide services to, and generally engage in any kind of
lending, trust, or other business with any Loan Party or any of its
Subsidiaries or affiliates as if it were not acting as Agent, and NationsBank
(and any successor acting as Agent) and its affiliates may accept fees and
other consideration from any Loan Party or any of its Subsidiaries or
affiliates for services in connection with this Agreement or otherwise without
having to account for the same to the Lenders.
11.5. Indemnification. The Lenders agree to indemnify the Agent (to
the extent not reimbursed under Section 12.9 hereof, but without limiting the
obligations of the Borrower under such Section) ratably in accordance with
their respective Revolving Credit Commitments, for any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses (including attorneys' fees), or disbursements of any kind and nature
whatsoever that may be imposed on, incurred by or asserted against the Agent
(including by any Lender) in any way relating to or arising out of any Loan
Document or the transactions contemplated thereby or any action taken or
omitted by the Agent under any Loan Document; provided that no Lender shall be
liable for any of the foregoing to the extent they arise from the gross
negligence or willful misconduct of the Person to be indemnified. Without
limitation of the foregoing, each Lender agrees to reimburse the Agent
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promptly upon demand for its ratable share of any costs or expenses payable by
the Borrower under Section 12.5, to the extent that the Agent is not promptly
reimbursed for such costs and expenses by the Borrower. The agreements
contained in this Section shall survive payment in full of the Loans and all
other amounts payable under this Agreement.
11.6. Non-Reliance on Agent and Other Lenders. Each Lender agrees
that it has, independently and without reliance on the Agent or any other
Lender, and based on such documents and information as it has deemed
appropriate, made its own credit analysis of the Loan Parties and their
Subsidiaries and decision to enter into this Agreement and that it will,
independently and without reliance upon the Agent or any other Lender, and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own analysis and decisions in taking or not taking
action under the Loan Documents. Except for notices, reports, and other
documents and information expressly required to be furnished to the Lenders by
the Agent hereunder, the Agent shall not have any duty or responsibility to
provide any Lender with any credit or other information concerning the affairs,
financial condition, or business of any Loan Party or any of its Subsidiaries
or affiliates that may come into the possession of the Agent or any of its
affiliates.
11.7. Resignation of Agent. The Agent may resign at any time by
giving notice thereof to the Lenders and the Borrower. Upon any such
resignation, the Required Lenders shall have the right to appoint a successor
Agent meeting the requirements set forth herein. The Borrower shall have the
right to approve such Agent so long as no Default or Event of Default exist.
If no successor Agent shall have been so appointed by the Required Lenders and
shall have accepted such appointment within thirty (30) days after the retiring
Agent's giving of notice of resignation, then the retiring Agent may, on behalf
of the Lenders, appoint a successor Agent which shall be a commercial bank
organized under the laws of the United States of America having combined
capital and surplus of at least $500,000,000. Upon the acceptance of any
appointment as Agent hereunder by a successor, such successor shall thereupon
succeed to and become vested with all the rights, powers, discretion,
privileges, and duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations hereunder. After any retiring
Agent's resignation hereunder as Agent, the provisions of this Article XI
shall continue in effect for its benefit in respect of any actions taken or
omitted to be taken by it while it was acting as Agent.
11.8. Sharing of Payments, etc. Each Lender agrees that if it
shall, through the exercise of a right of banker's lien, set-off, counterclaim
or otherwise, obtain payment with respect to its Obligations (other than
pursuant to Article V) which results in its receiving more than its pro rata
share of the aggregate payments with respect to all of the Obligations (other
than any payment expressly provided hereunder to be distributed on other than a
pro rata basis and payments pursuant to Article V), then (a) such Lender shall
be deemed to have simultaneously purchased from the other Lenders a share in
their Obligations so that the amount of the Obligations held by each of the
Lenders shall be pro rata and (b) such other adjustments shall be made from
time to time as shall be equitable to insure that the Lenders share such
payments ratably; provided, however, that for purposes of this Section 11.8 the
term "pro rata" shall be determined with respect to the Revolving Credit
Commitment of each Lender and to the Total Revolving Credit Commitments after
subtraction in each case of amounts, if any, by which any such Lender has not
funded its share of
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the outstanding Loans and Obligations. If all or any portion of any such
excess payment is thereafter recovered from the Lender which received the same,
the purchase provided in this Section 11.8 shall be rescinded to the extent of
such recovery, without interest. The Borrower expressly consents to the
foregoing arrangements and agrees that each Lender so purchasing a portion of
the other Lenders' Obligations may exercise all rights of payment (including,
without limitation, all rights of set-off, banker's lien or counterclaim) with
respect to such portion as fully as if such Lender were the direct holder of
such portion.
11.9. Fees. The Borrower agrees to pay to the Agent, for its
individual account, an annual Agent's fee as from time to time agreed to by the
Borrower and Agent in writing.
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ARTICLE XII
Miscellaneous
12.1. Assignments and Participations. (a) Each Lender may assign
to one or more Eligible Assignees all or a portion of its rights and
obligations under this Agreement (including, without limitation, all or a
portion of its Loans, its Note, and its Revolving Credit Commitment); provided,
however, that
(i) each such assignment shall be to an Eligible
Assignee;
(ii) except in the case of an assignment to another Lender
or an assignment of all of a Lender's rights and obligations under this
Agreement, any such partial assignment shall be in an amount when taken
together with the pro rata portion of TROL Indebtedness of such Lender being
assigned at least equal to $5,000,000 or an integral multiple of $1,000,000 in
excess thereof;
(iii) each such assignment by a Lender shall be of a
constant, and not varying, percentage of all of its rights and obligations
under this Agreement and the Note; and
(iv) the parties to such assignment shall execute and
deliver to the Agent for its acceptance an Assignment and Acceptance in the
form of Exhibit B hereto, together with any Note subject to such assignment and
a processing fee of $3,000.
Upon execution, delivery, and acceptance of such Assignment and Acceptance, the
assignee thereunder shall be a party hereto and, to the extent of such
assignment, have the obligations, rights, and benefits of a Lender hereunder
and the assigning Lender shall, to the extent of such assignment, relinquish
its rights and be released from its obligations under this Agreement. Upon the
consummation of any assignment pursuant to this Section, the assignor, the
Agent and the Borrower shall make appropriate arrangements so that, if
required, new Notes are issued to the assignor and the assignee. If the
assignee is not incorporated under the laws of the United States of America or
a state thereof, it shall deliver to the Borrower and the Agent certification
as to exemption from deduction or withholding of Taxes in accordance with
Section 5.6.
(b) The Agent shall maintain at its address referred to in Section
12.2 a copy of each Assignment and Acceptance delivered to and accepted by it
and a register for the recordation of the names and addresses of the Lenders
and the Revolving Credit Commitment of, and principal amount of the Loans owing
to, each Lender from time to time (the "Register"). The entries in the
Register shall be conclusive and binding for all purposes, absent manifest
error, and the Borrower, the Agent and the Lenders may treat each Person whose
name is recorded in the Register as a Lender hereunder for all purposes of this
Agreement. The Register shall be available for inspection by the Borrower or
any Lender at any reasonable time and from time to time upon reasonable prior
notice.
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(c) Upon its receipt of an Assignment and Acceptance executed by
the parties thereto, together with any Note subject to such assignment and
payment of the processing fee, the Agent shall, if such Assignment and
Acceptance has been completed and is in substantially the form of Exhibit B
hereto, (i) accept such Assignment and Acceptance, (ii) record the information
contained therein in the Register and (iii) give prompt notice thereof to the
parties thereto.
(d) Each Lender may sell participations at its expense to one or
more Persons in all or a portion of its rights and obligations under this
Agreement (including all or a portion of its Revolving Credit Commitment and
its Loans); provided, however, that (i) such Lender's obligations under this
Agreement shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such
obligations, (iii) the Borrower shall continue to deal solely and directly with
such Lender in connection with such Lender's rights and obligations under this
Agreement, and such Lender shall retain the sole right to enforce the
obligations of the Borrower relating to its Loans and its Note and to approve
any amendment, modification, or waiver of any provision of this Agreement
(other than amendments, modifications, or waivers decreasing the amount of
principal of or the rate at which interest is payable on such Loans or Note,
extending any scheduled principal payment date or date fixed for the payment of
interest on such Loans or Note, or extending its Revolving Credit Commitment)
and (iv) the sale of any such participation which requires the Borrower to file
a registration statement with federal or state regulatory authorities shall not
be permitted.
(e) Notwithstanding any other provision set forth in this
Agreement, any Lender may at any time assign and pledge all or any portion of
its Loans and its Note to any Federal Reserve Bank as collateral security
pursuant to Regulation A and any Operating Circular issued by such Federal
Reserve Bank. No such assignment shall release the assigning Lender from its
obligations hereunder.
(f) Any Lender may furnish any information concerning the Borrower
or any of its Subsidiaries in the possession of such Lender from time to time
to assignees and participants (including prospective assignees and
participants) so long as such Lender shall require in writing (which writing
names the Borrower as a third party beneficiary thereof) any such assignee or
participant or perspective assignee or participant to maintain the
confidentiality of any information delivered to it which is not publicly
available.
(g) The Borrower may not assign, nor shall it cause, suffer or
permit any Guarantor to assign any rights, powers, duties or obligations under
this Agreement or the other Loan Documents without the prior written consent of
all the Lenders.
(h) Notwithstanding the fact that a Lender holding TROL
Indebtedness may assign all or a portion of its interest therein without the
assignment of a pro rata portion of its Revolving Credit Commitment, the Agent
shall encourage Lenders assigning a portion of its rights and obligations under
this Agreement who hold TROL Indebtedness to assign a like pro rata portion of
its TROL Indebtedness to the same Eligible Assignee. Should any Lender fail to
make a pro rata assignment
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of TROL Indebtedness held by it, the Agent shall, at the request of the
Borrower, assist the Borrower in locating an Eligible Assignee pursuant to
Section 5.7 to replace such assigning Lender.
12.2. Notices. Any notice shall be conclusively deemed to have been
received by any party hereto and be effective (i) on the day on which delivered
(including hand delivery by commercial courier service) to such party (against
receipt therefor), (ii) on the date of receipt at such address, telefacsimile
number or telex number as may from time to time be specified by such party in
written notice to the other parties hereto or otherwise received), in the case
of notice by telegram or telefacsimile, respectively (where the receipt of such
message is verified by return), or (iii) on the fifth Business Day after the
day on which mailed, if sent prepaid by certified or registered mail, return
receipt requested, in each case delivered, transmitted or mailed, as the case
may be, to the address or telefacsimile number, as appropriate, set forth below
or such other address or number as such party shall specify by notice
hereunder:
(a) if to the Borrower:
Wackenhut Corrections Corporation
4200 Wackenhut Drive, #100
Palm Beach Gardens, Florida 33410
Attention: Mr. David Watson, Controller and Chief
Accounting Officer
Telephone: (800) 666-5640 ext. 6646
Telefacsimile: (561) 691-6473
With a copy to:
Ackerman Senterfitt & Edison, P.A.
One Southeast Third Avenue, 28th Floor
Miami, Florida 33131-1704
Attention: Bruce I. March, Esq.
Telephone: (305) 374-5600
Telefacsimile: (305) 374-5095
(b) if to the Agent:
NationsBank, National Association
Independence Center, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Agency Services
Telephone: (704) 388-2374
Telefacsimile: (704) 386-9923
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with a copy to:
NationsBank, National Association
100 S.E. 2nd Street, 14th Floor
Miami, Florida 33131
Attention: Maria Conroy
Telephone: (305) 533-2420
Telefacsimile: (305) 533-2437
(c) if to the Lenders:
At the addresses set forth on the signature pages
hereof and on the signature page of each Assignment
and Acceptance;
(d) if to any Guarantor, at the address set forth on the
signature page of the Facility Guaranty or other Loan
Document executed by such Guarantor, as the case may
be.
12.3. Right of Set-off; Adjustments. Upon the occurrence and during
the continuance of any Event of Default, each Lender (and each of its
affiliates) is hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by such Lender (or any of its affiliates)
to or for the credit or the account of the Borrower against any and all of the
obligations of the Borrower now or hereafter existing under this Agreement and
the Note held by such Lender, irrespective of whether such Lender shall have
made any demand under this Agreement or such Note and although the payment of
such obligations may not have been accelerated. Each Lender agrees promptly to
notify the Borrower after any such set-off and application made by such Lender;
provided, however, that the failure to give such notice shall not affect the
validity of such set-off and application. The rights of each Lender under this
Section are in addition to other rights and remedies (including, without
limitation, other rights of set-off) that such Lender may have.
12.4. Survival. All covenants, agreements, representations and
warranties made herein shall survive the making by the Lenders of the Loans and
the issuance of the Letters of Credit and the execution and delivery to the
Lenders of this Agreement and the Notes and shall continue in full force and
effect so long as any of Obligations remain outstanding or any Lender has any
commitment hereunder or the Borrower has continuing obligations hereunder
unless otherwise provided herein. Whenever in this Agreement any of the
parties hereto is referred to, such reference shall be deemed to include the
successors and permitted assigns of such party and all covenants, provisions
and agreements by or on behalf of the Borrower which are contained in the Loan
Documents shall inure to the benefit of the successors and permitted assigns of
the Lenders or any of them.
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<PAGE> 95
12.5. Expenses. The Borrower agrees to pay on demand all reasonable
costs and expenses of the Agent in connection with the syndication, preparation,
execution, delivery, modification, and amendment of this Agreement, the other
Loan Documents, and the other documents to be delivered hereunder, including,
without limitation, the reasonable fees and expenses of counsel for the Agent
with respect thereto and with respect to advising the Agent as to its rights and
responsibilities under the Loan Documents. The Borrower further agrees to pay
on demand all reasonable costs and expenses of the Agent and the Lenders, if any
(including, without limitation, reasonable attorneys' fees and expenses and the
cost of internal counsel), in connection with the enforcement (whether through
negotiations, legal proceedings, or otherwise) of the Loan Documents and the
other documents to be delivered hereunder.
12.6. Amendments and Waivers. Any provision of this Agreement or
any other Loan Document may be amended or waived if, but only if, such
amendment or waiver is in writing and is signed by the Borrower and the
Required Lenders (and, if Article XI or the rights or duties of the Agent are
affected thereby, by the Agent); provided that no such amendment or waiver
shall, unless signed by all the Lenders, (i) increase the Revolving Credit
Commitments of the Lenders, (ii) reduce the principal of or rate of interest on
any Loan or any fees or other amounts payable hereunder, (iii) postpone any
date fixed for the payment of any scheduled installment of principal of or
interest on any Loan or any fees or other amounts payable hereunder or for
termination of any Revolving Credit Commitment, (iv) change the percentage of
the Revolving Credit Commitments or of the unpaid principal amount of the
Notes, or the number of Lenders, which shall be required for the Lenders or any
of them to take any action under this Section or any other provision of this
Agreement, (v) release any Guarantor or Pledged Stock or (vi) release all or
substantially all of the Collateral, other than Collateral which may be
transferred pursuant to Section 9.6(f); and provided, further, that no such
amendment or waiver which affects the rights, privileges, or obligations of
NationsBank as provider of the Swing Loans or issuer of Letters of Credit,
shall be effective unless signed in writing by NationsBank.
Notwithstanding any provision of the other Loan Documents to the contrary, as
between the Agent and the Lenders, execution by the Agent shall not be deemed
conclusive evidence that the Agent has obtained the written consent of the
Required Lenders. No notice to or demand on the Borrower in any case shall
entitle the Borrower to any other or further notice or demand in similar or
other circumstances, except as otherwise expressly provided herein. No delay
or omission on any Lender's or the Agent's part in exercising any right, remedy
or option shall operate as a waiver of such or any other right, remedy or
option or of any Default or Event of Default.
12.7. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original, and it shall not be necessary in making proof of this Agreement to
produce or account for more than one such fully-executed counterpart.
12.8. Termination. The termination of this Agreement shall not
affect any rights of the Borrower, the Lenders or the Agent or any obligation
of the Borrower, the Lenders or the Agent,
89
<PAGE> 96
arising prior to the effective date of such termination, and the provisions
hereof shall continue to be fully operative until all transactions entered into
or rights created or obligations incurred prior to such termination have been
fully disposed of, concluded or liquidated and the Obligations arising prior to
or after such termination have been irrevocably paid in full. The rights
granted to the Agent for the benefit of the Lenders under the Loan Documents
shall continue in full force and effect, notwithstanding the termination of
this Agreement, until all of the Obligations have been paid in full after the
termination hereof (other than Obligations in the nature of continuing
indemnities or expense reimbursement obligations not yet due and payable, which
shall continue) or the Borrower has furnished the Lenders and the Agent with an
indemnification satisfactory to the Agent and each Lender with respect thereto.
All representations, warranties, covenants, waivers and agreements contained
herein shall survive termination hereof until payment in full of the
Obligations unless otherwise provided herein. Notwithstanding the foregoing,
if after receipt of any payment of all or any part of the Obligations, any
Lender is for any reason compelled to surrender such payment to any Person
because such payment is determined to be void or voidable as a preference,
impermissible setoff, a diversion of trust funds or for any other reason, this
Agreement shall continue in full force and the Borrower shall be liable to, and
shall indemnify and hold the Agent or such Lender harmless for, the amount of
such payment surrendered until the Agent or such Lender shall have been finally
and irrevocably paid in full. The provisions of the foregoing sentence shall
be and remain effective notwithstanding any contrary action which may have been
taken by the Agent or the Lenders in reliance upon such payment, and any such
contrary action so taken shall be without prejudice to the Agent or the
Lenders' rights under this Agreement and shall be deemed to have been
conditioned upon such payment having become final and irrevocable.
12.9. Indemnification. (a) The Borrower agrees to indemnify and
hold harmless the Agent and each Lender and each of their affiliates and their
respective officers, directors and employees (each, an "Indemnified Party")
from and against any and all claims, damages, losses, liabilities, costs, and
expenses (including, without limitation, reasonable attorneys' fees) that may
be incurred by or asserted or awarded against any Indemnified Party, in each
case arising out of or in connection with or by reason of (including, without
limitation, in connection with any investigation, litigation, or proceeding or
preparation of defense in connection therewith) the Loan Documents, any of the
transactions contemplated herein or the actual or proposed use of the proceeds
of the Loans, except to the extent such claim, damage, loss, liability, cost,
or expense is finally judicially determined to have resulted from such
Indemnified Party's gross negligence or willful misconduct. In the case of an
investigation, litigation or other proceeding to which the indemnity in this
Section 12.9(a) applies, such indemnity shall be effective whether or not such
investigation, litigation or proceeding is brought by the Borrower, its
directors, shareholders or creditors or an Indemnified Party or any other
Person or any Indemnified Party is otherwise a party thereto and whether or not
the transactions contemplated hereby are consummated.
(b) Without prejudice to the survival of any other agreement of
the Borrower hereunder, the agreements and obligations of the Borrower
contained in this Section 12.9 shall survive the payment in full of the Loans
and all other amounts payable under this Agreement and the Notes.
90
<PAGE> 97
12.10. Severability. If any provision of this Agreement or the other
Loan Documents shall be determined to be illegal or invalid as to one or more
of the parties hereto, then such provision shall remain in effect with respect
to all parties, if any, as to whom such provision is neither illegal nor
invalid, and in any event all other provisions hereof shall remain effective
and binding on the parties hereto.
12.11. Entire Agreement. This Agreement, together with the other
Loan Documents, constitutes the entire agreement among the parties with respect
to the subject matter hereof and supersedes all previous proposals,
negotiations, representations, commitments and other communications between or
among the parties, both oral and written, with respect thereto.
12.12. Agreement Controls. In the event that any term of any of the
Loan Documents other than this Agreement conflicts with any express term of
this Agreement, the terms and provisions of this Agreement shall control to the
extent of such conflict.
12.13. Usury Savings Clause. Notwithstanding any other provision
herein, the aggregate interest rate charged under any of the Notes, including
all charges or fees in connection therewith deemed in the nature of interest
under applicable law shall not exceed the Highest Lawful Rate (as such term is
defined below). If the rate of interest (determined without regard to the
preceding sentence) under this Agreement at any time exceeds the Highest Lawful
Rate (as defined below), the outstanding amount of the Loans made hereunder
shall bear interest at the Highest Lawful Rate until the total amount of
interest due hereunder equals the amount of interest which would have been due
hereunder if the stated rates of interest set forth in this Agreement had at
all times been in effect. In addition, if when the Loans made hereunder are
repaid in full the total interest due hereunder (taking into account the
increase provided for above) is less than the total amount of interest which
would have been due hereunder if the stated rates of interest set forth in this
Agreement had at all times been in effect, then to the extent permitted by law,
the Borrower shall pay to the Agent an amount equal to the difference between
the amount of interest paid and the amount of interest which would have been
paid if the Highest Lawful Rate had at all times been in effect.
Notwithstanding the foregoing, it is the intention of the Lenders and the
Borrower to conform strictly to any applicable usury laws. Accordingly, if any
Lender contracts for, charges, or receives any consideration which constitutes
interest in excess of the Highest Lawful Rate, then any such excess shall be
cancelled automatically and, if previously paid, shall at such Lender's option
be applied to the outstanding amount of the Loans made hereunder or be refunded
to the Borrower. As used in this paragraph, the term "Highest Lawful Rate"
means the maximum lawful interest rate, if any, that at any time or from time
to time may be contracted for, charged, or received under the laws applicable
to such Lender which are presently in effect or, to the extent allowed by law,
under such applicable laws which may hereafter be in effect and which allow a
higher maximum nonusurious interest rate than applicable laws now allow.
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<PAGE> 98
12.14. GOVERNING LAW; WAIVER OF JURY TRIAL.
(a) THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE
OF FLORIDA APPLICABLE TO CONTRACTS EXECUTED, AND TO BE FULLY
PERFORMED, IN SUCH STATE. NOTWITHSTANDING THAT THIS AGREEMENT AND THE
OTHER LOAN DOCUMENTS HAVE BEEN EXECUTED OUTSIDE THE STATE OF FLORIDA.
(b) THE BORROWER HEREBY EXPRESSLY AND IRREVOCABLY AGREES
AND CONSENTS THAT ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREIN
MAY BE INSTITUTED IN ANY STATE OR FEDERAL COURT SITTING IN THE COUNTY
OF BROWARD, STATE OF FLORIDA, UNITED STATES OF AMERICA AND, BY THE
EXECUTION AND DELIVERY OF THIS AGREEMENT, THE BORROWER EXPRESSLY
WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING
OF VENUE IN, OR TO THE EXERCISE OF JURISDICTION OVER IT AND ITS
PROPERTY BY, ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING,
AND THE BORROWER HEREBY IRREVOCABLY SUBMITS GENERALLY AND
UNCONDITIONALLY TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUCH
SUIT, ACTION OR PROCEEDING.
(c) THE BORROWER AGREES THAT SERVICE OF PROCESS MAY BE
MADE BY PERSONAL SERVICE OF A COPY OF THE SUMMONS AND COMPLAINT OR
OTHER LEGAL PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING, OR BY
REGISTERED OR CERTIFIED MAIL (POSTAGE PREPAID) TO THE ADDRESS OF THE
BORROWER PROVIDED IN SECTION 12.2, OR BY ANY OTHER METHOD OF SERVICE
PROVIDED FOR UNDER THE APPLICABLE LAWS IN EFFECT IN THE STATE OF
FLORIDA.
(d) NOTHING CONTAINED IN SUBSECTIONS (A) OR (B) HEREOF
SHALL PRECLUDE THE AGENT OR ANY LENDER FROM BRINGING ANY SUIT, ACTION
OR PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT IN THE
COURTS OF ANY JURISDICTION WHERE THE BORROWER OR ANY OF THE BORROWER'S
PROPERTY OR ASSETS MAY BE FOUND OR LOCATED. TO THE EXTENT PERMITTED
BY THE APPLICABLE LAWS OF ANY SUCH JURISDICTION, THE BORROWER HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT AND
EXPRESSLY WAIVES, IN RESPECT OF ANY SUCH SUIT, ACTION OR PROCEEDING,
OBJECTION TO THE EXERCISE OF JURISDICTION OVER IT AND ITS PROPERTY BY
ANY SUCH OTHER COURT OR COURTS WHICH NOW OR HEREAFTER MAY BE AVAILABLE
UNDER APPLICABLE LAW.
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<PAGE> 99
(e) IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY
RIGHTS OR REMEDIES UNDER OR RELATED TO ANY LOAN DOCUMENT OR ANY
AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR THAT MAY IN
THE FUTURE BE DELIVERED IN CONNECTION THEREWITH, THE BORROWER, THE
AGENT AND THE LENDERS HEREBY AGREE, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED
BEFORE A COURT AND NOT BEFORE A JURY AND HEREBY IRREVOCABLY WAIVE, TO
THE EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT SUCH PERSON MAY HAVE
TO TRIAL BY JURY IN ANY SUCH ACTION OR PROCEEDING.
12.15. Judgment Currency. The Borrower, the Agent and each Lender
hereby agree that if, in the event that a judgment is given in relation to any
sum due to the Agent or any Lender hereunder, such judgment is given in a
currency (the "Judgment Currency") other than that in which such sum was
originally denominated (the "Original Currency"), the Borrower agrees to
indemnify the agent or such Lender, as the case may be, to the extent that the
amount of the Original Currency which could have been purchased by the Agent in
accordance with normal banking procedures on the Business Day following receipt
of such sum is less than the sum which could have been so purchased by the
agent had such purchase been made on the day on which such judgment was given
or, if such day is not a Business Day, on the Business Day immediately
preceding the giving of such judgment, and if the amount so purchased exceeds
the amount which could have been so purchased by the Agent had such purchase
been made on the day on which such judgment was given or, if such day is not a
Business Day, on the Business Day immediately preceding such judgment, the
Agent or the applicable Lenders agrees to remit such excess to the Borrower.
The agreements in this Section shall survive payment of all other Obligations.
12.16. Economic and Monetary Union in the European Community.
(a) The parties confirm that, except as provided in subsection (b)
below of this Section 12.16, the occurrence or non-occurence of an event
associated with economic and monetary union in the European Community will not
have the effect of altering any term of, or discharging or excusing performance
under, this Agreement, any other Loan Document, any Loan or any transaction
contemplated by any of the foregoing, nor give a party the right unilaterally
to alter or terminate this Agreement, any other Loan Document, any Loan or any
transaction contemplated by any of the foregoing or give rise to an Event of
Default or otherwise be the basis for the effective designation of the
Revolving Credit Termination Date.
"An event associated with economic and monetary union in the European
Community" includes, without limitation, each (and any combination) of the
following:
(i) the introduction of, changeover to or operation of a
single or unified European currency (whether known as the euro or
otherwise);
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<PAGE> 100
(ii) the fixing of conversion rates between a member
state's currency and the new currency or between the currencies of
member states;
(iii) the substitution of that new currency for the Euro
Currency as the unit of account of the European Community;
(iv) the introduction of that new currency as lawful
currency in a member state;
(v) the withdrawal from legal tender of any currency
that, before the introduction of the new currency, was lawful currency
in one of the member states; or
(vi) the disappearance or replacement of a relevant price
source for the Euro Currency or the national currency of any member
state, or the failure of the agreed sponsor (or a successor sponsor)
to publish or display a relevant rate, index, price, page or screen.
(b) Any agreement between the parties that amends or overrides the
provisions of this Section in respect of any Loan or any other transaction
contemplated by this Agreement or any of the Loan Documents will be effective
if it is in writing and expressly refers to this Section or to European
monetary union or to an event associated with economic and monetary union in
the European Community and would otherwise be effective in accordance with
Section 12.6.
(c) The Borrower agrees that, notwithstanding anything to the
contrary contained in any agreement relating to "an event associated with
economic and monetary union in the European Community", upon the occurrence of
any such event, the Lenders shall have the right in their respective discretion
to convert any or all Loans in an Alternative Currency of a member of the
European Union into Loans denominated in Dollars determined as of a date, as
may be selected by the Agent in its sole discretion
12.17. Confidentiality. The Agent and each Lender (each, a "Lending
Party") agrees to keep confidential any information furnished or made available
to it by the Borrower pursuant to this Agreement that is marked confidential;
provided that nothing herein shall prevent any Lending Party from disclosing
such information (a) to any other Lending Party or any advisor of any Lending
party or affiliate of any Lending Party, (b) to any other Person if reasonably
incidental to the administration of the credit facility provided herein, (c) as
required by any law, rule, or regulation, (d) upon the order of any court or
administrative agency, (e) upon the request or demand of any regulatory agency
or authority, (f) that is or becomes available to the public or that is or
becomes available to any Lending Party other than as a result of a disclosure
by any Lending Party prohibited by this Agreement, (g) in connection with any
litigation to which such Lending Party or any of its affiliates may be a party,
(h) to the extent necessary in connection with the exercise of any remedy under
this Agreement or any other Loan Document, and (i) subject to provisions
substantially similar to those contained in this Section, to any actual or
proposed participant or assignee.
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<PAGE> 101
[Signatures on following pages]
95
<PAGE> 102
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be made, executed and delivered by their duly authorized officers as of the day
and year first above written.
WACKENHUT CORRECTIONS CORPORATION
WITNESS:
- --------------------- By:/s/ John G. O'Rourke
--------------------------------
Name: John G. O'Rourke
- --------------------- Title: Senior Vice President
Signature Page 1 of 12
<PAGE> 103
NATIONSBANK, NATIONAL ASSOCIATION,
as Agent for the Lenders
By:/s/ Maria Conroy
------------------------------------
Name: Maria Conroy
Title: Senior Vice President
Signature Page 2 of 12
<PAGE> 104
NATIONSBANK, NATIONAL ASSOCIATION
By:/s/ Maria Conroy
------------------------------------
Name: Maria Conroy
Title: Senior Vice President
Domestic Lending Office:
NationsBank, National Association
Independence Center, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Jamie McCotter, Agency
Services
Telephone: (704) 388-2374
Telefacsimile: (704) 386-9923
Wire Transfer Instructions:
NationsBank, National Association
ABA# 053000196
Account No.:
----------------------
Reference: Wackenhut Corrections
Corporation
Attention: Agency Services
Eurodollar Lending Office:
NationsBank, National Association
Independence Center, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Jamie McCotter, Agency
Services
Telephone: (704) 388-2374
Telefacsimile: (704) 386-9923
Wire Transfer Instructions:
NationsBank, National Association
ABA# 053000196
Account No.:
-----------------------
Reference: Wackenhut Corrections
Corporation
Attention: Agency Services
Signature Page 3 of 12
<PAGE> 105
SCOTIABANC INC.
By: /s/ W.J. Brown
-------------------------------------
Name: W.J. Brown
-----------------------------------
Title: Managing Director
----------------------------------
Lending Office:
600 Peachtree Street, N.E.
Suite 2700
Atlanta, Georgia 30308
Wire Transfer Instructions:
The Bank of Nova Scotia
New York, New York
ABA #026002532
Attention: Further Credit #0735639
ScotiaBanc Inc.
Reference: Wackenhut Corrections Corporation
Signature Page 4 of 12
<PAGE> 106
BARNETT BANK, N.A.
By: /s/ Bentley H. Utt
--------------------------------------
Name: Bentley H. Utt
------------------------------------
Title: Vice President/Relationship Mgr.
-----------------------------------
Lending Office:
625 N. Flagler Drive
West Palm Beach, Florida 33401
Wire Transfer Instructions:
Barnett Bank, N.A.
ABA #063000047
Account #06000074838
Attention: Wire Wash Acct 1396-10231
(Participation)
Reference: Wackenhut Corrections Corporation
Signature Page 5 of 12
<PAGE> 107
SUNTRUST BANK, SOUTH FLORIDA, N.A.
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
Lending Office:
222 Lakeview Avenue
Suite 305
West Palm Beach, Florida 33401
Wire Transfer Instructions:
SunTrust Bank, South Florida, N.A.
Fort Lauderdale, Florida
ABA #067-006-076
Attention: Jennifer Campbell
Reference: Wackenhut Corrections Corporation
Signature Page 6 of 12
<PAGE> 108
SOUTHTRUST BANK, NATIONAL
ASSOCIATION
By: /s/ Martin D. Gawel
---------------------------------
Name: Martin D. Gawel
-------------------------------
Title: Vice President
------------------------------
Lending Office:
150 2nd Avenue, North
Suite 470
St. Petersburg, Florida 33701
Wire Transfer Instructions:
SouthTrust Bank, National Association
Birmingham, Alabama
ABA #062000080
Attention: Joanne Gundling
(813) 898-2607
Reference: Wackenhut Corrections Corporation
Signature Page 7 of 12
<PAGE> 109
SUMMIT BANK
By: /s/ Lisa Cohen
------------------------------------
Name: Lisa Cohen
----------------------------------
Title: Vice President
---------------------------------
Lending Office:
250 Moore Street, 2nd Floor
Hackensack, New Jersey 07602
Wire Transfer Instructions:
Summit Bank
Ridgefield Park, New Jersey
ABA #021202162
Account #GLA 47902
Attention: CL02
Reference: Wackenhut Corrections Corporation
Signature Page 8 of 12
<PAGE> 110
AMSOUTH BANK
By: /s/ Bryan Grantham
------------------------------------
Name: Bryan Grantham
----------------------------------
Title: Commercial Banking Officer
---------------------------------
Lending Office:
1900 5th Avenue, North
Birmingham, Alabama 35203
Wire Transfer Instructions:
AmSouth Bank
Birmingham, Alabama
ABA #062000019
Account #001102450400100
Attention: Mashika Myhand
Reference: Wackenhut Corrections Corporation
Signature Page 9 of 12
<PAGE> 111
BANQUE PARIBAS
By: /s/ Duane Helkowski /s/ Mary T. Finnegan
----------------------------------------------
Name: Duane Helkowski Mary T. Finnegan
--------------------------------------------
Title: Vice President Director
-------------------------------------------
Lending Office:
787 Seventh Avenue
New York, New York 10019
Wire Transfer Instructions:
Bankers Trust NY
ABA #021-000-033
Name of Account: Banque Paribas NY
Account #__________
Attention: Loan Servicing
Reference: Wackenhut Corrections Corporation
Signature Page 10 of 12
<PAGE> 112
HIBERNIA NATIONAL BANK
By: /s/ Troy J. Villafarra
------------------------------------
Name: Troy J. Villafarra
----------------------------------
Title: Vice President
---------------------------------
Lending Office:
313 Carondelet
New Orleans, Louisiana 70130
Wire Transfer Instructions:
Hibernia National Bank
New Orleans, Louisiana
ABA #065000090
Account #__________
Reference: Wackenhut Corrections Corporation
Signature Page 11 of 12
<PAGE> 113
PNC BANK, KENTUCKY, INC.
By: /s/ Ralph M. Bowman
--------------------------------
Name: Ralph M. Bowman
------------------------------
Title: Vice President
-----------------------------
Lending Office:
500 West Jefferson Street
Louisville, Kentucky 40202
Wire Transfer Instructions:
PNC Bank, Kentucky, Inc.
Louisville, Kentucky
ABA #083-000-108
Account #__________
Reference: Wackenhut Corrections Corporation
Signature Page 12 of 12
<PAGE> 114
EXHIBIT A
Applicable Revolving Credit Commitment Percentages
<TABLE>
<CAPTION>
Lender Revolving Applicable
- ------ Credit Commitment
Commitment Percentage
---------- ----------
<S> <C> <C>
NationsBank, National
Association $ 4,683,648.32 15.612161052%
Scotiabanc Inc. $ 4,683,648.32 15.612161052%
Barnett Bank, N.A. $ 3,537,387.02 11.791290058%
SunTrust Bank, South $ 3,537,387.02 11.791290058%
Florida, N.A.
SouthTrust Bank, $ 3,081,347.58 10.271178587%
National Association
Summit Bank $ 3,081,347.58 10.271178587%
AmSouth Bank $ 1,848,808.55 6.162695152%
Banque Paribas $ 1,848,808.55 6.162695152%
Hibernia National Bank $ 1,848,808.55 6.162695152%
PNC Bank, Kentucky, Inc. $ 1,848,808.55 6.162695152%
---------------- ---------------
$30,000,000.00 100%
</TABLE>
A-1
<PAGE> 115
EXHIBIT B
Form of Assignment and Acceptance
DATED _______________, ____
Reference is made to the Amended and Restated Credit Agreement dated as
of December 18, 1997 (the "Agreement") among WACKENHUT CORRECTIONS CORPORATION,
a Florida corporation (the "Borrower"), the Lenders (as defined in the
Agreement), and NationsBank, National Association, as Agent for the Lenders
("Agent"). Unless otherwise defined herein, terms defined in the Agreement are
used herein with the same meanings.
The "Assignor" and the "Assignee" referred to on Schedule 1 agree as
follows:
1. The Assignor hereby sells and assigns to the Assignee, WITHOUT
RECOURSE and without representation or warranty except as expressly set forth
herein, and the Assignee hereby purchases and assumes from the Assignor, an
interest in and to the Assignor's rights and obligations under the Credit
Agreement and the other Loan Documents as of the date hereof equal to the
percentage interest specified on Schedule 1 of all outstanding rights and
obligations under the Credit Agreement and the other Loan Documents. After
giving effect to such sale and assignment, the Assignee's Revolving Credit
Commitment and the amount of the Loans owing to the Assignee will be as set
forth on Schedule 1.
2. The Assignor (i) represents and warrants that it is the legal
and beneficial owner of the interest being assigned by it hereunder and that
such interest is free and clear of any adverse claim; (ii) makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the
Loan Documents or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Loan Documents or any other instrument
or document furnished pursuant thereto; (iii) makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of any Loan Party or the performance or observance by any Loan Party of any of
its obligations under the Loan Documents or any other instrument or document
furnished pursuant thereto; and (iv) attaches the Note held by the Assignor and
requests that the Agent exchange such Note for new Notes payable to the order
of the Assignee in an amount equal to the Revolving Credit Commitment assumed
by the Assignee pursuant hereto and to the Assignor in an amount equal to the
Revolving Credit Commitment retained by the Assignor, if any, as specified on
Schedule 1.
3. The Assignee (i) confirms that it has received a copy of the
Credit Agreement, together with copies of the financial statements referred to
in Section 8.1 thereof and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment and Acceptance; (ii) agrees that it will, independently and without
reliance upon the Agent, the Assignor or any other Lender and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in
B-1
<PAGE> 116
taking or not taking action under the Credit Agreement; (iii) confirms that it
is an Eligible Assignee; (iv) appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers and discretion under
the Credit Agreement as are delegated to the Agent by the terms thereof,
together with such powers and discretion as are reasonably incidental thereto;
(v) agrees that it will perform in accordance with their terms all of the
obligations that by the terms of the Credit Agreement are required to be
performed by it as a Lender; and (vi) attaches any U.S. Internal Revenue Service
or other forms required under Section 5.6.
4. Following the execution of this Assignment and Acceptance, it
will be delivered to the Agent for acceptance and recording by the Agent. The
effective date for this Assignment and Acceptance (the "Effective Date") shall
be the date of acceptance hereof by the Agent, unless otherwise specified on
Schedule 1.
5. Upon such acceptance and recording by the Agent, as of the
Effective Date, (i) the Assignee shall be a party to the Credit Agreement and,
to the extent provided in this Assignment and Acceptance, have the rights and
obligations of a Lender thereunder and (ii) the Assignor shall, to the extent
provided in this Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Credit Agreement.
6. Upon such acceptance and recording by the Agent, from and
after the Effective Date, the Agent shall make all payments under the Credit
Agreement and the Notes in respect of the interest assigned hereby (including,
without limitation, all payments of principal, interest and commitment fees
with respect thereto) to the Assignee. The Assignor and Assignee shall make
all appropriate adjustments in payments under the Credit Agreement and the
Notes for periods prior to the Effective Date directly between themselves.
7. This Assignment and Acceptance shall be governed by, and
construed in accordance with, the laws of the State of Florida.
8. This Assignment and Acceptance may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement. Delivery of an
executed counterpart of Schedule 1 to this Assignment and Acceptance by
telefacsimile shall be effective as delivery of a manually executed counterpart
of this Assignment and Acceptance.
IN WITNESS WHEREOF, the Assignor and the Assignee have caused Schedule
1 to this Assignment and Acceptance to be executed by their officers thereunto
duly authorized as of the date specified thereon.
B-2
<PAGE> 117
SCHEDULE 1
to
ASSIGNMENT AND ACCEPTANCE
<TABLE>
<S> <C>
Percentage interest assigned: ________%
Assignee's Revolving Credit Commitment: $_______
Aggregate outstanding principal amount
of Loans assigned: $_______
Principal amount of Note payable to Assignee: $_______
Principal amount of Note payable to Assignor: $_______
Effective Date (if other than date
of acceptance by Agent): _______, 19__
</TABLE>
[NAME OF ASSIGNOR], as Assignor
By:
---------------------------
Title:
Dated: , 19 _
----------
[NAME OF ASSIGNEE], as Assignee
By:
---------------------------
Title:
Domestic Lending Office:
Eurodollar Lending Office:
B-3
<PAGE> 118
Accepted [and Approved] *
this ___ day of ___________, 19 _
NATIONSBANK NATIONAL ASSOCIATION
By:
-----------------------------
Title:
[Approved this ____ day
of ____________, 19__
WACKENHUT CORRECTIONS CORPORATION
By: ]*
-----------------------
Title:
B-4
<PAGE> 119
* Required if the Assignee is an Eligible Assignee solely by reason
of clause (iii) of the definition of "Eligible Assignee".
B-5
<PAGE> 120
EXHIBIT C
Notice of Appointment (or Revocation) of Authorized Representative
Reference is hereby made to the Amended and Restated Credit Agreement dated
as of December 18, 1997 (the "Agreement") among WACKENHUT CORRECTIONS
CORPORATION, a Florida corporation (the "Borrower"), the Lenders (as defined in
the Agreement), and NationsBank, National Association, as Agent for the Lenders
("Agent"). Capitalized terms used but not defined herein shall have the
respective meanings therefor set forth in the Agreement.
The Borrower hereby nominates, constitutes and appoints each individual
named below as an Authorized Representative under the Loan Documents, and hereby
represents and warrants that (i) set forth opposite each such individual's name
is a true and correct statement of such individual's office (to which such
individual has been duly elected or appointed), a genuine specimen signature of
such individual and an address for the giving of notice, and (ii) each such
individual has been duly authorized by the Borrower to act as Authorized
Representative under the Loan Documents:
Name and Address Office Specimen Signature
-------------------------
-------------------------
Borrower hereby revokes (effective upon receipt hereof by the Agent) the prior
appointment of ________________ as an Authorized Representative.
This the ___ day of __________________, 19__.
______________________________________
By: __________________________________
Name: ________________________________
Title: _______________________________
C-1
<PAGE> 121
EXHIBIT D-1
Form of Borrowing Notice
To: NationsBank, National Association,
as Agent
Independence Center, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Agency Services
Telefacsimile: (704)386-9923
Reference is hereby made to the Amended and Restated Credit Agreement dated
as of December 18, 1997 (the "Agreement") among WACKENHUT CORRECTIONS
CORPORATION (the "Borrower"), the Lenders (as defined in the Agreement), and
NationsBank, National Association, as Agent for the Lenders ("Agent").
Capitalized terms used but not defined herein shall have the respective meanings
therefor set forth in the Agreement.
The Borrower through its Authorized Representative hereby gives notice to
the Agent that Loans of the type and amount set forth below be made on the date
indicated:
<TABLE>
<CAPTION>
Type of Loan Interest Aggregate
(check one) Period(1) Amount(2) Date of Loan(3)
- ---------- ------ ------ ------------
<S> <C> <C> <C>
Base Rate Loan ______ _________ ____________
Eurodollar Rate Loan ______ _________ ____________
Alternative Currency(4) ______ _________ ____________
</TABLE>
- -----------------------
(1) For any Eurodollar Rate Loan, one, two, three or six months or nine months,
if available.
(2) Must be $2,000,000 or if greater an integral multiple of $100,000, unless a
Base Rate Refunding Loan.
(3) At least three (3) Business Days later if a Eurodollar Rate Loan;
(4) Specify Pounds Sterling, Australian Dollars, or Canadian Dollars.
The Borrower hereby requests that the proceeds of Loans described in this
Borrowing Notice be made available to the Borrower as follows: [insert
transmittal instructions].
D-1-1
<PAGE> 122
The undersigned hereby certifies that:
1. No Default or Event of Default exists either now or after giving effect
to the borrowing described herein; and
2. All the representations and warranties set forth in Article VII of the
Agreement and in the Loan Documents (other than those expressly stated to refer
to a particular date) are true and correct in all material respects as of the
date hereof except that the reference to the financial statements in Section
7.6(a) of the Agreement are to those financial statements most recently
delivered to you pursuant to Section 8.1 of the Agreement (it being understood
that any financial statements delivered pursuant to Section 8.1(b) have not been
certified by independent public accountants) and attached hereto are any changes
to the Schedules referred to in connection with such representations and
warranties.
3. All conditions contained in the Agreement to the making of any Loan
requested hereby have been met or satisfied in full.
WACKENHUT CORRECTIONS CORPORATION
BY: ____________________________________
Authorized Representative
DATE: __________________________________
D-1-2
<PAGE> 123
EXHIBIT D-2
Form of Borrowing Notice--Swing Line Loans
To: NationsBank, National Association,
Independence Center, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Agency Services
Telefacsimile: (704)386-9923
Reference is hereby made to the Amended and Restated Credit Agreement dated
as of December 18, 1997 (the "Agreement") among WACKENHUT CORRECTIONS
CORPORATION (the "Borrower"), the Lenders (as defined in the Agreement), and
NationsBank, National Association, as Agent for the Lenders ("Agent").
Capitalized terms used but not defined herein shall have the respective meanings
therefor set forth in the Agreement.
The Borrower through its Authorized Representative hereby gives notice to
NationsBank that a Swing Line Loan of the amount set forth below be made on the
date indicated:
<TABLE>
<CAPTION>
Interest
Amount(1) Period Date of Loan
------ ------ ------------
<S> <C> <C> <C>
CD Rate Loan _________ __________ __________, ____
</TABLE>
- -----------------------
(1) Must be a minimum of $200,000, unless a Base Rate Refunding Loan.
The Borrower hereby requests that the proceeds of Swing Line Loans
described in this Borrowing Notice be made available to the Borrower as follows:
[insert transmittal instructions] .
The undersigned hereby certifies that:
1. No Default or Event of Default exists either now or after giving effect
to the borrowing described herein; and
2. All the representations and warranties set forth in Article VII of the
Agreement and in the Loan Documents (other than those expressly stated to refer
to a particular date) are true and correct in all material respects as of the
date hereof except that the reference to the financial statements in Section
7.6(a) of the Agreement are to those financial statements most recently
delivered to you pursuant to Section 8.1 of the Agreement (it being understood
that any financial statements
D-2-1
<PAGE> 124
delivered pursuant to Section 8.1(b) have not been certified by independent
public accountants) and attached hereto are any changes to the Schedules
referred to in connection with such representations and warranties.
3. All conditions contained in the Agreement to the making of any Loan
requested hereby have been met or satisfied in full .
WACKENHUT CORRECTIONS CORPORATION
BY: __________________________________
Authorized Representative
DATE: ________________________________
D-2-2
<PAGE> 125
EXHIBIT E
Form of Interest Rate Selection Notice
To: NationsBank, National Association,
as Agent
Independence Center, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Agency Services
Telefacsimile: (704) 386-9923
Reference is hereby made to the Amended and Restated Credit Agreement dated
as of December 18, 1997 (the "Agreement") among WACKENHUT CORRECTIONS
CORPORATION (the "Borrower"), the Lenders (as defined in the Agreement), and
NationsBank, National Association, as Agent for the Lenders ("Agent").
Capitalized terms used but not defined herein shall have the respective meanings
therefor set forth in the Agreement.
The Borrower through its Authorized Representative hereby gives notice to
the Agent of the following selection of a type of Loan and Interest Period:
<TABLE>
<CAPTION>
Type of Loan Interest Aggregate
(check one) Period(1) Amount(2) Date of Loan(3)
--------- ------ ------ ------------
<S> <C> <C> <C>
Base Rate Loan ______ _________ ____________
Eurodollar Rate Loan ______ _________ ____________
Alternative Currency(4) ______ _________ ____________
</TABLE>
- -----------------------
(1) For any Eurodollar Rate Loan, one, two, three or six months or nine months,
if available.
(2) Must be $2,000,000 or if greater an integral multiple of $100,000, unless a
Base Rate Refunding Loan.
(3) At least three (3) Business Days later if a Eurodollar Rate Loan;
(4) Specify Pounds Sterling, Australian Dollars, or Canadian Dollars.
WACKENHUT CORRECTIONS CORPORATION
BY: _____________________________
Authorized Representative
DATE: ___________________________
E-1
<PAGE> 126
EXHIBIT F-1
Form of Revolving Note
Promissory Note
(Revolving Loan)
$__________ Charlotte, North Carolina
________ __, 1997
FOR VALUE RECEIVED, WACKENHUT CORRECTIONS CORPORATION, a Florida
corporation having its principal place of business located in Palm Beach
Gardens, Florida (the "Borrower"), hereby promises to pay to the order of
________________________________ (the "Lender"), in its individual capacity, at
the office of NATIONSBANK, NATIONAL ASSOCIATION, as agent for the Lenders (the
"Agent"), located at One Independence Center, 101 North Tryon Street,
NC1-001-15-04, Charlotte, North Carolina 28255 (or at such other place or places
as the Agent may designate in writing) at the times set forth in the Amended and
Restated Credit Agreement dated as of December 18, 1997 among the Borrower, the
financial institutions party thereto (collectively, the "Lenders") and the Agent
(the "Agreement" -- all capitalized terms not otherwise defined herein shall
have the respective meanings set forth in the Agreement), in lawful money of the
United States of America, in immediately available funds, the principal amount
of _________________ DOLLARS ($__________) or the applicable Alternative
Currency, or, if less than such principal amount, the aggregate unpaid principal
amount of all Revolving Loans made by the Lender to the Borrower pursuant to the
Agreement on the Revolving Credit Termination Date or such earlier date as may
be required pursuant to the terms of the Agreement, and to pay interest from the
date hereof on the unpaid principal amount hereof, in like money, at said
office, on the dates and at the rates provided in Article II of the Agreement.
All or any portion of the principal amount of Loans may be prepaid or required
to be prepaid as provided in the Agreement.
If payment of all sums due hereunder is accelerated under the terms of the
Agreement or under the terms of the other Loan Documents executed in connection
with the Agreement, the then remaining principal amount and accrued but unpaid
interest shall bear interest which shall be payable on demand at the rates per
annum set forth in the proviso to Section 2.2 (a) of the Agreement. Further, in
the event of such acceleration, this Revolving Note shall become immediately due
and payable, without presentation, demand, protest or notice of any kind, all of
which are hereby waived by the Borrower.
In the event this Revolving Note is not paid when due at any stated or
accelerated maturity, the Borrower agrees to pay, in addition to the principal
and interest, all costs of collection, including reasonable attorneys' fees, and
interest due hereunder thereon at the rates set forth above.
Interest hereunder shall be computed as provided in the Agreement.
F-1-1
<PAGE> 127
This Revolving Note is one of the Revolving Notes referred to in the
Agreement and is issued pursuant to and entitled to the benefits and security of
the Agreement to which reference is hereby made for a more complete statement of
the terms and conditions upon which the Revolving Loans evidenced hereby were or
are made and are to be repaid. This Revolving Note is subject to certain
restrictions on transfer or assignment as provided in the Agreement.
All Persons bound on this obligation, whether primarily or secondarily
liable as principals, sureties, guarantors, endorsers or otherwise, hereby waive
to the full extent permitted by law the benefits of all provisions of law for
stay or delay of execution or sale of property or other satisfaction of judgment
against any of them on account of liability hereon until judgment be obtained
and execution issues against any other of them and returned satisfied or until
it can be shown that the maker or any other party hereto had no property
available for the satisfaction of the debt evidenced by this instrument, or
until any other proceedings can be had against any of them, also their right, if
any, to require the holder hereof to hold as security for this Revolving Note
any collateral deposited by any of said Persons as security. Protest, notice of
protest, notice of dishonor, diligence or any other formality are hereby waived
by all parties bound hereon.
IN WITNESS WHEREOF, the Borrower has caused this Revolving Note to be made,
executed and delivered by its duly authorized representative as of the date and
year first above written, all pursuant to authority duly granted.
WACKENHUT CORRECTIONS CORPORATION
WITNESS:
By: _____________________________
Name: ___________________________
Title: __________________________
F-1-2
<PAGE> 128
EXHIBIT F-2
Form of Swing Line Note
Promissory Note
(Swing Line Loan)
$5,000,000 Charlotte, North Carolina
__________ __, 1997
FOR VALUE RECEIVED, WACKENHUT CORRECTIONS CORPORATION, a Florida
corporation having its principal place of business located in Palm Beach
Gardens, Florida (the "Borrower"), hereby promises to pay to the order of
NATIONSBANK, NATIONAL ASSOCIATION (the "Lender"), in its individual capacity, at
the office of NATIONSBANK, NATIONAL ASSOCIATION, located at One Independence
Center, 101 North Tryon Street, NC1-001-15-04, Charlotte, North Carolina 28255
(or at such other place or places as the Agent may designate in writing) at the
times set forth in the Amended and Restated Credit Agreement dated as of
December 18, 1997 among the Borrower, the financial institutions party thereto
(collectively, the "Lenders") and the Agent (the "Agreement" -- all capitalized
terms not otherwise defined herein shall have the respective meanings set forth
in the Agreement), in lawful money of the United States of America, in
immediately available funds, the principal amount of FIVE MILLION DOLLARS
($5,000,000) or, if less than such principal amount, the aggregate unpaid
principal amount of all Swing Line Loans made by the Lender to the Borrower
pursuant to the Agreement on the Revolving Credit Termination Date or such
earlier date as may be required pursuant to the terms of the Agreement, and to
pay interest from the date hereof on the unpaid principal amount hereof, in like
money, at said office, on the dates and at the rates provided in Article II of
the Agreement. All or any portion of the principal amount of Loans may be
prepaid or required to be prepaid as provided in the Agreement.
If payment of all sums due hereunder is accelerated under the terms of the
Agreement or under the terms of the other Loan Documents executed in connection
with the Agreement, the then remaining principal amount and accrued but unpaid
interest shall bear interest which shall be payable on demand at the rates per
annum set forth in the proviso to Section 2.2 (a) of the Agreement. Further, in
the event of such acceleration, this Swing Line Note shall become immediately
due and payable, without presentation, demand, protest or notice of any kind,
all of which are hereby waived by the Borrower.
In the event this Swing Line Note is not paid when due at any stated or
accelerated maturity, the Borrower agrees to pay, in addition to the principal
and interest, all costs of collection, including reasonable attorneys' fees, and
interest due hereunder thereon at the rates set forth above.
Interest hereunder shall be computed as provided in the Agreement.
F-2-1
<PAGE> 129
This Swing Line Note is one of the Swing Line Notes in the principal amount
of $5,000,000 referred to in the Agreement and is issued pursuant to and
entitled to the benefits and security of the Agreement to which reference is
hereby made for a more complete statement of the terms and conditions upon which
the Swing Line Loans evidenced hereby were or are made and are to be repaid.
This Swing Line Note is subject to certain restrictions on transfer or
assignment as provided in the Agreement.
All Persons bound on this obligation, whether primarily or secondarily
liable as principals, sureties, guarantors, endorsers or otherwise, hereby waive
to the full extent permitted by law the benefits of all provisions of law for
stay or delay of execution or sale of property or other satisfaction of judgment
against any of them on account of liability hereon until judgment be obtained
and execution issues against any other of them and returned satisfied or until
it can be shown that the maker or any other party hereto had no property
available for the satisfaction of the debt evidenced by this instrument, or
until any other proceedings can be had against any of them, also their right, if
any, to require the holder hereof to hold as security for this Swing Line Note
any collateral deposited by any of said Persons as security. Protest, notice of
protest, notice of dishonor, diligence or any other formality are hereby waived
by all parties bound hereon.
IN WITNESS WHEREOF, the Borrower has caused this Swing Line Note to be
made, executed and delivered by its duly authorized representative as of the
date and year first above written, all pursuant to authority duly granted.
WACKENHUT CORRECTIONS CORPORATION
WITNESS:
By: _____________________________
Name: ___________________________
Title ___________________________
F-2-2
<PAGE> 130
EXHIBIT G
Form of Opinion of Borrower's Counsel
See attached.
G-1
<PAGE> 131
EXHIBIT H
Compliance Certificate
NationsBank, National Association,
as Agent
Independence Center, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Agency Services
Telefacsimile: (704) 386-9923
Reference is hereby made to the Amended and Restated Credit Agreement dated
as of December 18, 1997 (the "Agreement") among Wackenhut Corrections
Corporation, a Florida corporation (the "Borrower"), the Lenders (as defined in
the Agreement) and NationsBank, National Association (South), as Agent for the
Lenders ("Agent"). Capitalized terms used but not otherwise defined herein shall
have the respective meanings therefor set forth in the Agreement. The
undersigned, a duly authorized and acting Authorized Representative, hereby
certifies to you as of __________ (the "Determination Date") as follows:
1. Calculations in (thousands):
A. Compliance with Section 9.1(a): Consolidated Net Worth
1. Consolidated Net Worth at the last day of the most recent fiscal
quarter
$______________
2. Consolidated Net Income x 75%
$______________
3. Net proceeds of sale of Common Stock (100%) $ ________
4. Sum of A.1 + A.2 + A.3
$______________
5. Actual Consolidated Net Worth
$______________
REQUIRED: A.5 MUST NOT BE LESS THAN A.4
B. Compliance with Section 9.1(b): Annualized Consolidated Senior
Leverage Ratio
H-1
<PAGE> 132
1. Revolver Borrowings and Other Money Borrowed $___________
2. TROL Indebtedness $___________
3. B.1 + B.2: Consolidated Senior Indebtedness $___________
4. Consolidated EBITDA for current quarter $___________
5. B.4 x 4: Annualized Consolidated EBITDA $___________
6. Ratio of B.3 to B.5 ____ to 1.00
REQUIRED: LINE B.6 MUST NOT BE GREATER THAN 6.00 TO 1.00, WITH THE
FOLLOWING STEPDOWNS:
4Q FY98** 5.00 TO 1.00
2Q FY99 4.50 TO 1.00
3Q FY99 THROUGH 1Q00 4.00 TO 1.00
2Q FY00 AND THEREAFTER 3.50 TO 1.00
** THE STEP DOWN WILL OCCUR AT THE EARLIER OF THE EXECUTION OF THE
REIT TRANSACTION OR 4Q FY 1998.
C. Compliance with Section 9.1(c): Adjusted Consolidated Leverage Ratio
1. Consolidated Senior Indebtedness (from B.3) $______________
2. Subordinated Indebtedness $______________
3. C.1 + C.2: Total Indebtedness $______________
4. Adjusted Consolidated EBITDA* $______________
5. Ratio of C.3 to C.4 ____ to 1.00
REQUIRED: LINE C.5 MUST NOT BE GREATER THAN 8.00 TO 1.00, WITH THE
FOLLOWING STEPDOWNS:
3Q FY98 THROUGH 3Q FY99 7.00 TO 1.00
4Q FY99 THROUGH 1Q FY00 6.00 TO 1.00
2Q FY00 AND THEREAFTER 5.50 TO 1.00
H-2
<PAGE> 133
D. Compliance with Section 9.1(d): Consolidated Fixed Charge Coverage
Ratio
1. Consolidated EBITDA for most recent 4 quarters* $___________
2. Consolidated Lease Payments* $___________
3. Sum of D.1 + D.2 $___________
4. Consolidated Interest Expense* $___________
5. Required principal payments of Consolidated
Indebtedness* $___________
6. Consolidated Lease Payments* $___________
7. Restricted Payments* $___________
8. D.4 + D.5 + D.6 +D.7: Consolidated Fixed Charges $___________
9. Ratio of D.3 to D.8 $____ to 1.00
REQUIRED: LINE D.9 MUST NOT BE LESS THAN 1.50 TO 1.00
2. No Default
A. Since __________ (the date of the last similar certification),
(a) the Borrower has not defaulted in the keeping, observance,
performance or fulfillment of its obligations pursuant to any of the
Loan Documents; and (b) no Default or Event of Default specified in
Article X of the Agreement has occurred and is continuing.
B. If a Default or Event of Default has occurred since __________ (the
date of the last similar certification), the Borrower proposes to take the
following action with respect to such Default or Event of Default:
__________________________________________________________________
___________________________________________________________________________.
(Note, if no Default or Event of Default has occurred, insert
"Not Applicable").
The Determination Date is the date of the last required financial
statements submitted to the Lenders in accordance with Section 8.1 of the
Agreement.
H-3
<PAGE> 134
* See attached Schedule 1 to Compliance Certificate for calculations.
IN WITNESS WHEREOF, I have executed this Certificate this _____ day of
__________, 19___.
By: _________________________
Authorized Representative
Name: _______________________
Title: ______________________
H-4
<PAGE> 135
Schedule 1 to Compliance Certificate
Covenant Calculations ($ in 000s)
1. Quarterly Consolidated EBITDA Calculation:
A. Consolidated Net Income $__________
B. Consolidated Interest Expense $__________
C. Taxes on income $__________
D. Amortization $__________
E. Depreciation $__________
F. Consolidated EBITDA $__________
(A + B + C + D + E)
2. Annualized Consolidated EBITDA Calculation:
A. Consolidated Quarterly EBITDA $__________
B. Annualized Consolidated Quarterly EBITDA
(A x 4) $__________
C. Quarterly Contract EBITDA Already Included in Consolidated
Quarterly EBITDA:
Prospective Contract #1 $__________
Prospective Contract #2 $__________
Prospective Contract #3 $__________
Prospective Contract #4 $__________
Prospective Contract #5 $__________
Prospective Contract #6 $__________
Total Contract EBITDA $__________
D. Annualized Contract EBITDA
(C x 4) $__________
H-5
<PAGE> 136
E. Full Year Contract EBITDA:
Prospective Contract #1 $__________
Prospective Contract #2 $__________
Prospective Contract #3 $__________
Prospective Contract #4 $__________
Prospective Contract #5 $__________
Prospective Contract #6 $__________
Total Full Year Contract EBITDA $__________
F. Adjustment to EBITDA
(E - D) $__________
G. Adjusted Consolidated Annualized EBITDA
(B + F) $__________
III. Calculation of Components of Consolidated Fixed Charge Coverage Ratio
<TABLE>
<CAPTION>
Rolling
1Q 2Q 3Q 4Q 4Q
-- -- -- -- --
<S> <C> <C> <C> <C> <C>
A. Consolidated EBITDA $_____ $_____ $_____ $_____ $_____
B. Consolidated Lease Payments $_____ $_____ $_____ $_____ $_____
C. Consolidated Interest Expense $_____ $_____ $_____ $_____ $_____
D. Required Principal Payments $_____ $_____ $_____ $_____ $_____
E. Restricted Payments $_____ $_____ $_____ $_____ $_____
</TABLE>
H-6
<PAGE> 137
EXHIBIT I
Form of Facility Guaranty
GUARANTY AND SURETYSHIP AGREEMENT
THIS GUARANTY AND SURETYSHIP AGREEMENT (this "Guaranty Agreement" or this
"Guaranty"), dated as of ________ __, 1997, is made by each of the undersigned
(each a "Guarantor" and collectively the "Guarantors") to NATIONSBANK, NATIONAL
ASSOCIATION, a national banking association, as a Lender ("NationsBank"), and
NATIONSBANK, NATIONAL ASSOCIATION, a national banking association, in its
capacity as agent for the Lenders (in such capacity, and together with any
successors in such capacity, the "Agent") party to the Amended and Restated
Credit Agreement (as defined below).
W I T N E S S E T H:
WHEREAS, the Agent and the Lenders have agreed to provide Wackenhut
Corrections Corporation, a Florida corporation (the "Borrower"), revolving
credit and letter of credit facilities pursuant to the terms of that certain
Amended and Restated Credit Agreement dated as of December 18, 1997 among the
Borrower and the Agent (as from time to time amended, supplemented or restated,
the "Credit Agreement"); and
WHEREAS, each Guarantor is a Subsidiary of the Borrower and will materially
benefit from the Loans to be made and the Letters of Credit to be issued under
the Credit Agreement, and each Guarantor is willing to enter into this Guaranty
Agreement to provide an inducement for the Lenders to make Loans and issue
Letters of Credit thereunder;
NOW, THEREFORE, in order to induce the Agent and the Lenders to enter into
the Credit Agreement and the other Loan Documents and in consideration of the
premises and the mutual covenants contained herein, the parties hereto agree as
follows:
1. DEFINITIONS. All capitalized terms used but not otherwise defined herein
shall have the meanings ascribed to such terms in the Credit Agreement.
2. GUARANTY. Each Guarantor hereby jointly and severally, unconditionally,
absolutely, continually and irrevocably guarantees to the Agent and the Lenders
the payment in full of the Borrower's Liabilities (as defined below). For all
purposes of this Guaranty Agreement, "Borrower's Liabilities" means: (a) the
Borrower's prompt payment in full, when due or declared due and at all such
times, of all Obligations and all other amounts pursuant to the terms of the
Credit Agreement, the Notes, and all other Loan Documents executed in connection
with the Credit Agreement heretofore, now or at any time or times hereafter
owing, arising, due or payable from the Borrower to any one or more of the
Lenders, including without limitation principal, interest, premium or fee
I-1
<PAGE> 138
(including, but not limited to, loan fees and attorneys' fees and expenses).
Each Guarantor agrees that it is jointly and severally, directly and primarily
liable for the Borrower's Liabilities.
3. LIMIT OF LIABILITY. The obligations of the Guarantor hereunder shall be
limited to an aggregate amount equal to the largest amount that would not render
its obligations hereunder subject to avoidance under Section 548 of the United
States Bankruptcy Code or any comparable provisions of any applicable state law.
4. PAYMENT. If the Borrower shall default in payment or performance of any
Borrower's Liabilities when and as the same shall become due, whether according
to the terms of the Credit Agreement, by acceleration, or otherwise, or upon the
occurrence of any other Event of Default under the Credit Agreement that has not
been cured or waived, then each Guarantor, upon demand thereof by the Agent or
its successors or assigns, will, as of the date of the Agent's demand, fully pay
to the Agent, for the benefit of itself and the Lenders, subject to any
restriction set forth in Section 3 hereof, an amount equal to all Guarantor's
Obligations then due and owing.
5. UNCONDITIONAL OBLIGATIONS. This is a guaranty of payment and not of
collection. The Guarantors' Obligations under this Guaranty Agreement shall be
joint and several, absolute and unconditional irrespective of the validity,
legality or enforceability of the Credit Agreement, the Notes or any other Loan
Document or any other guaranty of the Borrower's Liabilities, and shall not be
affected by any action taken under the Credit Agreement, the Notes or any other
Loan Document, any other guaranty of the Borrower's Liabilities, or any other
agreement between the Agent or the Lenders and the Borrower or any other person,
in the exercise of any right or power therein conferred, or by any failure or
omission to enforce any right conferred thereby, or by any waiver of any
covenant or condition therein provided, or by any acceleration of the maturity
of any of the Borrower's Liabilities, or by the release or other disposal of any
Collateral or other security for any of the Borrower's Liabilities, or by the
dissolution of the Borrower or the combination or consolidation of the Borrower
into or with another entity or any transfer or disposition of any assets of the
Borrower or by any extension or renewal of the Credit Agreement, any of the
Notes or any other Loan Document, in whole or in part, or by any modification,
alteration, amendment or addition of or to the Credit Agreement, any of the
Notes or any other Loan Document, any other guaranty of the Borrower's
Liabilities, or any other agreement between the Agent or the Lenders and the
Borrower or any other Person, or by any other circumstance whatsoever (with or
without notice to or knowledge of any Guarantor) which may or might in any
manner or to any extent vary the risks of any Guarantor, or might otherwise
constitute a legal or equitable discharge of a surety or guarantor; it being the
purpose and intent of the parties hereto that this Guaranty Agreement and the
Guarantors' Obligations hereunder shall be absolute and unconditional under any
and all circumstances and shall not be discharged except by payment as herein
provided.
6. CURRENCY AND FUNDS OF PAYMENT. Each Guarantor hereby guarantees that the
Guarantors' Obligations will be paid in (i) the same Alternative Currency in the
case of Loans made and Letters of Credit drawn in Alternative Currencies, and
(ii) in Dollars in all other cases and in immediately available funds,
regardless of any law, regulation or decree now or hereafter in effect that
might in any manner affect the Borrower's Liabilities, or the rights of the
Agent or any Lender
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with respect thereto as against the Borrower, or cause or permit to be invoked
any alteration in the time, amount or manner of payment by the Borrower of any
or all of the Borrower's Liabilities.
6. EVENTS OF DEFAULT. In the event that (a) any Guarantor shall file a
petition to take advantage of any insolvency statute; (b) any Guarantor shall
commence or suffer to exist a proceeding for the appointment of a receiver,
trustee, liquidator or conservator of itself or of the whole or substantially
all of its property; (c) any Guarantor shall file a petition or answer seeking
reorganization or arrangement or similar relief under the Federal bankruptcy
laws or any other applicable law or statute of the United States of America or
any state or similar law of any other country; (d) a court of competent
jurisdiction shall enter an order, judgment or decree appointing a custodian,
receiver, trustee, liquidator or conservator of any Guarantor or of the whole or
substantially all of its properties, or approve a petition filed against any
Guarantor seeking reorganization or arrangement or similar relief under the
Federal bankruptcy laws or any other applicable law or statute of the United
States of America or any state or similar law of any other country, or if, under
the provisions of any other law for the relief or aid of debtors, a court of
competent jurisdiction shall assume custody or control of any Guarantor or of
the whole or substantially all of its properties and such order, judgment,
decree, approval or assumption remains unstayed or undismissed for a period of
thirty (30) consecutive days; (e) there is commenced against any Guarantor any
proceeding or petition seeking reorganization, arrangement or similar relief
under the Federal bankruptcy laws or any other applicable law or statute of the
United States of America or any state, which proceeding or petition remains
unstayed or undismissed for a period of thirty (30) consecutive days; (f) there
shall occur an Event of Default under the Credit Agreement; (g) any default
shall occur in the payment of amounts due hereunder; or (h) any other default in
compliance with the terms hereof shall occur which remains uncured or unwaived
for a period of thirty (30) days after the earlier of notice of such default
from the Agent or an officer of a Guarantor becomes aware of such default (each
of the foregoing an "Event of Default" hereunder), then notwithstanding any
Collateral or other security that the Agent or any Lender may process from
Borrower or any Guarantor or any other guarantor of the Borrower's Liabilities,
or any other party, at the Agent's election and without notice thereof or demand
therefor, so long as such Event of Default shall be continuing, the Guarantors'
Obligations shall immediately become due and payable.
7. SUITS. Each Guarantor from time to time shall pay to the Agent for the
benefit of itself and the Lenders, on demand, at the Agent's place of business
set forth in the Credit Agreement, the Guarantors' Obligations as they become or
are declared due, and in the event such payment is not made forthwith, the Agent
or any Lender or any of them may proceed to suit against any one or more or all
of the Guarantors. At the Agent's election, one or more and successive or
concurrent suits may be brought hereon by the Agent against any one or more or
all of the Guarantors, whether or not suit has been commenced against the
Borrower, any other guarantor of the Borrower's Liabilities, or any other Person
and whether or not the Agent or Lender has taken or failed to take any other
action to collect all or any portion of the Borrower's Liabilities.
8. SET-OFF AND WAIVER. Each Guarantor waives any right to assert against
the Agent or Lender as a defense, counterclaim, set-off or cross claim, any
defense (legal or equitable) or other
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claim which such Guarantor may now or at any time hereafter have against the
Borrower, the Agent or the Lenders, without waiving any additional defenses,
set-offs, counterclaims or other claims otherwise available to such Guarantor.
If at any time hereafter the Agent or any Lender employs counsel for advice or
other representation to enforce the Guarantors' Obligations that arise out of an
Event of Default, then, in any of the foregoing events, all of the reasonable
attorneys' fees arising from such services and all expenses, costs and charges
in any way or respect arising in connection therewith or relating thereto shall
be jointly and severally paid by the Guarantors to the Agent, for the benefit of
itself and the Lenders, on demand.
10. WAIVER; SUBROGATION; SUBORDINATION.
(a) Each Guarantor hereby waives notice of the following events or
occurrences: (i) the Agent's acceptance of this Guaranty Agreement; (ii) the
Lenders' heretofore, now or from time to time hereafter loaning monies or giving
or extending credit to or for the benefit of the Borrower, whether pursuant to
the Credit Agreement or the Notes or any amendments, modifications, or
supplements thereto, or replacements or extensions thereof; (iii) the Agent or
the Lenders or the Borrower heretofore, now or at any time hereafter, obtaining,
amending, substituting for, releasing, waiving or modifying the Credit
Agreement, the Notes or any other Loan Documents; (iv) presentment, demand,
notices of default, non-payment, partial payment and protest; (v) the Agent or
the Lenders heretofore, now or at any time hereafter granting to the Borrower
(or any other party liable to the Lenders on account of the Borrower's
Liabilities) any indulgence or extensions of time of payment of the Borrower's
Liabilities; and (vi) the Agent or the Lenders heretofore, now or at any time
hereafter accepting from the Borrower or any other person, any partial payment
or payments on account of the Borrower's Liabilities or any collateral securing
the payment thereof or the Agent settling, subordinating, compromising,
discharging or releasing the same. Each Guarantor agrees that the Agent and each
Lender may heretofore, now or at any time hereafter do any or all of the
foregoing in such manner, upon such terms and at such times as Agent or such
Lender, in its sole and absolute discretion, deems advisable, without in any way
or respect impairing, affecting, reducing or releasing such Guarantor from the
Guarantors' Obligations, and each Guarantor hereby consents to each and all of
the foregoing events or occurrences.
(b) Each Guarantor hereby agrees that payment or performance by such
Guarantor of the Guarantors' Obligations under this Guaranty Agreement may be
enforced by the Agent on behalf of itself and the Lenders upon demand by the
Agent to such Guarantor without the Agent being required, each Guarantor
expressly waiving any right it may have to require the Agent, to (i) prosecute
collection or seek to enforce or resort to any remedies against the Borrower or
any other Guarantor or any other guarantor of the Borrower's Liabilities, IT
BEING EXPRESSLY UNDERSTOOD, ACKNOWLEDGED AND AGREED TO BY EACH GUARANTOR THAT
DEMAND UNDER THIS GUARANTY AGREEMENT MAY BE MADE BY THE AGENT, AND THE
PROVISIONS HEREOF ENFORCED BY THE AGENT, EFFECTIVE AS OF THE FIRST DATE ANY
EVENT OF DEFAULT OCCURS AND IS CONTINUING UNDER THE CREDIT AGREEMENT, or (ii)
seek to enforce or resort to any remedies with respect to any, Liens or
encumbrances granted to the Agent by the Borrower or any other Person on account
of the
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Borrower's Liabilities or any guaranty thereof. Neither the Agent nor any Lender
shall have any obligation to protect, secure or insure any of the foregoing
security interests, Liens or encumbrances on the properties or interests in
properties subject thereto. The Guarantors' Obligations shall in no way be
impaired, affected, reduced, or released by reason of the Agent's or any
Lender's failure or delay to do or take any of the acts, actions or things
described in this Guaranty Agreement including, without limiting the generality
of the foregoing, those acts, actions and things described in this Section 10.
(c) Each Guarantor further agrees with respect to this Guaranty
Agreement that it shall have no right of subrogation, reimbursement or
indemnity, nor any right of recourse to security for the Borrower's Liabilities
in each case until after all the Borrower's Liabilities have been paid in full.
This waiver is expressly intended to prevent the existence of any claim in
respect to such reimbursement by the Guarantor against the estate of Borrower
within the meaning of Section 101 of the Bankruptcy Code, and to prevent the
Guarantor from constituting a creditor of Borrower in respect of such
reimbursement within the meaning of Section 547(b) of the Bankruptcy Code in the
event of a subsequent case involving the Borrower.
(d) Until the Guarantors' Obligations are paid in full and the Lenders are
under no further obligation to lend or extend funds or credit which would
constitute Guarantors' Obligations, each Guarantor hereby unconditionally
subordinates all present and future debts, liabilities or obligations of the
Borrower to the Guarantor to the Guarantors' Obligations, and all amounts due
under such debts, liabilities, or obligations shall, upon the occurrence and
during the continuance of an Event of Default, be collected and paid over
forthwith to the Lenders on account of the Guarantors' Obligations and, pending
such payment, shall be held by each Guarantor as agent and bailee of the Lenders
separate and apart from all other funds, property and accounts of the Guarantor.
Each Guarantor, at the reasonable request of the Lenders, shall execute such
further documents in favor of the Lenders to further evidence and support the
purpose of this Section 10(d).
10. EFFECTIVENESS; ENFORCEABILITY. This Guaranty Agreement shall be
effective as of the date of the initial Advance under the Credit Agreement and
shall continue in full force and effect until the Borrower's Obligations are
fully paid and the Credit Agreement has terminated. The Agent shall give each
Guarantor written notice of such termination at each Guarantor's address set
forth below such Guarantor's execution hereof on the signature pages of this
Guaranty or such other address for the Guarantor as such Guarantor shall give
notice to the Agent in the manner provided for the giving of notices under the
Credit Agreement (the "Guarantor's Address"). This Guaranty Agreement shall be
binding upon and inure to the benefit of each Guarantor, the Agent and the
Lenders and their respective successors and assigns. Notwithstanding the
foregoing, no Guarantor may, without the prior written consent of the Agent,
assign any rights, powers, duties or obligations hereunder. Any claim or claims
that the Agent and the Lenders may at any time hereafter have against any
Guarantor under this Guaranty Agreement may be asserted by the Agent or any
Lender by written notice directed to any one or more or all of the Guarantors at
the applicable Guarantor's Address.
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12. REPRESENTATIONS AND WARRANTIES. Each Guarantor represents and warrants
to the Agent for the benefit of itself and the Lenders that it is duly
authorized to execute, deliver and perform this Guaranty Agreement, that this
Guaranty Agreement is legal, valid, binding and enforceable against such
Guarantor in accordance with its terms except as enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
the enforcement of creditors' rights generally and by general equitable
principles; and that such Guarantor's execution, delivery and performance of
this Guaranty Agreement do not violate or constitute a breach of its certificate
of incorporation or charter or governance documents or any agreement to which
such Guarantor is a party, or any applicable laws.
13. EXPENSES. Each Guarantor agrees to be jointly and severally liable for
the payment of all reasonable fees and expenses, including attorney's fees,
incurred by the Agent in connection with the enforcement of this Guaranty
Agreement.
14. REINSTATEMENT. Each Guarantor agrees that this Guaranty Agreement shall
continue to be effective or be reinstated, as the case may be, at any time
payment received by the Agent under the Credit Agreement or this Guaranty
Agreement is rescinded or must be restored for any reason.
15. COUNTERPARTS. This Guaranty Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original as against any
party whose signature appears thereon, and all of which shall constitute one and
the same instrument.
16. RELIANCE. Each Guarantor represents and warrants to the Agent, for the
benefit of the Agent and the Lenders, that: (a) such Guarantor has adequate
means to obtain from Borrower, on a continuing basis, information concerning
Borrower and Borrower's financial condition and affairs and has full and
complete access to Borrower's books and records; (b) such Guarantor is not
relying on the Agent or any Lender, its or their employees, agents or other
representatives, to provide such information, now or in the future; (c) such
Guarantor is executing this Guaranty Agreement freely and deliberately, and
understands the obligations and financial risk undertaken by providing this
Guaranty; (d) such Guarantor has relied solely on the Guarantor's own
independent investigation, appraisal and analysis of Borrower and Borrower's
financial condition and affairs in deciding to provide this Guaranty and is
fully aware of the same; and (e) such Guarantor has not depended or relied on
the Agent or any Lender, its or their employees, agents or representatives, for
any information whatsoever concerning Borrower or Borrower's financial condition
and affairs or other matters material to such Guarantor's decision to provide
this Guaranty or for any counseling, guidance, or special consideration or any
promise therefor with respect to such decision. Each Guarantor agrees that
neither the Agent nor any Lender has any duty or responsibility whatsoever, now
or in the future, to provide to any Guarantor any information concerning
Borrower or Borrower's financial condition and affairs, other than as expressly
provided herein, and that, if such Guarantor receives any such information from
the Agent or any Lender, its or their employees, agents or other
representatives, such Guarantor will independently verify the information and
will not rely on the Agent or any Lender, its or their employees, agents or
other representatives, with respect to such information.
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17. NOTICES. Any notice shall be conclusively deemed to have been received
by any party hereto and be effective (i) on the day on which delivered
(including hand delivery by commercial courier service) to such party (against
receipt therefor), (ii) on the date of receipt at such telefacsimile number for
such party and the receipt of such message is verified by the sender's
telefacsimile machine, (iii) on the fifth Business Day after the day on which
mailed, if sent prepaid by certified or registered mail, return receipt
requested, in each case delivered, transmitted or mailed, as the case may be, to
the Guarantor's Address or telefacsimile number, as appropriate.
18. TERMINATION. This Guaranty Agreement and all obligations of the
Guarantors hereunder shall terminate without delivery of any instrument or
performance of any act by any party on the date when all of the Obligations have
been fully paid and the Credit Agreement has terminated.
19. GOVERNING LAW; WAIVERS OF TRIAL BY JURY, ETC.
(A) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF FLORIDA APPLICABLE TO
CONTRACTS EXECUTED, AND TO BE FULLY PERFORMED, IN SUCH STATE.
(B) EACH PARTY HEREBY EXPRESSLY AND IRREVOCABLY AGREES AND
CONSENTS THAT ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREIN
MAY BE INSTITUTED IN ANY STATE OR FEDERAL COURT SITTING IN THE COUNTY
OF BROWARD, STATE OF FLORIDA, UNITED STATES OF AMERICA AND, BY THE
EXECUTION AND DELIVERY OF THIS AGREEMENT, EXPRESSLY WAIVES ANY
OBJECTION THAT IT MAY HAVE NOW OR HEREAFTER TO THE LAYING OF THE VENUE
OR TO THE JURISDICTION OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND
IRREVOCABLY SUBMITS GENERALLY AND UNCONDITIONALLY TO THE JURISDICTION
OF ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING.
(C) EACH PARTY AGREES THAT SERVICE OF PROCESS MAY BE MADE BY
PERSONAL SERVICE OF A COPY OF THE SUMMONS AND COMPLAINT OR OTHER LEGAL
PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING, OR BY REGISTERED OR
CERTIFIED MAIL (POSTAGE PREPAID) TO THE GUARANTOR'S ADDRESS (AS HEREIN
DEFINED) OR BY ANY OTHER METHOD OF SERVICE PROVIDED FOR UNDER THE
APPLICABLE LAWS IN EFFECT IN THE STATE OF FLORIDA.
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(D) NOTHING CONTAINED IN SUBSECTIONS (B) OR (C) HEREOF SHALL
PRECLUDE ANY PARTY FROM BRINGING ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER LOAN
DOCUMENTS IN THE COURTS OF ANY PLACE WHERE ANY OTHER PARTY OR ANY OF
SUCH PARTY'S PROPERTY OR ASSETS MAY BE FOUND OR LOCATED. TO THE EXTENT
PERMITTED BY THE APPLICABLE LAWS OF ANY SUCH JURISDICTION, EACH PARTY
HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT AND
EXPRESSLY WAIVES, IN RESPECT OF ANY SUCH SUIT, ACTION OR PROCEEDING,
THE JURISDICTION OF ANY OTHER COURT OR COURTS WHICH NOW OR HEREAFTER,
BY REASON OF ITS PRESENT OR FUTURE DOMICILE, OR OTHERWISE, MAY BE
AVAILABLE TO IT.
(E) IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS
OR REMEDIES UNDER OR RELATED TO THIS AGREEMENT OR ANY AMENDMENT,
INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR THAT MAY IN THE FUTURE
BE DELIVERED IN CONNECTION WITH THE FOREGOING, EACH PARTY HEREBY
AGREES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, THAT ANY SUCH
ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A
JURY AND EACH PARTY HEREBY WAIVES, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, ANY OBJECTION THAT IT MAY HAVE THAT EACH ACTION OR
PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
[SIGNATURES ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties have duly executed this Guaranty
Agreement on the day and year first written above.
GUARANTORS:
WITNESS:
_________________________ By: __________________________________
Name: ________________________________
_________________________ Title: _______________________________
Address for Notices:
______________________________________
______________________________________
______________________________________
Telefacsimile: _______________________
WITNESS:
_________________________ By: __________________________________
Name: ________________________________
_________________________ Title: _______________________________
Address for Notices:
______________________________________
______________________________________
______________________________________
Telefacsimile: _______________________
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WITNESS: NATIONSBANK, NATIONAL ASSOCIATION,
as Agent
_________________________ By: __________________________________
Name: ________________________________
_________________________ Title: _______________________________
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EXHIBIT J
Form of LC Account Agreement
LC ACCOUNT AGREEMENT
THIS LC ACCOUNT AGREEMENT (the "Agreement") dated as of December 18, 1997,
and made between WACKENHUT CORRECTIONS CORPORATION, a Florida corporation (the
"Pledgor"), and NATIONSBANK, NATIONAL ASSOCIATION, a national banking
association, as a Lender ("NationsBank") and as Agent (in such capacity herein
and together with any successors in such capacity, the "Agent") for the lenders
(the "Lenders") party to the Amended and Restated Credit Agreement (as
hereinafter defined).
W I T N E S S E T H:
WHEREAS, the Pledgor, the Lenders, and the Agent have entered into that
certain Amended and Restated Credit Agreement dated as of the date hereof (as
may hereafter be amended, restated, supplemented or otherwise modified from time
to time in accordance with the terms thereof and in effect, hereinafter referred
to as the "Credit Agreement");
WHEREAS, as a condition precedent to the Lenders' obligations to make the
Loans or to issue Letters of Credit, the Pledgor is required to execute and
deliver to the Agent a copy of this Agreement on or before the Closing Date;
NOW, THEREFORE, in consideration of the foregoing and the agreements,
provisions and covenants contained herein, the Pledgor and the Agent hereby
agree as follows:
Section 1. Definitions. Capitalized terms used in this Agreement shall have
the following meanings:
"Collateral" means (a) all funds from time to time on deposit in the LC
Account; (b) all Investments and all certificates and instruments from time to
time representing or evidencing such Investments; (c) all notes, certificates of
deposit, checks and other instruments from time to time hereafter delivered to
or otherwise possessed by the Agent for or on behalf of the Pledgor in
substitution for or in addition to any or all of the Collateral described in
clause (a) or (b) above; (d) all interest, dividends, cash, instruments and
other property from time to time received, receivable or otherwise distributed
in respect of or in exchange for any or all of the Collateral described in
clause (a), (b) or (c) above; and (e) to the extent not covered by clauses (a)
through (d) above, all proceeds of any or all of the foregoing Collateral.
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"Investments" means those investments, if any, made by the Agent pursuant
to Section 5 hereof.
"LC Account" means the cash collateral account established and maintained
pursuant to Section 2 hereof.
"Secured Obligations" means (i) all obligations of the Pledgor now existing
or hereafter arising under or in respect of the Credit Agreement or the Notes
(including, without limitation, the Pledgor's obligation to pay principal and
interest and all other charges, fees, expenses, commissions, reimbursements,
indemnities and other payments related to or in respect of the obligations
contained in the Credit Agreement or the Notes) or any documents or agreement
related to the Credit Agreement or the Notes; and (ii) without duplication, all
obligations of the Pledgor now or hereafter existing under or in respect of this
Agreement, including, without limitation, with respect to all charges, fees,
expenses, commissions, reimbursements, indemnities and other payments related to
or in respect of the obligations contained in this Agreement.
Capitalized terms used herein and not otherwise defined shall have the
meanings set forth in the Credit Agreement.
Section 2. LC Account; Cash Collateralization of Letters of Credit.
(i) From and after the occurrence of an Event of Default, the Agent
shall establish and maintain at the offices of NationsBank, N.A. at 101
North Tryon Street, Charlotte, North Carolina, in the name of the Agent and
under the sole dominion and control of the Agent, a cash collateral account
designated as Wackenhut Corrections Cash LC Account (the "LC Account").
(ii) In accordance with Article X of the Credit Agreement, in the
event that an Event of Default has occurred and shall not have been waived
pursuant to Section 12.6 of the Credit Agreement and the Pledgor is
required to pay to Agent an amount equal to the maximum amount remaining
undrawn or unpaid under the Letters of Credit, the Agent shall, upon
receipt of any such amounts, exercise the remedies set forth in Section 12
hereof and shall apply the proceeds as provided in Article X of the Credit
Agreement. Any such amounts received by the Agent shall be deposited in the
LC Account. Upon a drawing under the Letters of Credit in respect of which
any amounts described above have been deposited in the LC Account, the
Agent shall apply such amounts to reimburse NationsBank for the amount of
such drawing. In the event the Letters of Credit are canceled or expire or
in the event of any reduction in the maximum amount available at any time
for drawing under such Letters of Credit (the "Maximum Available Amount"),
the Agent shall apply the amount then in the LC Account designated to
reimburse NationsBank for any drawings under the Letters of Credit less the
Maximum Available Amount immediately after such cancellation, expiration or
reduction, if any, first, to the cash collateralization of the Letters of
Credit if the Pledgor has failed to pay all or a portion of the maximum
amounts described above,
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second, to the payment in full of the outstanding Secured Obligations and
third, the balance, if any, to the Pledgor.
(iii) Interest received in respect of Investments of any amounts
deposited in the LC Account pursuant to clause (ii) of this Section 2 shall
be delivered by Agent to the Pledgor on the last Business Day of each
calendar month or, if earlier, upon cancellation or expiration of or
drawing of the Maximum Available Amount for drawing under the Letters of
Credit, as the case may be, in respect of which such amounts were so
deposited; provided, however, that the Agent shall not deliver to the
Pledgor any such interest received in respect of Investments of any amounts
deposited in the LC Account pursuant to this Section 2 if an Event of
Default has occurred and shall not have been waived pursuant to Section
12.6 of the Credit Agreement or unless all outstanding Secured Obligations
have been indefeasibly paid in full in cash.
Section 3. Pledge; Security for Secured Obligations. The Pledgor hereby
pledges to the Agent (for itself and on behalf of the Lenders) a first priority
lien and security interest in, the Collateral, as collateral security for the
prompt payment in full when due, whether at stated maturity, by acceleration or
otherwise (including, without limitation, the payment of interest and other
amounts which would accrue and become due but for the filing of a petition in
bankruptcy or the operation of the automatic stay under Section 362(a) of the
Bankruptcy Code), of all Secured Obligations.
Section 4. Delivery of Collateral. All certificates or instruments, if any,
representing or evidencing the Collateral shall be delivered to and held by the
Agent pursuant hereto and shall be in suitable form for transfer by delivery, or
shall be accompanied by duly executed instruments of transfer or assignment in
blank, all in form and substance reasonably satisfactory to the Agent. In the
event any Collateral is not evidenced by a certificate, a notation, reflecting
title in the name of the Agent or the security interest of the Agent, shall be
made in the records of the issuer of such Collateral or in such other
appropriate records as the Agent may require, all in form and substance
reasonably satisfactory to the Agent. The Agent shall have the right, at any
time and without notice to the Pledgor, to transfer to or to register in the
name of the Agent or any of its nominees any or all of the Collateral. In
addition, the Agent shall have the right at any time to exchange certificates or
instruments representing or evidencing Collateral for certificates or
instruments of smaller or larger denominations.
Section 5. Investing of Amounts in the LC Account; Amounts held by the
Agent. Cash held by the Agent in the LC Account shall not be invested or
reinvested except as provided in this Section 5.
(i) Except as otherwise provided in Section 12 hereof, any funds on
deposit in the LC Account shall be invested by the Agent so long as no
Default or Event of Default shall have occurred and shall not have been
waived pursuant to Section 12.6 of the Credit Agreement, in cash
equivalents.
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(ii) The Agent is hereby authorized to sell, and shall sell, all or
any designated part of the Collateral (A) so long as no Default or Event of
Default shall have occurred and shall not have been waived pursuant to
Section 12.6 of the Credit Agreement, upon the receipt of appropriate
written instructions from an Authorized Representative or (B) in any event
if such sale is necessary to permit the Agent to perform its duties
hereunder or under the Credit Agreement. The Agent shall have no
responsibility for any loss in the value of the Collateral resulting from a
fluctuation in interest rates or otherwise. Any interest on securities
constituting part of the Collateral and the net proceeds of the sale or
payment of any such securities shall be held in the LC Account by the
Agent. Section 6. Representations and Warranties. In addition to its
representations and warranties made pursuant to Article VII of the Credit
Agreement, the Pledgor represents and warrants to the Agent (for itself and
as agent on behalf of the Lenders), that the following statements are true,
correct and complete:
(i) The Pledgor will be the legal and beneficial owner of the
Collateral free and clear of any Lien except for the lien and security
interest created by this Agreement and the Credit Agreement;
(ii) The pledge and assignment of the Collateral pursuant to this
Agreement creates a valid and perfected first priority security interest in
the Collateral, securing the payment of the Secured Obligations.
Section 7. Further Assurances. The Pledgor agrees that at any time and from
time to time, at the Pledgor's expense, the Pledgor will promptly execute and
deliver to the Agent any further instruments and documents, and take any further
actions, that may be necessary or that the Agent may reasonably request, in
order to perfect and protect any security interest granted or purported to be
granted hereby or to enable the Agent to exercise and enforce its rights and
remedies hereunder with respect to any Collateral.
Section 8. Transfers and Other Liens. The Pledgor agrees that it will not
(a) sell or otherwise dispose of any of the Collateral, or (b) create or permit
to exist any Lien upon or with respect to any of the Collateral, except for the
lien and security interest created by this Agreement.
Section 9. The Agent Appointed Attorney-in-Fact. The Pledgor hereby
appoints the Agent as its attorney-in-fact, with full authority in the place and
stead of the Pledgor and in the name of the Pledgor or otherwise, from time to
time in the Agent's reasonable discretion to take any action and to execute any
instrument which the Agent may reasonably deem necessary or advisable to
accomplish the purposes of the Agreement, including, without limitation, to
receive, endorse and collect all instruments made payable to the Pledgor or
either of them representing any payment, dividend, or other distribution in
respect of the Collateral or any part thereof and to give full discharge for the
same. In performing its functions and duties under this Agreement, the Agent
shall
J-4
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act solely for itself and as the agent of the Lenders and the Agent has not
assumed nor shall be deemed to have assumed any obligation towards or
relationship of agency or trust with or for the Pledgor.
Section 10. The Agent May Perform. If the Pledgor fails to perform any
agreement contained herein, after notice to the Pledgor, the Agent may itself
perform, or cause performance of, such agreement, and the expenses of the Agent
incurred in connection therewith shall be payable by the Pledgor under Section
13 hereof.
Section 11. Standard of Care; No Responsibility For Certain Matters. In
dealing with the Collateral in its possession, the Agent shall exercise the same
care which it would exercise in dealing with its own property of a similar
nature, but it shall not be responsible for (a) ascertaining or taking action
with respect to calls, conversions, exchanges, maturities, tenders or other
matters relative to any Collateral, whether or not the Agent has or is deemed to
have knowledge of such matters, (b) taking any steps to preserve rights against
any parties with respect to any Collateral (other than steps taken in accordance
with the standard of care set forth above to maintain possession of the
Collateral), (c) the collection of any proceeds, (d) any loss resulting from
Investments made pursuant to Section 5 hereof, or (e) determining (x) the
correctness of any statement or calculation made by the Pledgor in any written
or telex (tested or otherwise) instructions, or (y) whether any deposit in the
LC Account is proper.
Section 12. Remedies upon Default; Application of Proceeds. If any
Event of Default shall have occurred and shall not have been waived pursuant to
Section 12.6 of the Credit Agreement:
(i) The Agent may exercise in respect of the Collateral, in
addition to other rights and remedies provided for herein otherwise
available to it, all the rights and remedies of a secured party on
default under the Uniform Commercial Code (the "Code") as in effect in
the State of North Carolina at that time, and the Agent may, without
notice except as specified below, sell the Collateral or any part
thereof in one or more parcels at public or private sale, at any
exchange or broker's board or at any of the Agent's offices or
elsewhere, for cash, on credit or for future delivery, and at such
price or prices, and upon such other terms as the Agent may reasonably
deem commercially reasonable. The Pledgor agrees that, to the extent
notice of sale shall be required by law, at least ten (10) days'
notice to Pledgor of the time and place of any public sale or the time
after which any private sale is to be made shall constitute reasonable
notification. The Agent shall not be obligated to make any sale of the
Collateral regardless of notice of sale having been given. The Agent
may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was
so adjourned.
(ii) Subject to the provisions of Section 2(ii) hereof, any cash
held by the Agent as Collateral and all cash proceeds received by the
Agent in respect of any sale of, collection from, or other realization
upon all or part of the Collateral shall be applied (after payment
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of any amounts payable to the Agent pursuant to Section 13 hereof) by the
Agent to pay the Secured Obligations pursuant to Article X of the Credit
Agreement. Any surplus of such cash or cash proceeds held by the Agent and
remaining after payment in full of all Secured Obligations shall be paid
over to the Pledgor or to whomsoever may be lawfully entitled to receive
such surplus.
Section 13. Expenses. In addition to any payments of expenses of Agent
pursuant to the Credit Agreement or the other Loan Documents, the Pledgor agrees
to pay promptly to the Agent all the costs and expenses, including reasonable
attorneys fees and expenses, which the Agent may reasonably incur in connection
with (a) the custody or preservation of, or the sale of, collection from, or
other realization upon, any of the Collateral, (b) the exercise or enforcement
of any of the rights of the Agent hereunder, or (c) the failure by the Pledgor
to perform or observe any of the provisions hereof.
Section 14. No Delays; Waiver, etc. No delay or failure on the part of the
Agent in exercising, and no course of dealing with respect to, any power or
right hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise by the Agent of any power or right hereunder preclude other or
further exercise thereof or the exercise of any other power or right. The
remedies herein provided are to the fullest extent permitted by law cumulative
and are not exclusive of any remedies provided by law.
Section 15. Amendments, Etc. No amendment, modification, termination or
waiver of any provision of this Agreement, or consent to any departure by the
Pledgor therefrom, shall in any event be effective without the written
concurrence of the Agent.
Section 16. Notices. Except as otherwise specifically provided herein, all
notices which are to be sent to the Pledgor or Agent shall be given in
accordance with the Credit Agreement.
Section 17. Continuing Security Interest; Termination. This Agreement shall
create a continuing security interest in the Collateral and shall (a) remain in
full force and effect until all Secured Obligations (other than Secured
Obligations in the nature of continuing indemnities or expense reimbursement
obligations not yet due and payable) shall have been indefeasibly paid in full
in cash, the commitments or other obligations of the Agent or any Lender to make
any Loan under the Credit Agreement shall have expired and the Letters of Credit
shall have expired, (b) be binding upon Pledgor, its successors and assigns, and
(c) inure to the benefit of the Agent, the Lenders and their respective
successors, transferees and assigns. Without limiting the generality of the
foregoing clause (c) and subject to the provisions of the Credit Agreement, any
Lender may assign or otherwise transfer any Note held by it to any other person
or entity, and such other person or entity shall thereupon become vested with
all the benefits in respect thereof granted to such Lender herein or otherwise.
Upon the indefeasible payment in full in cash of the Secured Obligations (other
than Secured Obligations in the nature of continuing indemnities or expense
reimbursement obligations not yet due and payable) and the cancellation or
expiration of the Letters of Credit and termination or expiration of all
commitments and other obligations of the Agent and any Lender to make any
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<PAGE> 153
Loan, Pledgor shall be entitled, subject to the provisions of Section 12 hereof,
to the return, upon its request and at its expense, of such of the Collateral as
shall not have been sold or otherwise applied pursuant to the terms hereof.
Section 18. GOVERNING LAW; TERMS. THIS AGREEMENT SHALL BE GOVERNED BY, AND
SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
FLORIDA WITHOUT REGARD TO ANY OTHERWISE APPLICABLE PRINCIPLES OF CONFLICTS OF
LAWS, EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE SECURITY
INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR
COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF
FLORIDA. UNLESS OTHERWISE DEFINED HEREIN OR IN THE CREDIT AGREEMENT, TERMS
DEFINED IN ARTICLE 9 OF THE CODE ARE USED HEREIN AS THEREIN DEFINED.
Section 19. CONSENT TO JURISDICTION. ALL JUDICIAL PROCEEDINGS BROUGHT
AGAINST PLEDGOR WITH RESPECT TO THIS AGREEMENT MAY BE BROUGHT IN ANY STATE OR
FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF FLORIDA AND BY EXECUTION
AND DELIVERY OF THIS AGREEMENT, EACH PLEDGOR ACCEPTS FOR ITSELF AND IN
CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE
JURISDICTION OF THE AFORESAID COURTS, AND IRREVOCABLY AGREES TO BE BOUND BY AND
JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT SUBJECT TO RIGHT OF
APPEAL. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE AGENT OR ANY LENDER TO
BRING PROCEEDINGS AGAINST THE PLEDGOR IN THE COURTS OF ANY OTHER JURISDICTION.
Section 20. Successors and Assigns. Whenever in this Agreement any of the
parties hereto is referred to, such reference shall be deemed to include the
successors and assigns of such party and all covenants, promises, and agreements
by or on behalf of the Pledgor or by and on behalf of the Agent shall bind and
inure to the benefit of the successors and assigns of the Pledgor, the Agent and
the Lenders.
Section 21. Execution in Counterparts. This Agreement may be executed in
any number of counterparts and by the different parties on separate counterparts
and each such counterpart shall for all purposes be deemed an original, but all
such counterparts shall together constitute but one and the same Agreement. The
Pledgor and the Agent hereby acknowledge receipt of a true, correct, and
complete counterpart of this Agreement.
Section 22. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such provision and
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of this Agreement
or affecting the validity or enforceability of such provision in any other
jurisdiction.
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Section 23. Headings. This section headings in this Agreement are inserted
for convenience of reference and shall not be considered a part of this
Agreement or used in its interpretation.
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<PAGE> 155
IN WITNESS WHEREOF, The Pledgor and the Agent have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first above written.
WITNESS: WACKENHUT CORRECTIONS CORPORATION
______________________ By: _________________________
Name: _______________________
______________________ Title: ______________________
WITNESS: NATIONSBANK, NATIONAL ASSOCIATION,
as Agent
______________________ By: _________________________
Name: _______________________
______________________ Title: ______________________
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<PAGE> 156
Schedule 4.3
Location of Collateral
Schedule 1.1
Existing Letters of Credit
None.
S-1
<PAGE> 157
Schedule 4.3
Location of Collateral
S-2
<PAGE> 158
Schedule 7.6
Indebtedness
Schedule 7.4
Subsidiaries and Investments in Other Persons
S-3
<PAGE> 159
Schedule 7.6
Indebtedness
S-4
<PAGE> 160
Schedule 7.7
Liens
S-5
<PAGE> 161
Schedule 7.10
Litigation
S-6
<PAGE> 162
Schedule 8.5
Insurance
S-7
<PAGE> 1
___________________________________________________________________________
AMENDED AND RESTATED PARTICIPATION AGREEMENT
Dated as of June 19, 1997
among
WACKENHUT CORRECTIONS CORPORATION,
as Construction Agent,
WACKENHUT CORRECTIONS CORPORATION,
as Lessee,
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not individually, except as expressly
stated herein, but solely as Owner Trustee
under the Wackenhut Corrections Trust 1997-1
THE VARIOUS BANKS AND OTHER
LENDING INSTITUTIONS WHICH ARE PARTIES
HERETO FROM TIME TO TIME,
as the Holders
THE VARIOUS BANKS AND OTHER
LENDING INSTITUTIONS WHICH
ARE PARTIES HERETO FROM TIME TO TIME,
as the Lenders
SCOTIABANC INC.
as Documentation Agent
and
NATIONSBANK, NATIONAL ASSOCIATION,
as Administrative Agent for the
Lenders
___________________________________________________________________________
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 1. THE LOANS......................................................... 1
SECTION 2. HOLDER FUNDINGS................................................... 1
SECTION 3. SUMMARY OF TRANSACTIONS........................................... 2
3.1. Operative Agreements.............................................. 2
3.2. Property Purchase................................................. 2
3.3. Construction of Improvements; Lease or Disposition of Properties.. 2
SECTION 4. THE CLOSINGS...................................................... 2
4.1. Amendment Closing Date............................................ 2
4.2. Initial Closing Date; Amendment Closing Date; Property
Closing Dates; Construction Fundings.............................. 3
SECTION 5. FUNDINGS; REPORTING REQUIREMENTS ON COMPLETION
DATE; LESSEE DELIVERY OF NOTICES.................................. 3
5.1. General........................................................... 3
5.2. Procedures for Funding............................................ 3
5.3. Conditions to the Holders' and the Lenders'
Obligations to advance funds on the Initial Closing Date, the
Amendment Closing Date or funds for the Acquisition of
Property.......................................................... 4
5.4. Conditions to the Holders' and the Lenders'
Obligations to Make Construction Fundings for the
Commencement of Construction of any Improvements.................. 8
5.5. Conditions to the Holders' and the Lenders'
Obligations to Make Construction Fundings for the Ongoing
Construction on any Property Prior to the Construction Period
Termination Date.................................................. 10
5.6. Reporting and Delivery Requirements on Completion Date............ 11
5.7. Construction Agent Delivery of Allocation Notice;
Notice Regarding the Holder Construction Property Cost and
Construction Budget Modifications................................. 12
5.8. Inspection of Documents; Hold Harmless; Removal of Properties..... 12
SECTION 6. CONDITIONS OF THE AMENDMENT CLOSING............................... 12
6.1. Conditions to the Lessor's and the Holders' Obligations........... 12
6.2. Conditions to the Lessee's Obligations............................ 14
6.3. Conditions to the Agent's Obligations............................. 15
SECTION 7. REPRESENTATIONS AND WARRANTIES ON THE AMENDMENT CLOSING DATE...... 16
7.1. Representations and Warranties of the Initial Holders............. 16
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
7.2. Representations and Warranties of the Owner Trustee............... 18
7.3. Representations and Warranties of the Construction Agent and
the Lessee........................................................ 20
7.4. Representations and Warranties of the Agent....................... 25
SECTION 8. REPRESENTATIONS AND WARRANTIES ON FUNDING DATES................... 25
8.1. Representations and Warranties on Property Closing Dates.......... 25
8.2. Representations and Warranties Upon Initial Construction
Fundings.......................................................... 27
8.3. Representations and Warranties Upon the Date of Each
Construction Funding that is not an Initial Construction
Funding........................................................... 29
8.4. Certain Construction Fundings During Defaults..................... 30
SECTION 9. PAYMENT OF CERTAIN EXPENSES....................................... 30
9.1. Transaction Expenses.............................................. 30
9.2. Certain Fees and Expenses......................................... 31
9.3. Unused Fee and Holder Unused Fee.................................. 31
SECTION 10. OTHER COVENANTS AND AGREEMENTS.................................... 32
10.1. Cooperation with the Construction Agent or the Lessee............. 32
10.2. Covenants of the Owner Trustee and the Holders.................... 32
10.3. Lessee Covenants, Consent and Acknowledgment;
Construction Agent Covenants...................................... 34
10.4. Sharing of Certain Payments....................................... 36
10.5. Grant of Easements, Voting at Meetings, etc....................... 36
SECTION 11. CREDIT AGREEMENT AND TRUST AGREEMENT.............................. 36
11.1. Construction Agent's and Lessee's Credit Agreement Rights......... 36
11.2. Construction Agent's and Lessee's Trust Agreement Rights.......... 37
SECTION 12. TRANSFER OF INTEREST.............................................. 37
12.1. Restrictions on Transfer.......................................... 38
12.2. Effect of Transfer................................................ 38
SECTION 13. INDEMNIFICATION................................................... 38
13.1. General Indemnity................................................. 38
13.2. General Tax Indemnity............................................. 41
13.3. Environmental Indemnity........................................... 45
SECTION 14. MISCELLANEOUS..................................................... 45
14.1. Survival of Agreements............................................ 45
14.2. No Broker, etc.................................................... 45
14.3. Notices........................................................... 46
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
14.4. Counterparts...................................................... 47
14.5. Amendments and Termination........................................ 47
14.6. Headings, etc..................................................... 47
14.7. Parties in Interest............................................... 48
14.8. GOVERNING LAW; WAIVERS OF JURY TRIAL.............................. 48
14.9. Submission to Jurisdiction; Waivers............................... 48
14.10. Severability...................................................... 49
14.11. Liability Limited................................................. 49
14.12. Rights of Lessee.................................................. 50
14.13. Further Assurances................................................ 50
14.14. Calculations under Operative Agreements........................... 50
14.15. Confidentiality................................................... 51
14.16. Calculation of Rent, Interest, Holder Yield and Fees.............. 52
Schedule 1 Initial Holders........................................ Schedule-1
EXHIBIT A REQUISITION FORM.............................................. A-1
Schedule 1 Legal Description of Land............................... A-4
Schedule 2 Description of Improvements............................. A-5
Schedule 3 Description of Equipment................................ A-6
Schedule 4 Work.................................................... A-7
EXHIBIT B WACKENHUT CORRECTIONS CORPORATION OFFICER'S
CERTIFICATE................................................... B-1
Schedule 1 [itemized expenditures]................................. B-3
EXHIBIT C FORM OF OPINION OF COUNSEL TO WACKENHUT
CORRECTIONS CORPORATION....................................... C-1
EXHIBIT D WACKENHUT CORRECTIONS CORPORATION OFFICER'S
CERTIFICATE................................................... D-1
EXHIBIT E WACKENHUT CORRECTIONS CORPORATION SECRETARY'S
CERTIFICATE................................................... E-1
EXHIBIT F FIRST SECURITY BANK, NATIONAL ASSOCIATION
OFFICER'S CERTIFICATE......................................... F-1
EXHIBIT G FIRST SECURITY BANK, NATIONAL ASSOCIATION
CERTIFICATE OF ASSISTANT SECRETARY............................ G-1
EXHIBIT H FORM OF OPINION OF COUNSEL TO FIRST SECURITY BANK,
NATIONAL ASSOCIATION.......................................... H-1
Appendix A Rules of Usage and Definitions....................... Appendix A-1
</TABLE>
iii
<PAGE> 5
AMENDED AND RESTATED PARTICIPATION AGREEMENT
THIS AMENDED AND RESTATED PARTICIPATION AGREEMENT, dated as of June 19,
1997 (as amended, modified, restated or supplemented from time to time, this
"Agreement"), is by and among WACKENHUT CORRECTIONS CORPORATION, a Florida
corporation ("Wackenhut" or the "Construction Agent"); WACKENHUT CORRECTIONS
CORPORATION, as Lessee (the "Lessee"); FIRST SECURITY BANK, NATIONAL
ASSOCIATION, a national banking association, not individually (in its
individual capacity, the "Trust Company"), except as expressly stated herein,
but solely as Owner Trustee under the Wackenhut Corrections Trust 1997-1 (the
"Owner Trustee" or the "Lessor"); NATIONSBANK, NATIONAL ASSOCIATION, as
Administrative Agent (in such capacity, the "Agent") for the Lenders;
NATIONSBANK, NATIONAL ASSOCIATION, a national banking association and the
various other banks and lending institutions which are parties hereto from time
to time as Holders; NATIONSBANK, NATIONAL ASSOCIATION and the various other
banks and lending institutions which are parties hereto from time to time as
Lenders. Capitalized terms used but not otherwise defined in this Agreement
shall have the meanings set forth in Appendix A hereto.
In consideration of the mutual agreements herein contained and other good
and valuable consideration, receipt of which is hereby acknowledged, the
parties hereto hereby agree as follows:
SECTION 1. THE LOANS.
The Lenders have agreed to make Loans to the Lessor from time to time in
an aggregate principal amount of up to the aggregate amount of the Commitments
of the Lenders in order for the Lessor to acquire the Properties and certain
Improvements and to develop and construct certain Improvements in accordance
with the Agency Agreement and the terms and provisions hereof, and in
consideration of the receipt of the proceeds of such Loans, the Lessor will
issue the Notes (together with any note or notes issued in exchange or
substitution therefor in accordance with the Credit Agreement, the "Notes").
The Loans shall be made and the Notes shall be issued pursuant to the Credit
Agreement. Pursuant to Section 5 of this Agreement and Section 2 of the Credit
Agreement, the Loans will be made to the Lessor from time to time upon the
appropriate submission by the Construction Agent of a Requisition and borrowing
request therefor, in accordance with this Agreement and the other Operative
Agreements. The Loans and the obligations of the Lessor under the Credit
Agreement shall be secured by the Collateral. The Lessee and the Construction
Agent agree that each Property shall be improved for business purposes and
shall not merely be held as unimproved Land for speculative purposes.
SECTION 2. HOLDER FUNDINGS.
Subject to the terms and conditions of this Agreement and in reliance on
the representations and warranties of each of the parties hereto contained
herein or made pursuant hereto on each date Fundings are made in accordance
with Section 5 hereof, each Holder shall make a Holder Funding on a pro rata
basis to the Owner Trustee with respect to the Wackenhut
<PAGE> 6
Corrections Trust 1997-1 based on its Holder Commitment in an amount in
immediately available funds such that the aggregate of all Holder Fundings
shall be three percent (3%) of the amount of the Funding being funded on such
date; provided, no Holder shall be obligated for any Holder Funding in excess
of its pro rata share of the Available Holder Commitment. The aggregate amount
of Holder Fundings shall be up to the aggregate amount of the Holder
Commitments. No prepayment or any other payment with respect to any Funding
shall be permitted such that the Holder Funding with respect to such Funding is
less than 3% of the outstanding amount of such Funding, except in connection
with termination or expiration of the Term or in connection with the exercise
of remedies relating to the occurrence of a Lease Event of Default. The
representations, warranties, covenants and agreements of the Holders herein and
in the other Operative Agreements are several, not joint, and not joint and
several.
SECTION 3. SUMMARY OF TRANSACTIONS.
3.1. Operative Agreements. As of the date hereof (the "Initial Closing
Date"), each of the respective parties hereto and thereto shall execute and
deliver this Agreement, the Lease, the Agency Agreement, the Credit Agreement,
the Notes, the Certificates, the Trust Agreement, the Security Agreement and
such other documents, instruments, certificates and opinions of counsel as
agreed to by the parties hereto.
3.2. Property Purchase. On each Property Closing Date and subject to the
terms and conditions of this Agreement (a) the Holders will each make a Holder
Funding in accordance with Sections 2 and 5 of this Agreement and the terms and
provisions of the Trust Agreement, (b) the Lenders will make Loans in
accordance with Sections 1 and 5 of this Agreement and the terms and provisions
of the Credit Agreement, and (c) the Lessor will purchase, or lease pursuant to
a Ground Lease, the applicable Property identified by the Construction Agent,
and grant the Agent a Lien on such Property by execution of the required
Security Documents.
3.3. Construction of Improvements; Lease or Disposition of Properties.
Construction Fundings will be made with respect to particular Improvements to
be constructed and with respect to ongoing Work regarding the Equipment and
ongoing construction of particular Improvements, in each case, pursuant to the
terms and conditions of this Agreement and the Agency Agreement. The
Construction Agent will act as a construction agent on behalf of the Lessor
respecting such Work and the construction of such Improvements and the
expenditures of the Construction Fundings related thereto. The Construction
Agent shall promptly notify the Lessor upon Completion of the Improvements and
at such time Lessee shall execute and deliver to Lessor a Lease Supplement
relating to the particular Property and thereupon the Term shall commence with
respect to such Property.
SECTION 4. THE CLOSINGS.
4.1. Amendment Closing Date. All documents and instruments required to be
delivered on the Amendment Closing Date shall be delivered at the offices of
Smith Helms Mulliss & Moore, L.L.P., Charlotte, North Carolina, or at such
other location as may be determined by the Lessor, the Agent and the Lessee.
Because certain Properties are already
2
<PAGE> 7
owned by the Owner Trustee and are under construction, and because real
estate and other filings have already been made showing the Initial Closing
Date, the amended and restated Operative Agreements continue to be dated as of
the Initial Closing Date to avoid confusion and to help maintain the Lien on
those Properties. Notwithstanding such dating, the obligations under new
Lenders and Holders arise on the date they actually execute and deliver the
Operative Agreements.
4.2. Initial Closing Date; Amendment Closing Date; Property Closing Dates;
Construction Fundings. The Construction Agent shall deliver to the Lessor and
the Agent a requisition (a "Requisition"), in the form attached hereto as
Exhibit A or in such other form as is reasonably satisfactory to the Lessor,
the Construction Agent and the Agent, in connection with (a) each of the
Initial Closing Date and the Amendment Closing Date relating to the
Transaction Expenses and other fees, expenses and disbursements payable by the
Lessor pursuant to Section 9.1(a) with invoices (in form and substance
reasonably acceptable to the Agent and the Lessor) for such Transaction
Expenses and other fees, expenses and disbursements attached to such
Requisition, (b) each Property Closing Date relating to each Acquisition
Funding pursuant to Section 5.3 and (c) each date of a Construction Funding
pursuant to Sections 5.4 or 5.5.
SECTION 5. FUNDINGS; REPORTING REQUIREMENTS ON COMPLETION DATE; LESSEE
DELIVERY OF NOTICES.
5.1. General. To the extent funds have been made available to the Lessor
as Loans by the Lenders and Holder Fundings by the Holders, the Lessor will use
such funds from time to time in accordance with the terms and conditions of
this Agreement and the other Operative Agreements (i) to pay interest regarding
the Loans relating to a Property and to pay the Holder Yield regarding the
Holder Fundings relating to a Property, in each case to the extent accrued
under the Credit Agreement or Trust Agreement (as the case may be) during the
period prior to the Basic Rent Commencement Date with respect to such Property,
(ii) at the direction of the Construction Agent to acquire Properties in
accordance with the terms of this Agreement, the Agency Agreement, the Lease
and the other Operative Agreements, (iii) to make advances to the Construction
Agent to permit the testing, engineering, installation, development,
construction, modification, design and renovation, as applicable, of
Improvements in accordance with the terms of the Agency Agreement, the Lease
and the other Operative Agreements, and (iv) to pay Transaction Expenses, fees,
expenses and other disbursements payable by the Lessor under Sections 9.1(a)
and (b).
5.2. Procedures for Funding.
(a) The Construction Agent shall designate the date for Fundings
hereunder in accordance with the terms and provisions hereof; provided,
however, it is understood and agreed that no more than eight (8) Fundings
(of which only two (2) may be Eurodollar Fundings) may be requested
during any calendar month. Not less than (i) one (1) Business Day prior
to the date of any requested Base Rate Funding and (ii) three (3)
Business Days prior to the date of any requested Eurodollar Funding, the
Construction Agent shall deliver to the Lessor and the Agent, (A) with
respect to the Initial Closing
3
<PAGE> 8
Date, the Amendment Closing Date and each Property Closing Date, a
Requisition as described in Section 4.2 hereof (including without
limitation a legal description of the Land, a schedule of the
Improvements, if any, and a schedule of the Equipment, if any, to be
acquired on such date, and a schedule of the Work, if any, to be
performed, each of the foregoing in a form reasonably acceptable to the
Lessor and the Agent) and (B) with respect to each Construction Funding,
a Requisition identifying (among other things) the Property to which such
Work relates.
(b) Each Requisition shall: (i) be irrevocable, (ii) request funds
in an amount that is not in excess of the total aggregate of the
Available Commitments plus the Available Holder Commitments at such time,
and (iii) request that the Holders make Holder Fundings and that the
Lenders make Loans to the Lessor for the payment of the Property
Acquisition Costs (in the case of an Acquisition Funding) or other
Property Costs, including the cost of Improvements (in the case of a
Construction Funding) that have previously been incurred and were not
subject to a prior Requisition, in each case as specified in the
Requisition.
(c) Subject to the terms and conditions of the Credit Agreement and
the Trust Agreement and subject to the satisfaction of the conditions
precedent set forth in Sections 5.3, 5.4 or 5.5, as applicable, on each
Property Closing Date or the date on which the Construction Funding is to
be made, as applicable, (i) the Lenders shall make Loans to the Lessor in
an aggregate amount equal to 97% of the Requested Funds specified in any
Requisition (such loans to be apportioned 88% to Series A Loans and 9% to
Series B Loans), up to aggregate principal amount equal to the Available
Commitments, (ii) each Holder shall make a pro rata Holder Funding based
on its Holder Commitment in an amount such that the aggregate of all
Holder Fundings at such time shall be 3% of the balance of the Requested
Funds specified in such Requisition, provided no such Holder Funding
shall exceed such Holder's pro rata share of the Available Holder
Commitments; and (iii) the total amount of such Loans and Holder Fundings
made on such date shall (w) be used by the Lessor to pay the Property
Acquisition Costs within three (3) Business Days of the receipt by the
Lessor of such Funding (in the case of a Property Closing Date), (x) be
used by the Lessor on the date of such Funding to pay interest regarding
the Loans relating to a Property and to pay the Holder Yield regarding
the Holder Fundings relating to a Property, in each case to the extent
accrued under the Credit Agreement or Trust Agreement (as the case may
be) during the period prior to the Basic Rent Commencement Date with
respect to such Property, (y) be used by the Lessor to pay Transaction
Expenses, fees, expenses and other disbursements to the extent permitted
under Sections 5.3, 5.4 or 5.5, or (z) be disbursed by the Lessor, on the
date of such Funding, to the Construction Agent or the Lessee to pay
Property Costs, as applicable. Any such amounts held by the Lessor (or
the Agent on behalf of the Lessor) shall be subject to the lien of the
Security Agreement.
5.3. Conditions to the Holders' and the Lenders' Obligations to advance
funds on the Initial Closing Date, the Amendment Closing Date or funds for the
Acquisition of Property.
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(a) The obligations of each Holder to make Holder Fundings, and of
each Lender to make Loans, to the Lessor on the Initial Closing Date or
the Amendment Closing Date for the purpose of providing funds to the
Lessor necessary to pay Transaction Expenses, fees, expenses and other
disbursements payable by the Lessor under Section 9.1 of this Agreement,
are subject to the prior or contemporaneous satisfaction or waiver of the
following conditions precedent:
(i) the correctness in all material respects on such date
of the representations and warranties of the Owner Trustee, the
Construction Agent, the Lessee and the Holders (other than such
Holder) contained herein and in each of the other Operative
Agreements;
(ii) the performance in all material respects by the
Construction Agent and the Lessee of their respective agreements
contained herein and in the other Operative Agreements which
covenants are to be performed by them on or prior to such date;
(iii) the satisfaction of all conditions to any such Holder
Funding or Loan set forth in any Operative Agreement;
(iv) the Agent and the Owner Trustee shall have received a
fully executed copy of a counterpart of the respective
Requisition, appropriately completed; and
(v) no Default or Event of Default under any of the
Operative Agreements shall have occurred after giving effect to
the Funding requested by such Requisition.
(b) The obligations of each Holder to make Holder Fundings, and of
each Lender to make Loans, to the Lessor on a Property Closing Date for
the purpose of providing funds to the Lessor necessary to pay the
Transaction Expenses, fees, expenses and other disbursements payable by
Lessor under Section 9.1 (b) of this Agreement and to acquire a Property,
are subject to the prior or contemporaneous satisfaction or waiver of the
following conditions precedent:
(i) the correctness in all material respects on such Property
Closing Date of the representations and warranties of the Owner
Trustee, the Construction Agent, the Lessee and the Holders (other
than such Holder) contained herein and in each of the other
Operative Agreements;
(ii) the performance in all material respects by the
Construction Agent and the Lessee of their respective agreements
contained herein and in the other Operative Agreements which
covenants are to be performed by them on or prior to each such
Property Closing Date;
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<PAGE> 10
(iii) the satisfaction of all conditions to any such Holder
Funding or Loan set forth in any Operative Agreement;
(iv) the Agent and the Owner Trustee shall have received a
fully executed copy of a counterpart of the respective Requisition,
appropriately completed;
(v) title to each Property being acquired on such Property
Closing Date shall conform to the representations and warranties
set forth in Section 8.1(c) hereof;
(vi) the Construction Agent shall have delivered to the Lessor
a copy of the Deed with respect to the Land and existing
Improvements (if any), a copy of the Ground Lease (if any) with
respect to the Land, and a copy of the Bill of Sale with respect to
the Equipment, in each case for such of the foregoing as are being
acquired on such Property Closing Date; and such Land and existing
Improvements shall be located in an Approved State;
(vii) there shall not have occurred and be continuing any
Default or Event of Default under any of the Operative Agreements
and no Default or Event of Default under any of the Operative
Agreements shall have occurred after giving effect to the Funding
requested by such Requisition;
(viii) the Construction Agent shall have delivered to the
Agent and the Owner Trustee, title insurance commitments to issue
policies in favor of the Owner Trustee and the Agent with respect
to each Property being acquired on such Property Closing Date, such
policies being in form and substance reasonably acceptable to the
Owner Trustee and the Agent, with such title exceptions thereto as
are reasonably acceptable to the Owner Trustee and the Agent; and
the Construction Agent shall deliver to the Owner Trustee and the
Agent, as soon as possible after such Property Closing Date, the
final title insurance policies for each such Property, taking no
specific exception for any Lien filed on account of materials
furnished or labor performed in connection with the Property, and
otherwise showing no additional exceptions to coverage;
(ix) the Construction Agent shall have delivered to the Agent
and the Owner Trustee a "Phase I" environmental site assessment
with respect to each such Property, prepared by an independent
recognized professional reasonably acceptable to the Agent and the
Owner Trustee and in a form and substance that is reasonably
acceptable to the Agent and the Owner Trustee;
(x) the Construction Agent shall have delivered to the Agent
and the Owner Trustee a survey of each such Property, prepared by
an independent recognized professional meeting the then current
minimum standard detail requirements for American Land Title
Association/American Congress of
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<PAGE> 11
Surveying and Mapping (ALTA/ACSM) Land Title Surveys certified
to the Agent and otherwise reasonably acceptable to the Agent;
(xi) the Construction Agent shall have caused to be delivered
to the Agent and the Owner Trustee a legal opinion (in form and
substance reasonably satisfactory to the Agent and the Owner
Trustee) from counsel located in the state where each such Property
is located or, if the Agent and the Owner Trustee have previously
received an opinion from counsel in such state, the Agent and the
Owner Trustee (in their discretion) may accept an update or a
reaffirmation of the previous opinion, in each case addressed to
each Lender;
(xii) the Owner Trustee and the Agent shall be satisfied, in
their sole discretion, that the acquisition or ground leasing of
each such Property and the execution of the Mortgage Instrument and
the other Security Documents will not adversely affect in any
material respect the rights of the Owner Trustee, the Holders, the
Agent or the Lenders under or with respect to the Operative
Agreements in effect as of such Property Closing Date (it being
understood and acknowledged that the Agent and the Owner Trustee
may require that the Construction Agent deliver an acceptable legal
opinion in connection with this condition);
(xiii) the Construction Agent shall have determined (as set
forth in the related Requisition) that such Property is appropriate
for its business operations; and the Agent shall have consented to
the Lessor's acquisition of such Property, which consent (subject
to clause (xii) above) shall not be unreasonably withheld or
delayed;
(xiv) the Construction Agent shall have delivered to the Agent
and the Owner Trustee, respecting each such Property, invoices for
the various Transaction Expenses and other fees, expenses and
disbursements referenced in Section 9.1 (a) or (b) of this
Agreement;
(xv) the Lessor shall have delivered to the Agent a Mortgage
Instrument and Lender Financing Statements with respect to each
such Property in a form reasonably acceptable to the Agent and
Lessee;
(xvi) the Construction Agent shall have delivered to the
Lessor (A) with respect to each such Completed Property, a Lease
Supplement and a memorandum regarding the Lease and such Lease
Supplement, and (B) with respect to each such Property (other than
a Completed Property), a memorandum regarding the Lease (such
memoranda referenced in the foregoing (A) and (B) to be
substantially in the forms attached to the Lease as Exhibit C-1 or
Exhibit C-2 as appropriate, and in each case, in form suitable for
recording);
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<PAGE> 12
(xvii) the Construction Agent shall have delivered to the
Lessor with respect to each such Property Lessor Financing
Statements executed by the Lessee and the Lessor;
(xviii) if any such Property is subject to a Ground Lease, the
Construction Agent shall have caused a lease memorandum (in form
and substance satisfactory to the Agent) to be delivered to the
Agent for such Ground Lease;
(xix) counsel for the ground lessor of each such Property
subject to a Ground Lease shall have issued to the Lessor, the
Agent and the Holders, an opinion satisfactory to the Agent;
(xx) all necessary (or in the reasonable opinion of the Owner
Trustee, the Agent, or their respective counsel, advisable)
Governmental Actions, in each case required by any law or
regulation enacted, imposed or adopted on or prior to each such
date or by any change in facts or circumstances on or prior to each
such date, shall have been obtained or made and be in full force
and effect;
(xxi) the Construction Agent shall cause (i) Uniform
Commercial Code lien searches, tax lien searches and judgment lien
searches regarding each of the Lessee and the Lessor to be
conducted (and copies thereof to be delivered to the Agent and the
Owner Trustee) in the state and county (or other jurisdiction) in
which such Property is located, by a nationally recognized search
company acceptable to the Owner Trustee and the Agent and (ii) the
liens referenced in such lien searches which are objectionable to
the Owner Trustee or the Agent to be either removed or otherwise
handled in a manner reasonably satisfactory to the Owner Trustee
and the Agent; and
(xxii) the Agent shall have received an Appraisal for such
Property showing that such Property has a value at least equal to
eighty-five percent (85%) of the expected total Property Cost of
such Property and all Improvements constructed or expected to be
constructed thereon (based on a Construction Budget satisfying the
requirements of Section 5.4(e)).
5.4. Conditions to the Holders' and the Lenders' Obligations to Make
Construction Fundings for the Commencement of Construction of any Improvements.
The obligations of each Holder to make Holder Fundings, and of each Lender to
make Loans, to the Lessor for the purpose of providing funds to the Lessor
necessary to pay the Transaction Expenses, fees, expenses and other
disbursements payable by Lessor under Section 9.1(b) of this Agreement, to make
an advance for the commencement of construction of any Improvements on a
Property, or to pay interest regarding the Loans relating to a Property and to
pay the Holder Yield regarding the Holder Fundings relating to a Property, in
each case regarding such interest and Holder Yield to the extent accrued and
payable under the Credit Agreement or Trust Agreement (as the case may be), in
each case during the period prior to the earlier of (i) the Applicable Property
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<PAGE> 13
Construction Termination Date for such Property and (ii) the Construction
Period Termination Date, are subject to the satisfaction or waiver of the
following conditions precedent:
(a) the correctness in all material respects on the date of such
Holder Fundings and Loans of the representations and warranties of the
Owner Trustee, the Construction Agent, the Lessee and the Holders (other
than such Holder) contained herein and in each of the other Operative
Agreements;
(b) the performance in all material respects by the Construction
Agent and the Lessee of their respective agreements contained herein and
in the other Operative Agreements and to be performed by them on or prior
to each such date;
(c) the satisfaction of all conditions to any such Holder Funding or
Loan set forth in any Operative Agreement;
(d) the Agent and the Owner Trustee shall have received a copy of a
fully executed counterpart of the respective Requisition appropriately
completed, together with copies of all Bills of Sale with respect to any
Equipment acquired as a part of any Improvements;
(e) with respect to each Initial Construction Funding, the Agent and
the Owner Trustee shall have received a copy of the Construction Budget
for the completion of the Improvements to which such Funding relates,
which Construction Budget shall indicate a total Property Cost for such
Improvements and the Land on which such Improvements are to be
constructed of not less than $5,000,000;
(f) with respect to each Initial Construction Funding, (i) the title
insurance commitments to issue policies (and any policies) delivered in
connection with the requirements of Section 5.3(b)(viii) shall provide
for (or shall be endorsed to provide for) insurance in an amount at least
equal to the maximum total Property Cost indicated by the Construction
Budget referred to in subparagraph (e) above taking no specific exception
for any Lien filed on account of materials furnished or labor performed
in connection with the Property, and otherwise showing no additional
exceptions to coverage, and (ii) all necessary recording fees,
documentary stamp taxes or similar amounts will be paid in connection
with the related Mortgage Instrument in an amount sufficient to cover
such maximum total Property Cost;
(g) there shall not have occurred and be continuing any Event of
Default or (except as permitted under Section 8.4) any Default under any
of the Operative Agreements, and no Default or Event of Default under any
of the Operative Agreements will have occurred after giving effect to the
Funding requested by such Requisition;
(h) with respect to each Initial Construction Funding, based upon
Construction Budgets which satisfy the requirements of subparagraph (e)
above, the Available
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<PAGE> 14
Commitment and the Available Holder Commitment (after deducting the
Unfunded Amount) will be sufficient to complete the Improvements; and
(i) the Construction Agent shall have determined (as set forth in
the related Requisition) that such Improvements are appropriate to its
business; and the Agent shall have consented to such Improvements, which
consent shall not be unreasonably withheld or delayed.
5.5. Conditions to the Holders' and the Lenders' Obligations to Make
Construction Fundings for the Ongoing Construction on any Property Prior to the
Construction Period Termination Date. The obligations of each Holder to make
Holder Fundings, and of each Lender to make Loans, to the Lessor (i) in
connection with all subsequent requests for Fundings to pay the Transaction
Expenses, fees, expense and other disbursements payable by Lessor under Section
9.1(b) of this Agreement, (ii) to pay interest regarding the Loans relating to
a Property and to pay the Holder Yield regarding the Holder Fundings relating
to a Property, in each case regarding such interest and Holder Yield to the
extent accrued and payable under the Credit Agreement or Trust Agreement (as
the case may be), during the period prior to the Basic Rent Commencement Date
with respect to such Property, and (iii) to pay for the construction of
Improvements with respect to any Property, in each case prior to the earlier of
(i) the Applicable Property Construction Termination Date for such Property and
(ii) the Construction Period Termination Date, are subject to the satisfaction
or waiver of the following conditions precedent:
(a) the correctness in all material respects on the date of such
Holder Fundings and Loans of the representations and warranties of the
Owner Trustee, the Construction Agent, the Lessee and the Holders (other
than such Holder) contained herein and in each of the other Operative
Agreements;
(b) the performance in all material respects by the Construction
Agent and the Lessee hereto of their respective agreements contained
herein and in the other Operative Agreements and to be performed by them
on or prior to each such date;
(c) the satisfaction of all conditions to any such Holder Funding or
Loan set forth in any Operative Agreements;
(d) the Agent and the Owner Trustee shall have received a copy of a
fully executed counterpart of the respective Requisition, appropriately
completed;
(e) there shall not have occurred and be continuing any Event of
Default or (except as permitted under Section 8.4) any Default under any
of the Operative Agreements, and no Default or Event of Default under any
of the Operative Agreements will have occurred after giving effect to the
Construction Funding requested by such Requisition;
(f) (with respect to each Construction Funding) based upon
Construction Budgets which satisfy the requirements of Section 5.4(e) of
this Agreement, the Available
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<PAGE> 15
Commitments and the Available Holder Commitment (after deducting the
Unfunded Amount) will be sufficient to complete the Improvements; and
(g) with respect to each Construction Funding, the title insurance
commitments to issue policies (or any policies) delivered in connection
with the requirements of Section 5.3(b)(iii)) shall provide for (or shall
be endorsed to provide for) insurance in an amount at least equal to the
maximum total Property Cost indicated by the Construction Budget referred
to in Section 5.4(e) (and taking into account any additional Property
Cost represented by such Construction Funding), taking no specific
exception for any Lien filed on account of materials furnished or labor
performed in connection with the Property (other than Permitted Liens
which the title company insures as being junior to the Liens of the
Lessor, the Administrative Agent, the Lenders and the Holders), and
otherwise showing no additional exceptions to coverage.
5.6. Reporting and Delivery Requirements on Completion Date. On the
Completion Date for each Property, the Construction Agent shall deliver to the
Agent, and the Owner Trustee an Officer's Certificate in the form attached
hereto as Exhibit B specifying (a) the Completion Date for the construction of
Improvements at the Property, (b) the aggregate Property Cost for the Property
and (c) if any of the Property consists of Tangible Personal Property, a
separate statement of the Property Cost attributable to such Tangible Personal
Property. Such Officer's Certificate shall also include, in form and in detail
reasonably acceptable to the Agent and the Holders, a summary of the Property
Cost figures and a certification to the effect that all Improvements have been
made in accordance with all applicable material Legal Requirements, in a good
and workmanlike manner and otherwise in substantial compliance with the
standards and practices of the Construction Agent with respect to properties
and improvements owned by the Construction Agent, and that no consent or
approval of any Person is required for such Improvements except for consents
and approvals which have already been obtained. Furthermore, (i) on the
Completion Date for each Property, the Construction Agent shall deliver or
cause to be delivered originals of the following to the Agent (and copies
thereof to the Owner Trustee) each of which shall be in a form reasonably
acceptable to the Agent: (1) insurance certificates with respect to the
Property as required under the Lease Agreement; (2) a Lease Supplement with
respect to the Property, (3) a memorandum of the Lease and such Lease
Supplement (in form suitable for recording), and (4) if requested by the Agent
or the Owner Trustee, amendments or modifications to the Lessor Financing
Statements executed by the Lessee and the Lessor; and (ii) within ninety (90)
days after the Completion Date for each Property, the Construction Agent shall
deliver or cause to be delivered originals of the following to the Agent (and
copies thereof to the Owner Trustee) each of which shall be in a form
reasonably acceptable to the Agent: (1) an as-built survey for the applicable
Property, (2) an endorsement of the title insurance policy regarding such
Property, amending the effective date of such policy to the date of such
endorsement and taking no exception for any Lien on account of materials
furnished or labor performed in connection with the Property (except for Liens
which have been fully bonded by bonds acceptable to the Agent), and otherwise
showing no additional exceptions to coverage, and (3) the final Plans and
Specifications for such Property. In addition, on the Completion Date for such
Property the Construction Agent covenants and agrees that the recording fees,
documentary stamp taxes or similar amounts paid or required to be paid in
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<PAGE> 16
connection with the related Mortgage Instrument shall be in an amount
required by applicable law.
5.7. Construction Agent Delivery of Allocation Notice; Notice Regarding
the Holder Construction Property Cost and Construction Budget Modifications.
The Construction Agent covenants and agrees to deliver (i) to the Agent at
least five (5) Business Days before any Scheduled Interest Payment Date during
the Commitment Period the Allocation Notice referred to in the first sentence
of Section 2.3(b) of the Credit Agreement, and (ii) to the Agent and the Owner
Trustee each month any modification to any Construction Budget regarding any
Property; provided, no Construction Budget may be amended unless (a) the title
insurance policies referenced in Section 5.3(b)(viii) are also modified or
endorsed, if necessary, to provide for insurance in an amount that satisfies
the requirements of Section 5.4(f)(i) of this Agreement and, if necessary, any
additional recording fees, documentary stamp taxes or similar amounts paid in
connection with the related Mortgage Instrument in an amount sufficient to
comply with the requirements of Section 5.4(f)(ii), and (b) after giving effect
to any such amendment the Construction Budget remains in compliance with the
requirements of Section 5.4(e) of this Agreement.
5.8. Inspection of Documents; Hold Harmless; Removal of Properties. Any
document or item (including without limitation any environmental report)
delivered to the Agent shall be available for inspection at any time during
ordinary business hours upon reasonable notice by any Lender or Holder. The
Agent shall not incur any liability to any Lender, any Holder, the Owner
Trustee or any other Person (and each Lender, each Holder, the Owner Trustee,
the Lessee and the Construction Agent hereby holds the Agent harmless from any
such liability) as a result of any such document or item, any information
contained therein, the failure to receive any such document, or the Agent's
approval of any Property. In the event the Majority Lenders determine that any
environmental site assessment reveals an Environmental Violation and they or
the Agent so notify the Lessee, then the Lessee shall remedy or purchase such
Property in accordance with Sections 15.2, 16.1 and 16.2 of the Lease, provided
that if the Property is a Construction Period Property, the Construction Agent
shall be responsible for such remedy or purchase.
SECTION 6. CONDITIONS OF THE AMENDMENT CLOSING.
6.1. Conditions to the Lessor's and the Holders' Obligations. The
obligations of the Lessor and the Holders to consummate the transactions
contemplated by this Agreement, including the obligation to execute and deliver
the applicable Operative Agreements to which each is a party on the Amendment
Closing Date, are subject to (i) the accuracy and correctness on the Amendment
Closing Date of the representations and warranties of the other parties hereto
contained herein, (ii) the accuracy and correctness on the Amendment Closing
Date of the representations and warranties of the other parties hereto
contained in any other Operative Agreement or certificate delivered pursuant
hereto or thereto, (iii) the performance by the other parties hereto of their
respective agreements contained herein and in the other Operative Agreements
and to be performed by them on or prior to the Amendment Closing Date and (iv)
the satisfaction, or waiver by the Lessor and the Holders, of all of the
following conditions on or prior to the Amendment Closing Date:
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<PAGE> 17
(a) Each of the Operative Agreements to be entered into as of the
Initial Closing Date shall have been duly authorized, executed and
delivered by the parties thereto, other than the Lessor, and shall be in
full force and effect, and no Default or Event of Default shall exist
thereunder (both before and after giving effect to the transactions
contemplated by the Operative Agreements), and the Lessor shall have
received a fully executed copy of each of the Operative Agreements (other
than the Notes of which it shall have received specimens). The Operative
Agreements (or memoranda thereof), any supplements thereto and any
financing statements and fixture filings in connection therewith required
under the Uniform Commercial Code shall have been filed or shall be
promptly filed, if necessary, in such manner as to enable the Lessee's
counsel to render its opinion referred to in Section 6.1(g) hereof;
(b) All taxes, fees and other charges in connection with the
execution, delivery, recording, filing and registration of the Operative
Agreements shall have been paid or provision for such payment shall have
been made to the reasonable satisfaction of the Lessor and the Agent;
(c) No action or proceeding shall have been instituted, nor shall
any action or proceeding be threatened, before any Governmental
Authority, nor shall any order, judgment or decree have been issued or
proposed to be issued by any Governmental Authority (i) to set aside,
restrain, enjoin or prevent the full performance of this Agreement, any
other Operative Agreement or any transaction contemplated hereby or
thereby or (ii) which is reasonably likely to have a Material Adverse
Effect;
(d) In the reasonable opinion of the Lessor and the Holders and
their counsel, the transactions contemplated by the Operative Agreements
do not and will not violate any material Legal Requirements and do not
and will not subject the Lessor or the Holders to any materially adverse
regulatory prohibitions or constraints;
(e) The Lessor and the Agent shall each have received an Officer's
Certificate of the Lessee, dated as of the Amendment Closing Date, in the
form attached hereto as Exhibit D or in such other form as is reasonably
acceptable to such parties stating that (i) each and every representation
and warranty of the Lessee contained in the Operative Agreements to which
it is a party is true and correct in all material respects on and as of
the Amendment Closing Date; (ii) no Default or Event of Default has
occurred and is continuing under any Operative Agreement; (iii) each
Operative Agreement to which Lessee is a party is in full force and
effect with respect to it; and (iv) the Lessee has performed and complied
with all covenants, agreements and conditions contained herein or in any
Operative Agreement required to be performed or complied with by it on or
prior to the Amendment Closing Date;
(f) The Lessor and the Agent shall each have received (i) a
certificate of the Secretary or an Assistant Secretary of Lessee in the
form attached hereto as Exhibit E or in such other form as is reasonably
acceptable to such parties attaching and certifying as to (A) the
resolutions of its Board of Directors duly authorizing the execution,
delivery
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<PAGE> 18
and performance by Lessee of each of the Operative Agreements to
which it is or will be a party, (B) its certificate of incorporation and
by-laws, in each case certified as of a recent date by the Secretary of
State of the State of its incorporation, and (C) the incumbency and
signature of persons authorized to execute and deliver on its behalf the
Operative Agreements to which it is a party and (ii) a good standing
certificate from the appropriate officer of each state in which it is
required to be qualified to do business as to its good standing in such
state;
(g) Counsel for the Lessee and the Guarantor reasonably acceptable
to the other parties hereto shall have issued to the Lessor, the Agent,
the Lenders and the Holders an opinion in the form attached hereto as
Exhibit C or in such other form as is reasonably acceptable to such
parties; and
(h) As of the Amendment Closing Date, there shall not have occurred
any material adverse change in the consolidated assets, liabilities,
operations, business or financial condition of the Lessee from that set
forth in the audited financial statements of the Lessee dated December
29, 1996.
6.2. Conditions to the Lessee's Obligations. The obligation of the Lessee
to consummate the transactions contemplated by this Agreement, including the
obligation to execute and deliver the Operative Agreements to which it is a
party as of the Initial Closing Date, is subject to (i) the accuracy and
correctness on the Amendment Closing Date of the representations and warranties
of the other parties hereto contained herein, (ii) the accuracy and correctness
on the Amendment Closing Date of the representations and warranties of the
other parties hereto contained in any other Operative Agreement or certificate
delivered pursuant hereto or thereto, (iii) the performance by the other
parties hereto of their respective agreements contained herein and in the other
Operative Agreements, in each case to be performed by them on or prior to the
Amendment Closing Date, and (iv) the satisfaction or waiver by the Lessee of
all of the following conditions on or prior to the Amendment Closing Date:
(a) Each of the Operative Agreements to be entered into as of the
Initial Closing Date shall have been duly authorized, executed and
delivered by the parties thereto, other than the Lessee, and shall be in
full force and effect, and no Default, other than Defaults of the Lessee,
shall exist thereunder, and the Lessee shall have received a fully
executed copy of each of the Operative Agreements (other than Notes of
which it shall have received a specimen);
(b) In the reasonable opinion of the Lessee and its counsel, the
transactions contemplated by the Operative Agreements do not violate any
material Legal Requirements and will not subject Lessee to any materially
adverse regulatory prohibitions or constraints;
(c) No action or proceeding shall have been instituted nor shall any
action or proceeding be threatened, before any Governmental Authority,
nor shall any order, judgment or decree have been issued or proposed to
be issued by any Governmental
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<PAGE> 19
Authority (i) to set aside, restrain, enjoin or prevent the full
performance of this Agreement, any other Operative Agreement or any
transaction contemplated hereby or thereby or (ii) which is reasonably
likely to have a Material Adverse Effect;
(d) The Lessee and the Agent shall each have received an Officer's
Certificate of the Lessor dated as of such Closing Date in the form
attached hereto as Exhibit F or in such other form as is reasonably
acceptable to Lessee and the Agent, stating that (i) each and every
representation and warranty of the Lessor contained in the Operative
Agreements to which it is a party is true and correct on and as of the
Amendment Closing Date; (ii) each Operative Agreement to which the Lessor
is a party is in full force and effect with respect to it, and (iii) the
Lessor has duly performed and complied with all covenants, agreements and
conditions contained herein or in any Operative Agreement required to be
performed or complied with by it on or prior to the Amendment Closing
Date;
(e) The Lessee and the Agent shall each have received (i) a
certificate of the Secretary, an Assistant Secretary, Trust Officer or
Vice President of the Trust Company in the form attached hereto as
Exhibit G or in such other form as is reasonably acceptable to Lessee and
the Agent, attaching and certifying as to (A) the signing resolutions,
(B) its articles of incorporation or other equivalent charter documents,
as the case may be, certified as of a recent date by an appropriate
officer of the Trust Company, (C) its by- laws and (D) the incumbency and
signature of persons authorized to execute and deliver on its behalf the
Operative Agreements to which it is a party and (ii) a good standing
certificate from the state of incorporation of the Trust Company; and
(f) Counsel for the Lessor acceptable to the other parties hereto
shall have issued to the Lessee, the Holders, the Lenders and the Agent
an opinion in the form attached hereto as Exhibit H or in such other form
as is reasonably acceptable to such parties.
6.3. Conditions to the Agent's Obligations. The obligation of the Agent to
consummate the transactions contemplated by this Agreement, including the
obligation to execute and deliver each of the Operative Agreements to which it
is a party as of the Initial Closing Date, is subject to (i) the accuracy and
correctness on the Amendment Closing Date of the representations and warranties
of the other parties hereto contained herein, (ii) the accuracy and correctness
on the Amendment Closing Date of the representations and warranties of the
other parties hereto contained in any other Operative Agreement or certificate
delivered pursuant hereto or thereto, (iii) the performance by the other
parties hereto of their respective agreements contained herein and in the other
Operative Agreements, in each case to be performed by them on or prior to the
Amendment Closing Date, and (iv) the satisfaction, or waiver by the Agent, of
all of the following conditions on or prior to the Amendment Closing Date:
(a) Each of the Operative Agreements to be entered into as of the
Initial Closing Date shall have been duly authorized, executed and
delivered by the parties thereto, other than the Agent, and shall be in
full force and effect, and no Default or Event
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of Default shall exist thereunder (both before and after giving
effect to the transactions contemplated by the Operative Agreements), and
the Agent shall have received a fully executed copy of each of the
Operative Agreements (including the Notes). The Operative Agreements (or
memoranda thereof), any supplements thereto and any financing statements
and fixture filings in connection therewith required under the Uniform
Commercial Code shall have been filed or shall be promptly filed, if
necessary, in such manner as to enable the Lessor's counsel to render its
opinion referred to in Section 6.2(f) hereof;
(b) The satisfaction of each of the conditions set forth in Sections
6.1(b), (c), (e), (f) and (h) and Sections 6.2(d), (e) and (f) hereof;
and
(c) In the reasonable opinion of the Agent and its counsel, the
transactions contemplated by the Operative Agreements do not and will not
violate any material Legal Requirements and do not and will not subject
the Agent to any materially adverse regulatory prohibitions or
constraints.
SECTION 7. REPRESENTATIONS AND WARRANTIES ON THE AMENDMENT CLOSING DATE.
7.1. Representations and Warranties of the Initial Holders. Effective as of
the Amendment Closing Date, each Holder on such date represents and warrants to
each of the other parties hereto that:
(a) It is a national banking association, or a corporation that is a
commercial finance company, in each case duly organized, validly existing
and in good standing under the laws of the United States or the country
or state of its organization and has the power and authority to carry on
its business as now conducted and to enter into and perform its
obligations under each Operative Agreement to which it is or will be a
party and each other agreement, instrument and document to be executed
and delivered by it on or before each Closing Date in connection with or
as contemplated by each such Operative Agreement to which it is or will
be a party;
(b) The execution, delivery and performance of each Operative
Agreement to which it is or will be a party have been duly authorized by
all necessary action on its part and neither the execution and delivery
thereof, nor the consummation of the transactions contemplated thereby,
nor compliance by it with any of the terms and provisions thereof (i)
requires or will require any approval of the stockholders of, or approval
or consent of any trustee or holder of any indebtedness or obligations
of, such Holder which have not been obtained and in full force and
effect, (ii) violates or will violate any Legal Requirement applicable to
or binding on it (except no representation or warranty is made as to any
Legal Requirement to which it may be subject solely as a result of the
activities of the Lessee) as of the date hereof, (iii) violates or will
violate or result in any breach of or constitute any default under, or
result in the creation of any Lien upon any Property or any of the
Improvements (other than Liens created by the Operative Agreements) under
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its certificate of incorporation or other equivalent charter
documents, or any indenture, mortgage, chattel mortgage, deed of trust,
conditional sales contract, bank loan or credit agreement or other
agreement or instrument to which it is a party or by which it or its
properties is bound or affected or (iv) requires or will require any
Governmental Action by any Governmental Authority (other than arising
solely by reason of the business, condition or activities of the Lessee
or any Affiliate thereof or the construction or use of the Properties or
the Improvements);
(c) This Agreement and each other Operative Agreement to which it is
or will be a party have been, or will be, duly executed and delivered by
it and constitute, or upon execution and delivery will constitute, a
legal, valid and binding obligation enforceable against it in accordance
with the terms thereof, subject to the effect of any applicable
bankruptcy, moratorium, insolvency, reorganization or other similar laws
affecting the enforceability of creditors' rights generally and to the
effect of general principles of equity (whether considered in a
proceeding at law or in equity);
(d) There is no action or proceeding pending or, to its knowledge,
threatened against it before any Governmental Authority that questions
the validity or enforceability of any Operative Agreement to which it is
or will become a party or that, if adversely determined, would materially
and adversely affect its ability to perform its obligations under the
Operative Agreements to which it is a party;
(e) It has not assigned or transferred any of its right, title or
interest in or under the Lease except in accordance with the Operative
Agreements;
(f) No Default or Event of Default under the Operative Agreements
attributable to it has occurred and is continuing;
(g) It is not a "holding company" or a "subsidiary company" of a
"holding company" or an "affiliate" of a "holding company" or a "public
utility" within the meaning of the Public Utility Holding Company Act of
1935, as amended, or a "public utility" within the meaning of the Federal
Power Act, as amended. It is not an "investment company" or a company
"controlled" by an "investment company" within the meaning of the
Investment Company Act or an "investment adviser" within the meaning of
the Investment Advisers Act of 1940, as amended; and
(h) It is acquiring its interest in the Trust Estate for its own
account for investment and not with a view to any distribution (as such
term is used in Section 2(11) of the Securities Act) thereof, and if in
the future it should decide to dispose of its interest in the Trust
Estate, it understands that it may do so only in compliance with the
Securities Act and the rules and regulations of the Securities and
Exchange Commission thereunder and any applicable state securities laws.
Neither it nor anyone authorized to act on its behalf has taken or will
take any action which would subject, as a direct result of such action
alone, the issuance or sale of any interest in any Property, the Trust
Estate or the Lease to the registration requirements of Section 5 of the
Securities Act. No
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representation or warranty contained in this Section 7.1(i) shall
include or cover any action or inaction of the Lessee or any Affiliate
thereof whether or not purportedly on behalf of the Holders, the Owner
Trustee or any of their Affiliates.
7.2. Representations and Warranties of the Owner Trustee. Effective as of
the Amendment Closing Date, Trust Company in its individual capacity and as the
Owner Trustee, as indicated, represents and warrants to each of the other
parties hereto as follows, provided, that the representations in paragraphs
(h), (i), (j) and (k) below are made solely in its capacity as the Owner
Trustee:
(a) It is a national banking association duly organized, validly
existing and in good standing under the laws of the United States of
America and has the power and authority to enter into and perform its
obligations under the Trust Agreement and (assuming due authorization,
execution and delivery of the Trust Agreement by the Holders) has the
corporate and trust power and authority to act as the Owner Trustee and
to enter into and perform the obligations under each of the other
Operative Agreements to which Trust Company or the Owner Trustee, as the
case may be, is or will be a party and each other agreement, instrument
and document to be executed and delivered by it on or before each Closing
Date in connection with or as contemplated by each such Operative
Agreement to which Trust Company or the Owner Trustee, as the case may
be, is or will be a party;
(b) The execution, delivery and performance of each Operative
Agreement to which it is or will be a party, either in its individual
capacity or (assuming due authorization, execution and delivery of the
Trust Agreement by the Holders) as the Owner Trustee, as the case may be,
has been duly authorized by all necessary action on its part and neither
the execution and delivery thereof, nor the consummation of the
transactions contemplated thereby, nor compliance by it with any of the
terms and provisions thereof (i) requires or will require any approval of
its stockholders, or any approval or consent of any trustee or holders of
any of its indebtedness or obligations, (ii) violates or will violate any
current law, governmental rule or regulation relating to its banking or
trust powers, (iii) violates or will violate or result in any breach of
or constitute any default under, or result in the creation of any Lien
upon any of its property under, (A) its charter or by-laws, or (B) any
indenture, mortgage, chattel mortgage, deed of trust, conditional sales
contract, bank loan or credit agreement or other agreement or instrument
to which it is a party or by which it or its properties may be bound or
affected, which violation, breach, default or Lien under clause (B) would
materially and adversely affect its ability, in its individual capacity
or as Owner Trustee, to perform its obligations under the Operative
Agreements to which it is a party or (iv) requires or will require any
Governmental Action by any Governmental Authority regulating its banking
or trust powers;
(c) The Trust Agreement and, assuming the Trust Agreement is the
legal, valid and binding obligation of the Holders, each other Operative
Agreement to which the Trust Company or the Owner Trustee, as the case
may be, is or will be a party have been,
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<PAGE> 23
or will be, duly executed and delivered by Trust Company or the
Owner Trustee, as the case may be, and the Trust Agreement and each such
other Operative Agreement to which Trust Company or the Owner Trustee, as
the case may be, is a party constitutes, or upon execution and delivery
will constitute, a legal, valid and binding obligation enforceable
against Trust Company or the Owner Trustee, as the case may be, in
accordance with the terms thereof;
(d) There is no action or proceeding pending or, to its knowledge,
threatened to which it is or will be a party, either in its individual
capacity or as the Owner Trustee, before any Governmental Authority that,
if adversely determined, would materially and adversely affect its
ability, in its individual capacity or as Owner Trustee, to perform its
obligations under the Operative Agreements to which it is a party or
would question the validity or enforceability of any of the Operative
Agreements to which it is or will become a party;
(e) It has not assigned or transferred any of its right, title or
interest in or under the Lease or the Agency Agreement except in
accordance with the Operative Agreements;
(f) No Default or Event of Default under the Operative Agreements
attributable to it has occurred and is continuing;
(g) Neither the Owner Trustee nor any Person authorized by the Owner
Trustee to act on its behalf has offered or sold any interest in the
Trust Estate or the Notes, or in any similar security relating to a
Property, or in any security the offering of which for the purposes of
the Securities Act would be deemed to be part of the same offering as the
offering of the aforementioned securities to, or solicited any offer to
acquire any of the same from, any Person other than, in the case of the
Notes, the Lenders, and neither the Owner Trustee nor any Person
authorized by the Owner Trustee to act on its behalf will take any action
which would subject, as a direct result of such action alone, the
issuance or sale of any interest in the Trust Estate or the Notes to the
provisions of Section 5 of the Securities Act, or require the
qualification of any Operative Agreement under the Trust Indenture Act of
1939, as amended;
(h) The Owner Trustee's chief place of business, chief executive
office and office where the documents, accounts and records relating to
the transactions contemplated by this Agreement and each other Operative
Agreement are kept are located at 79 South Main Street, Salt Lake City,
Utah 84111;
(i) The Owner Trustee is not engaged principally in, and does not
have as one of its important activities, the business of extending credit
for the purpose of purchasing or carrying any margin stock (within the
meaning of Regulation U of the Board of Governors of the Federal Reserve
System of the United States), and no part of the proceeds of the Loans or
the Holder Fundings will be used by it to purchase or carry any margin
stock or to extend credit to others for the purpose of purchasing
or carrying any
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<PAGE> 24
such margin stock or for any purpose that violates, or is
inconsistent with, the provisions of Regulations G, T, U, or X of the
Federal Reserve Board; and
(j) The Owner Trustee is not a "holding company" or a "subsidiary
company" of a "holding company" or an "affiliate" of a "holding company"
or a "public utility" within the meaning of the Public Utility Holding
Company Act of 1935, as amended, or a "public utility" within the meaning
of the Federal Power Act, as amended. The Owner Trustee is not an
"investment company" or a company "controlled" by an "investment company"
within the meaning of the Investment Company Act or an "investment
adviser" within the meaning of the Investment Advisers Act of 1940, as
amended.
7.3. Representations and Warranties of the Construction Agent and the
Lessee. Effective as of the Amendment Closing Date, the Construction Agent and
the Lessee represent and warrant to each of the other parties hereto that:
(a) Each of the Construction Agent and the Lessee is a corporation
duly organized, validly existing and in good standing under the laws of
the State of Florida; each of their Subsidiaries is duly organized and
validly existing under the laws of the jurisdiction of its organization;
and each of the Construction Agent and the Lessee and each of their
Subsidiaries is duly qualified to do business in each other jurisdiction
where the nature of its business makes such qualification necessary,
except where such failure to so qualify would not have a Material Adverse
Effect. Each of the Construction Agent and the Lessee has the power and
authority to carry on its business as now conducted and to enter into and
perform its obligations under each Operative Agreement to which it is or
will be a party and each other agreement, instrument and document to be
executed and delivered by it on or before each Closing Date in connection
with or as contemplated by each such Operative Agreement to which it is
or will be a party;
(b) The execution, delivery and performance by each of the
Construction Agent and the Lessee of this Agreement and the other
Operative Agreements to which each is or will be a party have been duly
authorized by all necessary corporate action on the part of each of the
Construction Agent and the Lessee (including any necessary shareholder
action), have received all necessary governmental approval, and do not
and will not (i) violate any Legal Requirement, decree, judgment or award
which is applicable to or binding on the Construction Agent or the Lessee
or any of their Subsidiaries, (ii) violate or conflict with, or result in
a breach of, any provision of the Certificate of Incorporation, By-Laws
or other organizational documents of either the Construction Agent or the
Lessee or any of their Subsidiaries, or any indenture, mortgage, chattel
mortgage, deed of trust, conditional sales contract, bank loan, credit
agreement or other agreement, instrument or document to which either the
Construction Agent or the Lessee or any of their Subsidiaries is a party
or which is binding on either the Construction Agent or the Lessee or any
of their Subsidiaries or any of their respective properties, or (iii)
result in, or require, the creation or imposition of any Lien (other than
pursuant to the terms of the Operative Agreements) on any asset of either
of the Construction Agent or the Lessee or any of their Subsidiaries;
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<PAGE> 25
(c) Each of this Agreement and each other Operative Agreement to
which the Construction Agent or the Lessee is or will be a party has
been, or will be, duly executed and delivered by it and constitutes, or
upon execution and delivery will constitute, the legal, valid or binding
obligation of the Construction Agent or the Lessee, as the case may be,
enforceable against it in accordance with the terms thereof, subject to
the effect of any applicable bankruptcy, moratorium, insolvency,
reorganization or other similar laws affecting the enforceability of
creditors' rights generally and to the effect of general principles of
equity (whether considered in a proceeding at law or in equity). The
Construction Agent and the Lessee have each executed the various
Operative Agreements required to be executed as of the Initial Closing
Date;
(d) There are no actions, suits or proceedings (including, without
limitation, any derivative action) pending or, to the knowledge of either
the Construction Agent or the Lessee, threatened with respect to the
Construction Agent or Lessee or any of their Subsidiaries which, if
adversely decided, are reasonably likely to result, either individually
or collectively, in a Material Adverse Effect. None of the Construction
Agent, the Lessee nor any of their Subsidiaries has any material
contingent liabilities not provided for or disclosed in the financial
statements referred to in Section 7.3(f), which are required in
accordance with GAAP to be reported in such financial statements;
(e) No Governmental Action by any Governmental Authority or
authorization, registration, consent, approval, waiver, notice or other
action by, to or of any other Person is required to authorize or is
required in connection with (i) the execution, delivery or performance of
any Operative Agreement or (ii) the legality, validity, binding effect or
enforceability of any Operative Agreement, in each case, except those
which have been obtained and are in full force and effect;
(f) (i) The audited consolidated financial statements of each of the
Construction Agent and the Lessee as at December 29, 1996, copies of
which have been furnished to the Agent and the Owner Trustee, were
prepared in accordance with GAAP and fairly present the financial
condition of each of the Construction Agent and the Lessee and their
Subsidiaries on a consolidated basis as of such date and their
consolidated results of operations for the fiscal year then ended and
(ii) the unaudited consolidated financial statements as at March 30,
1997, copies of which have been furnished to the Agent and the Owner
Trustee, were prepared in accordance with GAAP (subject to normal
year-end adjustments) and fairly present the financial condition of the
Construction Agent and the Lessee and their Subsidiaries on a
consolidated basis as of such date and their consolidated results of
operations for the fiscal year then ended and such 13-week period,
respectively;
(g) Since the date of the audited financial statements described in
Section 7.3(f), there has been no event or occurrence which has had or is
reasonably likely to have a Material Adverse Effect;
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(h) Neither the Construction Agent nor the Lessee knows of any
proposed material tax assessments against it. No extension of time for
assessment or payment of any material federal, state or local tax by
either the Construction Agent or the Lessee is in effect;
(i) ERISA.
(A) None of the employee benefit plans maintained at any time
by the Construction Agent or the Lessee or the trusts created
thereunder has engaged in a prohibited transaction which could
subject any such employee benefit plan or trust to a material tax
or penalty on prohibited transactions imposed under Code Section
4975 or ERISA;
(B) None of the employee benefit plans maintained at any time
by the Construction Agent or the Lessee which are employee pension
benefit plans and which are subject to Title IV of ERISA or the
trusts created thereunder has been terminated nor has any such
employee benefit plan of the Construction Agent or Lessee incurred
any liability to the PBGC, other than for required insurance
premiums which have been paid; neither the Construction Agent nor
the Lessee has withdrawn from or caused a partial withdrawal to
occur with respect to any Multi-employer Plan; the Construction
Agent and the Lessee have made or provided for all contributions to
all such employee pension benefit plans which they maintain and
which are required as of the end of the most recent fiscal year
under each such plan; neither the Construction Agent nor the Lessee
has incurred any accumulated funding deficiency with respect to any
such plan, whether or not waived; nor has there been any reportable
event, or other event or condition, which presents a material risk
of termination of any such employee benefit plan by the PBGC;
(C) The present value of all vested accrued benefits under the
employee pension benefit plans which are subject to Title IV of
ERISA, maintained by the Construction Agent or the Lessee, did not,
as of the most recent valuation date for each such plan, exceed the
then current value of the assets of such employee benefit plans
allocable to such benefits;
(D) The consummation of the transactions contemplated by the
Operative Agreements will not involve any prohibited transaction
under ERISA;
(E) To the best of the Construction Agent's and the Lessee's
knowledge, each employee pension benefit plan subject to Title IV
of ERISA, maintained by the Construction Agent or the Lessee, has
been administered in accordance with its terms and is in compliance
in all material respects with all applicable requirements of ERISA
and other applicable laws, regulations and rules;
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(F) There has been no withdrawal liability incurred with
respect to any Multi-employer Plan to which the Construction Agent
or the Lessee is or was a contributor;
(G) As used in this Agreement, the terms "employee benefit
plan," "employee pension benefit plan," "accumulated funding
deficiency," "reportable event," and "accrued benefits" shall have
the respective meanings assigned to them in ERISA, and the term
"prohibited transaction" shall have the meaning assigned to it in
Code Section 4975 and ERISA;
(H) Neither the Construction Agent nor the Lessee has any
liability, contingent or otherwise, under any plan or program or
the equivalent for unfunded post-retirement benefits, including
pension, medical and death benefits, which liability would have a
Material Adverse Effect;
(j) Upon the execution and delivery of each Lease Supplement to the
Lease, (i) the Lessee will have unconditionally accepted the Property
subject to the Lease Supplement and will have a valid and subsisting
leasehold interest in the Property, subject only to the Permitted
Exceptions, and (ii) no offset will exist with respect to any Rent or
other sums payable under the Lease;
(k) Neither the Construction Agent nor the Lessee has filed a
voluntary petition in bankruptcy or been adjudicated bankrupt or
insolvent, or filed any petition or answer seeking any reorganization,
liquidation, receivership, dissolution or similar relief under any
bankruptcy, receivership, insolvency, or other law relating to relief for
debtors, or sought or consented to or acquiesced in the appointment of
any trustee, receiver, conservator or liquidator of all or any part of
its properties or its interest in any Property. No court of competent
jurisdiction has entered an order, judgment, or decree approving a
petition filed against the Construction Agent or the Lessee seeking any
reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any federal or state bankruptcy,
receivership, insolvency or other law relating to relief for debtors, and
no other liquidator has been appointed for the Construction Agent or the
Lessee or all or any part of its properties or its interest in any
Property, and no such action is pending. Neither the Construction Agent
nor the Lessee has given notice to any Governmental Authority or any
Person of insolvency or pending insolvency, or suspension or pending
suspension of operations;
(l) Each of the Construction Agent, the Lessee and their
Subsidiaries owns marketable title to, or a subsisting leasehold interest
in, all of its Properties free and clear of all Liens, except Permitted
Liens;
(m) Neither the Construction Agent, the Lessee nor any of their
Subsidiaries is (a) an "investment company" or a company "controlled" by
an "investment company", within the meaning of the Investment Company Act
or an "investment adviser" within the meaning of the Investment Advisers
Act of 1940, as amended, or (b) a "holding
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company", or a "subsidiary company" of a "holding company", or an
"affiliate" of a "holding company" or of a "subsidiary company" of a
"holding company", or a "public utility", within the meaning of the
Public Utility Holding Company Act of 1935, as amended, or a "public
utility" within the meaning of the Federal Power Act, as amended;
(n) Neither the Construction Agent, the Lessee nor any of their
Subsidiaries is engaged principally in, or has as one of its important
activities, the business of extending credit for the purpose of
purchasing or carrying any margin stock (within the meaning of Regulation
U of the Federal Reserve Board), and no part of the proceeds of the Loans
or the Holder Fundings will be used for the purpose, whether immediate,
incidental or ultimate, of purchasing or carrying any margin stock or
maintaining or extending credit to others for such purpose, or for any
purpose that violates, or is inconsistent with Regulations G, T, U, or X
of the Federal Reserve Board;
(o) Each of the Construction Agent, the Lessee and their
Subsidiaries has filed all material tax returns and reports required by
Law to have been filed by it and has paid all Taxes and governmental
charges thereby shown to be owing, except any such Taxes or charges which
are being diligently contested in good faith by appropriate proceedings
and for which adequate reserves shall in accordance with GAAP have been
set aside on its books;
(p) To the best of the knowledge of each of the Construction Agent
and the Lessee, after inquiry it has deemed appropriate, each of the
Construction Agent, the Lessee and their Subsidiaries is in material
compliance with all Environmental Laws and Occupational Safety and Health
Laws where failure to comply could have a Material Adverse Effect. None
of the Construction Agent, the Lessee nor any of their Subsidiaries has
received notice of any claims that any of them is not in compliance in
all material respects with any Environmental Law where failure to comply
could have a Material Adverse Effect;
(q) Each of the Construction Agent, the Lessee and their
Subsidiaries is in compliance with all statutes, judicial and
administrative orders, permits and governmental rules and regulations
which are material to its business or the non-compliance with which could
result in Material Adverse Result; and
(r) All information heretofore or contemporaneously herewith
furnished by either the Construction Agent or the Lessee or any of their
Subsidiaries to the Agent, the Owner Trustee, any Lender or any Holder
for purposes of or in connection with this Agreement and the transactions
contemplated hereby is, and all information hereafter prepared and
furnished by the Construction Agent, the Lessee or any of their
Subsidiaries to the Agent, the Owner Trustee, any Lender or any Holder
pursuant hereto or in connection herewith will be, true and accurate in
every material respect on the date as of which such information is dated
or certified, and such information, taken as a whole, does not and will
not omit to state any material fact necessary to make such information,
taken as a whole, not misleading.
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7.4. Representations and Warranties of the Agent. Effective as of the
Amendment Closing Date, the Agent represents and warrants to each of the other
parties hereto that:
(a) It is a national banking association duly organized and validly
existing under the laws of the United States of America and has the full
power and authority to enter into and perform its obligations under this
Agreement and each other Operative Agreement to which it is or will be a
party;
(b) The execution, delivery and performance by the Agent of this
Agreement and each other Operative Agreement to which it is or will be a
party are not, and will not be, inconsistent with the articles of
incorporation or by-laws or other charter documents of the Agent, do not
and will not contravene any applicable Law of the State of Florida or of
the United States of America governing its activities and will not
contravene any provision of, or constitute a default under any indenture,
mortgage, contract or other instrument to which it is a party or by which
it or its properties are bound, or require any consent or approval of any
Governmental Authority under any applicable law, rule or regulation of
the State of Florida or any federal law, rule or regulation of the United
States of America governing its activities; and
(c) Each of this Agreement and each other Operative Agreement to
which it is a party has been, or when executed and delivered will be,
duly authorized by all necessary corporate action on the part of the
Agent and has been, or on such Closing Date will be, duly executed and
delivered by the Agent and, assuming the due authorization, execution and
delivery hereof and thereof by the other parties hereto and thereto, will
constitute a legal, valid and binding obligation enforceable against the
Agent in accordance with the terms thereof.
SECTION 8. REPRESENTATIONS AND WARRANTIES ON FUNDING DATES.
8.1. Representations and Warranties on Property Closing Dates. The
Construction Agent and the Lessee hereby represent and warrant as of each
Property Closing Date as follows:
(a) The representations and warranties of the Construction Agent and
the Lessee set forth in the Operative Agreements are true and correct in
all material respects on and as of such Property Closing Date as if made
on and as of such date. The Construction Agent and the Lessee are in all
material respects in compliance with their respective obligations under
the Operative Agreements and there exists no Default or Event of Default
under any of the Operative Agreements. No Default or Event of Default
will occur under any of the Operative Agreements as a result of, or after
giving effect to, the Funding requested by the Requisition on such
Property Closing Date;
(b) The Properties to be acquired are being acquired at a price that
is not in excess of the price that would be obtained on an arm's-length
basis between unrelated parties, and such Properties consist of (i)
unimproved Land, or (ii) Land and existing Improvements thereon which
Improvements are either suitable for occupancy at the time
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of acquisition or will be renovated or modified in accordance with
the terms of this Agreement, or (iii) Equipment. Each of the Properties
is located at the site set forth on the applicable Requisition, which is
in one of the Approved States;
(c) Upon the acquisition of each Property on such Property Closing
Date, and at all times thereafter, the Lessor will have marketable title
to such Property, subject only to Permitted Exceptions;
(d) The execution and delivery of each Operative Agreement delivered
by the Construction Agent or the Lessee on such Property Closing Date and
the performance of the obligations of the Construction Agent and the
Lessee under each Operative Agreement have been duly authorized by all
requisite corporate action of the Construction Agent or the Lessee, as
applicable;
(e) Each Operative Agreement delivered on such Property Closing Date
by the Construction Agent or the Lessee has been duly executed and
delivered by the Construction Agent or the Lessee;
(f) Each Operative Agreement delivered by the Construction Agent or
the Lessee on such Property Closing Date is a legal, valid and binding
obligation of the Construction Agent or the Lessee, as applicable,
enforceable against the Construction Agent or the Lessee, as applicable,
in accordance with its respective terms, subject to the effect of any
applicable bankruptcy, moratorium, insolvency, reorganization or other
similar laws affecting the enforceability of creditors' rights generally
and to the effect of general principles of equity (whether considered in
a proceeding at law or in equity);
(g) Upon filing of each of the UCC Financing Statements (with
respect to the Property being acquired) in the filing offices designated
by the Construction Agent or the Lessee, such UCC Financing Statements
will have been filed with the appropriate Governmental Authorities in
order to perfect a security interest in the Property described therein
(to the extent perfection can be obtained by filing under the UCC);
(h) Upon filing in the filing offices designated by the Construction
Agent or the Lessee, the Lender Financing Statements, together with an
assignment to the Agent of the filed Lessor Financing Statements, will
perfect a valid first priority security interest in all Equipment and
other collateral described therein in which a security interest or
mortgage can be perfected by filing under the UCC, subject only to
Permitted Exceptions, and upon filing, the Lessor Financing Statements
will protect Lessor's interest under the Lease to the extent the Lease is
a security agreement and mortgage;
(i) No portion of any Property being acquired by the Lessor on such
Property Closing Date is located in an area identified as a special flood
hazard area by the Federal Emergency Management Agency or other
applicable agency, or if any such Property is located in an area
identified as a special flood hazard area by any such agency, then flood
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insurance has been obtained for such Property in accordance with
Section 14.2(b) of the Lease and in accordance with the National Flood
Insurance Act of 1968, as amended;
(j) The Construction Agent has obtained insurance coverage for each
Property being acquired by the Lessor on such Property Closing Date which
meets the requirements of Article XIV of the Lease and all of such
coverage is in full force and effect;
(k) Each Property being acquired by the Lessor on such Property
Closing Date complies with all Legal Requirements (including, without
limitation, all zoning and land use laws and Environmental Laws), except
to the extent that failure to comply therewith would not, individually or
in the aggregate, have a Material Adverse Effect; and
(l) All utility services and facilities necessary for the
construction of the Improvements existing on, or to be constructed after,
such Property Closing Date (including, without limitation, gas,
electrical, water and sewage services and facilities) are available at
the boundaries of the real property upon which such Improvements exist or
will be constructed on each such Property prior to the Completion Date
for such Property.
8.2. Representations and Warranties Upon Initial Construction Fundings.
The Construction Agent and the Lessee hereby represent and warrant as of each
date on which an Initial Construction Funding is made as follows:
(a) The representations and warranties of the Construction Agent and
the Lessee set forth in the Operative Agreements are true and correct in
all material respects on and as of the date of such Initial Construction
Funding as if made on and as of such date. The Construction Agent and
the Lessee are in all material respects in compliance with their
respective obligations under the Operative Agreements and there does not
exist any Event of Default or (except as permitted under Section 8.4
hereof) any Default under any of the Operative Agreements. No Default or
Event of Default will occur under any of the Operative Agreements as a
result of, or after giving effect to, the Funding requested by the
Requisition on such date;
(b) The Lessor has marketable title to each Property, subject only
to Permitted Exceptions;
(c) Upon filing in the filing offices designated by the Construction
Agent or the Lessee, the Lender Financing Statements, together with an
assignment of the filed Lessor Financing Statements, will perfect a valid
first priority security interest in all the Properties and other
collateral described therein in which a security interest can be
perfected by filing under the UCC, subject only to Permitted Liens;
(d) All consents, licenses, permits, authorizations, assignments and
building permits required as of the date on which such Funding is made by
all Legal Requirements or pursuant to the terms of any contract,
indenture, instrument or agreement for
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construction, completion, occupancy, operation, leasing or
subleasing of each Property with respect to which a Funding is being made
have been obtained and are in full force and effect, except to the extent
that the failure to so obtain would not, individually or in the
aggregate, have a Material Adverse Effect;
(e) The Construction Agent has obtained insurance coverage covering
the Property which is the subject of such Funding which coverage meets
the requirements of Section 2.6 of the Agency Agreement before commencing
construction, repairs or modifications, as the case may be, and such
coverage is in full force and effect;
(f) The Improvements which are the subject of the Funding, as
improved in accordance with the Plans and Specifications, will comply as
of the applicable Completion Date with all applicable Legal Requirements
and Insurance Requirements (including, without limitation, all zoning and
land use laws and Environmental Laws), except to the extent the failure
to comply therewith would not, individually or in the aggregate, have a
Material Adverse Effect. The Plans and Specifications have been or will
be prepared in accordance with all applicable Legal Requirements
(including, without limitation, all applicable Environmental Laws and
building, planning, zoning and fire codes), except to the extent the
failure to comply therewith would not, individually or in the aggregate,
have a Material Adverse Effect, and upon completion of such Improvements
in accordance with the Plans and Specifications, such Improvements will
not encroach in any manner onto any adjoining land (except as permitted
by express written easements) and such Improvements and the use thereof
by the Lessee and its agents, assignees, employees, invitees, lessees,
licensees and tenants will comply as of the applicable Completion Date in
all respects with all applicable Legal Requirements (including, without
limitation, all applicable Environmental Laws and building, planning,
zoning and fire codes), except to the extent the failure to comply
therewith would not, individually or in the aggregate, have a Material
Adverse Effect. Upon completion of such Improvements in accordance with
the Plans and Specifications, (i) there will be no material defects to
such Improvements including, without limitation, the plumbing, heating,
air conditioning and electrical systems thereof and (ii) all water,
sewer, electric, gas, telephone and drainage facilities and all other
utilities required to adequately service such Improvements for their
intended use will be available pursuant to adequate permits (including
any that may be required under applicable Environmental Laws), except to
the extent that failure to obtain any such permit would not, individually
or in the aggregate, have a Material Adverse Effect. There is no action,
suit or proceeding (including any proceeding in condemnation or eminent
domain or under any Environmental Law) pending or, to the best knowledge
of the Lessee or the Construction Agent, threatened which adversely
affects the title to, or the use, operation or value of, such Properties.
No fire or other casualty with respect to such Properties has occurred
which (y) has had a Material Adverse Effect or (2) is not fully covered
by insurance. All utilities serving the related Properties, or proposed
to serve the related Properties in accordance with the Plans and
Specifications, are located in (or will be located in) and vehicular
access to such Improvements is provided by (or will be provided by),
either public rights-of-way abutting the related Property or Appurtenant
Rights. All licenses, approvals,
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authorizations, consents, permits (including, without limitation,
building, demolition and environmental permits, licenses, approvals,
authorizations and consents), easements and rights-of-way, including
proof of dedication, required for (i) the use, treatment, storage,
transport, disposal or disposition of any Hazardous Substance on, at,
under or from the real property underlying such Improvements during the
construction of such Improvements and the use and operation of such
Improvements following such construction, (ii) the construction of such
Improvements in accordance with the Plans and Specifications and the
Agency Agreement and (iii) the use and operation of such Improvements
following such construction with the applicable Equipment which such
Improvements support for the purposes for which they were intended have
either been obtained from the appropriate Governmental Authorities or
from private parties, as the case may be, or will be obtained from the
appropriate Governmental Authorities or from private parties, as the case
may be, prior to commencing any such construction or use and operation,
as applicable; and
(g) All conditions precedent contained in this Agreement and in the
other Operative Agreements relating to the Initial Construction Funding
have been substantially satisfied.
8.3. Representations and Warranties Upon the Date of Each Construction
Funding that is not an Initial Construction Funding. The Construction Agent and
the Lessee hereby represent and warrant as of each date on which a Construction
Funding is made, when such advance is not an Initial Construction Funding, as
follows:
(a) The representations and warranties of the Construction Agent and
the Lessee set forth in the Operative Agreements (including the
representations and warranties set forth in Section 8.2) are true and
correct in all material respects on and as of the date of such
Construction Funding as if made on and as of such date. The Construction
Agent and the Lessee are in all material respects in compliance with
their respective obligations under the Operative Agreements and there
does not exist any Event of Default or (except as expressly permitted
under Section 8.4 hereof) any Default under any of the Operative
Agreements. No Default or Event of Default will occur under any of the
Operative Agreements as a result of, or after giving effect to, the
Funding requested by the Requisition on such date;
(b) Construction of the Improvements to date has been performed in a
good and workmanlike manner, substantially in accordance with the Plans
and Specifications and in compliance with all Insurance Requirements and
Legal Requirements, except to the extent noncompliance with any Legal
Requirements would not, individually or in the aggregate, have a Material
Adverse Effect;
(c) All consents, licenses, permits, authorizations, assignments and
building permits required as of the date on which such Funding is made by
all Legal Requirements or pursuant to the terms of any contract,
indenture, instrument or agreement for
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construction, completion, occupancy, operation, leasing or
subleasing of each Property have been obtained and are in full force and
effect;
(d) When completed, the Improvements shall be wholly within any
building restriction lines (unless consented to by applicable Government
Authorities), however established; and
(e) The Funding is secured by the Lien of the Security Agreement,
and there have been no Liens against the applicable Improvements other
than Permitted Liens.
8.4. Certain Construction Fundings During Defaults. Notwithstanding any
other provision of the Operative Agreements, unless an Event of Default has
occurred and is continuing, the existence of a Default shall not prevent a
Construction Funding with respect to an existing Property if (a) such Default
does not relate to such Property and (b) the amount of such Funding, together
with the amounts of any other Fundings (whether or not relating to such
Property) made under the Operative Agreements during the period such Default
has been continuing, do not exceed in the aggregate ten percent (10%) of the
aggregate Commitments and Holder Commitments. The foregoing notwithstanding,
no Acquisition Funding shall be made when any Default or Event of Default has
occurred and is continuing.
SECTION 9. PAYMENT OF CERTAIN EXPENSES.
9.1. Transaction Expenses.
(a) Lessor agrees on the Initial Closing Date and the Amendment
Closing Date, to pay, or cause to be paid, all reasonable fees, expenses
and disbursements of the various outside legal counsels for the Lessor
and the Agent in connection with the transactions contemplated by the
Operative Agreements and incurred in connection with the Initial Closing
Date and the Amendment Closing Date, including all Transaction Expenses
(arising in connection with the Initial Closing Date and the Amendment
Closing Date), and all other reasonable fees, expenses and disbursements
in connection with the Initial Closing Date and the Amendment Closing
Date, and including, without limitation, all fees, taxes and expenses for
the recording, registration and filing of documents; provided, however,
that the Lessor shall pay such amounts described in this Section 9.1(a)
only if (i) such amounts are properly described in a Requisition
delivered on or before such date, and (ii) funds are made available by
the Lenders and the Holders in connection with such Requisition in an
amount sufficient to allow such payment. On the Initial Closing Date and
the Amendment Closing Date, after delivery and receipt of the Requisition
referenced in Section 4.2(a) hereof and satisfaction of the other
conditions precedent for such date, the Holders shall make Holder
Fundings and the Lenders shall make Loans to the Lessor to pay for the
Transaction Expenses, fees, expenses and other disbursements referenced
in this Section 9.1(a). The Lessee agrees to pay all amounts referred to
in this Section 9.1(a) to the extent not paid by Lessor.
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(b) Lessor agrees on each Property Closing Date, on the date of any
Construction Funding and on the Completion Date to pay, or cause to be
paid, all reasonable fees, expenses and disbursements of the various
outside legal counsels for the Lessor and the Agent in connection with
the transactions contemplated by the Operative Agreements and billed in
connection with such Property Closing Date, the date of such Funding, or
such Completion Date, including all Transaction Expenses (arising with
respect to the Initial Closing Date and the Amendment Closing Date, such
Property Closing Date, the date of such Funding or such Completion Date),
all fees, expenses and disbursements incurred with respect to the various
items referenced in Sections 5.3, 5.4, 5.5 or 5.6 (including without
limitation the cost of any Appraisals or environmental site assessments,
any developer's fees, any premiums for title insurance policies and
charges for any updates to such policies) and all other reasonable fees,
expenses and disbursements in connection with such Property Closing Date,
the date of such Funding or such Completion Date including, without
limitation, all expenses relating to and all fees (including brokers'
fees), taxes (including any and all stamp, transfer or similar taxes) and
expenses for the recording, registration and filing of documents;
provided, however, the Lessor shall pay such amounts described in this
Section 9.1(b) only if (i) such amounts are properly described in a
Requisition delivered on the applicable date and (ii) funds are made
available by the Lenders and the Holders in connection with such
Requisition in an amount sufficient to allow such payment. On each
Property Closing Date, on the date of any Construction Funding or any
Completion Date, after delivery of the applicable Requisition in
satisfaction of the other conditions precedent for such date, the Holders
shall make a Holder Funding and the Lenders shall make Loans to the
Lessor to pay for the Transaction Expenses, fees, expenses and other
disbursements referenced in this Section 9.1(b). The Lessee agrees to
pay all amounts referred to in this Section 9.1(b) to the extent not paid
by the Lessor.
9.2. Certain Fees and Expenses. Lessee agrees to pay or cause to be paid
(i) the initial and annual Owner Trustee's fee and all reasonable expenses of
the Owner Trustee and any necessary co-trustees (including reasonable outside
counsel fees and expenses) or any successor owner trustee, for acting as owner
trustee under the Trust Agreement, (ii) all reasonable costs and expenses
(including reasonable counsel fees and expenses) incurred by the Construction
Agent, the Lessee, the Agent, the Lenders, the Holders or the Lessor in
entering into any future amendments or supplements requested by the Lessee with
respect to any of the Operative Agreements, whether or not such amendments or
supplements are ultimately entered into, or giving or withholding of waivers of
consents hereto or thereto which have been requested by the Lessee, or any
purchase of any Property by the Lessee pursuant to Article XX of the Lease, and
(iii) all reasonable costs and expenses (including reasonable counsel fees and
expenses) incurred by the Lessor, the Construction Agent, the Lessee, the
Holders, the Lenders or the Agent in connection with the enforcement of any
Operative Agreement or any exercise of remedies under any Operative Agreement.
9.3. Unused Fee and Holder Unused Fee. From the date hereof through the
Expiration Date and thereafter so long as any Rent or other amounts remain
outstanding under the Operative Agreements, the Lessee agrees to pay (a) to the
Agent, for the pro rata benefit of the Lenders of
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each Category of Loans based on the Commitment Percentage of each such
Lender during the period for which payment is made, the Unused Fee; and (b) to
the Lessor, for the pro rata benefit of the Holders based on the Holder
Commitment of each such Holder during the period for which payment is made, the
Holder Unused Fee. Such payments of fees provided for in this Section 9.3
shall be due in arrears on each Unused Fee Payment Date. Notwithstanding the
foregoing, so long as any Lender or Holder fails (in violation of the Operative
Agreements) to make available any portion of its Commitment or Holder
Commitment when requested, such Person shall not be entitled to receive payment
of its pro rata share of its Unused Fee or Holder Unused Fee (as the case may
be) until such Person shall make available such portion. Each such fee shall
be calculated on the basis of a year of 360 days for the actual number of days
elapsed. If all or a portion of any Unused Fee or Holder Unused Fee shall not
be paid when due, such overdue amount shall bear interest, payable by the
Lessee on demand, at a rate per annum equal to the Base Rate plus 2%, from the
date of such non-payment until such amount is paid in full (as well after as
before judgment).
SECTION 10. OTHER COVENANTS AND AGREEMENTS
10.1. Cooperation with the Construction Agent or the Lessee. The Holders,
the Owner Trustee (at the direction of the Holders) and the Agent shall, to the
extent reasonably requested by the Construction Agent or Lessee (but without
assuming additional liabilities on account thereof), at the Construction
Agent's or the Lessee's expense, cooperate with the Construction Agent or the
Lessee in connection with its covenants contained herein including, without
limitation, at any time and from time to time, upon the request of the
Construction Agent or the Lessee, promptly and duly executing and delivering
any and all such further instruments, documents and financing statements (and
continuation statements related thereto) as the Construction Agent or the
Lessee may reasonably request in order to perform such covenants.
10.2. Covenants of the Owner Trustee and the Holders. Each of the Owner
Trustee and the Holders hereby agree that so long as this Agreement is in
effect:
(a) None of the Holders and the Owner Trustee (both in its trust
capacity and in its individual capacity) will create or permit to exist
at any time, and each of the Holders and the Owner Trustee will, at its
own cost and expense, promptly take such action (and notify Lessee of
such action) as may be necessary duly to discharge, or to cause to be
discharged, all Lessor Liens attributable to it on the Properties;
provided, however, that the Holders and the Owner Trustee shall not be
required to discharge any such Lessor Lien while the same is being
contested in good faith by appropriate proceedings diligently prosecuted
so long as (a) such proceedings shall not involve any material danger of
impairment of the Liens of the Security Documents or of the sale,
forfeiture or loss of, any Property or title thereto or any interest
therein or the payment of Rent, and (b) such proceedings shall not
materially interfere with the disposition of any Property or title
thereto or interest therein or the payment of Rent;
(b) Without prejudice to any right of the Owner Trustee under the
Trust Agreement to resign (subject to requirement set forth in the Trust
Agreement that such resignation shall not be effective until a successor
shall have agreed to accept such appointment), or the Holders' rights
under the Trust Agreement to remove the institution
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acting as Owner Trustee (after consent to such removal by the Agent
as provided in the Trust Agreement), each of the Holders and the Owner
Trustee hereby agrees with the Lessee and the Agent (i) not to terminate
or revoke the trust created by the Trust Agreement except as permitted by
Article VIII of the Trust Agreement, (ii) not to amend, supplement,
terminate or revoke or otherwise modify any provision of the Trust
Agreement in such a manner as to adversely affect the rights of the
Lessee or the Agent without the prior written consent of such party and
(iii) to comply with all of the terms of the Trust Agreement, the
nonperformance of which would adversely affect any such party;
(c) The Owner Trustee or any successor may resign or be removed by
the Holders as Owner Trustee, a successor Owner Trustee may be appointed
and a corporation may become the Owner Trustee under the Trust Agreement,
only in accordance with the provisions of Article IX of the Trust
Agreement and, with respect to such appointment, with the consent of the
Lessee, which consent shall not be unreasonably withheld, conditioned or
delayed;
(d) The Owner Trustee, in its capacity as Owner Trustee under the
Trust Agreement, and not in its individual capacity, shall not contract
for, create, incur or assume any indebtedness (other than the
indebtedness under the Bridge Debt), or enter into any business or other
activity, other than pursuant to or under the Operative Agreements,
except that the Owner Trustee may own the Ancillary Properties;
(e) The Holders will not instruct the Owner Trustee to take any
action in violation of the terms of any Operative Agreement;
(f) Neither any Holder nor the Owner Trustee shall (i) commence any
case, proceeding or other action with respect to the Owner Trustee under
any existing or future law of any jurisdiction, domestic or foreign,
relating to bankruptcy, insolvency, reorganization, arrangement,
winding-up, liquidation, dissolution, composition or other relief with
respect to it or its debts, or (ii) seek appointment of a receiver,
trustee, custodian or other similar official with respect to the Owner
Trustee or for all or any substantial benefit of the creditors of the
Owner Trustee; and neither any Holder nor the Owner Trustee shall take
any action in furtherance of, or indicating its consent to, approval of,
or acquiescence in, any of the acts set forth in this paragraph;
(g) The Owner Trustee shall give prompt notice to the Lessee and the
Agent if the Owner Trustee's chief place of business or chief executive
office, or the office where the records concerning the accounts or
contract rights relating to a Property are kept, shall cease to be
located at 79 South Main Street, Salt Lake City, Utah 84111, or if it
shall change its name;
(h) Provided that no Lease Event of Default has occurred and is
continuing, neither the Owner Trustee nor any Holder shall, without the
prior written consent of the Lessee, consent to or permit any amendment,
supplement or other modification of the terms and provisions of the
Credit Agreement or the Notes or (to the extent such
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amendment, supplement or modification would have an adverse effect
on the rights or obligations of the Lessee under the Lease) any other
Operative Agreement;
(i) Neither the Owner Trustee nor any Holder shall consent to or
permit any amendment, supplement or other modification of the terms and
provisions of any Operative Agreement, in each case without the prior
written consent of the Agent except as described in Section 10.5 of this
Agreement;
(j) The Owner Trustee (i) shall take such actions and shall refrain
from taking such actions with respect to the Operative Agreements or the
Properties and shall grant such approvals and otherwise act or refrain
from acting with respect to the Operative Agreements or the Properties in
each case as directed in writing by the Agent or, in connection with
Section 10.5 hereof, the Lessee, notwithstanding any contrary instruction
or absence of instruction by any Holder or Holders; and (ii) shall not
take any action, grant any approvals or otherwise act under or with
respect to the Operative Agreements or any matters relating to the
Properties without first obtaining the prior written consent of the Agent
(and without regard to any contrary instruction or absence of instruction
by any Holder); provided, however, that notwithstanding the foregoing
provisions of this subparagraph (j) the Owner Trustee, the Agent and the
Holders each acknowledge, covenant and agree that, with respect to all
matters under the Operative Agreements that require the consent or
concurrence of all of the Lenders pursuant to the terms of Section 9.1 of
the Credit Agreement (the "Unanimous Vote Matters"), neither the Owner
Trustee nor the Agent shall act or refrain from acting with respect to
any Unanimous Vote Matter until such party has received the approval of
each Lender and each Holder with respect thereto;
(k) Except as otherwise contemplated by the Operative Agreements,
neither the Owner Trustee nor any Holder shall use the proceeds of any
Loan or Holder Funding for any purpose other than the payment of
Transaction Expenses and the fees, expenses and other disbursements
referenced in Sections 9.1(a) and (b) of this Agreement, the purchase or
lease of Properties, the acquisition of Equipment, the construction of
Improvements and the payment of interest regarding the Loans and the
payment of the Holder Yield regarding the Holder Fundings, in each case
accrued under the Credit Agreement or Trust Agreement, as the case may
be, during the period prior to the Basic Rent Commencement Date with
respect to a particular Property; and
(l) Upon request of the Lessee, the Lessor shall provide the Lessee
with a copy of its fiduciary tax returns solely for the purpose of
enabling the Lessee to perform its obligations hereunder.
10.3. Lessee Covenants, Consent and Acknowledgment; Construction Agent
Covenants.
(a) Lessee acknowledges and agrees that the Owner Trustee, pursuant
to the terms and conditions of the Security Agreement and the Mortgage
Instruments, shall create Liens respecting the various personal property,
fixtures and real property described
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therein in favor of the Agent. Lessee hereby irrevocably consents
to the creation, perfection and maintenance of such Liens.
(b) Lessor hereby instructs Lessee, and Lessee hereby acknowledges
and agrees, that until such time as the Loans are paid in full and the
Liens evidenced by the Security Agreement and the Mortgage Instruments
have been released, (i) any and all Rent and any and all other amounts of
any kind or type under any of the Operative Agreements due and owing or
payable to the Lessor or the Owner Trustee shall instead be paid directly
to the Agent or as the Agent may direct from time to time and (ii) Lessee
shall cause all notices, certificates, financial statements,
communications and other information which is delivered, or is required
to be delivered, to the Lessor, the Owner Trustee or any Holder also to
be delivered at the same time to the Agent.
(c) Lessee shall not consent to or permit any amendment, supplement
or other modification of the terms or provisions of any Operative
Agreement without, in each case, obtaining the prior written consent of
the Agent and, to the extent required by the proviso at the end of
Section 10.2(j) hereof, each of the Holders.
(d) Except as otherwise contemplated by the Operative Agreements,
the Construction Agent shall not use the proceeds of any Holder Funding
or Loan for any purpose other than the payment of Transaction Expenses
and the fees, expenses and other disbursements referenced in Section
9.1(a) and (b) of this Agreement, the purchase or lease of Properties,
the acquisition of Equipment, the construction of Improvements, the
payment of interest regarding the Loans and the payment of the Holder
Yield regarding the Holder Fundings, in each case accrued under the
Credit Agreement or Trust Agreement, as the case may be, during the
period prior to the Basic Rent Commencement Date with respect to a
particular Property.
(e) The Construction Agent and the Lessee shall restrict the amount
of Equipment located in or on each Property, so that at all times the
Property Cost of the Equipment located in or on a given Property shall be
less than or equal to 10% of the total Property Cost of such Property,
provided, however, that this percentage limitation shall not apply to any
such Equipment consisting of Fixtures or other goods incorporated into or
customarily considered to be part of a building or structure erected on
real property (such as heating, ventilating, air-conditioning, electrical
and mechanical equipment or systems, escalators, elevators, wall and
floor coverings, plumbing, pumps, tanks, conduits, wiring, lighting,
security systems, sprinklers and other fire prevention and extinguishing
apparatus). This 10% limitation shall apply to removable Equipment that
(i) is not incorporated into a building or structure or (ii) is
customarily considered to be trade fixtures or operating equipment for
the corrections business of the Lessee.
(f) Neither the Lessee nor the Construction Agent shall create or
permit to exist at any time (and each of the Lessee and the Construction
Agent shall, at its own expense, take such action as may be necessary to
duly discharge, or cause to be discharged) any Lien against any Property
other than Permitted Liens.
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(g) The Lessee shall pay (or cause to be paid) to the Agent the
administrative fee (described in the Fee Letter) when and as due from
time to time.
10.4. Sharing of Certain Payments. The parties hereto acknowledge and
agree that all payments due and owing by the Lessee to the Lessor under the
Lease or any of the other Operative Agreements shall be made by the Lessee
directly to the Agent as more particularly provided in Section 10.3 hereof.
The Holders and the Agent, on behalf of the Lenders, acknowledge the terms of
Section 8 of the Credit Agreement regarding the allocation of payments and
other amounts made or received from time to time under the Operative Agreements
and agree all such payments and amounts are to be allocated as provided in
Section 8 of the Credit Agreement. In connection therewith the Holders hereby
(a) appoint the Agent to act as collateral agent for the Holders in connection
with the Lien granted by the Mortgage Instruments to secure the Holder Amount
and (b) acknowledge and agree and direct that the rights and remedies of the
beneficiaries of the Lien of the Mortgage Instruments shall be exercised by the
Agent on behalf of the Lenders and the Holders as directed from time to time by
the Lenders without notice to or consent from the Holders.
10.5. Grant of Easements, Voting at Meetings, etc. The Agent and the
Holders hereby agree that, so long as no Event of Default shall have occurred
and be continuing, and until such time as the Agent gives instructions to the
contrary to the Owner Trustee, the Owner Trustee shall, from time to time at
the request of the Lessee, in connection with the transactions contemplated by
the Agency Agreement, the Lease or the other Operative Agreements, (i) grant
easements and other rights in the nature of easements with respect to any
Property, (ii) release existing easements or other rights in the nature of
easements which are for the benefit of any Property, (iii) execute and deliver
to any Person any instrument appropriate to confirm or effect such grants or
releases, and (iv) execute and deliver to any Person such other documents or
materials in connection with the acquisition, development or operation of any
Property, including, without limitation, reciprocal easement agreements,
operating agreements, development agreements, plats, replats or subdivision
documents; provided, that each of the agreements and documents referred to in
this Section 10.5 shall be of the type normally executed by the Lessee in the
ordinary course of the Lessee's business and shall be on commercially
reasonable terms so as not to diminish the value of any Property in any
material respect.
SECTION 11. CREDIT AGREEMENT AND TRUST AGREEMENT.
11.1. Construction Agent's and Lessee's Credit Agreement Rights.
Notwithstanding anything to the contrary contained in the Credit Agreement, the
Agent, the Construction Agent, the Lessee and the Owner Trustee hereby agree
that, prior to the occurrence and continuation of any Lease Default or Lease
Event of Default, the Construction Agent and the Lessee (as designated below)
shall have the following rights:
(a) the Construction Agent shall have the right and obligation (as
more specifically provided in Section 5.7 hereof) to designate the
portion of the Loans on which interest is due and payable for purposes of
the definition of "Allocated Interest";
(b) the Construction Agent shall have the right to give the notice
referred to in Section 2.3 of the Credit Agreement, to designate the
account to which a borrowing under
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the Credit Agreement is to be credited pursuant to Section 2.3 of
the Credit Agreement and to provide the Allocation Notice;
(c) the Lessee shall have the right to terminate or reduce the
Commitments pursuant to Section 2.5(a) of the Credit Agreement;
(d) the Lessee shall have the right to exercise the conversion and
continuation options pursuant to Section 2.7 of the Credit Agreement;
(e) the Lessee shall have the right to approve any successor agent
pursuant to Section 7.9 of the Credit Agreement;
(f) the Lessee shall have the right to consent to any assignment by
a Lender to which the Lessor has the right to consent pursuant to Section
9.8 of the Credit Agreement; and
(g) without limiting the foregoing clauses (a) through (f), and in
addition thereto, the Lessee shall have the right to exercise any other
right of the Owner Trustee under the Credit Agreement upon not less than
five (5) Business Days' prior written notice from the Lessee to the Owner
Trustee and the Agent.
11.2. Construction Agent's and Lessee's Trust Agreement Rights.
Notwithstanding anything to the contrary contained in the Trust Agreement, the
Construction Agent, the Lessee, the Owner Trustee and the Holders hereby agree
that, prior to the occurrence and continuation of any Lease Default or Lease
Event of Default, the Construction Agent and the Lessee (as designated below)
shall have the following rights:
(a) the Construction Agent shall have the right and the obligation
(as more specifically provided in Section 5.7 hereof) to designate the
portion of the Holder Fundings on which Holder Yield is due and payable
for purposes of the definition of Allocated Return in this Agreement;
(b) the Lessee shall have the right to exercise the conversion and
continuation options pursuant to Section 3.8 of the Trust Agreement;
(c) no removal of the Owner Trustee or appointment of a successor
Owner Trustee pursuant to Section 9.1 of the Trust Agreement shall be
made without the prior written consent (not to be unreasonably withheld
or delayed) of the Lessee; and
(d) the Holders and the Owner Trustee shall not amend, supplement or
otherwise modify any provision of the Trust Agreement in such a manner as
to adversely affect the rights of the Lessee without the prior written
consent (not to be unreasonably withheld or delayed) of the Lessee.
SECTION 12. TRANSFER OF INTEREST.
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12.1. Restrictions on Transfer. The Holders may, directly or indirectly,
assign, convey or otherwise transfer any of their right, title or interest in
or to the Trust Estate or the Trust Agreement with the prior written consent of
the Agent, and (provided no Default or Event of Default has occurred and is
continuing) the Lessee, and (only if such proposed assignee is not a Lender)
the Majority Lenders (which consent in each case shall not be unreasonably
withheld or delayed), provided that such consents shall not be required for an
assignment to an affiliate of the assigning Holder. The Owner Trustee may,
subject to the Lien of the applicable Security Documents, but only with the
prior written consent of the Agent, the Holders (which consent may be withheld
by the Agent or the Holders in their sole discretion) and (provided no Default
or Event of Default has occurred and is continuing) the Lessee, directly or
indirectly, assign, convey, appoint an agent with respect to enforcement of, or
otherwise transfer any of the Owner Trustee's right, title or interest in or to
any Property, the Lease, the Trust Agreement, this Agreement (including,
without limitation, any right to indemnification thereunder), or any other
document relating to a Property or any interest in a Property as provided in
the Trust Agreement and the Lease. The provisions of the immediately preceding
sentence shall not apply to the obligations of the Owner Trustee to transfer
Property to the Lessee or a third party purchaser pursuant to Article XXII of
the Lease upon payment for such Property in accordance with each of the terms
and conditions of the Lease.
12.2. Effect of Transfer. From and after any transfer effected in
accordance with this Section 12, the transferor shall be released, to the
extent of such transfer, from its liability hereunder and under the other
documents to which it is a party in respect of obligations to be performed on
or after the date of such transfer; provided, however, that any transferor
Holder shall remain liable under Article XI of the Trust Agreement to the
extent that the transferee Holder shall not have assumed the obligations of the
transferor Holder thereunder. Upon any transfer by the Owner Trustee or a
Holder as above provided, any such transferee shall assume the obligations of
the Owner Trustee and Lessor or the obligations of a Holder, as the case may
be, and shall be deemed an "Owner Trustee", "Lessor" or "Holder", as the case
may be, for all purposes of such documents and each reference herein to the
transferor shall thereafter be deemed a reference to such transferee for all
purposes, except as provided in the preceding sentence. Notwithstanding any
transfer of all or a portion of the transferor's interest as provided in this
Section 12, the transferor shall be entitled to all benefits accrued and all
rights vested prior to such transfer including, without limitation, rights to
indemnification under any such document.
SECTION 13. INDEMNIFICATION.
13.1. General Indemnity. Whether or not any of the transactions
contemplated hereby shall be consummated, the Indemnity Provider hereby assumes
liability for and agrees to defend, indemnify and hold harmless each
Indemnified Person on an After Tax Basis from and against any Claims which may
be imposed on, incurred by or asserted against an Indemnified Person by any
other Person (but not to the extent such Claims arise from the gross
negligence, willful misconduct or willful breach of such Indemnified Person) in
any way relating to or arising, or alleged (by any Person asserting such a
Claim against an Indemnified Person) to arise, out of the execution, delivery,
performance or enforcement of this Agreement, the Lease, any other Operative
Agreement or the Bridge Loan Documents or on or with respect to any Ancillary
Property or Property or any part thereof, including, without limitation, Claims
in any way relating to or arising or alleged to arise out of (a) the financing,
refinancing, purchase, acceptance,
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rejection, ownership, design, construction, refurbishment, development,
delivery, acceptance, nondelivery, leasing, subleasing, possession, use,
operation, repair, modification, transportation, condition, sale, return,
repossession (whether by summary proceedings or otherwise), or any other
disposition of an Ancillary Property, a Property, or any part thereof,
including the acquisition, holding or disposition of any interest in any
Ancillary Property, Property, lease or agreement comprising a portion of any
thereof; (b) any latent or other defect in any property whether or not
discoverable by an Indemnified Person or the Indemnity Provider; (c) any
Environmental Claim, any violation of Environmental Laws, or any other loss of
or damage to any property or the environment relating to any Property, the
Lease, the Agency Agreement or the Indemnity Provider; (d) the Operative
Agreements, or any transaction contemplated thereby, or the Bridge Loan
Documents or any transaction contemplated thereby; (e) any breach by the
Construction Agent or the Lessee of any of its representations or warranties
under the Operative Agreements to which it is a party or failure by the
Construction Agent or the Lessee to perform or observe any covenant or
agreement to be performed by it under any of the Operative Agreements; (f) the
transactions contemplated hereby or by any other Operative Agreement, in
respect of the application of Parts 4 and 5 of Subtitle B of Title I of ERISA;
(g) any personal injury, death or property damage, including without limitation
Claims based on strict or absolute liability in tort; (h) any easement, right,
agreement or document referred to in Section 10.5 of this Agreement; or (i) any
Lien on any Ancillary Property or any Property (other than Liens created by
the Operative Agreements or Lessor Liens).
If a written Claim is made against any Indemnified Person or if any
proceeding shall be commenced against such Indemnified Person (including a
written notice of such proceeding) for any Claim, such Indemnified Person shall
promptly notify the Indemnity Provider in writing and shall not take action
with respect to such Claim without the consent of the Indemnity Provider for
thirty (30) days after the receipt of such notice by the Indemnity Provider;
provided, however, that, in the case of any such Claim, if action shall be
required by law or regulation to be taken prior to the end of such 30-day
period, such Indemnified Person shall endeavor, in such notice to the Indemnity
Provider, to inform the Indemnity Provider of such shorter period, and no
action shall be taken with respect to such Claim without the consent of the
Indemnity Provider before seven (7) days before the end of such shorter period;
provided, further, that the failure of such Indemnified Person to give the
notices referred to in this sentence shall not diminish the Indemnity
Provider's obligation hereunder except to the extent such failure materially
precludes the Indemnity Provider from contesting such Claim.
If, within thirty (30) days of receipt of such notice from the Indemnified
Person (or such shorter period as the Indemnified Person has notified the
Indemnity Provider is required by law or regulation for the Indemnified Person
to respond to such Claim), the Indemnity Provider shall request in writing that
such Indemnified Person respond to such Claim, the Indemnified Person shall, at
the expense of the Indemnity Provider, in good faith conduct and control such
action (including, without limitation by pursuit of appeals) (provided,
however, that (A) if such Claim can be pursued by the Indemnity Provider on
behalf of or in the name of such Indemnified Person, the Indemnified Person, at
the Indemnity Provider's request, shall allow the Indemnity Provider to conduct
and control the response to such Claim and (B) in the case of any Claim, the
Indemnified Person may request the Indemnity Provider to conduct and control
the response to such Claim (with counsel to be selected by the Indemnity
Provider and consented to by such Indemnified Person, such consent not to be
unreasonably withheld, conditioned or delayed;
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provided, however, that any Indemnified Person may retain separate counsel
at the expense of the Indemnity Provider in the event of a conflict)) by, in
the sole discretion of the Person conducting and controlling the response to
such Claim, (1) resisting payment thereof, (2) not paying the same except under
protest, if protest is necessary and proper, (3) if the payment be made, using
reasonable efforts to obtain a refund thereof in appropriate administrative and
judicial proceedings, or (4) taking such other action as is reasonably
requested by the Indemnity Provider from time to time.
The party controlling the response to any Claim shall consult in good
faith with the non-controlling party and shall keep the non-controlling party
reasonably informed as to the conduct of the response to such Claim; provided,
that all decisions ultimately shall be made in the discretion of the
controlling party, except that the Indemnity Provider may not agree to any
dismissal or settlement of, or other agreement in connection with, any claim
without the prior written consent of such Indemnified Person, if such
dismissal, settlement or agreement would require any admission or
acknowledgment of any culpability or wrongdoing by such Indemnified Person or
provide for any nonmonetary relief to be performed by such Indemnified Person.
The parties agree that an Indemnified Person may at any time decline to take
further action with respect to the response to such Claim and may settle such
Claim if such Indemnified Person shall waive its rights to any indemnity from
the Indemnity Provider that otherwise would be payable in respect of such Claim
(and any future Claim, the pursuit of which is precluded by reason of such
resolution of such Claim) and shall pay to the Indemnity Provider any amount
previously paid or advanced by the Indemnity Provider pursuant to this Section
13.1 by way of indemnification or advance for the payment of any amount
regarding such Claim other than expenses of the action relating to such Claim.
Notwithstanding the foregoing provisions of this Section 13.1, an
Indemnified Person shall not be required to take any action and no Indemnity
Provider shall be permitted to respond to any Claim in its own name or that of
the Indemnified Person unless (A) the Indemnity Provider shall have agreed to
pay and shall pay to such Indemnified Person on demand and on an After Tax
Basis all reasonable costs, losses and expenses that such Indemnified Person
actually incurs in connection with such Claim, including, without limitation,
all reasonable legal, accounting and investigatory fees and disbursements, (B)
the Indemnified Person shall have reasonably determined that the action to be
taken will not result in any material danger of sale, forfeiture or loss of any
Property, or any part thereof or interest therein, will not interfere with the
payment of Rent, and will not result in risk of criminal liability, (C) if such
Claim shall involve the payment of any amount prior to the resolution of such
Claim, the Indemnity Provider shall provide to the Indemnified Person an
interest-free advance in an amount equal to the amount that the Indemnified
Person is required to pay (with no additional net after-tax cost to such
Indemnified Person), (D) in the case of a Claim that must be pursued in the
name of an Indemnified Person (or an Affiliate thereof), the Indemnity Provider
shall have provided to such Indemnified Person an opinion of independent
counsel selected by the Indemnified Person and reasonably satisfactory to the
Indemnity Provider stating that a reasonable basis exists to contest such
Claim, (E) such claim is covered by insurance and (F) no Event of Default shall
have occurred and be continuing. In addition, an Indemnified Person shall not
be required to contest any Claim in its name (or that of an Affiliate) if the
subject matter thereof shall be of a continuing nature and shall have
previously been decided adversely by a court of competent jurisdiction pursuant
to the contest provisions of this Section 13.1, unless there shall have been a
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change in law (or interpretation thereof) and the Indemnified Person shall
have received, at the Indemnity Provider's expense, an opinion of independent
counsel selected by the Indemnified Person and reasonably acceptable to the
Indemnity Provider stating that as a result of such change in law (or
interpretation thereof), it is more likely than not that the Indemnified Person
will prevail in such contest.
13.2. General Tax Indemnity.
(a) The Indemnity Provider shall pay and assume liability for, and
does hereby agree to indemnify, protect and defend each Property and each
Ancillary Property and all Indemnified Persons, and hold them harmless
against, all Impositions on an After Tax Basis.
(b) (i) Subject to the terms of Section 13.2(f), the Indemnity
Provider shall pay or cause to be paid all Impositions directly to
the taxing authorities where feasible and otherwise to the
Indemnified Person, as appropriate, and the Indemnity Provider
shall at its own expense, upon such Indemnified Person's reasonable
request, furnish to such Indemnified Person copies of official
receipts or other satisfactory proof evidencing such payment.
(ii) In the case of Impositions for which no contest is
conducted pursuant to Section 13.2(f) and which the Indemnity
Provider pays directly to the taxing authorities, the Indemnity
Provider shall pay such Impositions prior to the latest time
permitted by the relevant taxing authority for timely payment. In
the case of Impositions for which the Indemnity Provider reimburses
an Indemnified Person, the Indemnity Provider shall do so within
thirty (30) days after receipt by the Indemnity Provider of demand
by such Indemnified Person describing in reasonable detail the
nature of the Imposition and the basis for the demand (including
the computation of the amount payable). In the case of Impositions
for which a contest is conducted pursuant to Section 13.2(f), the
Indemnity Provider shall pay such Impositions or reimburse such
Indemnified Person for such Impositions, to the extent not
previously paid or reimbursed pursuant to subsection (a), prior to
the latest time permitted by the relevant taxing authority for
timely payment after conclusion of all contests under Section
13.2(f).
(iii) Impositions imposed with respect to a Property for a
billing period during which the Lease expires or terminates with
respect to such Property (unless the Lessee has exercised the
Purchase Option with respect to such Property or the Lessee has
otherwise purchased such Property) shall be adjusted and prorated
on a daily basis between the Indemnity Provider and the Lessor,
whether or not such Imposition is imposed before or after such
expiration or termination and each party shall pay its pro rata
share thereof.
(iv) At the Indemnity Provider's request, the amount of any
indemnification payment by the Indemnity Provider pursuant to
subsection (a) shall be verified and certified by an independent
public accounting firm mutually acceptable to the Indemnity
Provider and the Indemnified Person. The fees and
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expenses of such independent public accounting firm shall be
paid by the Indemnity Provider unless such verification shall
result in an adjustment in the Indemnity Provider's favor of 15% or
more of the payment as computed by the Indemnified Person, in which
case such fee shall be paid by the Indemnified Person.
(v) The Indemnified Persons shall use good faith efforts to
take lawful deductions in their respective tax returns so as to
reduce the Impositions required to be reimbursed by the Indemnity
Provider hereunder; provided, however, that the failure of any
Indemnified Person to take any deduction shall not impair in any
way such Person's right to indemnification from the Indemnity
Provider for any Impositions.
(c) (i) The Indemnity Provider shall be responsible for preparing
and filing any real and personal property or ad valorem tax returns with
respect to each Property or Ancillary Property. In case any other report
or tax return shall be required to be made with respect to any
obligations of the Indemnity Provider under or arising out of subsection
(a) and of which the Indemnity Provider has knowledge or should have
knowledge, the Indemnity Provider, at its sole cost and expense, shall
notify the relevant Indemnified Person of such requirement and (except if
such Indemnified Person notifies the Indemnity Provider that such
Indemnified Person intends to file such report or return) (A) to the
extent required or permitted by and consistent with Legal Requirements,
make and file in Indemnity Provider's name such return, statement or
report; and (B) in the case of any other such return, statement or report
required to be made in the name of such Indemnified Person, advise such
Indemnified Person of such fact and prepare such return, statement or
report for filing by such Indemnified Person or, where such return,
statement or report shall be required to reflect items in addition to any
obligations of the Indemnity Provider under or arising out of subsection
(a), provide such Indemnified Person at the Indemnity Provider's expense
with information sufficient to permit such return, statement or report to
be properly made with respect to any obligations of the Indemnity
Provider under or arising out of subsection (a). Such Indemnified Person
shall, upon the Indemnity Provider's request and at the Indemnity
Provider's expense, provide any data maintained by such Indemnified
Person (and not otherwise available to or within the control of the
Indemnity Provider) with respect to any Property which the Indemnity
Provider may reasonably require to prepare any required tax returns or
reports.
(d) If as a result of the payment or reimbursement by the Indemnity
Provider of any Imposition or other reasonable expenses of the Lessor or
the payment of any Transaction Expenses incurred in connection with the
transactions contemplated by the Operative Agreements, the Lessor, the
Holders or partners of any Holder shall suffer a net increase in any
federal, state or local income tax liability, the Indemnity Provider
shall indemnify such Persons (without duplication of any indemnification
required by subsection (a)) on an After Tax Basis for the amount of such
increase. The calculation of any such net increase shall take into
account any current or future tax savings (including tax deductions, net
operating loss carry-forward or tax credits) realized or reasonably
expected to be realized by such Person in respect thereof, as well as any
interest, penalties
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and additions to tax payable by such Lessor, or such Holder, or such
Affiliate, in respect thereof.
(e) As between the Indemnity Provider on one hand, and the Lessor or
the Agent, any Lender or any Holder on the other hand, the Indemnity
Provider shall be responsible for, and the Indemnity Provider shall
indemnify and hold harmless the Lessor, the Agent, the Lenders and each
Holder (without duplication of any indemnification required by subsection
(a)) on an After Tax Basis against, any obligation for United States or
foreign withholding taxes imposed in respect of payments on the Notes or
Certificates or with respect to Rent payments under the Lease (and, if
the Lessor, the Agent, any Lender or any Holder receives a demand for
such payment from any taxing authority, the Indemnity Provider shall
discharge such demand on behalf of the Lessor, the Agent, such Lender or
such Holder); provided, however, that the right of any Lender to make a
claim for indemnification under this Section 13.2(e) is subject to the
compliance by such Lender with the requirements of Section 2.13 of the
Credit Agreement.
(f) (i) If a written Claim is made against any Indemnified Person,
or if any proceeding shall be commenced against such Indemnified
Person (including a written notice of such proceeding), for any
Impositions, such Indemnified Person shall promptly notify the
Indemnity Provider in writing and shall not take action with
respect to such Claim or proceeding without the consent of the
Indemnity Provider for thirty (30) days after the receipt of such
notice by the Indemnity Provider; provided, however, that, in the
case of any such Claim or proceeding, if action shall be required
by law or regulation to be taken prior to the end of such 30- day
period, such Indemnified Person shall, in such notice to the
Indemnity Provider, inform the Indemnity Provider of such shorter
period, and no action shall be taken with respect to such Claim or
proceeding without the consent of the Indemnity Provider before
seven (7) days before the end of such shorter period; provided,
further, that the failure of such Indemnified Person to give the
notices referred to this sentence shall not diminish the Indemnity
Provider's obligation hereunder except to the extent such failure
materially precludes the Indemnity Provider from contesting such
Claim.
(ii) If, within thirty (30) days of receipt of such notice
from the Indemnified Person (or such shorter period as the
Indemnified Person has notified the Indemnity Provider is required
by law or regulation for the Indemnified Person to commence such
contest), the Indemnity Provider shall request in writing that such
Indemnified Person contest such Imposition, the Indemnified Person
shall, at the expense of the Indemnity Provider, in good faith
conduct and control such contest (including, without limitation, by
pursuit of appeals) relating to the validity, applicability or
amount of such Imposition (provided, however, that (A) if such
contest can be pursued independently from any other proceeding
involving a tax liability of such Indemnified Person, the
Indemnified Person, at the Indemnity Provider's request, shall
allow the Indemnity Provider to conduct and control such contest
and (B) in the case of any contest, the Indemnified Person may
request the Indemnity Provider to conduct and control such contest
(with counsel to be selected by the Indemnity Provider and
consented to by such
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Indemnified Person, such consent not to be unreasonably
withheld, conditioned or delayed; provided, however, that any
Indemnified Person may retain separate counsel at the expense of
the Indemnity Provider in the event of a conflict)) by, in the sole
discretion of the Person conducting and controlling such contest,
(1) resisting payment thereof, (2) not paying the same except under
protest, if protest is necessary and proper, (3) if the payment be
made, using reasonable efforts to obtain a refund thereof in
appropriate administrative and judicial proceedings, or (4) taking
such other action as is reasonably requested by the Indemnity
Provider from time to time.
(iii) The party controlling any contest shall consult in good
faith with the non-controlling party and shall keep the
non-controlling party reasonably informed as to the conduct of such
contest; provided, that all decisions ultimately shall be made in
the sole discretion of the controlling party, except that the
Indemnity Provider may not agree to any dismissal or settlement of,
or other agreement in connection with, any claim without the prior
written consent of such Indemnified Person, if such dismissal,
settlement or agreement would require any admission or
acknowledgment of any culpability or wrongdoing by such Indemnified
Person or provide for any nonmonetary relief to be performed by
such Indemnified Person. The parties agree that an Indemnified
Person may at any time decline to take further action with respect
to the contest of any Imposition and may settle such contest if
such Indemnified Person shall waive its rights to any indemnity
from the Indemnity Provider that otherwise would be payable in
respect of such Imposition (and any future Claim by any taxing
authority, the contest of which is precluded by reason of such
resolution of such contest) and shall pay to the Indemnity Provider
any amount previously paid or advanced by the Indemnity Provider
pursuant to this Section 13.2 by way of indemnification or advance
for the payment of any amount regarding such Imposition other than
expenses of such contest.
(iv) Notwithstanding the foregoing provisions of this Section
13.2, an Indemnified Person shall not be required to take any
action and no Indemnity Provider shall be permitted to contest any
Imposition in its own name or that of the Indemnified Person unless
(A) the Indemnity Provider shall have agreed to pay and shall pay
to such Indemnified Person on demand and on an After Tax Basis all
reasonable costs, losses and expenses that such Indemnified Person
actually incurs in connection with contesting such Imposition,
including, without limitation, all reasonable legal, accounting and
investigatory fees and disbursements, (B) the Indemnified Person
shall have reasonably determined that the action to be taken will
not result in any material danger of sale, forfeiture or loss of
any Property, or any part thereof or interest therein, will not
interfere with the payment of Rent, and will not result in risk of
criminal liability, (C) if such contest shall involve the payment
of the Imposition prior to the contest, the Indemnity Provider
shall provide to the Indemnified Person an interest-free advance in
an amount equal to the Imposition that the Indemnified Person is
required to pay (with no additional net after-tax cost to such
Indemnified Person), (D) in the case of a Claim that must be
pursued in the name of an Indemnified
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Person (or an Affiliate thereof), the Indemnity Provider shall
have provided to such Indemnified Person an opinion of independent
tax counsel selected by the Indemnified Person and reasonably
satisfactory to the Indemnity Provider stating that a reasonable
basis exists to contest such Claim, and (E) no Event of Default
shall have occurred and be continuing. In addition, an Indemnified
Person shall not be required to contest any claim in its name (or
that of an Affiliate) if the subject matter thereof shall be of a
continuing nature and shall have previously been decided adversely
by a court of competent jurisdiction pursuant to the contest
provisions of this Section 13.2, unless there shall have been a
change in law (or interpretation thereof) and the Indemnified
Person shall have received, at the Indemnity Provider's expense, an
opinion of independent tax counsel selected by the Indemnified
Person and reasonably acceptable to the Indemnity Provider stating
that as a result of such change in law (or interpretation thereof),
it is more likely than not that the Indemnified Person will prevail
in such contest.
13.3. Environmental Indemnity. Without the limiting the generality of the
foregoing, whether or not the transactions contemplated hereby shall be
consummated, the Indemnity Provider hereby assumes liability for and agrees to
defend, indemnify and hold harmless each Indemnified Person on an after Tax
Basis from and against any Claims which may be imposed on, incurred by or
asserted against an Indemnified Person by any other Person (but not to the
extent such Claims arise from the gross negligence, willful misconduct or
willful breach of such Indemnified Person) in any way relating to or arising,
or alleged (by any Person asserting such a Claim against an Indemnified Person)
to arise, out of any Environmental Claim, any violation of Environmental Laws,
or any other loss of or damage to any Property or Ancillary Property or the
environment, in each case relating to any Property, Ancillary Property, the
Lease, the Agency Agreement or the Indemnity Provider.
SECTION 14. MISCELLANEOUS.
14.1. Survival of Agreements. The representations, warranties, covenants,
indemnities and agreements of the parties provided for in the Operative
Agreements, and the parties' obligations under any and all thereof, shall
survive the execution and delivery of this Agreement, the transfer of any
Property to the Owner Trustee, the acquisition of any Equipment, the
construction of any Improvements, any disposition of any interest of the Owner
Trustee in any Property or any interest of the Holders in the Owner Trust, the
payment of the Notes and any disposition thereof, and shall be and continue in
effect notwithstanding any investigation made by any party and the fact that
any party may waive compliance with any of the other terms, provisions or
conditions of any of the Operative Agreements. Except as otherwise expressly
set forth herein or in other Operative Agreements, the indemnities of the
parties provided for in the Operative Agreements shall survive the expiration
or termination of any thereof.
14.2. No Broker, etc. Each of the parties hereto represents to the others
that it has not retained or employed any broker, finder or financial adviser to
act on its behalf in connection with this Agreement, nor has it authorized any
broker, finder or financial adviser retained or employed by any other Person so
to act. Any party who is in breach of this representation shall indemnify and
hold the other parties harmless from and against any liability arising out of
such breach of this representation.
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14.3. Notices. Unless otherwise specifically provided herein, all notices,
consents, directions, approvals, instructions, requests and other
communications required or permitted by the terms hereof to be given to any
Person shall be given in writing by United States certified or registered mail
(postage prepaid), by nationally recognized courier service, by hand or by
telecopy with confirming notice and any such notice shall become effective upon
receipt and shall be directed to the address of such Person as indicated:
If to the Construction Agent, to it at the following address:
Wackenhut Corrections Corporation
4200 Wackenhut Drive, #100
Palm Beach Gardens, Florida 33410-4243
Attention: Mr. David Watson, Controller and
Chief Accounting Officer
Telephone No.: (800) 666-5640 Ext. 6646
Telecopy No.: (561) 691-6473
If to the Lessee, to it at the following address:
Wackenhut Corrections Corporation
4200 Wackenhut Drive, #100
Palm Beach Gardens, Florida 33410-4243
Attention: Mr. David Watson, Controller and
Chief Accounting Officer
Telephone No.: (800) 666-5640 Ext. 6646
Telecopy No.: (561) 691-6473
If to the Owner Trustee, to it at the following address:
First Security Bank, National Association
79 South Main Street
Salt Lake City, Utah 84111
Attention: Val T. Orton
Telephone No.: (801) 246-5630
Telecopy No.: (801) 246-5053
If to NationsBank, National Association, as a Holder or a Lender, to it at the
following address:
NationsBank, National Association
100 Southeast 2nd Street
FL7-950-14-02
Miami, Florida 33131
Attn: Maria P. Conroy
Telephone No.: (305) 533-2428
Telecopy No.: (305) 533-2437
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with all notices of requests for Holder Fundings, or conversion, continuation
or prepayment of any Holder Funding, to be sent to:
NationsBank Agency Services
Independence Center, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Jamie McCotter
Telephone No.: (704) 388-2374
Telecopy No.: (704) 386-9923
If to the Agent, to it at the following address:
NationsBank, National Association
100 Southeast 2nd Street
FL7-950-14-02
Miami, Florida 33131
Attn: Maria P. Conroy
Telephone No.: (305) 533-2428
Telecopy No.: (305) 533-2437
with all notices of borrowing, conversion, continuation or prepayment of any
Loan to be delivered to the address set forth in Section 9.2 of the Credit
Agreement.
If to any other Lender or Holder, to it at the address specified in the
signature pages to the Credit Agreement or Trust Agreement (as applicable), any
applicable amendment thereto, or any applicable Assignment and Assumption.
From time to time any party may designate a new address for purposes of notice
hereunder by notice to each of the other parties hereto.
14.4. Counterparts. This Agreement may be executed by the parties hereto
in separate counterparts, each of which when so executed and delivered shall be
an original, but all such counterparts shall together constitute but one and
the same instrument.
14.5. Amendments and Termination. Neither this Agreement nor any of the
terms hereof may be terminated, amended, supplemented, waived or modified
except by an instrument in writing signed by the Lessor, the Lessee, the
Construction Agent and (subject to Section 9.1 of the Credit Agreement) the
Agent. This Agreement may be terminated by an agreement signed in writing by
the Owner Trustee, the Holders, the Lenders, the Lessee, the Construction Agent
and the Agent.
14.6. Headings, etc. The Table of Contents and headings of the various
Articles and Sections of this Agreement are for convenience of reference only
and shall not modify, define, expand or limit any of the terms or provisions
hereof.
47
<PAGE> 52
14.7. Parties in Interest. Except as expressly provided herein, none of
the provisions of this Agreement are intended for the benefit of any Person
except the parties hereto; provided, that the Lenders are intended to be
third-party beneficiaries of this Agreement.
14.8. GOVERNING LAW; WAIVERS OF JURY TRIAL.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF FLORIDA, WITHOUT
REGARD TO ANY OTHERWISE APPLICABLE PRINCIPLES OF CONFLICT OF LAWS.
(b) TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE
PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN
ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AND FOR ANY
COUNTERCLAIM THEREIN.
14.9. Submission to Jurisdiction; Waivers. Each of the parties hereto
irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Operative Agreements
to which it is a party, or for recognition and enforcement of any
judgment in respect thereof, to the non-exclusive general jurisdiction of
the courts of the State of Florida and the courts of the United States of
America, in each case sitting in Broward County, Florida, and appellate
courts from any thereof;
(b) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have to
the venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not
to plead or claim the same,
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form of mail) postage prepaid, to the
respective party at its address set forth in Section 14.3 hereof or at
such other address of which the Administrative Agent shall have been
notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit
the right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right
it may have to claim or recover in any legal action or proceeding
referred to in this Section 14.9 any special, exemplary, punitive or
consequential damages.
48
<PAGE> 53
14.10. Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render such
provision unenforceable in any other jurisdiction.
14.11. Liability Limited.
(a) The Agent, the Lessee and the Holders each acknowledge and agree
that the Owner Trustee is (except as otherwise expressly provided herein
or therein) entering into this Agreement and the other Operative
Agreements to which it is a party (other than the Trust Agreement and
other than as set forth in Section 7.2 of this Agreement), solely in its
capacity as trustee under the Trust Agreement and not in its individual
capacity and that Trust Company shall not be liable or accountable under
any circumstances whatsoever in its individual capacity for or on account
of any statements, representations, warranties, covenants or obligations
stated to be those of the Owner Trustee, except for its own gross
negligence or willful misconduct and except as otherwise expressly
provided herein or in the other Operative Agreements.
(b) Anything to the contrary contained in this Agreement, the Credit
Agreement, the Notes or in any other Operative Agreement notwithstanding,
neither the Lessor nor any Holder (in its capacity as a Holder) nor any
officer, director, shareholder, or partner thereof, nor any of the
successors or assigns of the foregoing (all such Persons being
hereinafter referred to collectively as the "Exculpated Persons"), shall
be personally liable in any respect for any liability or obligation
hereunder or under any other Operative Agreement including the payment of
the principal of, or interest on, the Notes, or for monetary damages for
the breach of performance of any of the covenants contained in the Credit
Agreement, the Notes, this Agreement, the Security Agreement or any of
the other Operative Agreements. The Agent (for itself and on behalf of
the Lenders) agrees that, in the event the Agent or any Lender pursues
any remedies available to them under the Credit Agreement, the Notes,
this Agreement, the Security Agreement, the Mortgage Instruments or under
any other Operative Agreement, neither the Lenders nor the Agent shall
have any recourse against any Exculpated Person, for any deficiency, loss
or Claim for monetary damages or otherwise resulting therefrom, and
recourse shall be had solely and exclusively against the Trust Estate and
the Lessee (with respect to the Lessee's obligations under the Lease, the
Participation Agreement and the Agency Agreement); but nothing contained
herein shall be taken to prevent recourse against or the enforcement of
remedies against the Trust Estate in respect of any and all liabilities,
obligations and undertakings contained herein, in the Credit Agreement,
in the Notes, in the Security Agreement, the Mortgage Instruments or in
any other Operative Agreement. Notwithstanding the provisions of this
Section, nothing in this Agreement, the Credit Agreement, the Notes, the
Security Agreement, the Mortgage Instruments or any other Operative
Agreement shall: (i) constitute a waiver, release or discharge of any
indebtedness or obligation evidenced by the Notes or arising under this
Agreement, the Security Agreement, the Mortgage Instruments or the Credit
Agreement or secured by the
49
<PAGE> 54
Security Agreement, the Mortgage Instruments or any other Operative
Agreement, but the same shall continue until paid or discharged; (ii)
relieve the Lessor or any Exculpated Person from liability and
responsibility for (but only to the extent of the damages arising by
reason of): (a) active waste knowingly committed by such Lessor or such
Exculpated Person with respect to the Properties or (b) any fraud, gross
negligence, willful misconduct or willful breach on the part of such
Lessor or such Exculpated Person; (iii) relieve such Lessor or such
Exculpated Person from liability and responsibility for (but only to the
extent of the moneys misappropriated, misapplied or not turned over) (a)
misappropriation or misapplication by such Lessor (i.e., application in a
manner contrary to any Operative Agreement) of any insurance proceeds or
condemnation award paid or delivered to such Lessor by any Person other
than the Agent, (b) any deposits or any escrows or amounts owed by the
Lessee under the Agency Agreement held by such Lessor or (c) any rents or
other income received by such Lessor from the Lessee that are not turned
over to the Agent; or (iv) affect or in any way limit the Agent's rights
and remedies under any Operative Agreement with respect to the Rents and
its rights thereunder or its right to obtain a judgment against the
Lessor's interest in the Properties.
14.12. Rights of Lessee. Notwithstanding any provision of the Operative
Agreements, if at any time all obligations (i) of the Owner Trustee under the
Credit Agreement, the Security Documents, the Trust Agreement and the other
Operative Agreements and (ii) of the Lessee under the Operative Agreements have
in each case been satisfied or discharged in full, then the Lessee shall be
entitled to (a) terminate the Lease and (b) receive all amounts then held under
the Operative Agreements and all proceeds with respect to any of the
Properties. Upon the termination of the Lease pursuant to the foregoing clause
(a), the Lessor shall transfer to the Lessee all of its right, title and
interest free and clear of the Lien of the Lease and all Lessor Liens in and to
any Properties then subject to the Lease and any amounts or proceeds referred
to in the foregoing clause (b) shall be paid over to the Lessee.
14.13. Further Assurances. The parties hereto shall promptly cause to be
taken, executed, acknowledged or delivered, at the sole expense of the Lessee,
all such further acts, conveyances, documents and assurances as the other
parties may from time to time reasonably request in order to carry out and
effectuate the intent and purposes of this Participation Agreement, the other
Operative Agreements and the transactions contemplated hereby and thereby
(including, without limitation, the preparation, execution and filing of any
and all Uniform Commercial Code financing statements and other filings or
registrations which the parties hereto may from time to time request to be
filed or effected). The Lessee, at its own expense and without need of any
prior request from any other party, shall take such action as may be necessary
(including any action specified in the preceding sentence), or (if Owner
Trustee shall so request) as so requested, in order to maintain and protect all
security interests provided for hereunder or under any other Operative
Agreement.
14.14. Calculations under Operative Agreements. The parties hereto agree
that all calculations and numerical determinations to be made under the
Operative Agreements by the Owner Trustee shall be made by the Agent and that
such calculations and determinations shall be conclusive and binding on the
parties hereto in the absence of manifest error.
50
<PAGE> 55
14.15. Confidentiality. Each of the Owner Trustee, the Holders, the Agent
and the Lenders severally agrees to use reasonable efforts to keep confidential
all non-public information pertaining to the Lessee or its Subsidiaries which
is provided to it by the Lessee or its Subsidiaries, and shall not
intentionally disclose such information to any Person except:
(a) to the extent such information is public when received by such
Person or becomes public thereafter due to the act or omission of any
party other than such Person;
(b) to the extent such information is independently obtained from a
source other than the Lessee or any of its Subsidiaries and such
information from such source is not, to such Person's knowledge, subject
to an obligation of confidentiality or, if such information is subject to
an obligation of confidentiality, that disclosure of such information is
permitted;
(c) to any Affiliate of any such Person or to counsel, auditors or
accountants retained by any such Person or any such Affiliate, provided
they agree to keep such information confidential as if such Person or
Affiliate were party to this Agreement and to financial institution
regulators, including examiners of any Lender, the Agent or the Owner
Trustee, any Holder or any Affiliate in the course of examinations of
such Persons;
(d) in connection with any litigation or the enforcement or
preservation of the rights of the Agent, the Owner Trustee, the Lessor,
any Lender or any Holder under the Operative Agreements;
(e) to the extent required by any applicable statute, rule or
regulation or court order (including, without limitation, by way of
subpoena) or pursuant to the request of any regulatory or Governmental
Authority having jurisdiction over any such Person; provided, however,
that such Person shall endeavor (if not otherwise prohibited by Law) to
notify the Lessee prior to any disclosure made pursuant to this clause
(e), except that no such Person shall be subject to any liability
whatsoever for any failure to so notify the Lessee;
(f) the Agent, any Lender or any Holder may disclose such
information to the Agent, any Lender or any Holder; or
(g) to the extent disclosure to any other financial institution or
other Person is appropriate in connection with any proposed or actual (i)
assignment or grant of a participation by any of the Lenders of interests
in the Credit Agreement or any Note to such other financial institution
(who will in turn be required by the Agent to agree in writing to
maintain confidentiality as if it were a Lender originally party to the
Credit Agreement) or (ii) assignment by any Holder of interests in the
Trust Agreement to another Person (who will in turn be required by the
transferring Holder to agree in writing to maintain confidentiality as if
it were a Holder originally party to this Participation Agreement).
51
<PAGE> 56
14.16. Calculation of Rent, Interest, Holder Yield and Fees. Except as
otherwise expressly set forth in the Operative Agreements, all calculation of
Rent, interest, Holder Yield, Overdue Rate, Holder Overdue Rate, Facility Fees,
or Holder Facility Fees payable hereunder shall be computed based on the actual
number of days elapsed over a year of 360 days.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
52
<PAGE> 57
IN WITNESS WHEREOF, the parties hereto have caused this
Participation Agreement to be duly executed by their respective officers
thereunto duly authorized as of the day and year first above written.
WACKENHUT CORRECTIONS CORPORATION,
as Construction Agent
By:____________________________________
Name: John G. O'Rourke
Title: Senior Vice President/Treasurer/
Chief Financial Officer
WACKENHUT CORRECTIONS CORPORATION,
as Lessee
By:____________________________________
Name: John G. O'Rourke
Title: Senior Vice President/Treasurer/
Chief Financial Officer
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not individually, except as expressly
stated herein, but solely as Owner Trustee
under the Wackenhut Corrections Trust
1997-1
By:_____________________________________
Name: C. Scott Nielson
Title: Vice President
SIGNATURE PAGE 1
<PAGE> 58
NATIONSBANK, NATIONAL ASSOCIATION,
as Administrative Agent
By:____________________________________
Name: Maria P. Conroy
Title: Senior Vice President
NATIONSBANK, NATIONAL ASSOCIATION,
as a Holder
By:____________________________________
Name: Maria P. Conroy
Title: Senior Vice President
NATIONSBANK, NATIONAL ASSOCIATION,
as a Lender
By:____________________________________
Name: Maria P. Conroy
Title: Senior Vice President
SIGNATURE PAGE 2
<PAGE> 59
SCOTIABANC INC., as a Holder
By:____________________________________
Name:__________________________________
Title:_________________________________
SCOTIABANC INC., as a Lender
By:____________________________________
Name:__________________________________
Title:_________________________________
SIGNATURE PAGE 3
<PAGE> 60
BARNETT BANK, N.A., as a Holder
By:____________________________________
Name:__________________________________
Title:_________________________________
BARNETT BANK, N.A., as a Lender
By:____________________________________
Name:__________________________________
Title:_________________________________
SIGNATURE PAGE 4
<PAGE> 61
SUNTRUST BANK, SOUTH FLORIDA, N.A., as a
Holder
By:____________________________________
Name:__________________________________
Title:_________________________________
SUNTRUST BANK, SOUTH FLORIDA, N.A., as a
Lender
By:____________________________________
Name:__________________________________
Title:_________________________________
SIGNATURE PAGE 5
<PAGE> 62
SOUTHTRUST BANK, NATIONAL ASSOCIATION, as a
Lender
By:____________________________________
Name:__________________________________
Title:_________________________________
SIGNATURE PAGE 6
<PAGE> 63
SUMMIT BANK, as a Lender
By:____________________________________
Name:__________________________________
Title:_________________________________
SIGNATURE PAGE 7
<PAGE> 64
AMSOUTH BANK, as a Lender
By:____________________________________
Name:__________________________________
Title:_________________________________
SIGNATURE PAGE 8
<PAGE> 65
BANQUE PARIBAS, as a Lender
By:____________________________________
Name:__________________________________
Title:_________________________________
SIGNATURE PAGE 9
<PAGE> 66
HIBERNIA NATIONAL BANK, as a Lender
By:____________________________________
Name:__________________________________
Title:_________________________________
SIGNATURE PAGE 10
<PAGE> 67
PNC BANK, KENTUCKY, INC., as a Lender
By:____________________________________
Name:__________________________________
Title:_________________________________
SIGNATURE PAGE 11
<PAGE> 68
Schedule 1
Initial Holders
<TABLE>
<CAPTION>
Holder
Name Commitment
---- ----------
<S> <C>
NationsBank, National $2,000,000.00
Association
Barnett Bank, N.A. $1,300,000.00
ScotiaBanc Inc. $2,000,000.00
SunTrust, South Florida, N.A. $1,300,000.00
-------------
$6,600,000.00
=============
</TABLE>
Schedule-1
<PAGE> 69
EXHIBIT A
REQUISITION FORM
(Pursuant to Sections 4.2 and 5.2 of the Participation Agreement)
Wackenhut Corrections Corporation, a Florida corporation (the "Company")
hereby certifies as true and correct and delivers the following Requisition to
First Security Bank, National Association, not individually, except as
expressly stated in the Participation Agreement (hereinafter defined), but
solely as Owner Trustee under the Wackenhut Corrections Trust 1997-1
("Lessor"), the Holders (as defined in the Participation Agreement), and
NationsBank, National Association, as Administrative Agent for the Lenders
pursuant to the Credit Agreement (the "Agent"):
Reference is made herein to that certain Amended and Restated
Participation Agreement dated as of June 19, 1997 (as such agreement may be
amended, restated, supplemented or otherwise modified from time to time, the
"Participation Agreement") among the Company, in its capacity as Construction
Agent, the Company, as Lessee, the Lessor, the Holders party thereto, the
Lenders party thereto, and the Agent. Capitalized terms used herein but not
otherwise defined herein shall have the meanings set forth therefor in the
Participation Agreement.
Check one:
____ INITIAL CLOSING DATE: _______________
(one Business Day prior notice required for Base Rate Funding)
(three Business Days prior notice required for Eurodollar Funding)
____ AMENDMENT CLOSING DATE: _______________
(one Business Day prior notice required for Base Rate Funding)
(three Business Days prior notice required for Eurodollar Funding)
____ PROPERTY CLOSING DATE: _______________
(one Business Day prior notice required for Base Rate Funding)
(three Business Days prior notice required for Eurodollar Funding)
____ CONSTRUCTION FUNDING DATE: _______________
(one Business Day prior notice required for Base Rate Funding)
(three Business Days prior notice required for Eurodollar Funding)
1. Transaction Expenses and other fees, expenses and disbursements under
Section 9.1(a) or (b) of the Participation Agreement and any and all other
amounts contemplated to be financed under the Participation Agreement
including without limitation any Work, broker's fees, taxes, recording
fees and the like (with supporting invoices or closing statement
attached):
A-1
<PAGE> 70
<TABLE>
<CAPTION>
Party to Whom Amount is Owed
Amount Owed (in U.S. Dollars)
------------------- ----------------------
<S> <C>
___________________ __________________
___________________ __________________
___________________ __________________
___________________ __________________
</TABLE>
2. Legal Description of Land: See attached Schedule 1
[Note: Include legal description only with initial requisition form for
any particular piece of Land and any subsequent changes]
3. Description of Improvements: See attached Schedule 2
4. Description of Equipment: See attached Schedule 3
5. Description of Work: See attached Schedule 4
6. Total Property Cost requested to date with respect to
this Property (excluding the amount requested herein): $________
7. Total additional amount requested herein: $_____________
In connection with this Requisition, the Company hereby requests that the
Lenders make Loans to the Lessor in the amount of $__________ ($__________
constituting Series A Loans and $__________ constituting Series B Loans) and
that the Holder[s] make [a] Holder Funding[s] to the Lessor in the amount of
$__________. The Company hereby certifies (i) that the foregoing amounts
requested do not exceed the total aggregate of the Available Commitments plus
the Available Holder Commitment and (ii) each of the provisions of the
Participation Agreement applicable to the Loans and Holder Fundings requested
hereunder have been complied with as of the date of this Requisition.
The Company hereby certifies that the Land, Improvements, Equipment and
Work described herein are necessary and appropriate for its business
operations.
The Company has caused this Requisition to the executed by its duly
authorized officer as of this _____ day of June, 1997.
WACKENHUT CORRECTIONS CORPORATION
A-2
<PAGE> 71
By:____________________________________
Name:__________________________________
Title:_________________________________
A-3
<PAGE> 72
Schedule 1
Legal Description of Land
To be included only with initial requisition form and
to show any changes to legal description.
A-4
<PAGE> 73
Schedule 2
Description of Improvements
A-5
<PAGE> 74
Schedule 3
Description of Equipment
<TABLE>
<CAPTION>
General Description Make Model Serial Number
- ------------------- ---- ----- -------------
<S> <C> <C> <C>
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
</TABLE>
A-6
<PAGE> 75
Schedule 4
Work
(a) Work Performed for which the Funding is requested:
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
(b) Property to which such Work relates:
______________________________________________________________
______________________________________________________________
______________________________________________________________
A-7
<PAGE> 76
EXHIBIT B
WACKENHUT CORRECTIONS CORPORATION
OFFICER'S CERTIFICATE
(Pursuant to Section 5.6 of the Participation Agreement)
WACKENHUT CORRECTIONS CORPORATION, a Florida corporation (the "Company") DOES
HEREBY CERTIFY as follows:
1. The address for the subject Property is ____________________
____________________________________________________.
2. The Completion Date for the construction of Improvements at the Property
occurred on __________________.
3. The aggregate Property Cost for the Property was $________________. [If
any of the Property consists of Tangible Personal Property, the portion of
the Property Cost attributable to such Tangible Personal Property was
$_________________.]
4. Attached hereto as Schedule 1 is the detailed, itemized documentation
supporting the asserted expenditure amounts referenced above in Section 3
of this Officer's Certificate.
5. All Improvements have been made in accordance with all applicable Legal
Requirements, in a good and workmanlike manner and otherwise in full
compliance with the standards and practices of the Company with respect
to Company-owned properties and improvements.
6. No consent or approval of any Person is required for any of the
Improvements except for consents and approvals which have already been
obtained.
Capitalized terms used in this Officer's Certificate and not otherwise defined
have the respective meanings ascribed thereto in the Amended and Restated
Participation Agreement dated as of June 19, 1997 among the Company, as Lessee
and as Construction Agent, First Security Bank, National Association, as Owner
Trustee under the Wackenhut Corrections Trust 1997-1, the Holders party
thereto, the Lenders party thereto, and NationsBank, National Association, as
the Administrative Agent for the Lenders (as such agreement may be amended,
modified, supplemented or restated from time to time).
B-1
<PAGE> 77
IN WITNESS WHEREOF, the Company has caused this Officer's Certificate to be
duly executed and delivered as of this ___ day of _______________, 199_.
WACKENHUT CORRECTIONS CORPORATION
By:____________________________________
Name:__________________________________
Title:_________________________________
B-2
<PAGE> 78
Schedule 1
[itemized expenditures]
B-3
<PAGE> 79
EXHIBIT C
FORM OF OPINION
OF COUNSEL TO
WACKENHUT CORRECTIONS CORPORATION
AND WCC RE HOLDINGS, INC.
C-1
<PAGE> 80
EXHIBIT D
WACKENHUT CORRECTIONS CORPORATION
OFFICER'S CERTIFICATE
(Pursuant to Section 6.1(e) of the Participation Agreement)
WACKENHUT CORRECTIONS CORPORATION, a Florida corporation (the "Company"),
DOES HEREBY CERTIFY as follows:
1. Each and every representation and warranty of the Company contained in
the Operative Agreements to which it is a party is true and correct in all
material respects on and as of the date hereof.
2. No Default or Event of Default has occurred and is continuing under any
Operative Agreement.
3. Each Operative Agreement to which the Company is a party is in full force
and effect with respect to it.
4. The Company has performed and complied with all covenants, agreements and
conditions contained in the Participation Agreement (hereinafter defined)
or in any Operative Agreement required to be performed or complied with by
it on or prior to the date hereof.
Capitalized terms used in this Officer's Certificate and not otherwise defined
herein have the respective meanings ascribed thereto in the Amended and
Restated Participation Agreement dated as of June 19, 1997 among the Company,
as Construction Agent and as Lessee, First Security Bank, National Association,
as the Owner Trustee, the Holders party thereto, the Lenders party thereto, and
NationsBank, National Association, as the Administrative Agent.
IN WITNESS WHEREOF, the Company has caused this Officer's Certificate to be
duly executed and delivered as of this ____ day of December, 1997.
WACKENHUT CORRECTIONS CORPORATION
By:____________________________________
Name:__________________________________
Title:_________________________________
D-1
<PAGE> 81
EXHIBIT E
WACKENHUT CORRECTIONS CORPORATION
SECRETARY'S CERTIFICATE
(Pursuant to Section 6.1(f) of the Participation Agreement)
WACKENHUT CORRECTIONS CORPORATION, a Florida corporation (the "Company"),
DOES HEREBY CERTIFY as follows:
1. Attached hereto as Exhibit A is a true, correct and complete copy of the
Resolutions of the Board of Directors of the Company effective as of
______________, 1997. Such resolutions have not been amended, modified or
rescinded since their date of adoption and remain in full force and effect
as of the date hereof.
2. Attached hereto as Exhibit B is a true, correct and complete copy of the
Certificate of Incorporation of the Company on file in the Office of the
Secretary of State of Florida. Such Certificate of Incorporation, as
amended, remains in full force and effect as of the date hereof.
3. Attached hereto as Exhibit C is a true, correct and complete copy of the
Bylaws of the Company. Such Bylaws, as amended, remain in full force and
effect as of the date hereof.
4. The persons named below now hold the offices set forth opposite their
names, and the signatures opposite their names and title are their true
and correct signatures.
<TABLE>
<CAPTION>
Name Office Signature
---- ------ ---------
<S> <C> <C>
__________________ _______________________ ____________________
__________________ _______________________ ____________________
</TABLE>
IN WITNESS WHEREOF, the Company has caused this Secretary's Certificate to be
duly executed and delivered as of this ____ day of December, 1997.
WACKENHUT CORRECTIONS CORPORATION
By:____________________________________
Name:__________________________________
Title:_________________________________
E-1
<PAGE> 82
EXHIBIT F
FIRST SECURITY BANK, NATIONAL ASSOCIATION
OFFICER'S CERTIFICATE
(Pursuant to Section 6.2(d) of the Participation Agreement)
FIRST SECURITY BANK, NATIONAL ASSOCIATION not individually (except with
respect to paragraph (a) below, to the extent any such representations and
warranties are made in its individual capacity) but solely as owner trustee
under the Wackenhut Corrections Trust 1997-1 (the "Owner Trustee"), DOES HEREBY
CERTIFY as follows:
(a) Each and every representation and warranty of the Owner
Trustee contained in the Operative Agreements to which it is a party
is true and correct on and as of the date hereof.
(b) Each Operative Agreement to which the Owner Trustee is a
party is in full force and effect with respect to it.
(c) The Owner Trustee has duly performed and complied with all
covenants, agreements and conditions contained in the Participation
Agreement (hereinafter defined) or in any Operative Agreement
required to be performed or complied with by it on or prior to the
date hereof.
Capitalized terms used in this Officer's Certificate and not otherwise defined
herein have the respective meanings ascribed thereto in the Amended and
Restated Participation Agreement dated as of June 19, 1997 among Wackenhut
Corrections Corporation, as Construction Agent and as Lessee, First Security
Bank, National Association, as Owner Trustee, the Holders party thereto, the
Lenders party thereto, and NationsBank, National Association, as the
Administrative Agent.
IN WITNESS WHEREOF, the Owner Trustee has caused this Officer's Certificate to
be duly executed and delivered as of this ____ day of December, 1997.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION not individually, except as
expressly stated herein, but solely
as Owner Trustee under the Wackenhut Corrections
Trust 1997-1
By:_____________________________________________
Name:___________________________________________
Title:__________________________________________
F-1
<PAGE> 83
EXHIBIT G
FIRST SECURITY BANK, NATIONAL ASSOCIATION
CERTIFICATE OF ASSISTANT SECRETARY
(Pursuant to Section 6.2(e) of the Participation Agreement)
I, _____________________________, Senior Vice President and a duly elected
and qualified Assistant Secretary of the Board of Directors of First Security
Bank, National Association (the "Association"), hereby certify as follows:
1. The Association is a National Banking Association duly organized,
validly existing and in good standing under the laws of the United States.
With respect thereto the following is noted:
A. Pursuant to Revised Statutes 324, et seq., as amended, 12
U.S.C. 1, et seq., the Comptroller of the Currency charters and
exercises regulatory and supervisory authority over all
National Banking Associations;
B. On December 9, 1881, the First National Bank of Ogden, Utah was
chartered as a National Banking Association under the laws of
the United States and under Charter No. 2597;
C. On October 2, 1922, in connection with a consolidation of The
First National Bank of Ogden, Ogden, Utah, and The Utah
National Bank of Ogden, Ogden, Utah, the title was changed to
"The First & Utah National Bank of Ogden"; on January 18, 1923,
The First & Utah National Bank of Ogden changed its title to
"First Utah National Bank of Ogden"; on January 19, 1926, the
title was changed to "First National Bank of Ogden"; on
February 24, 1934, the title was changed to "First Security
Bank of Utah, National Association"; and
D. First Security Bank of Utah, National Association, Ogden, Utah,
continues to hold a valid certificate to do business as a
National Banking Association.
2. The Association's Articles of Association, as amended, are in full
force and effect, and a true, correct and complete copy is attached hereto as
Exhibit A and incorporated herein by reference. Said Articles were last
amended October 20, 1975, as required by law on notice at a duly called special
meeting of the shareholders of the Association.
3. The Association's By-Laws, as amended, are in full force and effect;
and a true, correct and complete copy is attached hereto as Exhibit B and
incorporated herein by reference. Said By-Laws, still in full force and
effect, were adopted September 17, 1942, by
G-1
<PAGE> 84
resolution, after proper notice of consideration and adoption of By-Laws
was given to each and every shareholder, at a regularly called meeting of the
Board of Directors with a quorum present.
4. Pursuant to the authority vested in it by an Act of Congress approved
December 23, 1913 and known as the Federal Reserve Act, as amended, the Federal
Reserve Board (now the Board of Governors of the Federal Reserve System) has
granted to the Association now known as "First Security Bank of Utah, National
Association" of Ogden, Utah, the right to act, when not in contravention of
State or local law, as trustee, executor, administrator, registrar of stocks
and bonds, guardian of estates, assignee, receiver, committee of estates of
lunatics, or in any of the fiduciary capacity in which State banks, trust
companies or other corporations which come into competition with National Banks
are permitted to act under the laws of the State of Utah; and under the
provisions of applicable law, the authority so granted remains in full force
and effect.
5. Pursuant to authority vested by Act of Congress (12 U.S.C. 92a and 12
U.S.C. 481, as amended) the Comptroller of the Currency has issued Regulation
9, as amended, dealing, in part, with the Fiduciary Powers of National Banks,
said regulation providing in sub-paragraph 9.7(a)(1-2):
(1) The board of directors is responsible for the
proper exercise of fiduciary powers by the Bank. All
matters pertinent thereto, including the determination
of policies, the investment and disposition of
property held in fiduciary capacity, and the direction
and review of the actions of all officers, employees,
and committees utilized by the Bank in the exercise of
its fiduciary powers, are the responsibility of the
board. In discharging this responsibility, the board
of directors may assign, by action duly entered in the
minutes, the administration of such of the Bank's
fiduciary powers as it may consider proper to assign
to such director(s), officer(s), employee(s) or
committee(s) as it may designate.
(2) No fiduciary account shall be accepted without the
prior approval of the board, or of the director(s),
officer(s), or committee(s) to whom the board may have
designated the performance of that responsibility . .
. .
6. A Resolution relating to Exercise of Fiduciary Powers was adopted by
the Board of Directors at a meeting held July 26, 1994 at which time there was
a quorum present; said resolution is still in full force and effect and has not
been rescinded. Said resolution is attached hereto as Exhibit C and
incorporated herein by reference.
7. A Resolution relating to the Designation of Officers and Employees to
Exercise Fiduciary Powers was adopted by the Trust Policy Committee at a
meeting held August 2, 1995 at which time a quorum was present; said resolution
is still in full force and effect and
G-2
<PAGE> 85
has not been rescinded. Said resolution is attached hereto as Exhibit D
and is incorporated herein by reference.
8. Attached hereto as Exhibit E and incorporated herein by reference, is a
listing of facsimile signatures of persons authorized (herein "Authorized
Signatory or Signatories") on behalf of the Association and its Trust Group to
act in exercise of its fiduciary powers subject to the resolutions in
Paragraphs 6 and 7, above.
9. The principal office of the First Security, National Association, Trust
Group and of its departments, except for the St. George, Utah, Ogden, Utah, and
Provo, Utah, branch offices, is located at 79 South Main Street, Salt Lake
City, Utah 84111 and all records relating to fiduciary accounts are located at
such principal office of the Trust Group or in storage facilities within Salt
Lake County, Utah, except for those of the Ogden, Utah, St. George, Utah, and
Provo, Utah, branch offices, which are located at said office.
10. Each Authorized Signatory (i) is a duly elected or appointed, duly
qualified officer or employee of the Association; (ii) holds the office or job
title set forth below his or her name on the date hereof; (iii) and the
facsimile signature appearing opposite the name of each such officer or
employee is a true replica of his or her signature.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of the
Association this ____ day of December, 1997.
(SEAL)
_____________________________________
Senior Vice President
Assistant Secretary
G-3
<PAGE> 86
EXHIBIT H
FORM OF
OPINION OF COUNSEL
TO FIRST SECURITY
BANK, NATIONAL ASSOCIATION
H-1
<PAGE> 87
______________________________________________________________________________
Appendix A
Rules of Usage and Definitions
______________________________________________________________________________
I. Rules of Usage
The following rules of usage shall apply to this Participation Agreement
and the Operative Agreements (and each appendix, schedule, exhibit and annex to
the foregoing) unless otherwise required by the context or unless otherwise
defined therein:
(a) Except as otherwise expressly provided, any definitions set
forth herein or in any other document shall be equally applicable to the
singular and plural forms of the terms defined.
(b) Except as otherwise expressly provided, references in any
document to articles, sections, paragraphs, clauses, annexes, appendices,
schedules or exhibits are references to articles, sections, paragraphs,
clauses, annexes, appendices, schedules or exhibits in or to such
document.
(c) The headings, subheadings and table of contents used in any
document are solely for convenience of reference and shall not constitute
a part of any such document nor shall they affect the meaning,
construction or effect of any provision thereof.
(d) References to any Person shall include such Person, its
successors and permitted assigns and transferees.
(e) Except as otherwise expressly provided, reference to any
agreement means such agreement as amended, modified, extended,
supplemented, restated or replaced from time to time in accordance with
the applicable provisions thereof.
(f) Except as otherwise expressly provided, references to any law
includes any amendment or modification to such law and any rules or
regulations issued thereunder or any law enacted in substitution or
replacement therefor.
(g) When used in any document, words such as "hereunder", "hereto",
"hereof" and "herein" and other words of like import shall, unless the
context clearly indicates to the contrary, refer to the whole of the
applicable document and not to any particular article, section,
subsection, paragraph or clause thereof.
(h) References to "including" means including without limiting the
generality of any description preceding such term and for purposes hereof
the rule of ejusdem
Appendix A-1
<PAGE> 88
generis shall not be applicable to limit a general statement,
followed by or referable to an enumeration of specific matters, to
matters similar to those specifically mentioned.
(i) Unless the context indicates otherwise, the disjunctive "or"
shall include the conjunctive "and."
(j) Each of the parties to the Operative Agreements and their
counsel have reviewed and revised, or requested revisions to, the
Operative Agreements, and the usual rule of construction that any
ambiguities are to be resolved against the drafting party shall be
inapplicable in the construing and interpretation of the Operative
Agreements and any amendments or exhibits thereto.
II. Definitions
"Acceleration" shall have the meaning given to such term in Section 6 of
the Credit Agreement.
"acquire" or "purchase" shall mean, with respect to any Property, unless
the context indicates, the acquisition or purchase of such Property by the
Owner Trustee from any Person.
"Acquisition Funding" shall mean an advance of funds (consisting of Loans
by the Lenders and Holder Fundings by the Holders) to the Lessor on a specified
date to pay Property Acquisition Costs and other expenses pursuant to Section
5.3(b) of the Participation Agreement.
"Acquisition Loan" shall mean any Loan made in connection with and as part
of an Acquisition Funding.
"Administrative Agent" or "Agent" shall mean, collectively, (a)
NationsBank, together with its Affiliates, as the administrative agent for the
Lenders under this Agreement and the other Operative Agreements and any
successor Administrative Agent who may be appointed pursuant to Section 7.9 of
the Credit Agreement, and (b) NationsBank, together with its affiliates, as
agent and collateral agent for itself, the Lenders and the Holders under the
Security Documents.
"Affiliate" shall mean, with respect to any Person, any Person or group
acting in concert in respect of the Person in question that, directly or
indirectly, controls or is controlled by or is under common control with such
Person. For the purposes of this definition, "control (including, with
correlative meanings, the terms "controlled by" and "under common control
with") shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of management and policies of a Person, whether
through the ownership of voting securities or by contract or otherwise.
"After Tax Basis" shall mean, with respect to any payment to be received,
the amount of such payment increased so that, after deduction of the amount of
all taxes required to be paid by the recipient calculated at the rate believed
by such recipient to be the highest marginal rate then applicable to the
recipient (less any tax savings realized as a result of the payment of the
Appendix A-2
<PAGE> 89
indemnified amount) with respect to the receipt by the recipient of such
amounts, such increased payment (as so reduced) is equal to the payment
otherwise required to be made.
"Agency Agreement" shall mean the Amended and Restated Agency Agreement,
dated as of the Initial Closing Date, between the Construction Agent and the
Lessor, as such agreement may be amended, modified, restated or supplemented
from time to time in accordance with the terms thereof.
"Agency Agreement Event of Default" shall mean an "Event of Default" as
defined in Section 5.1 of the Agency Agreement.
"Allocated Interest" with respect to any Construction Period Property
shall mean as of any Scheduled Interest Payment Date, the amount of interest
due and payable on such date with respect to a portion of the Loans (which
portion shall be designated by the Borrower by written notice (an "Allocation
Notice") to the Administrative Agent) having an aggregate principal amount
equal to the Loan Property Cost of such Property as of such date.
"Allocated Return" with respect to any Construction Period Property shall
mean, as of any Scheduled Interest Payment Date, the amount of Holder Yield due
and payable on such date with respect to a portion of the Holder Fundings
(which portion shall be designated by the Owner Trustee by written notice to
the Holders) having an aggregate stated amount equal to the Holder Property
Cost of such Property as of such date.
"Allocation Notice" shall have the meaning given to such term in the
definition of "Allocated Interest."
"Amendment Closing Date" shall mean December 18, 1997.
"Ancillary Property" shall mean the Louisiana Property or the Broward
Property.
"Applicable Margin" shall mean, for each Eurodollar Loan, that percent per
annum set forth below, which shall be based upon the Consolidated Fixed Charge
Coverage Ratio and the Consolidated Leverage Ratio for the Four-Quarter Period
most recently ended as specified below:
<TABLE>
<CAPTION>
Applicable Margin
----------------------------------------
Consolidated Fixed
Charge Coverage Consolidated Fixed
Ratio greater than Charge Coverage
or equal to 1.5 to Ratio greater than
Consolidated 1.0 and less than or equal to 2.0 to
Tier Leverage Ratio 2.0 to 1.0 1.0
- ----- -------------- ------------------ ------------------
<S> <C> <C> <C>
</TABLE>
Appendix A-3
<PAGE> 90
<TABLE>
<S> <C> <C> <C>
I Greater than 5.0 to 1.0 2.50% 2.25%
II Greater than 4.0 to 2.25% 2.00%
1.0 and less than or
equal to 5.0 to 1.0
III Greater than 3.0 to 2.00% 1.75%
1.0 and less than or
equal to 4.0 to 1.0
IV Less than or equal to 1.75% 1.50%
3.0 to 1.0
</TABLE>
The Applicable Margin shall be established at the end of each Fiscal Quarter of
Wackenhut Corrections (each, a "Determination Date"). Any change in the
Applicable Margin following each Determination Date shall be determined based
upon the computations set forth in the certificate furnished to the Agent
pursuant to Section 8.1(a)(ii) and Section 8.1(b)(ii) of the Existing Wackenhut
Corrections Credit Agreement (as incorporated by reference into Section 28.1 of
the Lease), subject to review and approval of such computations by the Agent,
and shall be effective commencing on the date following the date such
certificate is received (or, if earlier, the date such certificate was required
to be delivered) until the date following the date on which a new certificate
is delivered or is required to be delivered, whichever shall first occur;
provided however, if Wackenhut Corrections shall fail to deliver any such
certificate within five (5) days after the time period required by such Section
8.1, then the Applicable Margin shall be Tier I and as if the Consolidated
Fixed Charge Coverage Ratio is less than 2.0 to 1.0 from the date such
certificate was required to be delivered until the appropriate certificate is
so delivered. The foregoing notwithstanding, from the Amendment Closing Date
to the date following the date on which the compliance certificate required by
such Section 8.1(b)(ii) is delivered for the fourth (4th) quarter of Fiscal
Year 1997, the Applicable Margin shall be 1.75%.
"Applicable Unused Fee Rate" shall mean that percent per annum set forth
below, which shall be based upon the Consolidated Fixed Charge Coverage Ratio
and the Consolidated Leverage Ratio for the Four-Quarter Period most recently
ended as specified below:
Appendix A-4
<PAGE> 91
<TABLE>
<CAPTION>
Applicable Unused Fee Rate
-----------------------------------------
Consolidated Fixed
Charge Coverage Consolidated Fixed
Ratio greater than Charge Coverage
or equal to 1.5 to Ratio greater than
Consolidated 1.0 and less than or equal to 2.0 to
Tier Leverage Ratio 2.0 to 1.0 1.0
---- -------------- ------------------ -------------------
<S> <C> <C> <C>
I Greater than 5.0 to .50% .50%
1.0
II Greater than 4.0 to .50% .50%
1.0 and less than
or equal to 5.0 to
1.0
III Greater than 3.0 to .50% .375%
1.0 and less than
or equal to 4.0 to
1.0
IV Less than or equal .375% .375%
to 3.0 to 1.0
</TABLE>
The Applicable Unused Fee Rate shall be established at the end of each Fiscal
Quarter of Wackenhut Corrections (the "Determination Date"). Any change in the
Applicable Unused Fee Rate following each Determination Date shall be
determined based upon the computations set forth in the certificate furnished
to the Agent pursuant to Section 8.1(a)(ii) and Section 8.1(b)(ii) of the
Existing Wackenhut Corrections Credit Agreement (as incorporated by reference
into Section 28.1 of the Lease), subject to review and approval of such
computations by the Agent, and shall be effective commencing on the date
following the date such certificate is received (or, if earlier, the date such
certificate was required to be delivered) until the date following the date on
which a new certificate is delivered or is required to be delivered, whichever
shall first occur; provided however, if Wackenhut Corrections shall fail to
deliver any such certificate within five (5) days after the time period
required by such Section 8.1, then the Applicable Unused Fee Rate shall be Tier
I and as if the Consolidated Fixed Charge Coverage Ratio is less than 2.0 to
1.0 from the date such certificate was required to be delivered until the
appropriate certificate is so delivered. The foregoing notwithstanding, from
the Amendment Closing Date, the date following the date on which the compliance
certificate required by such Section 8.1(b)(ii) is delivered for the fourth
(4th) quarter of Fiscal Year 1997, the Applicable Unused Fee Rate shall be
.375%.
"Applicable Property Construction Termination Date" shall mean, with
respect to any Property, the date that is two (2) years after the Property
Closing Date for such Property.
Appendix A-5
<PAGE> 92
"Appraisal" shall mean, with respect to any Property an appraisal to be
delivered in connection with Section 5.3 of the Participation Agreement or in
accordance with the terms of Section 10.1(e) of the Lease, in each case
prepared by a reputable appraiser reasonably acceptable to the Agent, which in
the judgment of counsel to the Agent, complies with all of the provisions of
the Financial Institutions Reform, Recovery and Enforcement Act of 1989, as
amended, the rules and regulations adopted pursuant thereto, and all other
applicable Legal Requirements.
"Appraisal Procedure" shall have the meaning given such term in Section
22.4 of the Lease.
"Approved State" shall mean any state in the United States.
"Appurtenant Rights" shall mean (i) all agreements, easements, rights of
way or use, rights of ingress or egress, privileges, appurtenances, tenements,
hereditaments and other rights and benefits at any time belonging or pertaining
to the Land underlying any Improvements, or the Improvements, including,
without limitation, the use of any streets, ways, alleys, vaults or strips of
land adjoining, abutting, adjacent or contiguous to the Land and (ii) all
permits, licenses and rights, whether or not of record, appurtenant to such
Land.
"Assignment and Acceptance" shall mean the Assignment and Acceptance in
the form attached as Exhibit C to the Credit Agreement.
"Assignment of Project Rights" shall mean the Assignment of Project Rights
and Contract Documents dated as of the Initial Closing Date, between the Owner
Trustee and the Agent, as such agreement may be amended, modified, restated or
supplemented from time to time in accordance with the terms thereof.
"Available Commitment" shall mean, as to any Lender at any time, an amount
equal to the excess, if any, of (a) the amount of such Lender's Commitment over
(b) the aggregate principal amount of all Loans made by such Lender.
"Available Holder Commitments" shall mean an amount equal to the excess,
if any, of (i) the amount of the Holder Commitments over (ii) the aggregate
amount of the Holder Fundings made since the Initial Closing Date.
"Bankruptcy Code" shall mean Title 11 of the U.S. Code entitled
"Bankruptcy" as now or hereafter in effect, or any successor thereto;
"Base Rate" shall have the meaning given such term in the Existing
Wackenhut Corrections Credit Agreement.
"Base Rate Funding" shall mean a Funding that bears interest (with respect
to the Loans included therein) and Holder Yield (with respect to the Holder
Fundings included therein) based on the Base Rate.
Appendix A-6
<PAGE> 93
"Base Rate Holder Funding" shall mean a Holder Funding bearing a Holder
Yield based on the Base Rate.
"Base Rate Loans" shall mean Loans the rate of interest applicable to
which is based upon the Base Rate.
"Basic Rent" shall mean, the sum of (i) the Loan Basic Rent and (ii) the
Lessor Basic Rent, calculated as of the applicable date on which Basic Rent is
due.
"Basic Rent Commencement Date" shall have the meaning set forth in Section
3.1(a)(ii) of the Lease.
"Basic Term" shall mean with respect to any Property, the period beginning
on the commencement of the Term and ending on December 18, 2002.
"Basic Term Commencement Date" or "Term Commencement Date" shall have the
meaning specified in Section 2.2 of the Lease.
"Basic Term Expiration Date" shall have the meaning specified in Section
2.2 of the Lease.
"Bill of Sale" shall mean a Bill of Sale regarding Equipment in form and
substance satisfactory to the Owner Trustee, the Holders and the Agent.
"Board" shall mean the Board of Governors of the Federal Reserve System of
the United States (or any successor).
"Borrowing Date" shall mean any Business Day specified in a notice
delivered pursuant to Section 2.3 of the Credit Agreement as a date on which
the Borrower requests the Lenders to make Loans hereunder.
"Bridge Debt" shall mean indebtedness in the outstanding principal amount
of not more than $11,700,930.37 on the Initial Closing Date, and (after giving
effect to a required payment on June 20, 1997) not more than $4,959,243.37 from
and after June 20, 1997, owed by the Owner Trustee to NationsBank pursuant to
the Bridge Loan Documents.
"Bridge Loan Documents" shall mean, collectively, (a) the Promissory Note
dated as of March 14, 1997 by the Owner Trustee in favor of NationsBank, in the
original principal amount of $10,000,000, (b) the Guaranty Agreement dated as
of March 14, 1997 by Wackenhut Corrections Corporation, (c) the Indemnification
Agreement dated as of March 14, 1997 by and among Owner Trustee and
NationsBank, National Association, and (d) the Trust Agreement, as each of the
foregoing agreements or instruments may be amended, modified, supplemented or
restated from time to time (including without limitation by the Consolidated
Amendment No. 1 to Note and Other Agreements dated as of the Initial Closing
Date, among the Owner Trustee, NationsBank and Wackenhut); and any other
agreements, instruments and documents heretofore
Appendix A-7
<PAGE> 94
or hereafter executed or delivered in connection with any of the foregoing or
the transactions contemplated thereby.
"Bridge Loan Event of Default" shall mean an "Event of Default" as defined
in the Bridge Loan Documents.
"Broward Property" shall mean the property in Broward County, Florida,
currently owned by the Owner Trustee, which was acquired using proceeds of
loans under the Bridge Loan Documents.
"Budgeted Total Loan Property Cost" shall mean, at any date of
determination, with respect to any Construction Period Property, an amount
equal to the aggregate amount which the Construction Agent in good faith
expects to be expended in order to achieve Completion with respect to such
Property (including amounts expected to be expended to pay Allocated Interest
and Allocated Return with respect to such Property).
"Business Day" shall mean a day other than a Saturday, Sunday or other day
on which commercial banks in Charlotte, North Carolina are authorized or
required by law to close; provided, however, that when used in connection with
a Eurodollar Loan, the term "Business Day" shall also exclude any day on which
banks are not open for dealings in dollar deposits in the London interbank
market.
"Casualty" shall mean any damage or destruction of all or any portion of a
Property as a result of a fire or other casualty.
"Category" with respect to any Commitment or Loan shall mean a Commitment
or Loan with respect to Series A Loans or Series B Loans, as the case may be.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, 42 U.S.C. Section Section 9601 et
seq., as amended by the Superfund Amendments and Reauthorization Act of 1986.
"Certificate" shall mean a Certificate in favor of each Holder evidencing
the Holder Fundings made by such Holder and issued pursuant to the Trust
Agreement.
"Change of Control" shall mean (a) in the case of the Incorporated
Covenants, a "Change of Control" as defined in the Existing Wackenhut
Corrections Credit Agreement (together with any modifications or amendments
thereto, or covenants of a New Facility, in each case approved in accordance
with Section 28.1(a) of the Lease); and (b) in the case of a Wackenhut
Corrections Credit Agreement Event of Default, a "Change of Control" as defined
in the Existing Wackenhut Corrections Credit Agreement (as amended, modified or
restated heretofore or hereafter) or any New Facility.
Appendix A-8
<PAGE> 95
"Claims" shall mean any and all obligations, liabilities, losses, actions,
suits, penalties, claims, demands, costs and expenses (including, without
limitation, reasonable attorney's fees and expenses) of any nature whatsoever.
"Closing Date" shall mean the Initial Closing Date, the Amendment Closing
Date and each Property Closing Date.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time, or any successor statute thereto.
"Collateral" shall mean all assets of the Lessor or the Lessee, now owned
or hereafter acquired, upon which a lien is purported to be created by the
Security Documents.
"Commitment" shall mean, as to any Lender, the obligation of such Lender
to make Series A Loans or Series B Loans, as the case may be, to the Borrower
hereunder in an aggregate principal amount at any one time outstanding not to
exceed the respective amounts for such Category set forth opposite such
Lender's name on Schedule 1.2 of the Credit Agreement, as such amounts may be
reduced or increased from time to time in accordance with the provisions of
this Agreement, the Credit Agreement or the Lease.
"Commitment Percentage" shall mean, as to any Lender at any time, the
percentage which such Lender's Commitment with respect to a Category of Loans
then constitutes of the aggregate Commitments of all Lenders with respect to
the same Category (or, at any time after the Commitments of any such Category
shall have expired or terminated, the percentage which the aggregate principal
amount of such Lender's Loans of such Category then outstanding constitutes of
the aggregate principal amount of all of the Loans of such Category then
outstanding).
"Commitment Period" shall mean the period from the Initial Closing Date to
and including the Construction Period Termination Date, or such earlier date as
the Commitments shall terminate as provided in the Credit Agreement.
"Completed Property" shall mean a Property for which Completion has
occurred or will occur on the date of determination or on the respective
Property Closing Date.
"Completion" shall mean, with respect to a Property, such time as final
completion of the Improvements on such Property has been achieved in accordance
with the Plans and Specifications (excluding punch list items), the Agency
Agreement and the Lease, and in compliance with all material Legal Requirements
and Insurance Requirements, a certificate of occupancy has been issued with
respect to such Property by the appropriate Governmental Authority, and no
additional Fundings are needed for such Property. If the Lessor purchases a
Property that includes existing Improvements that are to be immediately
occupied by the Lessee, the date of Completion for such Property shall be the
Property Closing Date.
"Completion Date" shall mean, with respect to a Property, the earlier of
(i) the date on which Completion for such Property has occurred, (ii) the
Applicable Property Construction
Appendix A-9
<PAGE> 96
Termination Date for such Property and (iii) the Construction Period Termination
Date. The foregoing notwithstanding, for the purposes of Section 2.6(b),
3.2(a)(x), 3.3(b) or 5.1(b) of the Agency Agreement, "Completion Date" shall
mean, with respect to a Property, the date on which Completion for such Property
has occurred.
"Condemnation" shall mean any taking or sale of the use, access,
occupancy, easement rights or title to any Property or any part thereof, wholly
or partially (temporarily or permanently), by or on account of: (a) any actual
or threatened eminent domain proceeding or other taking of action by any Person
having the power of eminent domain, including any action by a Governmental
Authority to change the grade of, or widen the streets adjacent to, any
Property or alter the pedestrian or vehicular traffic flow to any Property so
as to result in a change in access to such Property, or (b) an eviction by
paramount title or any transfer made in lieu of any such proceeding or action.
"Consolidated Fixed Charge Coverage Ratio" shall have the meaning assigned
thereto in the Existing Wackenhut Corrections Credit Agreement.
"Consolidated Leverage Ratio" shall mean the Annualized Consolidated
Senior Leverage Ratio, as defined in the Existing Wackenhut Corrections Credit
Agreement.
"Construction Agent" shall mean Wackenhut Corrections, as construction
agent under the Agency Agreement.
"Construction Budget" shall mean, with respect to any Property, the cost
of constructing and developing any Improvements on such Property as determined
by the Construction Agent in its reasonable, good faith judgment.
"Construction Commencement Date" shall mean, with respect to Improvements,
the date on which construction of such Improvements commences pursuant to the
Agency Agreement.
"Construction Funding" shall mean an advance of funds (consisting of Loans
by the Lenders and Holder Fundings by the Holders) on a specified date to pay
Property Costs pursuant to Section 5.4 or 5.5 of the Participation Agreement.
"Construction Loan" shall mean any Loan made in connection with and as
part of a Construction Funding .
"Construction Loan Property Cost" shall mean, with respect to each
Construction Period Property at any date of determination, an amount equal to
(a) the aggregate principal amount of Construction Loans and Interest Payment
Loans made on or prior to such date with respect to such Property minus (b) the
aggregate principal amount of prepayments or repayments, as the case may be, of
the Loans allocated to reduce the Construction Loan Property Cost of such
Property pursuant to Section 2.6(c) of the Credit Agreement.
Appendix A-10
<PAGE> 97
"Construction Period" shall mean, with respect to a Property, the period
commencing on the Construction Commencement Date for such Property and ending
on the Completion Date for such Property.
"Construction Period Property" shall mean, at any date of determination,
any Property as to which the Basic Rent Commencement Date has not occurred on
or prior to such date.
"Construction Period Termination Date" shall mean the earlier of (i) the
date that the Commitments have been terminated in their entirety in accordance
with the terms of Section 2.5(a) of the Credit Agreement, or (ii) December 18,
2001.
"Contractual Obligation" shall mean, as to any Person, any provision of
any security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Control" (including the correlative meanings of the terms "controlled by"
and "under common control with"), as used with respect to any Person, shall
mean 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 or by contract or otherwise.
"Controlled Affiliate" shall mean (a) any Subsidiary of Wackenhut
Corrections or (b) any corporation in which Wackenhut Corrections or any
Subsidiary of Wackenhut Corrections has the power to elect directors having
more than 50% voting control of such corporation.
"Co-Owner Trustee" shall have the meaning specified in Section 9.2 of the
Trust Agreement.
"Credit Agreement" shall mean the Amended and Restated Credit Agreement,
dated as of the Initial Closing Date, among the Lessor, the Agent, and the
Lenders, as specified therein, as such agreement may be amended, modified,
restated or supplemented from time to time in accordance with the terms
thereof.
"Credit Agreement Default" shall mean any event or condition which, with
the lapse of time or the giving of notice, or both, would constitute a Credit
Agreement Event of Default.
"Credit Agreement Event of Default" shall mean any event or condition
defined as an "Event of Default" in Section 6 of the Credit Agreement.
"Credit Documents" shall mean the Credit Agreement, the Notes, and the
Security Documents.
"Deed" shall mean a warranty deed regarding Land or Improvements in form
and substance satisfactory to the Owner Trustee, the Holders and the Agent.
Appendix A-11
<PAGE> 98
"Default" shall mean any event, act or condition which with notice or
lapse of time, or both, would constitute an Event of Default.
"Dollars" and "$" shall mean dollars in lawful currency of the United
States of America.
"Election Notice" shall have the meaning given to such term in Section
20.1 of the Lease.
"Environmental Claim" shall mean any investigation, notice, violation,
demand, allegation, action, suit, injunction, judgment, order, consent decree,
penalty, fine, lien, proceeding, or claim (whether administrative, judicial, or
private in nature) arising (a) pursuant to, or in connection with, any actual
or alleged violation of, any Environmental Law, (b) in connection with any
Hazardous Substance, (c) from any abatement, removal, remedial, corrective, or
other response action in connection with a Hazardous Material, Environmental
Law, or other order of a Governmental Authority or (d) from any actual or
alleged damage, injury, threat, or harm to health, safety, natural resources,
or the environment.
"Environmental Law" shall mean any Law, permit, consent, approval,
license, award, or other authorization or requirement of any Governmental
Authority relating to emissions, discharges, releases, threatened releases of
any Hazardous Substance into ambient air, surface water, ground water, publicly
owned treatment works, septic system, or land, or otherwise relating to the
handling, storage, treatment, generation, use, emission or disposal of any
Hazardous Substance or pollution or to the protection of health or the
environment, including without limitation CERCLA, the Resource Conservation and
Recovery Act, 42 U.S.C. Section 6901, et seq., and state or local statutes
analogous thereto.
"Environmental Violation" shall mean any activity, occurrence or condition
that violates or threatens to violate (if the threat requires remediation under
any Environmental Law and is not remediated during any grace period allowed
under such Environmental Law) or results in or threatens (if the threat
requires remediation under any Environmental Law and is not remediated during
any grace period allowed under such Environmental Law) to result in
noncompliance with any Environmental Law.
"Equipment" shall mean equipment, apparatus, furnishings, fittings and
personal property of every kind and nature whatsoever purchased, leased or
otherwise acquired using the proceeds of the Loans or the Holder Fundings by
the Construction Agent, the Lessee or the Lessor as specified or described in
either a Requisition or a Lease Supplement, whether or not now or subsequently
attached to, contained in or used or usable in any way in connection with any
operation of any Improvements or other improvements to real property, including
without limitation, all equipment described in the Appraisal, all heating,
electrical, and mechanical equipment, lighting, switchboards, plumbing,
ventilation, air conditioning and air-cooling apparatus, refrigerating, and
incinerating equipment, escalators, elevators, loading and unloading equipment
and systems, sprinkler systems and other fire prevention and extinguishing
apparatus and materials, security systems, motors, engines, machinery, pipes,
pumps, tanks, conduits, fittings and fixtures of every kind and description.
Appendix A-12
<PAGE> 99
"Equipment Schedule" shall mean (a) each Equipment Schedule attached to
the applicable Requisition and (b) each Equipment Schedule attached to the
applicable Lease Supplement as Schedule I-A.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" shall mean each entity required to be aggregated with
the Lessee pursuant to the requirements of Section 414(b) or (c) of the Code.
"Eurodollar Reserve Percentage" shall have the meaning specified in the
Existing Wackenhut Corrections Credit Agreement.
"Eurodollar Funding" shall mean a Funding that bears interest (with
respect to the Loans included therein) and Holder Yield (with respect to the
Holder Fundings included therein) based on the Eurodollar Rate.
"Eurodollar Holder Funding" shall mean a Holder Funding bearing a Holder
Yield based on the Eurodollar Rate.
"Eurodollar Loans" shall mean Loans the rate of interest applicable to
which is based upon the Eurodollar Reserve Rate.
"Eurodollar Rate" or "Eurodollar Reserve Rate" shall mean for the Interest
Period for any Eurodollar Loan or Eurodollar Holder Funding comprising part of
the same borrowing or advance (including conversions, extensions and renewals),
a per annum rate calculated according to the following formula:
Interbank Offered Rate
________________________________
1-Eurodollar Reserve Percentage.
"Event of Default" shall mean a Lease Event of Default, a Guaranty Event
of Default, an Agency Agreement Event of Default or a Credit Agreement Event of
Default.
"Excepted Payments" shall mean:
(a) all indemnity payments (including indemnity payments made pursuant to
Section 13 of the Participation Agreement), whether made by adjustment to Basic
Rent or otherwise, to which the Owner Trustee, any Holder or any of their
respective Affiliates, agents, officers, directors or employees is entitled;
(b) any amounts (other than Basic Rent, Termination Value, or Purchase
Option Price) payable under any Operative Agreement to reimburse the Owner
Trustee, any Holder or any of their respective Affiliates for performing or
complying with any of the obligations of the Lessee under and as permitted by
any Operative Agreement (including without limitation any
Appendix A-13
<PAGE> 100
reimbursement of the reasonable expenses of the Owner Trustee, the Trust Company
and the Holders incurred in connection with any such payment);
(c) any amount payable to a Holder by any transferee of such interest of a
Holder as the purchase price of such Holder's interest in the Trust Estate (or
portion thereof);
(d) any insurance proceeds (or payments with respect to risks self-insured
or policy deductibles) under liability policies other than such proceeds or
payments payable to the Agent or any Lender;
(e) any insurance proceeds under policies maintained by the Owner Trustee
or any Holder other than such proceeds payable to the Agent or any Lender;
(f) Transaction Expenses or other amounts or expenses paid or payable to
or for the benefit of the Owner Trustee or any Holder;
(g) all right, title and interest of any Holder or the Owner Trustee to
any Property or any portion thereof or any other property to the extent any of
the foregoing has been released from the Liens of the Security Documents and
the Lease pursuant to the terms thereof;
(h) upon termination of the Credit Agreement pursuant to the terms
thereof, all remaining property covered by the Lease or Security Documents;
(i) all payments in respect of the Holder Yield;
(j) any payments in respect of interest to the extent attributable to
payments referred to in clauses (a) through (i) above; and
(k) any rights of either the Owner Trustee or Trust Company to demand,
collect, sue for or otherwise receive and enforce payment of any of the
foregoing amounts, provided that such rights shall not include the right to
terminate the Lease.
"Excepted Rights" shall mean the rights retained by the Owner Trustee
pursuant to Section 8.2(a) of the Credit Agreement.
"Excess Proceeds" shall mean the excess, if any, of the aggregate of all
awards, compensation or insurance proceeds payable in connection with a
Casualty or Condemnation over the Termination Value paid by the Lessee pursuant
to the Lease with respect to such Casualty or Condemnation.
"Existing Credit Agent" shall mean the "Agent" as defined in the Existing
Wackenhut Corrections Credit Agreement.
"Existing Wackenhut Corrections Credit Agreement" shall have the meaning
specified in Section 28.1 of the Lease.
Appendix A-14
<PAGE> 101
"Expected Maximum Property Cost" at any time shall mean the sum of (a) the
then outstanding aggregate Property Cost of all Properties (whether or not
subject to the Lease), plus (b) the maximum total additional Property Cost
expected to be advanced or incurred, on such date or at any time thereafter,
with respect to any Properties (including without limitation any expected
Acquisition Funding, Contribution Funding or other expected Property Costs, and
including without limitation any expected Property Cost referred to in a
Construction Budget).
"Expiration Date" shall mean the Basic Term Expiration Date or the last
day of any Extended Term, if applicable.
"Expiration Date Purchase Option" shall mean the Lessee's option to
purchase all (but not less than all) of the Properties on the Expiration Date.
"Extended Term" shall mean the extension of the Basic Term (or a previous
Extended Term) for a period of one year following the end of the Basic Term (or
such previous Extended Term) with respect to which Lessee has exercised its
Renewal Option pursuant to Section 21.1 of the Lease.
"Facility" shall mean a facility used for the treatment, storage or
disposal of Hazardous Substances.
"Fair Market Sales Value" shall mean, with respect to any Property, the
amount, which in any event, shall not be less than zero, that would be paid in
cash in an arms-length transaction between an informed and willing purchaser
and an informed and willing seller, neither of whom is under any compulsion to
purchase or sell, respectively, such Property. Fair Market Sales Value of any
Property shall be determined based on the assumption that, except for purposes
of Section 17 of the Lease, such Property is in the condition and state of
repair required under Section 10.1 of the Lease and the Lessee is in compliance
with the other requirements of the Operative Agreements.
"Federal Funds Effective Rate" shall have the meaning given to such term
in the Existing Wackenhut Corrections Credit Agreement.
"Fee Letter" shall mean that certain letter agreement dated November 12,
1997, between Wackenhut Corrections and NMSI.
"Fiscal Quarter" means any quarter of a Fiscal Year.
"Fiscal Year" means any period of approximately twelve consecutive
calendar months ending on the Sunday nearest to December 31; references to a
Fiscal Year with a number corresponding to any calendar year (e.g., the "1996
Fiscal Year") refer to the Fiscal Year ending on the Sunday nearest to December
31 of such calendar year (which Sunday may occur in such calendar year or the
following calendar year.)
Appendix A-15
<PAGE> 102
"Fixtures" shall mean all fixtures relating to the Improvements, including
all components thereof, located in or on the Improvements, together with all
replacements, modifications, alterations and additions thereto.
"Force Majeure Event" shall mean any event beyond the control of the
Construction Agent, other than a Casualty or Condemnation, including, but not
limited to, strikes, lockouts, adverse soil conditions, acts of God, adverse
weather conditions, inability to obtain labor or materials, governmental
activities, civil commotion and enemy action; but excluding any event, cause or
condition that results from the Construction Agent's financial condition.
"Four-Quarter Period" shall have the meaning given to such term in the
Existing Wackenhut Corrections Credit Agreement.
"Funding" shall mean a Construction Funding or an Acquisition Funding.
"GAAP" shall mean "Generally Accepted Accounting Principles" as defined in
the Existing Wackenhut Corrections Credit Agreement.
"Governmental Action" shall mean all permits, authorizations,
registrations, consents, approvals, waivers, exceptions, variances, orders,
judgments, written interpretations, decrees, licenses, exemptions,
publications, filings, notices to and declarations of or with, or required by,
any Governmental Authority, or required by any Legal Requirement, and shall
include, without limitation, all environmental and operating permits and
licenses that are required for the full use, occupancy, zoning and operation of
any Property.
"Governmental Authority" shall mean any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, including without limitation any court or governmental body,
agency, department, commission, board, bureau or instrumentality of a
governmental body.
"Ground Lease" shall mean (a) a ground lease (in form and substance
satisfactory to the Agent and the Lessor) with respect to any Property owned by
the Lessee and leased to the Lessor where such lease has a ninety-nine year
term and payments set at $1.00 per year, or (b) a ground lease or ground
sub-lease of any Property by any Person to the Lessor, where such lease or
sub-lease (as well as any other lease or sub-lease with respect to such
Property) is in form and substance, and contains such terms and conditions, as
are satisfactory in all respects to the Agent and the Lessor.
"Guarantor" shall mean Wackenhut Corrections.
"Guaranty Agreement" or "Guaranty" shall mean, collectively, (a) the
Guaranty Agreement (Series A Obligations) dated as of the Initial Closing Date
between the Guarantor and the Agent, and (b) the Guaranty Agreement dated as of
the Initial Closing Date by Wackenhut
Appendix A-16
<PAGE> 103
Corrections to the Lessor, as each such agreement may be amended, supplemented,
restated or modified from time to time in accordance with the terms thereof.
"Guaranty Event of Default" shall mean any default by the Guarantor of any
of its covenants, agreements or obligations contained under the Guaranty
Agreement.
"Hazardous Substance" shall mean any of the following: (i) any petroleum
or petroleum product, explosives, radioactive material, asbestos, formaldehyde,
polychlorinated biphenyls, lead and radon gas; (ii) any substance, material,
product, derivative, compound or mixture, mineral, chemical, waste, gas,
medical waste, or pollutant, in each case whether naturally occurring, man-made
or the by-product of any process, that is toxic, harmful or hazardous to the
environment or human health or safety as determined in accordance with any
Environmental Law; or (iii) any substance, material, product, derivative,
compound or mixture, mineral, chemical, waste, gas, medical waste or pollutant
that would support the assertion of any claim under any Environmental Law,
whether or not defined as hazardous as such under any Environmental Law.
"Hedging Obligations" shall mean, with respect to any Person, all
liabilities of such Person under interest rate swap agreements, interest rate
cap agreements and interest rate collar agreements, and all other agreements or
arrangements designed to protect such Person against fluctuations in interest
rates or currency exchange rates.
"Holder Amount" shall mean as of any date, the aggregate amount of Holder
Fundings made by each Holder to the Trust Estate pursuant to Section 2 of the
Participation Agreement or Section 3.1 of the Trust Agreement less any payments
of any Holder Fundings received by the Holders pursuant to Section 3.4 of the
Trust Agreement.
"Holder Applicable Margin" shall mean a rate per annum equal to the
Applicable Margin plus one and one-fourth percent (1.25%).
"Holder Commitment" shall mean, as to any Holder, the obligation of such
Holder to make Holder Fundings to the Lessor in an aggregate principal amount
at any time outstanding not to exceed the respective amount set forth opposite
such Holder's name on Schedule 1, as such amounts may be increased or reduced
from time to time in accordance with the provisions of this Agreement, the
Trust Agreement or the Lease.
"Holder Commitments" shall mean the aggregate of all Holder Commitments.
"Holder Construction Property Cost" shall mean, with respect to any
Construction Period Property at any date of determination, an amount equal to
(a) the outstanding Holder Fundings made on or prior to such date in connection
with and as part of any Construction Funding for such Property, plus (b) the
outstanding Holder Fundings made on or prior to such date to fund the payment
of Allocated Holder Return with respect to such Property, minus (c) the
aggregate principal amount of prepayments or repayments, as the case may be, of
Holder Fundings described in clause (a) or clause (b).
Appendix A-17
<PAGE> 104
"Holder Funding" shall mean any Funding made by any Holder to the Owner
Trustee pursuant to the terms of the Trust Agreement or the Participation
Agreement.
"Holder Overdue Rate" shall mean the rate specified in Section 3.13 of the
Trust Agreement.
"Holder Property Cost" shall mean with respect to a Property an amount
equal to the outstanding Holder Fundings with respect thereto (including Holder
Fundings with respect to Allocated Return allocated to such Property).
"Holder Unused Fee" shall mean, at any time, the product of (a) the
Applicable Unused Fee Rate, multiplied by (b) the average daily amount by which
(i) the aggregate Holder Commitments of the Holders (under the Operative
Agreements) exceeds (ii) the aggregate outstanding principal amount of Holder
Fundings.
"Holder Yield" shall mean with respect to Holder Fundings from time to
time either the Eurodollar Reserve Rate plus the Holder Applicable Margin, or
the Base Rate plus one percent (1.00%) per annum, as elected by the Owner
Trustee from time to time with respect to such Holder Fundings in accordance
with the terms of the Trust Agreement; provided, however, that (i) upon
delivery of the notice described in Section 3.7(c) of the Trust Agreement, the
outstanding Holder Fundings of each Holder shall bear a yield at the Base Rate
plus one percent (1.00%) applicable from time to time from and after the dates
and during the periods specified in Section 3.7(c) of the Trust Agreement, and
(ii) upon the delivery by a Holder of the notice described in Section 3.9(d) of
the Trust Agreement or as otherwise set forth in Section 3.8 of the Trust
Agreement, the Holder Fundings of such Holder shall bear a yield at the Base
Rate plus one percent (1.00%) applicable from time to time after the dates and
during the periods specified in Section 3.9(d) or 3.8 (as the case may be) of
the Trust Agreement.
"Holders" shall mean the several banks and other financial institutions
which are from time to time holders of Certificates in connection with the
Wackenhut Corrections Trust 1997-1.
"Impositions" shall mean, except to the extent described in the following
sentence, any and all liabilities, losses, expenses, costs, charges and Liens
of any kind whatsoever for fees, taxes, levies, imposts, duties, charges,
assessments or withholdings ("Taxes") including without limitation (i) any real
and personal property taxes, including personal property taxes on any property
covered by the Lease that is classified by Governmental Authorities as personal
property, frontage taxes and real estate or ad valorem taxes in the nature of
property taxes; (ii) any sales taxes, use taxes and other similar taxes
(including rent taxes and intangibles taxes); (iii) any excise taxes; (iv) any
real estate transfer taxes, conveyance taxes, mortgage taxes, stamp taxes and
documentary recording taxes and fees; (v) any taxes that are or are in the
nature of franchise, income, value added, privilege and doing business taxes,
license and registration fees; (vi) any assessments on any Property, including
all assessments for public Improvements or benefits, whether or not such
improvements are commenced or completed within the Term; and (vii) any tax,
Lien, assessment or charge asserted, imposed or assessed by the PBGC or any
governmental authority succeeding to or performing functions similar to, the
PBGC; and in each
Appendix A-18
<PAGE> 105
case all interest, additions to tax and penalties thereon, which at any time
prior to, during or with respect to the Term or in respect of any period for
which the Lessee shall be obligated to pay Supplemental Rent, may be levied,
assessed or imposed by any Governmental Authority upon or with respect to (a)
any Property or any part thereof or interest therein; (b) the leasing,
financing, refinancing, demolition, construction, substitution, subleasing,
assignment, control, condition, occupancy, servicing, maintenance, repair,
ownership, possession, activity conducted on, delivery, insuring, use,
operation, improvement, transfer of title, return or other disposition of any
Property or any part thereof or interest therein; (c) the Certificates or the
Notes or other indebtedness with respect to any Property or any part thereof or
interest therein; (d) the rentals, receipts or earnings arising from any
Property or any part thereof or interest therein; (e) the Operative Agreements,
the performance thereof, or any payment made or accrued pursuant thereto; (f)
the income or other proceeds received with respect to any Property or any part
thereof or interest therein upon the sale or disposition thereof; (g) any
contract (including the Agency Agreement) relating to the construction,
acquisition or delivery of the Improvements or any part thereof or interest
therein; (h) the issuance of the Certificates or the Notes; or (i) otherwise in
connection with the transactions contemplated by the Operative Agreements.
The term "Imposition" shall not mean or include:
(i) Taxes and impositions (other than Taxes that are, or are in the
nature of, withholding, sales, use, rental, value added, transfer or
property taxes) that are imposed on an Indemnified Person (other than
Lessor) by the United States federal government or (in the case of a
Person organized under the laws of a foreign country) by a Governmental
Authority of such country, and that are in each case based on or measured
by the net income (including taxes based on capital gains and minimum
taxes or franchise taxes) of such Person; provided that this clause (i)
shall not apply to (and shall not exclude) any Tax or imposition imposed
with respect to a payment (including any Rent payment) except for (A) the
portion of such payment constituting interest on a Loan or Holder Yield
or (B) any such Tax or imposition to the extent it arises because an
Indemnified Person has previously written off as uncollectible (and
reduced the tax basis for) an Obligation which it has subsequently
collected, and provided, further that this clause (i) shall not be
interpreted to prevent a payment from being made on an After Tax Basis if
such payment is otherwise required to be so made;
(ii) Taxes and impositions (other than Taxes that are, or are in the
nature of, sales, use, rental, value added, transfer or property taxes)
that are imposed on any Indemnified Person (other than Lessor) by any
state or local jurisdiction or taxing authority within any state or local
jurisdiction and that are based upon or measured by the net income or net
receipts; provided that this clause (ii) shall not apply to (and shall
not exclude) (A) any Tax or imposition imposed with respect to a payment
(including any Rent payment) except for (I) the portion of such payment
constituting interest on a Loan or Holder Yield or (II) any such Tax or
imposition to the extent it arises because an Indemnified Person has
previously written off (and reduced the tax basis for) an Obligation
which it has subsequently collected, or (B) any Tax or imposition imposed
on an Indemnified Person by any state or local jurisdiction if such Tax
or imposition would not arise as to such
Appendix A-19
<PAGE> 106
Person but for the location, possession or use of any Property in such
jurisdiction; and provided, further, that this clause (ii) shall not be
interpreted to prevent a payment from being made on an After Tax Basis if
such payment is otherwise required to be so made;
(iii) any Tax or imposition to the extent, but only to such extent,
it relates to any act, event or omission that occurs after the
termination of the Lease and redelivery or sale of the property in
accordance with the terms of the Lease (but not any Tax or imposition
that relates to such termination, redelivery or sale or to any period
prior to such termination, redelivery or sale); or
(iv) any Taxes which are imposed on an Indemnified Person as a
result of the gross negligence or willful misconduct of such Indemnified
Person itself (as opposed to any gross negligence or willful misconduct
imputed to such Indemnified Person), but not Taxes imposed as a result of
the ordinary negligence of such Person.
Any Tax or imposition excluded from the defined term "Imposition" by any one of
the foregoing clauses (i) through (iv) shall not be construed as constituting
an Imposition by any provision of any other of the aforementioned clauses.
"Improvements" shall mean, with respect to the construction, renovation or
Modification of a Property, all buildings, structures, Fixtures, and other
improvements of every kind existing at any time and from time to time on or
under the Land purchased, leased or otherwise acquired using the proceeds of
the Loans or the Holder Fundings, together with any and all appurtenances to
such buildings, structures or improvements, including sidewalks, utility pipes,
conduits and lines, parking areas and roadways, and including all Modifications
and other additions to or changes in the Improvements at any time, including
without limitation (a) any Improvements existing as of the Property Closing
Date as such Improvements may be referenced on the applicable Requisition and
(b) any Improvements made subsequent to such Property Closing Date.
"Incorporated Covenants" shall have the meaning specified in Section 28.1
of the Lease.
"Indebtedness" shall have the meaning assigned thereto in the Existing
Wackenhut Corrections Credit Agreement.
"Indemnified Person" shall mean each of the Lessor, the Owner Trustee, in
its individual and its trust capacity, the Agent, NMSI, the Holders, the
Lenders and their respective successors, assigns, directors, shareholders,
partners, officers, employees, agents and Affiliates.
"Indemnity Provider" shall mean, respecting each Property, the
Construction Agent from the date of the Participation Agreement to and
including the Basic Rent Commencement Date for such Property and the Lessee for
the duration of the Term for such Property.
"Initial Closing Date" shall mean the date of the Participation Agreement.
Appendix A-20
<PAGE> 107
"Initial Construction Funding" shall mean any initial Funding to pay for:
(i) Property Costs for construction of any Improvements; and (ii) the Property
Costs of restoring or repairing any Property which is required to be restored
or repaired in accordance with Section 15.1(e) of the Lease.
"Insurance Requirements" shall mean (a) all terms and conditions of any
insurance policy either required by the Lease to be maintained by the Lessee or
required by the Agency Agreement to be maintained by the Construction Agent,
and (b) all requirements of the issuer of any such policy.
"Interbank Offered Rate" shall mean for the Interest Period for any
Eurodollar Loan or Eurodollar Holder Funding comprising part of the same
borrowing or advance (including conversions, extensions and renewals), a per
annum rate equal to the "Interbank Offered Rate" (as defined in the Existing
Wackenhut Corrections Credit Agreement) having an identical Interest Period.
"Interest Payment Loan" shall mean any Loan made to fund the payment of
Allocated Interest with respect to a Construction Period Property.
"Interest Period" shall mean, for each Eurodollar Loan and Eurodollar
Holder Fundings for a specified Property (a) prior to the Completion Date for
such Property, the period beginning on the date such Eurodollar Loan (and
related Eurodollar Holder Funding) are extended, continued or converted
pursuant to the terms of the Operative Agreements and ending one month later,
and (b) during the period from and after the Completion Date for such Property,
(i) initially, the period commencing on the conversion or continuation date, as
the case may be, with respect to such Eurodollar Loan or Eurodollar Holder
Funding and ending, in the case of any Eurodollar Loan or Eurodollar Holder
Funding, one, two, three, six or nine months thereafter, as selected by the
Borrower (in the case of a Eurodollar Loan) or the Owner Trustee (in the case
of a Eurodollar Holder Funding) in its notice of borrowing, Funding,
continuation or conversion, as the case may be, given with respect thereto; and
(ii) thereafter, each period commencing on the last day of the next preceding
Interest Period applicable to such Eurodollar Loan or Eurodollar Holder Funding
and ending one, two, three, six or nine months thereafter, as selected by the
Borrower by irrevocable notice to Administrative Agent (in the case of a
Eurodollar Loan) or by the Owner Trustee by irrevocable notice to the Holders
(in the case of a Eurodollar Holder Funding) in each case not less than three
Business Days prior to the last day of the then current Interest Period with
respect thereto; provided, however, that all of the foregoing provisions
relating to Interest Periods are subject to the following: (A) if any Interest
Period would end on a day which is not a Business Day, such Interest Period
shall be extended to the next succeeding Business Day (except that where the
next succeeding Business Day falls in the next succeeding calendar month, then
on the next preceding Business Day), (B) no Interest Period shall extend beyond
the Maturity Date, (C) where an Interest Period begins on a day for which there
is no numerically corresponding day in the calendar month in which the Interest
Period is to end, such Interest Period shall end on the last Business Day of
such calendar month, (D) during the Commitment Period, there shall not be (on
any day) more than two (2) Interest Periods in effect for all Eurodollar Loans
and Eurodollar Holder Fundings, and (E) from and after all the Commitment
Appendix A-21
<PAGE> 108
Period, on any day the sum of the (1) Interest Periods in effect under the
Operative Agreements for all Eurodollar Loans and Eurodollar Holder Funding plus
(2) all "Interest Periods" (as defined in the Existing Wackenhut Corrections
Credit Agreement, as amended from time to time), shall not exceed twelve (12) in
the aggregate.
"Investment Company Act" shall mean the Investment Company Act of 1940, as
amended, together with the rules and regulations promulgated thereunder.
"IRS" shall mean the United States Internal Revenue Service, or any
successor or analogous organization.
"Land" shall mean (a) a parcel or parcels of real property that is
described on (i) the Requisition issued by the Construction Agent on the
Property Closing Date relating to such parcel or (ii) Schedule I-C to each
applicable Lease Supplement executed and delivered in accordance with the
requirements of Section 2.4 of the Lease and, to the extent set forth in any
such Requisition or Schedule, may include without limitation a leasehold
interest (pursuant to a Ground Lease) in such Land, and (b) all Appurtenant
Rights with respect to such Land.
"Law" shall mean any statute, law, ordinance, code, regulation, rule,
directive, order, writ, injunction or decree of any Governmental Authority.
"Lease" or "Lease Agreement" shall mean the Amended and Restated Lease
Agreement dated as of the Initial Closing Date, between the Lessor and the
Lessee, together with any Lease Supplements thereto, as such Lease Agreement
may from time to time be supplemented, amended, restated or modified in
accordance with the terms thereof.
"Lease Default" shall mean any event or condition which, with the lapse of
time or the giving of notice, or both, would constitute a Lease Event of
Default.
"Lease Event of Default" shall have the meaning specified in Section 17.1
of the Lease.
"Lease Supplement" shall mean each Lease Supplement substantially in the
form of Exhibit A to the Lease, together with all attachments and schedules
thereto, as such Lease Supplement may be supplemented, amended, restated or
modified from time to time.
"Legal Requirements" shall mean all foreign, Federal, state, county,
municipal and other governmental statutes, laws, rules, orders, regulations,
ordinances, judgments, decrees and injunctions affecting the Owner Trustee, the
Holders, the Agent, any Lender or any Improvements or the taxation, demolition,
construction, use or alteration of such Improvements, whether now or hereafter
enacted and in force, including without limitation any that require repairs,
modifications or alterations in or to any Property or in any way limit the use
and enjoyment thereof (including all building, zoning and fire codes and the
Americans with Disabilities Act of 1990, 42 U.S.C. Section 12101 et seq., and
any other similar Federal, state or local laws or ordinances and the
regulations promulgated thereunder) and any that may relate to environmental
requirements (including all Environmental Laws), and all permits, certificates
of
Appendix A-22
<PAGE> 109
occupancy, licenses, authorizations and regulations relating thereto, and all
covenants, agreements, restrictions and encumbrances contained in any
instruments which are either of record or known to the Lessee affecting any
Property or the Appurtenant Rights.
"Lender Financing Statements" shall mean UCC financing statements and
fixture filings appropriately completed and executed for filing in the
applicable jurisdiction in order to evidence or perfect the Agent's security
interest (for itself and on behalf of the Lenders) in any Equipment or in any
Improvements.
"Lenders" shall mean the several banks and other financial institutions
from time to time party to the Credit Agreement.
"Lessee" shall have the meaning set forth in the Lease.
"Lessor" shall mean the Owner Trustee, not in its individual capacity, but
as Lessor under the Lease.
"Lessor Basic Rent" shall mean the scheduled Holder Yield due on the
Holder Fundings on any Scheduled Interest Payment Date pursuant to the Trust
Agreement (but not including interest on (i) any such scheduled Holder Yield
due on the Holder Fundings prior to the Basic Rent Commencement Date with
respect to the Property to which such Holder Fundings relate or (ii) overdue
amounts under the Trust Agreement or otherwise).
"Lessor Financing Statements" shall mean UCC financing statements and
fixture filings appropriately completed and executed for filing in the
applicable jurisdictions in order to evidence or perfect the Lessor's interest
under the Lease to the extent the Lease is a security agreement or a mortgage.
"Lessor Lien" shall mean any Lien, true lease or sublease or disposition
of title arising as a result of (a) any claim against the Lessor or Trust
Company, in its individual capacity, not resulting from the transactions
contemplated by the Operative Agreements, (b) any act or omission of the Lessor
or Trust Company, in its individual capacity, which is not required by the
Operative Agreements or is in violation of any of the terms of the Operative
Agreements, (c) any claim against the Lessor or Trust Company, in its
individual capacity, with respect to Taxes or Transaction Expenses against
which the Lessee is not required to indemnify Lessor or Trust Company, in its
individual capacity, pursuant to Section 13 of the Participation Agreement or
(d) any claim against the Lessor or Trust Company, in its individual capacity,
arising out of any transfer by the Lessor of all or any portion of the interest
of the Lessor in the Properties, the Trust Estate or the Operative Agreements
other than the transfer of title to or possession of any Properties by the
Lessor pursuant to and in accordance with the Lease, the Credit Agreement, the
Security Agreement or the Participation Agreement or pursuant to the exercise
of the remedies set forth in Article XVII of the Lease.
"Lien" shall mean any mortgage, pledge, security interest, encumbrance,
lien, option or charge of any kind.
Appendix A-23
<PAGE> 110
"Limited Recourse Amount" shall mean, with respect to the Properties on an
aggregate basis as of a specified date, an amount equal to the sum of the
Termination Values with respect to all of the Properties on such date, less the
Maximum Residual Guarantee Amount as of such date with respect to the
Properties.
"Loan Basic Rent" shall mean the interest due on the Loans on any
Scheduled Interest Payment Date pursuant to the Credit Agreement (but not
including interest on (i) any such Loan prior to the Basic Rent Commencement
Date with respect to the Property to which such Loan relates or (ii) any
overdue amounts under Section 2.8(c) of the Credit Agreement or otherwise).
"Loan Property Cost" shall mean, with respect to each Property at any date
of determination, an amount equal to (a) the aggregate principal amount of
Acquisition Loans, Construction Loans and Interest Payment Loans made on or
prior to such date with respect to such Property minus (b) the aggregate amount
of prepayments or repayments as the case may be of the Loans allocated to
reduce the Loan Property Cost of such Property pursuant to Section 2.6(c) of
the Credit Agreement.
"Loans" shall mean, collectively, the Series A Loans and the Series B
Loans.
"Louisiana Property" shall mean the property in Jena, Louisiana, currently
owned by the Owner Trustee, which was acquired using proceeds of loans under
the Bridge Loan Documents.
"Majority Lenders" shall mean at any time, Lenders whose Commitment
Percentages represent at least 51% of the aggregate Commitments.
"Marketing Period" shall mean, if the Lessee has given an Election Notice
in accordance with Section 20.1 of the Lease, the period commencing on the date
such Sale Notice is given and ending on the applicable Expiration Date or
Payment Date.
"Material Adverse Effect" shall mean a material adverse effect on (a) the
business, condition (financial or otherwise) assets, liabilities or operations
of Wackenhut Corrections or any of its Subsidiaries, (b) the ability of the
Lessee or any Subsidiary to perform its respective obligations under any
Operative Agreement to which it is a party, (c) the validity or enforceability
of any Operative Agreement or the rights and remedies of the Agent, the
Lenders, the Holders, or the Lessor thereunder, (d) the validity, priority or
enforceability of any Lien on any Property created by any of the Operative
Agreements, or (e) the value, utility or useful life of any Property or the
use, or ability of the applicable Lessee to use, any Property for the purpose
for which it was intended.
"Maturity Date" shall mean December 18, 2002, or such later date (not
later than December 18, 2004) as may be consented to by the Agent, the Lenders
and the Holders pursuant to Section 21.1 of the Lease, or such earlier date as
the Lease may terminate.
"Maximum Property Cost" shall mean the aggregate amount of the Property
Costs for all Properties subject to the Lease as of the applicable
determination date.
Appendix A-24
<PAGE> 111
"Maximum Residual Guarantee Amount" shall mean an amount equal to
eighty-eight percent (88%) of the aggregate Property Cost for all of the
Properties.
"Modifications" shall have the meaning specified in Section 11.1(a) of the
Lease.
"Mortgage Instrument" shall mean any mortgage, deed of trust or any other
instrument executed by the Owner Trustee in favor of the Agent and evidencing a
Lien on a Property, in form and substance reasonably acceptable to the Agent.
"Multi-employer Plan" shall mean any plan described in Section 4001(a)(3)
of ERISA to which contributions are or have been made or are required to be
made by Wackenhut Corrections or any of its Subsidiaries or ERISA Affiliates.
"NationsBank" shall mean NationsBank, National Association, a national
banking association.
"NMSI" means NationsBanc Montgomery Securities, Inc.
"Net Proceeds" shall mean all amounts paid in connection with any Casualty
or Condemnation, and all interest earned thereon, less the expense of claiming
and collecting such amounts, including all costs and expenses in connection
therewith for which the Agent or Lessor is entitled to be reimbursed pursuant
to the Lease.
"Net Sale Proceeds Shortfall" shall mean the amount by which the proceeds
of a sale described in Section 22.1 of the Lease (net of all expenses of sale)
are less than the Limited Recourse Amount with respect to the Properties if it
has been determined that the Fair Market Sales Value of the Properties at the
expiration of the term of the Lease has been impaired by greater than expected
wear and tear during the Term of the Lease.
"New Facility" shall have the meaning specified in Section 28.1 of the
Lease.
"Non-Excluded Taxes" shall have the meaning given to such term in Section
2.13 of the Credit Agreement.
"Notes" shall mean, collectively, the Series A Notes and the Series B
Notes.
"Occupational Safety and Health Law" shall mean the Occupational Safety
and Health Act of 1970 and any other federal, state or local statute, law,
ordinance, code, rule, regulation, order or decree regulating or relating to,
or imposing liability or standards of conduct concerning, employee health or
safety, as now or at any time hereafter in effect.
"Officer's Certificate" shall mean a certificate signed by any individual
holding the office of vice president or higher, which certificate shall certify
as true and correct the subject matter being certified to in such certificate.
Appendix A-25
<PAGE> 112
"Operative Agreements" shall mean, collectively, the Participation
Agreement, the Agency Agreement, the Trust Agreement, the Certificates, the
Credit Agreement, the Notes, the Lease (and a memorandum thereof in a form
reasonably acceptable to the Agent), each Lease Supplement (and a memorandum
thereof in a form reasonably acceptable to the Agent), the Guaranty Agreement,
the Security Agreement, the Assignment of Project Rights, and each Mortgage
Instrument.
"Overdue Interest" shall mean any interest payable pursuant to Section
2.8(c) of the Credit Agreement.
"Overdue Rate" shall mean (i) with respect to Loan Basic Rent, and any
other amount owed under or with respect to the Credit Agreement or the Security
Documents, the rate specified in Section 2.8(c) of the Credit Agreement, (ii)
with respect to Lessor Basic Rent, the Holder Yield and any other amount owed
under or with respect to the Trust Agreement, the Holder Overdue Rate and (iii)
with respect to any other amount, the Base Rate plus 2%.
"Owner Trustee" shall mean First Security Bank, National Association, not
individually, except as expressly stated in the various Operative Agreements,
but solely as Owner Trustee under the Wackenhut Corrections Trust 1997-1, and
any successor or replacement Owner Trustee expressly permitted under the
Operative Agreements.
"Participant" shall have the meaning given to such term in Section 9.7 of
the Credit Agreement.
"Participation Agreement" shall mean the Amended and Restated
Participation Agreement dated as of the date hereof among the Construction
Agent, the Lessee, the Owner Trustee, the Holders party thereto, the Lenders
party thereto, and the Administrative Agent, as amended, supplemented, restated
or otherwise modified from time to time in accordance with the terms thereof.
"Payment Date" shall mean any Scheduled Interest Payment Date and any date
on which interest or Holder Yield in connection with a prepayment of principal
on the Loans or of the Holder Fundings is due under the Credit Agreement or the
Trust Agreement.
"PBGC" shall mean the Pension Benefit Guaranty Corporation created by
Section 4002(a) of ERISA or any successor thereto.
"Permitted Exceptions" shall mean:
(i) Liens of the types described in clauses (i), (ii) and (v) of the
definition of Permitted Liens;
(ii) Liens for Taxes not yet due; and
Appendix A-26
<PAGE> 113
(iii) all encumbrances, exceptions, restrictions, easements, rights
of way, servitudes, encroachments and irregularities in title, other than
Liens which, in the reasonable assessment of the Agent, materially impair
the use of any Property for its intended purpose.
"Permitted Liens" shall mean:
(i) the respective rights and interests of the parties to the
Operative Agreements as provided in the Operative Agreements;
(ii) the rights of any sublessee or assignee under a sublease or an
assignment expressly permitted by the terms of the Lease;
(iii) Liens for Taxes that either are not yet due or are being
contested in accordance with the provisions of Section 13.1 of the Lease;
(iv) Liens arising by operation of law, materialmen's, mechanics',
workmen's, repairmen's, employees', carriers', warehousemen's and other
like Liens relating to the construction of the Improvements or in
connection with any Modifications or arising in the ordinary course of
business for amounts that either are not more than 30 days past due or
are being diligently contested in good faith by appropriate proceedings,
so long as such proceedings satisfy the conditions for the continuation
of proceedings to contest Taxes set forth in Section 13.1 of the Lease;
(v) Liens of any of the types referred to in clause (iv) above that
have been bonded for not less than the full amount in dispute (or as to
which other security arrangements satisfactory to the Lessor and the
Agent have been made), which bonding (or arrangements) shall comply with
applicable Legal Requirements, and shall have effectively stayed any
execution or enforcement of such Liens;
(vi) Liens arising out of judgments or awards with respect to which
appeals or other proceedings for review are being prosecuted in good
faith and for the payment of which adequate reserves have been provided
as required by GAAP or other appropriate provisions have been made, so
long as such proceedings have the effect of staying the execution of such
judgments or awards and satisfy the conditions for the continuation of
proceedings to contest Taxes set forth in Section 13.1 of the Lease;
(vii) Liens in favor of municipalities to the extent agreed to by
the Lessor and the Agent; and
(viii) Permitted Exceptions.
"Person" shall mean any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization,
limited liability company, limited liability partnership, governmental
authority or any other entity.
Appendix A-27
<PAGE> 114
"Plans and Specifications" shall mean, with respect to Improvements, the
plans and specifications for such Improvements to be constructed or already
existing, as such Plans and Specifications may be amended, modified or
supplemented from time to time in accordance with the terms of the
Participation Agreement.
"Prime Rate" shall have the meaning given to such term in the Existing
Wackenhut Corrections Credit Agreement.
"Property" shall mean, with respect to each real property site that is
acquired, constructed or renovated pursuant to the terms of the Operative
Agreements, the Land and each item of Equipment and the various Improvements,
in each case located on such Land. Each Property shall be suitable for, and
used by Lessee (or a permitted sublessee) only for, correctional facilities.
There shall not be more than 12 properties in the aggregate that are (or have
at any time been) Properties (including without limitation any properties that
were previously Properties subject to the Operative Agreements but have
subsequently been repurchased by the Lessee, transferred to any other Person,
or retained by the Lessor).
"Property Acquisition Cost" shall mean the cost to Lessor to purchase a
Property on a Property Closing Date.
"Property Closing Date" shall mean each date on which the Lessor purchases
a Property.
"Property Cost" shall mean with respect to a Property the aggregate amount
of the Loan Property Cost plus the Holder Property Cost for such Property (as
such amounts shall be increased equally among all Properties respecting the
Holder Fundings and the Loans extended from time to time to pay for the
Transaction Expenses, fees, expenses and other disbursements referenced in
Sections 9.1(a) and (b) of the Participation Agreement).
"Purchase Option" shall have the meaning given to such term in Section
20.1 of the Lease.
"Purchase Option Price" shall have the meaning specified in Section 20.1
of the Lease.
"Purchasing Lender" shall have the meaning given to such term in Section
9.8(a) of the Credit Agreement.
"Register" shall have the meaning given to such term in Section 9.9(a) of
the Credit Agreement.
"Release" shall mean any release, pumping, pouring, emptying, injecting,
escaping, leaching, dumping, seepage, spill, leek, flow, discharge, disposal or
emission of a Hazardous Substance.
"Renewal Option" shall have the meaning specified in Section 21.1 of the
Lease.
Appendix A-28
<PAGE> 115
"Rent" shall mean, collectively, the Basic Rent and the Supplemental Rent,
in each case payable under the Lease.
"Reportable Event" shall have the meaning specified in ERISA.
"Requested Funds" shall mean any funds requested by the Lessee or the
Construction Agent, as applicable, in accordance with Section 5 of the
Participation Agreement.
"Requirement of Law" shall mean, as to any Person, the Certificate of
Incorporation and By-laws or other organizational or governing documents of
such Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person
or any of its property is subject.
"Requisition" shall have the meaning specified in Section 4.2 of the
Participation Agreement.
"Responsible Officer" shall mean the Chief Executive Officer, the
President, any Senior Vice President or Controller or with respect to financial
matters, the Chief Financial Officer or Controller, except that when used with
respect to the Trust Company or the Owner Trustee, "Responsible Officer" shall
also include the Cashier, any Assistant Cashier, any Trust Officer or Assistant
Trust Officer, the Controller and any Assistant Controller or any other officer
of the Trust Company or the Owner Trustee customarily performing functions
similar to those performed by any of the above designated officers and also
means, with respect to a particular corporate trust matter, any other officer
to whom such matter is referred because of his or her knowledge of and
familiarity with the particular subject.
"Sale Date" shall have the meaning given to such term in Section 22.1(a)
of the Lease.
"Sale Notice" shall mean a notice given to Lessor in connection with the
election by Lessee of its Sale Option.
"Sale Option" shall have the meaning given to such term in Section 20.1 of
the Lease.
"Scheduled Interest Payment Date" shall mean (a) as to any Eurodollar Loan
(or Eurodollar Holder Funding), the last day of the Interest Period applicable
to such Eurodollar Loan (or Holder Funding), and if such Interest Period is for
more than three months, at intervals of three months after the first day of
such Interest Period and (b) as to any Base Rate Loan (or Base Rate Holder
Funding), the first day of each calendar quarter, and the date of conversion of
such Loan to a Eurodollar Loan (or conversion of such Holder Funding to a
Eurodollar Holder Funding), and (c) as to any Loan (or Holder Funding), the
Maturity Date.
"Securities Act" shall mean the Securities Act of 1933, as amended,
together with the rules and regulations promulgated thereunder.
Appendix A-29
<PAGE> 116
"Security Agreement" shall mean the Amended and Restated Security
Agreement, dated as of the Initial Closing Date between the Owner Trustee and
NationsBank, National Association, as agent, as such agreement may be amended,
supplemented, restated or otherwise modified from time to time in accordance
with the terms thereof.
"Security Documents" shall mean the collective reference to the Lease, the
Lease Supplements, the Security Agreement, the Mortgage Instruments, and all
other security documents hereafter delivered to the Administrative Agent
granting a lien on any asset or assets of any Person to secure the obligations
and liabilities of the Borrower hereunder or under any of the other Credit
Documents or to secure any guarantee of any such obligations and liabilities.
"Series A Loans" shall mean the loans described as such in Section 2.1 of
the Credit Agreement.
"Series A Notes" shall mean the promissory notes issued to the Lenders
pursuant to Section 2.2 of the Credit Agreement evidencing the Series A Loans.
"Series B Loans" shall mean the loans described as such in Section 2.1 of
the Credit Agreement.
"Series B Notes" shall mean the promissory notes issued to the Lenders
pursuant to Section 2.2 of the Credit Agreement evidencing the Series B Loans.
"Subsidiary" shall mean, as to any Person, any corporation in which more
than 50% of its outstanding voting stock is owned directly or indirectly by
such Person and/or by one or more of such Persons's Subsidiaries.
"Supplemental Rent" shall mean all amounts, liabilities and obligations
(other than Basic Rent) which the Lessee assumes or agrees to pay to Lessor,
the Holders, the Agent, the Lenders or any other Person under the Lease or
under any of the other Operative Agreements including, without limitation,
payments of the Purchase Option Price, the Termination Value and the Maximum
Residual Guarantee Amount and all indemnification amounts, liabilities and
obligations.
"Tangible Personal Property" shall mean that portion of the Equipment
which is not and will not become a Fixture or Improvement.
"Taxes" shall have the meaning specified in the definition of Impositions.
"Term" shall mean the Basic Term and each Extended Term, if any.
"Termination Date" shall have the meaning specified in Section 16.2(a) of
the Lease.
"Termination Notice" shall have the meaning specified in Section 16.1 of
the Lease.
Appendix A-30
<PAGE> 117
"Termination Value" shall mean, as of any date of determination, the sum
of (a) either (i) with respect to all Properties, an amount equal to the
aggregate outstanding Property Cost for all the Properties, or (ii) with
respect to a particular Property, an amount equal to the outstanding Property
Cost allocable to the particular Property in question, plus (b) respecting the
amounts described in each of the foregoing subclause (i) or (ii), as
applicable, any and all accrued interest on the Loans and any and all Holder
Yield on the Holder Advances related to the applicable Property Cost, plus (c)
to the extent not otherwise paid on such date of determination, all other Rent
and other amounts then due and payable for all Properties under the Agency
Agreement, Lease or under any other Operative Agreement (including without
limitation all amounts due and payable under Sections 13.1 or 13.2 of the
Participation Agreement and all costs and expenses referred to in clause FIRST
of Section 22.2 of the Lease).
"Total Commitment" shall mean (a) with respect to the Series A Loans,
$193,600,000, and (b) with respect to the Series B Loans, $19,800,000.
"Total Condemnation" shall mean a Condemnation that involves a taking of
Lessor's entire title to a Property.
"Total Holder Commitment" shall mean $6,600,000.
"Transaction Expenses" shall mean all costs and expenses incurred in
connection with the preparation, execution and delivery of the Operative
Agreements and the transactions contemplated by the Operative Agreements
including without limitation:
(a) the reasonable fees, out-of-pocket expenses and disbursements of
counsel in negotiating the terms of the Operative Agreements and the
other transaction documents, preparing for the closings under, and
rendering opinions in connection with, such transactions and in rendering
other services customary for counsel representing parties to transactions
of the types involved in the transactions contemplated by the Operative
Agreements;
(b) any and all reasonable fees, charges or other amounts payable to
the Lenders, Agent, the Holders, the Owner Trustee or any broker which
arise under any of the Operative Agreements;
(c) any other reasonable fee, out-of-pocket expenses, disbursement
or cost of any party to the Operative Agreements or any of the other
transaction documents;
(d) any and all Taxes and fees incurred in recording or filing any
Operative Agreement or any other transaction document, any deed,
declaration, mortgage, security agreement, notice or financing statement
with any public office, registry or governmental agency in connection
with the transactions contemplated by the Operative Agreement; and
(e) real estate taxes on a Property paid during the Construction
Period.
Appendix A-31
<PAGE> 118
"Trust Agreement" shall mean the Third Amended and Restated Trust
Agreement dated as of the Initial Closing Date between the Holders and the
Owner Trustee, as such agreement may be amended, modified, restated or
supplemented from time to time in accordance with the terms thereof.
"Trust Company" shall mean First Security Bank, National Association in
its individual capacity, and any successor owner trustee under the Trust
Agreement, in each case in its individual capacity.
"Trust Estate" shall have the meaning specified in Section 2.2 of the
Trust Agreement.
"Tuhnekcaw, Inc." shall mean Tuhnekcaw, Inc., a Delaware corporation.
"Type" shall mean, as to any Loan, whether it is a Base Rate Loan or a
Eurodollar Loan.
"UCC Financing Statements" shall mean collectively the Lender Financing
Statements and the Lessor Financing Statements.
"Unfunded Amount" shall have the meaning specified in Section 3.2 of the
Agency Agreement.
"Uniform Commercial Code" and "UCC" shall mean the Uniform Commercial Code
as in effect in any applicable jurisdiction.
"United States Bankruptcy Code" shall mean Title 11 of the United States
Code.
"Unused Fee" shall mean, at any time, the product of (a) the Applicable
Unused Fee Rate, multiplied by (b) the average daily amount by which (i) the
aggregate Commitments of the Lenders for all Categories of Loans (under the
Operative Agreements) exceeds (ii) the outstanding principal amount of all
Categories of Loans.
"Unused Fee Payment Date" shall mean last Business Day of each March,
June, September and December and the last day of the Commitment Period, or such
earlier date as the Commitments shall terminate as provided in the Credit
Agreement.
"U.S." shall mean the United States of America, its territories, its
possessions and all other areas subject to its jurisdiction.
"Voting Stock" shall mean, with respect to any Person, capital stock
issued by a corporation or equivalent interests in any other Person, the
holders of which are ordinarily, in the absence of contingencies, entitled to
vote for the election of directors (or persons performing similar functions) of
such Person, even though the right to vote may have been suspended by the
happening of such a contingency.
Appendix A-32
<PAGE> 119
"Wackenhut Control Group Member" shall mean any of the following: (a)
Wackenhut Corrections, (b) Wackenhut Corporation, (c) Tuhnekcaw, Inc., (d)
George R. Wackenhut, (e) Ruth J. Wackenhut, (f) Richard R. Wackenhut, (g) any
trust over which George R. Wackenhut or Ruth J. Wackenhut has dispositive or
voting power, or (h) any heir or successor of any of the foregoing.
"Wackenhut Corporation" shall mean Wackenhut Corporation, a Florida
corporation.
"Wackenhut Corrections" means Wackenhut Corrections Corporation, a Florida
corporation.
"Wackenhut Corrections Credit Agreement Event of Default" shall mean an
"Event of Default" as defined in the Existing Wackenhut Corrections Credit
Agreement (as amended, modified or restated heretofore or hereafter) or any New
Facility.
"Wackenhut Corrections Trust 1997-1" shall mean the grantor trust created
pursuant to the terms and conditions of the Trust Agreement.
"Work" shall mean the furnishing of labor, materials, components,
furniture, furnishings, fixtures, appliances, machinery, equipment, tools,
power, water, fuel, lubricants, supplies, goods or services with respect to any
Property.
Appendix A-33
<PAGE> 120
AMENDED AND RESTATED GUARANTY AGREEMENT
(SERIES A OBLIGATIONS)
THIS AMENDED AND RESTATED GUARANTY AGREEMENT (SERIES A OBLIGATIONS) (the
"Guaranty Agreement" or the "Guaranty"), dated as of June 19, 1997 is made by
WACKENHUT CORRECTIONS CORPORATION, a Florida corporation (the "Guarantor") to
NATIONSBANK, NATIONAL ASSOCIATION, as Administrative Agent (the "Agent") for
the ratable benefit of the Series A Lenders (as defined in the Participation
Agreement referred to below).
W I T N E S S E T H:
WHEREAS, the Agent and First Security Bank, N.A. (the "Borrower") have
entered into the Amended and Restated Credit Agreement dated as of June 19,
1997 (as from time to time amended, modified, restated or supplemented, the
"Credit Agreement"); and Wackenhut Corrections Corporation, as Construction
Agent (the "Construction Agent"), Wackenhut Corrections Corporation, as Lessee
(the "Lessee"), the Borrower, the Holders party thereto from time to time, the
Lenders party thereto from time to time, and the Agent have entered into the
Amended and Restated Participation Agreement dated as of June 19, 1997 (as from
time to time amended, modified, restated or supplemented, the "Participation
Agreement"); and
WHEREAS, pursuant to the Credit Agreement, the Participation Agreement and
certain other Operative Agreements (as defined in the Participation Agreement),
the Lenders with respect to the Series A Loans (the "Series A Lenders") will
extend a credit facility to the Borrower in the aggregate principal amount of
up to the aggregate Commitments for Series A Loans under the Credit Agreement;
and
WHEREAS, the proceeds of the Series A Loans will be used by the Borrower
to acquire and improve certain Properties which will be leased by the Borrower
to the Lessee as set forth in the Operative Agreements; and
WHEREAS, it is condition to the obligations of the Series A Loans under
the Credit Agreement that the Guarantor execute and deliver this Guaranty
Agreement; and
WHEREAS, Guarantor is the Lessee or an Affiliate of the Lessee and will
materially benefit from (a) the Series A Lenders' extension of the credit
facility and making of Series A Loans to the Borrower, and (b) the Borrower's
acquisition and improvement of the Properties and its lease of the Properties
to the Lessee; and the Guarantor is willing to enter into this Guaranty to
provide an inducement for the Series A Lenders to extend the credit facility
and make Series A Loans to the Borrower;
NOW, THEREFORE, as required under the Operative Agreements and in order to
induce the Series A Lenders to extend the credit facility and to make Series A
Loans, the Guarantor agrees as follows:
<PAGE> 121
1. DEFINITIONS. All capitalized terms not otherwise defined herein shall
have the meanings ascribed to such terms in the Credit Agreement or (if not
defined in the Credit Agreement) in the Participation Agreement.
2. GUARANTY. The Guarantor hereby, unconditionally, absolutely,
continually and irrevocably guarantees to the Agent and the Series A Lenders
the payment in full of the Borrower's Liabilities (as defined below). For all
purposes of this Guaranty Agreement, "Borrower's Liabilities" means: the
Borrower's prompt payment in full, when due or declared due and at all such
times, of all Series A Loans and all other amounts pursuant to the terms of the
Credit Agreement, the Series A Notes and all other Operative Agreements
heretofore, now or at any time or times hereafter owing, arising, due or
payable from the Borrower to the Series A Lenders (or to the Agent on behalf of
the Series A Lenders), including without limitation all principal and interest
on any Series A Loans, and any fees or expenses (including, but not limited to,
attorneys' fees and expenses). The Guarantor's obligations to the Agent and
the Series A Lenders under this Guaranty Agreement are hereinafter collectively
referred to as the "Guarantor's Obligations".
The Guarantor agrees that it is directly and primarily liable for the
Borrower's Liabilities.
3. PAYMENT. If the Borrower shall default in payment of any Borrower's
Liabilities, when and as the same shall become due (and such default is not
cured within the applicable grace period, if any), whether according to the
terms of the Credit Agreement, any Series A Note or any other Operative
Agreement, by acceleration, or otherwise, or upon the occurrence of any other
Event of Default that has not been cured or waived, then the Guarantor, upon
demand thereof by the Agent, or its successors or assigns, will AS OF THE DATE
OF THE AGENT'S DEMAND fully pay to the Agent (for the benefit of the Series A
Lenders), an amount equal to all of the Guarantor's Obligations then due and
owing.
4. UNCONDITIONAL OBLIGATIONS. This is a guaranty of payment and not of
collection. The Guarantor's Obligations under this Guaranty Agreement shall be
absolute and unconditional irrespective of the validity, legality or
enforceability of the Credit Agreement, any Series A Note or any other Operative
Agreement, or any other guaranty of the Borrower's Liabilities, and shall not be
affected by any action taken under the Credit Agreement, any Series A Note or
any other Operative Agreement, any other guaranty of the Borrower's Liabilities,
or any other agreement between the Borrower and the Agent, any Series A Lender
or any other Person, in the exercise of any right or power therein conferred, or
by any failure or omission to enforce any right conferred thereby, or by any
waiver of any covenant or condition therein provided, or by any acceleration of
the maturity of any of the Borrower's Liabilities, or by the release or other
disposal of any security for any of the Borrower's Liabilities, or by the
dissolution of the Lessee or the combination or consolidation of the Lessee or
the Borrower into or with another entity or any transfer or disposition of any
assets of the Lessee or the Borrower, or by any extension or renewal of the
Credit Agreement, any Series A Note or any other Operative Agreement, in whole
or in part, or by any modification, alteration, amendment or addition of or to
the Credit Agreement, any Series A Note or any other Operative Agreement, any
other guaranty of the Borrower's Liabilities, or any other agreement between the
Borrower and the Agent, any Series A Lender or any other Person, or by any
defense to or avoidance or rejection (by a bankruptcy trustee or otherwise) of
the Credit Agreement, any Series A Note or any other
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<PAGE> 122
Operative Agreement in any bankruptcy or similar proceeding, or by any other
circumstance whatsoever (with or without notice to or knowledge of the
Guarantor) which may or might in any manner or to any extent vary the risks of
the Guarantor, or might otherwise constitute a legal or equitable discharge of
a surety or guarantor; it being the purpose and intent of the parties hereto
that this Guaranty Agreement and the Guarantor's Obligations hereunder shall be
absolute and unconditional under any and all circumstances and shall not be
discharged except by payment as herein provided. Without limiting the
generality of the foregoing, the Guarantor acknowledges and agrees that (a) the
Guarantor's Obligations are absolute and separate from the Borrower's
obligations under the Credit Agreement, any Series A Note or any other
Operative Agreement, (b) the Guarantor's Obligations hereunder shall not be
reduced, limited or otherwise affected if the Credit Agreement, any Series A
Note or any other Operative Agreement is avoided, rejected or limited as an
executory contract in a bankruptcy or similar proceeding, and (c) for the
purpose of defining the Guarantor's Obligations, hereunder, the amount of the
Borrower's Liabilities shall include without limitation all principal and
interest on any Series A Loan and any other amount which is due or may become
due under the Credit Agreement, any Series A Note or any other Operative
Agreement, including without limitation any principal, interest or other amount
that would have been payable at any time but for the avoidance, rejection or
limitation of any Operative Agreement in a bankruptcy or similar proceeding.
5. CURRENCY AND FUNDS OF PAYMENT. The Guarantor hereby guarantees that
the Guarantor's Obligations will be paid in lawful currency of the United
States of America and in immediately available funds, regardless of any law,
regulation or decree now or hereafter in effect that might in any manner affect
the Borrower's Liabilities, or the rights of the Agent (or any Series A Lender)
with respect thereto as against the Borrower, or cause or permit to be invoked
any alteration in the time, amount or manner of payment by the Lessee of any or
all of the Borrower's Liabilities.
6. EVENTS OF DEFAULT. In the event that (a) the Guarantor shall file a
petition to take advantage of any insolvency statute; (b) the Guarantor shall
commence or suffer to exist a proceeding for the appointment of a receiver,
trustee, liquidator or conservator of itself or of the whole or substantially
all of its property; (c) the Guarantor shall file a petition or answer seeking
reorganization or arrangement or similar relief under the Federal bankruptcy
laws or any other applicable law or statute of the United States of America or
any state or similar law of any other country; (d) a court of competent
jurisdiction shall enter an order, judgment or decree appointing a custodian,
receiver, trustee, liquidator or conservator of the Guarantor or of the whole
or substantially all of its properties, or approve a petition filed against the
Guarantor seeking reorganization or arrangement or similar relief under the
Federal bankruptcy laws or any other applicable law or statute of the United
States of America or any state or similar law of any other country, or if,
under the provisions of any other law for the relief or aid of debtors, a court
of competent jurisdiction shall assume custody or control of the Guarantor or
of the whole or substantially all of its properties and such order, judgment,
decree, approval or assumption remains unstayed or undismissed for a period of
sixty (60) consecutive days; (e) there is commenced against the Guarantor any
proceeding or petition seeking reorganization, arrangement or similar relief
under the Federal bankruptcy laws or any other applicable law or statute of the
United States of America or any state, which proceeding or petition remains
unstayed or undismissed for a period of sixty (60)
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<PAGE> 123
consecutive days; (f) there shall occur Event of Default (as defined in the
Participation Agreement); (g) any default shall occur in the payment of amounts
due hereunder; or (h) any other default shall occur hereunder which remains
uncured or unwaived for a period of thirty (30) days after receipt of written
notice thereof from the Agent or the Lessor thereof (each of the foregoing an
"Event of Default" hereunder); then notwithstanding any collateral that the
Agent or any Lender may possess from the Borrower or the Guarantor or any other
guarantor of the Borrower's Liabilities, or any other party, at the Agent's
election and without notice thereof or demand therefor, so long as such Event
of Default shall be continuing, the Guarantor's Obligations shall immediately
become due and payable.
7. SUITS. The Guarantor from time to time shall pay to the Agent (on
behalf of the Series A Lenders), on demand, at the Agent's place of business
set forth in the Credit Agreement, the Guarantor's Obligations as they become
or are declared due, and in the event such payment is not made forthwith, the
Agent may proceed to suit against the Guarantor. At the Agent's election, one
or more and successive or concurrent suits may be brought hereon by the Agent
against the Guarantor, whether or not suit has been commenced against the
Borrower, any other guarantor of the Borrower's Liabilities, or any other
Person and whether or not the Agent has taken or failed to take any other
action to collect all or any portion of the Borrower's Liabilities.
8. SET-OFF AND WAIVER. The Guarantor waives any right to assert against
the Agent or any Series A Lender as a defense, counterclaim, set-off or cross
claim, any defense (legal or equitable) or other claim which the Guarantor may
now or at any time hereafter have against the Lessee, the Borrower, the Agent,
any Lender, or any Holder, without waiving any additional defenses, set-offs,
counterclaims or other claims otherwise available to the Guarantor. If at any
time hereafter the Agent or any Series A Lender employs counsel for advice or
other representation to enforce the Guarantor's Obligations that arise out of
an Event of Default, then, in any of the foregoing events, all of the
attorneys' fees arising from such services and all expenses, costs and charges
in any way or respect arising in connection therewith or relating thereto shall
be obligations of the Guarantor and shall be paid by the Guarantor to the Agent
(or such Series A Lender), on demand.
9. WAIVER; SUBROGATION.
(a) The Guarantor hereby waives notice of the following events or
occurrences: (i) the Agent's (or any Lender's) acceptance of this Guaranty
Agreement; (ii) any Series A Lender's heretofore, now or from time to time
hereafter, making any advances to the Borrower whether pursuant to the Credit
Agreement or any Series A Note, or any amendments, modifications, restatements
or supplements thereto, or replacements or extensions thereof; (iii) the
Borrower, the Agent or any Lender heretofore, now or at any time hereafter,
obtaining, amending, substituting for, releasing, waiving or modifying the
Credit Agreement, any Series A Note or any other Operative Agreements; (iv)
presentment, demand, notices of default, non-payment, partial payment and
protest; (v) the Agent (or any Lender) heretofore, now or at any time
hereafter, granting to the Borrower (or any other party liable to the Lessor on
account of the Borrower's Liabilities) any indulgence or extensions of time of
payment of the Borrower's Liabilities; and (vi) the Borrower heretofore, now or
at any time hereafter, accepting from the Agent (or any Lender) or any other
person, any partial
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payment or payments on account of the Borrower's Liabilities or any collateral
securing the payment thereof or the Agent (or any Lender) settling,
subordinating, compromising, discharging or releasing the same. The Guarantor
agrees that the Agent (or any Lender) may heretofore, now or at any time
hereafter do any or all of the foregoing in such manner, upon such terms and at
such times as the Agent (or any Lender), in its sole and absolute discretion,
deems advisable, without in any way or respect impairing, affecting, reducing
or releasing the Guarantor from the Guarantor's Obligations, and the Guarantor
hereby consents to each and all of the foregoing events or occurrences.
(b) The Guarantor hereby agrees that payment or performance by the
Guarantor of the Guarantor's Obligations under this Guaranty Agreement may be
enforced by the Agent upon demand by the Agent to the Guarantor without the
Agent being required, the Guarantor expressly waiving any right it may have to
require the Agent, to (i) prosecute collection or seek to enforce or resort to
any remedies against the Lessee, the Borrower or the Guarantor or any other
guarantor of the Lessee's Liabilities, IT BEING EXPRESSLY UNDERSTOOD,
ACKNOWLEDGED AND AGREED TO BY THE GUARANTOR THAT DEMAND UNDER THIS GUARANTY
AGREEMENT MAY BE MADE BY THE AGENT, AND THE PROVISIONS HEREOF ENFORCED BY THE
AGENT, EFFECTIVE AS OF THE FIRST DATE ANY EVENT OF DEFAULT OCCURS AND IS
CONTINUING, or (ii) seek to enforce or resort to any remedies with respect to
any security interests, Liens or encumbrances granted to the Agent by the
Borrower or any other Person on account of the Lessee's Liabilities or any
guaranty thereof. The Agent shall not have any obligation to protect, secure
or insure any of the foregoing security interests, Liens or encumbrances on the
properties or interests in properties subject thereto. The Guarantor's
Obligations shall in no way be impaired, affected, reduced, or released by
reason of the Agent's failure or delay to do or take any of the acts, actions
or things described in this Guaranty Agreement including, without limiting the
generality of the foregoing, those acts, actions and things described in this
Section 10.
(c) The Guarantor further agrees with respect to this Guaranty Agreement
that, until the Borrower's Liabilities have been paid in full and the Lenders
and the Holders have no further obligation to make any Loan or Holder Advance,
the Guarantor shall have no right of subrogation, reimbursement or indemnity,
nor any right of recourse to security for the Borrower's Liabilities. This
waiver is expressly intended to prevent the existence of any claim in respect
to such reimbursement by the Guarantor against the estate of Borrower within
the meaning of Section 101 of the Bankruptcy Code, and to prevent the Guarantor
from constituting a creditor of Borrower in respect of such reimbursement
within the meaning of Section 547(b) of the Bankruptcy Code in the event of a
subsequent case involving the Lessee.
(d) Any claim or claims that the Agent may at any time hereafter have
against the Guarantor under this Guaranty Agreement may be asserted by the
Agent by written notice directed to the Guarantor.
10. EFFECTIVENESS; ENFORCEABILITY. This Guaranty Agreement shall be
effective as of the date of the Initial Closing Date and shall continue in full
force and effect until the Borrower's Liabilities are fully paid and the Credit
Agreement, each Series A Note and the Participation Agreement have terminated
in accordance with their respective terms. The Agent shall give the Guarantor
written notice of such termination at the Guarantor's address set forth in
Section 17 below.
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This Guaranty Agreement shall be binding upon the Guarantor and its
successors and assigns and shall inure to the benefit of the Agent, each Series
A Lender, and their respective successors and assigns. Notwithstanding the
foregoing, the Guarantor may not, without the prior written consent of the
Agent, assign any rights, powers, duties or obligations hereunder.
11. REPRESENTATIONS AND WARRANTIES. The Guarantor warrants and represents
to the Agent and each Series A Lender that the Guarantor is duly authorized to
execute, deliver and perform this Guaranty Agreement, that this Guaranty
Agreement is legal, valid, binding and enforceable against the Guarantor in
accordance with its terms except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
the enforcement of creditors' rights generally and by general equitable
principles; and that the Guarantor's execution, delivery and performance of
this Guaranty Agreement do not violate or constitute a breach of its
certificate of incorporation or other documents of corporate governance or any
agreement to which the Guarantor is a party, or any applicable laws, in each
case, which violation or breach could reasonably be expected to have a material
adverse effect on the business, operations or condition (financial or
otherwise) of the Guarantor.
12. INCORPORATION OF COVENANTS. Reference is made to Article XXVIII of
the Lease, and the "Incorporated Covenants" (as defined therein). The
Guarantor agrees with the Lessor that, effective as of the date hereof (whether
or not the Basic Term has commenced with respect to any Property), the
Incorporated Covenants (and all other relevant provisions of the Existing
Wackenhut Corrections Credit Agreement related thereto) are hereby incorporated
by reference into this Guaranty Agreement to the same extent and with the same
effect as if set forth fully herein and shall inure to the benefit of the
Lessor, without giving effect to any waiver, amendment, modification or
replacement of the Existing Wackenhut Corrections Credit Agreement or any term
or provision of the Incorporated Covenants occurring subsequent to the date of
this Guaranty, except to the extent any such waiver or modification (or any
covenants contained in any New Facility) are approved as Incorporated Covenants
pursuant to Section 28.1(a) of the Lease. Without limiting the generality of
the foregoing, from and after the date hereof (whether or not the Basic Term
has commenced with respect to any Property), to the extent that the
Incorporated Covenants require Wackenhut Corrections or any of its Subsidiaries
to deliver any financial statement, certificate, notice, report, or other
document or information to the Existing Credit Agent (or any other agent under
the applicable credit facility), the Guarantor shall simultaneously deliver a
copy of such financial statement, certificate, notice, report, document or
information to the Agent, each Lender and (upon Lessor's request) the Lessor.
13. EXPENSES. The Guarantor agrees to be liable for the payment of all
fees and expenses, including attorney's fees, incurred by the Agent or any
Series A Lender in connection with the enforcement of this Guaranty Agreement.
14. REINSTATEMENT. The Guarantor agrees that this Guaranty Agreement
shall continue to be effective or be reinstated, as the case may be, at any
time payment received by the Lessor under the Credit Agreement, any Series A
Note any other Operative Agreement or this Guaranty Agreement is rescinded or
must be restored for any reason.
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15. COUNTERPARTS. This Guaranty Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original as against any
party whose signature appears thereon, and all of which shall constitute one
and the same instrument.
16. RELIANCE. The Guarantor represents and warrants to the Agent and
each Series A Lender that: (a) the Guarantor has adequate means to obtain from
Borrower, on a continuing basis, information concerning Lessee or Borrower and
Lessee's or Borrower's financial condition and affairs and has full and
complete access to Lessee's or Borrower's books and records; (b) the Guarantor
is not relying on the Agent, any Lender, or any of their respective employees,
agents or other representatives, to provide such information, now or in the
future; (c) the Guarantor is executing this Guaranty Agreement freely and
deliberately, and understands the obligations and financial risk undertaken by
providing this Guaranty; (d) the Guarantor has relied solely on its own
independent investigation, appraisal and analysis of Lessee and Borrower and
Lessee's and Borrower's financial condition and affairs in deciding to provide
this Guaranty and is fully aware of the same; and (e) the Guarantor has not
depended or relied on the Agent, any Lender, or any of their respective
employees, agents or representatives, for any information whatsoever concerning
Lessee or Borrower or Lessee's or Borrower's financial condition and affairs or
other matters material to the Guarantor's decision to provide this Guaranty or
for any counselling, guidance, or special consideration or any promise therefor
with respect to such decision. The Guarantor agrees that neither the Agent nor
any Lender has any duty or responsibility whatsoever, now or in the future, to
provide to the Guarantor any information concerning Lessee or the Borrower or
Lessee's or the Borrower's financial condition and affairs, other than as
expressly provided herein, and that, if the Guarantor receives any such
information from the Agent, any Lender, or any of their respective employees,
agents or other representatives, the Guarantor will independently verify the
information and will not rely on the Agent, any Lender, or any of their
respective employees, agents or other representatives, with respect to such
information.
17. TERMINATION. This Guaranty Agreement and all obligations of the
Guarantor hereunder shall terminate without delivery of any instrument or
performance of any act by any party on the date when all of the Borrower's
Liabilities have been fully paid and the Credit Agreement, each Series A Note
and the Participation Agreement have terminated in accordance with their
respective terms.
18. NOTICES. Any notice shall be conclusively deemed to have been
received by any party hereto and be effective on the day on which delivered to
such party (against receipt therefor) at the address set forth below or such
other address as such party shall specify to the other parties in writing (or,
in the case of telephonic notice or notice by telecopy, telegram or telex (where
the receipt of such message is verified by return) expressly provided for
hereunder, when received at such telephone, telecopy or telex number as may from
time to time be specified in written or verbal notice to the other parties
hereto or otherwise received), or if sent prepaid by certified or registered
mail return receipt requested on the third Business Day after the day on which
mailed, addressed to such party at said address:
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(a) if to the Guarantor:
Wackenhut Corrections Corporation
4200 Wackenhut Drive, #100
Palm Beach Gardens, Florida 33410
Attention: Mr. David Watson, Controller
and Chief Accounting Officer
Telephone No.: (800) 666-5640 Ext. 6646
Telecopy No.: (561) 691-6473
(b) if to the Administrative Agent:
NationsBank, National Association
100 Southeast 2nd Street
FL7-950-14-02
Miami, Florida 33131
Attention: Maria Conroy
Telephone No.:(305) 533-2428
Telecopy No.: (305) 533-2437
19. GOVERNING LAW; WAIVERS OF TRIAL BY JURY, ETC.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF FLORIDA WITHOUT REGARD TO ANY OTHERWISE
APPLICABLE PRINCIPLES OF CONFLICT OF LAWS.
(b) EACH PARTY HEREBY EXPRESSLY AND IRREVOCABLY AGREES AND CONSENTS
THAT ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREIN MAY BE INSTITUTED IN
ANY STATE OR FEDERAL COURT SITTING IN BROWARD COUNTY, FLORIDA AND, BY THE
EXECUTION AND DELIVERY OF THIS AGREEMENT, EXPRESSLY WAIVES ANY OBJECTION
THAT IT MAY HAVE NOW OR HEREAFTER TO THE LAYING OF THE VENUE OR TO THE
JURISDICTION OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND IRREVOCABLY
SUBMITS GENERALLY AND UNCONDITIONALLY TO THE JURISDICTION OF ANY SUCH
COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING.
(c) EACH PARTY AGREES THAT SERVICE OF PROCESS MAY BE MADE BY
PERSONAL SERVICE OF A COPY OF THE SUMMONS AND COMPLAINT OR OTHER LEGAL
PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING, OR BY REGISTERED OR
CERTIFIED MAIL (POSTAGE PREPAID) TO THE ADDRESS OF SUCH PARTY PROVIDED IN
SECTION 17
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HEREOF OR BY ANY OTHER METHOD OF SERVICE PROVIDED FOR UNDER THE
APPLICABLE LAWS IN EFFECT IN THE STATE OF FLORIDA.
(d) NOTHING CONTAINED IN SUBSECTIONS (B) OR (C) HEREOF SHALL
PRECLUDE ANY PARTY FROM BRINGING ANY SUIT, ACTION OR PROCEEDING ARISING
OUT OF OR RELATING TO THIS AGREEMENT IN THE COURTS OF ANY PLACE WHERE ANY
OTHER PARTY OR ANY OF SUCH PARTY'S PROPERTY OR ASSETS MAY BE FOUND OR
LOCATED. TO THE EXTENT PERMITTED BY THE APPLICABLE LAWS OF ANY SUCH
JURISDICTION, EACH PARTY HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION
OF ANY SUCH COURT AND EXPRESSLY WAIVES, IN RESPECT OF ANY SUCH SUIT,
ACTION OR PROCEEDING, THE JURISDICTION OF ANY OTHER COURT OR COURTS WHICH
NOW OR HEREAFTER, BY REASON OF ITS PRESENT OR FUTURE DOMICILE, OR
OTHERWISE, MAY BE AVAILABLE TO IT.
(e) IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS OR
REMEDIES UNDER OR RELATED TO THIS AGREEMENT OR ANY AMENDMENT, INSTRUMENT,
DOCUMENT OR AGREEMENT DELIVERED OR THAT MAY IN THE FUTURE BE DELIVERED IN
CONNECTION WITH THE FOREGOING, EACH PARTY HEREBY AGREES, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, THAT ANY SUCH ACTION OR PROCEEDING SHALL BE
TRIED BEFORE A COURT AND NOT BEFORE A JURY AND EACH PARTY HEREBY WAIVES,
TO THE EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY HAVE
THAT EACH ACTION OR PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
20. ADDITIONAL WAIVERS.
(a) WITHOUT LIMITING THE GENERALITY OF ANY OTHER WAIVER CONTAINED
HEREIN AND WITHOUT IMPAIRING THE PARTIES' CHOICE OF FLORIDA LAW TO GOVERN
THIS GUARANTY (AS SET FORTH ABOVE), THE GUARANTOR HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES THE RIGHT TO ASSERT, ARGUE OR RAISE, IN ANY ACTION
BROUGHT BY ANY PERSON AGAINST THE GUARANTOR UNDER THIS GUARANTY, THAT THE
AGENT, THE LESSOR OR ANY OTHER PERSON STRUCTURED THE TRANSACTION
CONTEMPLATED BY THE OPERATIVE AGREEMENTS IN SUCH A MANNER PRIMARILY TO
CIRCUMVENT THE CALIFORNIA ONE-FORM-OF-ACTION AND ANTI-DEFICIENCY LAWS,
INCLUDING CALIFORNIA CODE OF CIVIL PROCEDURE Section Section 580A, 580B,
580D AND 726.
(b) WITHOUT LIMITING THE GENERALITY OF ANY OTHER WAIVER CONTAINED
HEREIN AND WITHOUT IMPAIRING THE PARTIES' CHOICE OF FLORIDA LAW TO GOVERN
THIS GUARANTY (AS SET
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FORTH ABOVE), THE GUARANTOR HEREBY WAIVES (SUBJECT TO SECTION 9(C) ABOVE)
ALL OF THE GUARANTOR'S RIGHTS OF SUBROGATION AND REIMBURSEMENT AND ANY
OTHER RIGHTS AND DEFENSES AVAILABLE TO THE GUARANTOR BY REASON OF
CALIFORNIA CIVIL CODE SECTIONS 2787 TO 2855, INCLUSIVE, INCLUDING (I) ANY
GUARANTY BY REASON OF AN ELECTION OF REMEDIES BY THE LESSOR, THE AGENT OR
ANY OTHER PERSON, AND (II) ANY RIGHTS OF DEFENSES THE GUARANTOR MAY HAVE
BY REASON OF PROTECTION AFFORDED TO THE BORROWER, THE LESSEE OR ANY OTHER
PERSON WITH RESPECT TO THE OBLIGATIONS GUARANTEED HEREBY PURSUANT TO THE
ANTIDEFICIENCY OR OTHER LAWS OF THE STATE OF CALIFORNIA LIMITING OR
DISCHARGING THE LESSEE'S OR THE BORROWER'S INDEBTEDNESS, INCLUDING
CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 580A, 580B, 580D OR 726. THE
GUARANTOR'S WAIVER OF DEFENSES UNDER CLAUSE (I) ABOVE IS MADE EVEN
THROUGH AN ELECTION OF REMEDIES BY THE LESSOR, THE AGENT OR ANY OTHER
PERSON SUCH AS A NONJUDICIAL FORECLOSURE WITH RESPECT TO SECURITY FOR A
GUARANTEED OBLIGATION, DESTROYS THE GUARANTOR'S RIGHTS OF SUBROGATION AND
REIMBURSEMENT AGAINST THE LESSEE, THE BORROWER OR ANY OTHER PERSON BY THE
OPERATION OF CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 580D OR
OTHERWISE.
[SIGNATURE PAGE FOLLOWS.]
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IN WITNESS WHEREOF, the parties have duly executed this Agreement on the
day and year first written above.
GUARANTOR:
WACKENHUT CORRECTIONS CORPORATION
By: _____________________________________
Name: John G. O'Rourke
Title: Senior Vice-President/
Treasurer/Chief Financial Officer
ADMINISTRATIVE AGENT:
NATIONSBANK, NATIONAL ASSOCIATION,
as Administrative Agent
By: _____________________________________
Name: Maria P. Conroy
Title: Senior Vice President
SIGNATURE PAGE 1 OF 1
<PAGE> 1
AMENDED AND RESTATED LEASE AGREEMENT
Dated as of June 19, 1997
between
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not individually,
but solely as Owner Trustee
under the Wackenhut Corrections Trust 1997-1
as Lessor
and
WACKENHUT CORRECTIONS CORPORATION, as Lessee
- -----------------------------------------------------------------
This Amended and Restated Lease Agreement is subject to a security interest in
favor of NationsBank, National Association, as Administrative Agent (the
"Agent") under an Amended and Restated Security Agreement dated as of June 19,
1997, among First Security Bank, National Association, not individually except
as expressly stated therein, but solely as Owner Trustee under the Wackenhut
Corrections Trust 1997-1, the Lenders and the Agent, as amended, modified,
supplemented, restated or replaced from time to time. This Amended and Restated
Lease Agreement has been executed in several counterparts. To the extent, if
any, that this Amended and Restated Lease Agreement constitutes chattel paper
(as such term is defined in the Uniform Commercial Code as in effect in any
applicable jurisdiction), no security interest in this Amended and Restated
Lease Agreement may be created through the transfer or possession of any
counterpart other than the original counterpart containing the receipt therefor
executed by the Agent on the signature page hereof.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C> <C>
ARTICLE I........................................................................................................ 1
1.1 Definitions................................................................................ 1
ARTICLE II....................................................................................................... 2
2.1 Property................................................................................... 2
2.2 Lease Term................................................................................. 2
2.3 Title...................................................................................... 2
2.4 Lease Supplements.......................................................................... 2
2.5 Controlled Affiliates as Lessee............................................................ 2
ARTICLE III...................................................................................................... 3
3.1 Rent....................................................................................... 3
3.2 Payment of Basic Rent...................................................................... 3
3.3 Supplemental Rent.......................................................................... 3
3.4 Performance on a Non-Business Day.......................................................... 4
3.5 Rent Payment Provisions.................................................................... 4
ARTICLE IV....................................................................................................... 4
4.1 Utility Charges; Taxes..................................................................... 4
ARTICLE V........................................................................................................ 4
5.1 Quiet Enjoyment............................................................................ 4
ARTICLE VI....................................................................................................... 5
6.1 Net Lease.................................................................................. 5
6.2 No Termination or Abatement................................................................ 5
ARTICLE VII...................................................................................................... 6
7.1 Ownership of the Properties................................................................ 6
ARTICLE VIII..................................................................................................... 7
8.1 Condition of the Properties................................................................ 7
8.2 Possession and Use of the Properties....................................................... 7
ARTICLE IX....................................................................................................... 8
9.1 Compliance with Legal Requirements and Insurance Requirements.............................. 8
ARTICLE X........................................................................................................ 8
10.1 Maintenance and Repair; Return............................................................. 8
10.2 Environmental Inspection...................................................................10
ARTICLE XI.......................................................................................................10
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C> <C> <C>
11.1 Modifications..............................................................................10
ARTICLE XII......................................................................................................11
12.1 Warranty of Title..........................................................................11
ARTICLE XIII.....................................................................................................11
13.1 Permitted Contests Other Than in Respect of Indemnities....................................11
ARTICLE XIV......................................................................................................12
14.1 Public Liability and Workers' Compensation Insurance.......................................12
14.2 Hazard and Other Insurance.................................................................12
14.3 Coverage...................................................................................13
ARTICLE XV.......................................................................................................14
15.1 Casualty and Condemnation..................................................................14
15.2 Environmental Matters......................................................................15
15.3 Notice of Environmental Matters............................................................16
ARTICLE XVI......................................................................................................16
16.1 Termination Upon Certain Events............................................................16
16.2 Procedures.................................................................................16
ARTICLE XVII.....................................................................................................17
17.1 Lease Events of Default....................................................................17
17.2 Surrender of Possession....................................................................19
17.3 Reletting..................................................................................19
17.4 Damages....................................................................................19
17.5 Final Liquidated Damages...................................................................20
17.6 Waiver of Certain Rights...................................................................21
17.7 Assignment of Rights Under Contracts.......................................................21
17.8 Environmental Costs........................................................................21
17.9 Remedies Cumulative........................................................................21
17.10 Notice of Default or Event of Default......................................................21
17.11 Option to Purchase or Sell All Properties Upon Certain Changes of
Control....................................................................................21
17.12 Lessee's Purchase Option During Default....................................................22
ARTICLE XVIII....................................................................................................22
18.1 Lessor's Right to Cure Lessee's Lease Defaults.............................................22
ARTICLE XIX......................................................................................................22
19.1 Provisions Relating to Lessee's Exercise of its Purchase Option............................22
19.2 No Termination With Respect to Less than All of a Property.................................22
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C> <C> <C>
ARTICLE XX.......................................................................................................23
20.1 Individual Purchase Option.................................................................23
20.2 Purchase or Sale Option....................................................................24
20.3 Accounting Changes.........................................................................25
ARTICLE XXI......................................................................................................25
21.1 Renewal....................................................................................25
ARTICLE XXII.....................................................................................................26
22.1 Sale Procedure.............................................................................26
22.2 Application of Proceeds of Sale............................................................28
22.3 Indemnity for Excessive Wear...............................................................28
22.4 Appraisal Procedure........................................................................28
22.5 Certain Obligations Continue...............................................................29
ARTICLE XXIII....................................................................................................29
23.1 Holding Over...............................................................................29
ARTICLE XXIV.....................................................................................................29
24.1 Risk of Loss...............................................................................29
ARTICLE XXV......................................................................................................30
25.1 Assignment.................................................................................30
25.2 Subleases..................................................................................30
ARTICLE XXVI.....................................................................................................31
26.1 No Waiver..................................................................................31
ARTICLE XXVII....................................................................................................31
27.1 Acceptance of Surrender....................................................................31
27.2 No Merger of Title.........................................................................31
ARTICLE XXVIII...................................................................................................31
28.1 Incorporation of Covenants.................................................................31
ARTICLE XXIX.....................................................................................................32
29.1 Notices....................................................................................32
ARTICLE XXX......................................................................................................33
30.1 Miscellaneous..............................................................................33
30.2 Amendments and Modifications...............................................................33
30.3 Successors and Assigns.....................................................................34
30.4 Headings and Table of Contents.............................................................34
30.5 Counterparts...............................................................................34
30.6 GOVERNING LAW..............................................................................34
</TABLE>
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<PAGE> 5
<TABLE>
<S> <C> <C> <C>
30.7 Calculation of Rent........................................................................34
30.8 Memoranda of Lease and Lease Supplements...................................................34
30.9 Allocations between the Lenders and the Holders............................................34
30.10 Limitations on Recourse....................................................................34
30.11 WAIVERS OF JURY TRIAL......................................................................34
30.12 Original Leases............................................................................35
30.13 Mortgage Grant and Remedies................................................................35
30.14 Exercise of Lessor Rights..................................................................35
EXHIBITS.........................................................................................................38
EXHIBIT A Lease Supplement No. __............................................................38
EXHIBIT B Other Names and Locations of Lessee................................................48
EXHIBIT C-1 Form of Memorandum of Lease and Lease Supplement...................................49
</TABLE>
iv
<PAGE> 6
AMENDED AND RESTATED LEASE AGREEMENT
THIS AMENDED AND RESTATED LEASE AGREEMENT (as amended, supplemented or
modified from time to time, this "Lease"), dated as of June 19, 1997, is between
FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national banking association,
having its principal office at 79 South Main Street, Salt Lake City, Utah 84111,
not individually, but solely as Owner Trustee under the Wackenhut Corrections
Trust 1997-1, as lessor (the "Lessor"), and WACKENHUT CORRECTIONS CORPORATION, a
Florida corporation, having its principal place of business at 4200 Wackenhut
Drive, #100, Palm Beach Gardens, Florida 33410-4243 as lessee (the "Lessee")
provided that in the case of a Property with an alternate Lessee, as described
in Section 2.5 below, such alternate Lessee shall also be deemed a "Lessee" with
respect to such Property).
W I T N E S S E T H:
A. WHEREAS, subject to the terms and conditions of the Participation
Agreement and Agency Agreement, Lessor will (i) purchase or ground lease various
parcels of real property, some of which may have existing Improvements thereon,
from one or more third parties designated by the Construction Agent and (ii)
fund the development, refurbishment, installation and construction by the
Construction Agent of Improvements on such real property; and
B. WHEREAS, the Basic Term shall commence with respect to each Property
upon the date set forth in Section 2.2 hereof; and
C. WHEREAS, Lessor desires to lease to Lessee, and Lessee desires to
lease from Lessor, each Property;
NOW, THEREFORE, in consideration of the foregoing, and of other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
1.1 Definitions. Capitalized terms used but not otherwise defined in
this Lease have the respective meanings specified in Appendix A to the Amended
and Restated Participation Agreement of even date herewith (as such may be
amended, modified, supplemented, restated and/or replaced from time to time, the
"Participation Agreement") among Wackenhut Corrections Corporation, as
Construction Agent, the Lessee, First Security Bank, National Association, not
individually, except as expressly stated therein, as Owner Trustee under the
Wackenhut Corrections Trust 1997-1, the Holders party thereto, the Lenders party
thereto, and the Agent.
<PAGE> 7
ARTICLE II
2.1 Property. Subject to the terms and conditions hereinafter set forth
and contained in the respective Lease Supplement relating to each Property,
Lessor hereby leases to Lessee and Lessee hereby leases from Lessor, each
Property.
2.2 Lease Term. The term of this Lease with respect to each Property
(the "Basic Term") shall begin upon the earlier to occur of (i) the Property
Closing Date for such Property or (ii) the date the Lessor takes title to such
Property (such earlier date being referred to as the "Basic Term Commencement
Date" for such Property) and shall end on December 18, 2002, unless the Term is
extended in accordance with Article XXI of this Lease or earlier terminated in
accordance with the provisions of this Lease.
2.3 Title. Each Property is leased to Lessee without any representation
or warranty, express or implied, by Lessor and subject to the rights of parties
in possession (if any), the existing state of title (including, without
limitation, the Permitted Exceptions) and all applicable Legal Requirements.
Lessee shall in no event have any recourse against Lessor for any defect in
Lessor's title to any Property other than for Lessor Liens.
2.4 Lease Supplements. On or prior to each Basic Term Commencement
Date, Lessee and Lessor shall each execute and deliver a Lease Supplement for
the Property to be leased effective as of such Basic Term Commencement Date in
substantially the form of Exhibit A hereto. Lessee hereby irrevocably appoints
Lessor as Lessee's attorney-in-fact, with power of substitution, in the name of
Lessor or the name of Lessee or otherwise, to execute any Lease Supplement which
Lessee fails or refuses to sign in accordance with the terms of this Section
2.4.
2.5 Controlled Affiliates as Lessee. Subject to the consent of the
Administrative Agent and the delivery of such agreements and documents as the
Administrative Agent may require (including without limitation the Guaranty,
documents perfecting the liens of the Owner Trustee, Agent, Lenders and Holders
under the Operative Agreements and written opinions of counsel for the Lessee
and Wackenhut Corrections or any applicable Controlled Affiliate), any
Controlled Affiliate of Wackenhut Corrections may become party to this Lease as
a Lessee (each as "alternative Lessee") of a Property, and shall be liable
(jointly and severally with Wackenhut Corrections) for all obligations as
Lessee. The foregoing notwithstanding, (a) Wackenhut Corrections shall remain
fully liable for all obligations as Lessee and Construction Agent with respect
to each Property, and (b) Wackenhut Corrections shall have the right to give any
notice, consent or waiver, to exercise any option permitted under any Operative
Agreement, and to agree to any amendment or modification with respect to
Operative Agreement or any Property, as and on behalf of the Lessee with respect
to each Property (and each alternate Lessee hereby grants to Wackenhut
Corrections an irrevocable power of attorney to take any such actions), and any
other party to the Operative Agreements shall be fully protected in relying on
any such actions taken by Wackenhut Corrections or (with respect to the
applicable Property) by any alternate Lessee.
2
<PAGE> 8
ARTICLE III
3.1 Rent.
(a) Lessee shall pay Basic Rent on each Payment Date, and on any
date on which this Lease shall terminate with respect to any or all
Properties during the Term; provided, however, with respect to each
individual Property Lessee shall have no obligation to pay Basic Rent
with respect to such Property until the earlier of (i) the Completion
Date for such Property or (ii) if such Property is a Construction
Period Property as of the date of any Agency Agreement Event of
Default, the date of such Agency Agreement Event of Default (in each
case, such earlier date being referred to as the "Basic Rent
Commencement Date").
(b) Basic Rent shall be due and payable in lawful money of the
United States and shall be paid in immediately available funds on the
due date therefor (or within the applicable grace period) to such
account or accounts as Lessor shall from time to time direct.
(c) Lessee's inability or failure to take possession of all or
any portion of any Property when delivered by Lessor, whether or not
attributable to any act or omission of the Lessor, the Construction
Agent, Lessee, or any other Person, or for any other reason whatsoever,
shall not delay or otherwise affect Lessee's obligation to pay Rent for
such Property in accordance with the terms of this Lease.
3.2 Payment of Basic Rent. Basic Rent shall be paid absolutely net to
Lessor or its designee, so that this Lease shall yield to Lessor the full amount
of Basic Rent, without setoff, deduction or reduction.
3.3 Supplemental Rent. Lessee shall pay to Lessor or its designee or to
the Person entitled thereto any and all Supplemental Rent promptly as the same
shall become due and payable, and if Lessee fails to pay any Supplemental Rent,
Lessor shall have all rights, powers and remedies provided for herein or by law
or equity or otherwise in the case of nonpayment of Basic Rent. Without limiting
the generality of the definition of "Supplemental Rent," Lessee shall pay to
Lessor as Supplemental Rent, among other things, on demand, to the extent
permitted by applicable Legal Requirements, (a) any and all unpaid fees,
charges, payments and other obligations (except the obligations of Lessor to pay
the principal amount of the Loans and the Holder Amount) due and owing by Lessor
under the Credit Agreement, the Trust Agreement or any other Operative Agreement
(including specifically without limitation any amounts owing to the Lenders
under Section 2.11 or Section 2.12 of the Credit Agreement and any amounts owing
to the Holders under Section 3.9 or Section 3.10 of the Trust Agreement) and (b)
interest at the applicable Overdue Rate on any installment of Basic Rent not
paid when due (subject to the applicable grace period) for the period for which
the same shall be overdue and on any payment of Supplemental Rent not paid when
due or demanded by the appropriate Person for the period from the due date or
the date of any such demand, as the case may be, until the same shall be paid.
The expiration or other termination of Lessee's obligations to pay Basic Rent
hereunder shall not limit or modify the obligations of Lessee with respect to
Supplemental Rent. Unless expressly provided otherwise in this Lease, in the
event of any failure on the part of Lessee to pay and discharge any Supplemental
Rent as and when due,
3
<PAGE> 9
Lessee shall also promptly pay and discharge any fine, penalty, interest or cost
which may be assessed or added, pursuant to any Operative Agreement or
otherwise, in each case for nonpayment or late payment of such Supplemental
Rent, all of which shall also constitute Supplemental Rent.
3.4 Performance on a Non-Business Day. If any Basic Rent is required
hereunder on a day that is not a Business Day, then such Basic Rent shall be due
on the corresponding Scheduled Interest Payment Date. If any Supplemental Rent
is required hereunder on a day that is not a Business Day, then such
Supplemental Rent shall be due on the next succeeding Business Day.
3.5 Rent Payment Provisions. Lessee shall make payment of all Basic
Rent and Supplemental Rent when due regardless of whether any of the Operative
Agreements pursuant to which same is calculated and is owing shall have been
rejected, avoided or disavowed in any bankruptcy or insolvency proceeding
involving any of the parties to any of the Operative Agreements. Such provisions
of such Operative Agreements and their related definitions are incorporated
herein by reference and shall survive any termination, amendment or rejection of
any such Operative Agreements.
ARTICLE IV
4.1 Utility Charges; Taxes. Lessee shall pay or cause to be paid all
charges for electricity, power, gas, oil, water, telephone, sanitary sewer
service and all other rents and utilities used in or on a Property and related
real property during the Term. Lessee shall be entitled to receive any credit or
refund with respect to any utility charge paid by Lessee, provided that Lessee
must collect any such credit or refund from Lessor or the respective utility
company (as the case may be) and shall not be entitled to offset any such amount
owed to Lessee against Rent payable by the Lessee hereunder. Unless a Lease
Default or Lease Event of Default shall have occurred and be continuing, the
amount of any credit or refund received by Lessor on account of any utility
charges paid by Lessee, net of the costs and expenses incurred by Lessor in
obtaining such credit or refund, shall be promptly paid over to Lessee. In
addition, Lessee shall pay or cause to be paid all taxes or taxes assessments
against a Property. All charges for utilities and all taxes or tax assessments
imposed with respect to a Property for a billing period (or in the cases of tax
assessments, a tax period) during which this Lease expires or terminates shall
be adjusted and prorated on a daily basis between Lessor and Lessee, and each
party shall pay or reimburse the other for such party's pro rata share thereof.
ARTICLE V
5.1 Quiet Enjoyment. Subject to the rights of Lessor contained in
Sections 17.2 and 17.3 and the other terms of this Lease and the other Operative
Agreements and so long as no Lease Event of Default shall have occurred and be
continuing, Lessee shall peaceably and quietly have, hold and enjoy each
Property for the applicable Term, free of any claim or other action by Lessor or
anyone rightfully claiming by, through or under Lessor (other than Lessee) with
respect to any matters arising from and after the applicable Basic Term
Commencement Date.
4
<PAGE> 10
ARTICLE VI
6.1 Net Lease. This Lease shall constitute a net lease. Any present or
future law to the contrary notwithstanding, this Lease shall not terminate, nor
shall Lessee be entitled to any abatement, suspension, deferment, reduction,
setoff, counterclaim, or defense with respect to the Rent, nor shall the
obligations of Lessee hereunder be affected (except as expressly herein
permitted and by performance of the obligations in connection therewith) by
reason of: (a) any damage to or destruction of any Property or any part thereof;
(b) any taking of any Property or any part thereof or interest therein by
Condemnation or otherwise; (c) any prohibition, limitation, restriction or
prevention of Lessee's use, occupancy or enjoyment of any Property or any part
thereof, or any interference with such use, occupancy or enjoyment by any Person
or for any other reason; (d) any title defect, Lien or any matter affecting
title to any Property; (e) any eviction by paramount title or otherwise; (f) any
default by Lessor hereunder; (g) any action for bankruptcy, insolvency,
reorganization, liquidation, dissolution or other proceeding relating to or
affecting the Agent, any Lender, Lessor, Lessee, any Holder or any Governmental
Authority; (h) the impossibility or illegality of performance by Lessor, Lessee
or both; (i) any action of any Governmental Authority or any other Person; (j)
Lessee's acquisition of ownership of all or part of any Property; (k) breach of
any warranty or representation with respect to any Property or any Operative
Agreement; (l) any defect in the condition, quality or fitness for use of any
Property or any part thereof; or (m) any other cause or circumstance whether
similar or dissimilar to the foregoing and whether or not Lessee shall have
notice or knowledge of any of the foregoing. The foregoing clause (j) shall not
prevent the termination of the Lease in accordance with the terms hereof if the
Lessee purchases all of the Properties pursuant to Section 20.2, or the
termination of the Lease with respect to an individual Property if the Lessee
purchases such Property pursuant to Section 20.1. The parties intend that the
obligations of Lessee hereunder shall be covenants, agreements and obligations
that are separate and independent from any obligations of Lessor hereunder and
shall continue unaffected unless such covenants, agreements and obligations
shall have been modified or terminated in accordance with an express provision
of this Lease. Lessor and Lessee acknowledge and agree that the provisions of
this Section 6.1 have been specifically reviewed and subject to negotiation.
6.2 No Termination or Abatement. Lessee shall remain obligated under
this Lease in accordance with its terms and shall not take any action to
terminate, rescind or avoid this Lease, notwithstanding any action for
bankruptcy, insolvency, reorganization, liquidation, dissolution, or other
proceeding affecting Lessor, any other Person or any Governmental Authority, or
any action with respect to this Lease or any Operative Agreement which may be
taken by any trustee, receiver or liquidator of Lessor, any other Person or any
Governmental Authority or by any court with respect to Lessor, any other Person
or any Governmental Authority. Lessee hereby waives all right (a) to terminate
or surrender this Lease (except as permitted under the terms of the Operative
Agreements) or (b) to avail itself of any abatement, suspension, deferment,
reduction, setoff, counterclaim or defense with respect to any Rent. Lessee
shall remain obligated under this Lease in accordance with its terms and Lessee
hereby waives any and all rights now or hereafter conferred by statute or
otherwise to modify or to avoid strict compliance with its obligations under
this Lease. Notwithstanding any such statute or otherwise, Lessee shall be bound
by all of the terms and conditions contained in this Lease.
5
<PAGE> 11
ARTICLE VII
7.1 Ownership of the Properties.
(a) Lessor and Lessee intend that for federal and all state and
local income tax purposes and other tax purposes, for bankruptcy
purposes, creditor's rights purposes, environmental law purposes, for
purposes of exercising remedies against the Lessee, the Construction
Agent or the Properties, and for the purposes of any other laws
governing any right or obligation of any party under any Operative
Agreement (A) this Lease will be treated as a loan and financing
arrangement and not a true lease, (B) Lessee will be treated as the
owner of the Properties and will be entitled to all tax benefits
ordinarily available to owners of property similar to the Properties
for such tax purposes, and (C) all payments of Basic Rent shall be
deemed to be interest payments. Consistent with the foregoing, Lessee
intends to claim depreciation and cost recovery deductions associated
with the Property, and Lessor agrees not to take any inconsistent
position on its income tax returns. Neither Lessor, the Agent, any
Lender, any Holder nor NCMI makes any representation or warranty with
respect to the foregoing matters described in this Section 7.1 and will
assume no liability for the Lessee's accounting treatment of this
transaction.
(b) Lessor and Lessee further intend and agree that, for the
purpose of securing Lessee's obligations hereunder, (i) this Lease
shall be deemed to be a security agreement and financing statement
within the meaning of Article 9 of the Uniform Commercial Code
respecting each of the Properties to the extent such is personal
property and an irrevocable grant and conveyance of a lien and mortgage
on each of the Properties to the extent such is real property; (ii) the
acquisition of title (or to the extent applicable, a leasehold
interest) in each Property referenced in Article II shall be deemed to
be (A) a grant by Lessee to Lessor of a lien on and security interest
in all of Lessee's right, title and interest in and to each Property
and all proceeds (including without limitation insurance proceeds) of
any of the Property, whether in the form of cash, investments,
securities or other property, (B) an assignment by Lessee to Lessor of
all rents, profits and income produced by any of the Property and (C)
an assignment by Lessee to Lessor of all proceeds of any operating
agreements or other agreements between Lessee and any Governmental
Authority relating to any Property; and (iii) notifications to Persons
holding such property, and acknowledgments, receipts or confirmations
from financial intermediaries, bankers or agents (as applicable) of
Lessee shall be deemed to have been given for the purpose of perfecting
such security interest under applicable law. Lessor and Lessee shall
promptly take such actions as may be necessary or advisable in either
party's opinion (including without limitation the filing of Uniform
Commercial Code Financing Statements or Uniform Commercial Code Fixture
Filings) to ensure that the lien and security interest in each Property
will be deemed to be a perfected lien and security interest of first
priority under applicable law and will be maintained as such throughout
the Term.
6
<PAGE> 12
ARTICLE VIII
8.1 Condition of the Properties. LESSEE ACKNOWLEDGES AND AGREES THAT IT
IS LEASING EACH PROPERTY "AS IS" WITHOUT REPRESENTATION, WARRANTY OR COVENANT
(EXPRESS OR IMPLIED) BY LESSOR AND IN EACH CASE SUBJECT TO (A) THE EXISTING
STATE OF TITLE, (B) THE RIGHTS OF ANY PARTIES IN POSSESSION THEREOF (IF ANY),
(C) ANY STATE OF FACTS WHICH AN ACCURATE SURVEY OR PHYSICAL INSPECTION MIGHT
SHOW, (D) ALL APPLICABLE LEGAL REQUIREMENTS AND (E) VIOLATIONS OF LEGAL
REQUIREMENTS WHICH MAY EXIST ON THE DATE OF THE APPLICABLE LEASE SUPPLEMENT.
NEITHER LESSOR NOR THE AGENT NOR ANY LENDER NOR ANY HOLDER HAS MADE OR SHALL BE
DEEMED TO HAVE MADE ANY REPRESENTATION, WARRANTY OR COVENANT (EXPRESS OR
IMPLIED) OR SHALL BE DEEMED TO HAVE ANY LIABILITY WHATSOEVER AS TO THE TITLE,
VALUE, HABITABILITY, USE, CONDITION, DESIGN, OPERATION, MERCHANTABILITY OR
FITNESS FOR USE OF ANY PROPERTY (OR ANY PART THEREOF), OR ANY OTHER
REPRESENTATION, WARRANTY OR COVENANT WHATSOEVER, EXPRESS OR IMPLIED, WITH
RESPECT TO ANY PROPERTY (OR ANY PART THEREOF), AND NEITHER LESSOR NOR THE AGENT
NOR ANY LENDER NOR ANY HOLDER SHALL BE LIABLE FOR ANY LATENT, HIDDEN, OR PATENT
DEFECT THEREON OR THE FAILURE OF ANY PROPERTY, OR ANY PART THEREOF, TO COMPLY
WITH ANY LEGAL REQUIREMENT. THE LESSEE HAS OR WILL HAVE BEEN AFFORDED FULL
OPPORTUNITY TO INSPECT EACH PROPERTY AND THE IMPROVEMENTS THEREON (IF ANY), IS
OR WILL BE (INSOFAR AS THE LESSOR, THE AGENT, EACH LENDER AND EACH HOLDER ARE
CONCERNED) SATISFIED WITH THE RESULTS OF ITS INSPECTIONS AND IS ENTERING INTO
THIS LEASE SOLELY ON THE BASIS OF THE RESULTS OF ITS OWN INSPECTIONS, AND ALL
RISKS INCIDENT TO THE MATTERS DESCRIBED IN THE PRECEDING SENTENCE, AS BETWEEN
THE LESSOR, THE AGENT, THE LENDERS AND THE HOLDERS, ON THE ONE HAND, AND THE
LESSEE, ON THE OTHER HAND, ARE TO BE BORNE BY LESSEE.
8.2 Possession and Use of the Properties.
(a) At all times during the Term with respect to each Property,
such Property shall be used by Lessee in the ordinary course of its
business. Lessee shall pay, or cause to be paid, all charges and costs
required in connection with the use of the Properties as contemplated
by this Lease. Lessee shall not commit or permit any waste of the
Properties or any part thereof.
(b) Lessee represents and warrants that the address stated in
Section 29.1 of this Lease is the chief place of business and chief
executive office of Lessee (as such terms are used in Section 9-103 of
the Uniform Commercial Code of any applicable jurisdiction), and Lessee
will provide Lessor with prior written notice of any change of location
of its chief place of business or chief executive office. Regarding
each Property, Lessee represents and warrants that each Lease
Supplement correctly identifies the initial location of the related
Equipment and Improvements and contains an accurate legal description
for the related
7
<PAGE> 13
parcel of Land. Lessee has no other places of business where the
Equipment or Improvements will be located other than those identified
on the applicable Lease Supplement.
(c) Lessee will not attach or incorporate any item of Equipment to
or in any other item of equipment or personal property or to or in any
real property (except the Land identified in the Lease Supplement in
which such Equipment is also described) in a manner that could give
rise to the assertion of any Lien (other than a Permitted Lien) on such
item of Equipment by reason of such attachment or the assertion of a
claim that such item of Equipment has become a fixture and is subject
to a Lien in favor of a third party that is prior to the Liens thereon
created by the Operative Agreements.
(d) Each Lease Supplement delivered under the terms of this Lease
shall contain, in regard to the relevant Property, an Equipment
Schedule that has a complete description of each item of Equipment, an
Improvement Schedule that has a complete description of each
Improvement and a legal description of the Land, to be leased hereunder
as of such date. Simultaneously with the execution and delivery of each
Lease Supplement, such Equipment, Improvements and Land shall be deemed
to have been accepted by Lessee for all purposes of this Lease and to
be subject to this Lease.
(e) At all times during the Term with respect to each Property,
Lessee will comply with all obligations under, and (to the extent no
Event of Default has occurred and is continuing and provided that such
exercise will not impair the value of such Property) shall be permitted
to exercise all rights and remedies under, all operation and easement
agreements and related or similar agreements applicable to such
Property.
ARTICLE IX
9.1 Compliance with Legal Requirements and Insurance Requirements.
Subject to the terms of Article XIII relating to permitted contests, Lessee, at
its sole cost and expense, shall (i) comply with all material Legal Requirements
(including without limitation all Environmental Laws), and all Insurance
Requirements relating to the Properties, including the use, development,
construction, operation, maintenance, repair, refurbishment and restoration
thereof, whether or not compliance therewith shall require structural or
extraordinary changes in the Improvements or interfere with the use and
enjoyment of the Properties, and (ii) procure, maintain and comply with all
material licenses, permits, orders, approvals, consents and other authorizations
required for the construction, use, maintenance and operation of the Properties
and for the use, development, construction, operation, maintenance, repair and
restoration of the Improvements.
ARTICLE X
10.1 Maintenance and Repair; Return.
(a) Lessee, at its sole cost and expense, shall maintain each
Property in good condition, repair and working order (ordinary wear and
tear excepted) and make all necessary
8
<PAGE> 14
repairs thereto, of every kind and nature whatsoever, whether interior
or exterior, ordinary or extraordinary, structural or nonstructural, or
foreseen or unforeseen, in each case as required by all Legal
Requirements, Insurance Requirements, and manufacturer's specifications
and standards and on a basis consistent with the operation and
maintenance of properties or equipment comparable in type and function
to the applicable Property and in compliance with standard industry
practice, subject, however, to the provisions of Article XV with
respect to Condemnation and Casualty.
(b) Lessee shall not use or locate any component of any Property
outside of any Approved State. Lessee shall not move or relocate any
component of any Property beyond the boundaries of the Land described
in the applicable Lease Supplement without Lessor's prior written
consent, which consent shall not be unreasonably withheld or delayed.
(c) If any material component of any Property becomes worn out,
lost, destroyed, damaged beyond repair or otherwise permanently
rendered unfit for use, Lessee, at its own expense, will within a
reasonable time replace such component with a replacement component
which is free and clear of all Liens (other than Permitted Liens) and
has a value, utility and useful life at least equal to the component
replaced. All components which are added to any Property shall
immediately become the property of, and title thereto shall vest in,
Lessor, and shall be deemed incorporated in such Property and subject
to the terms of this Lease as if originally leased hereunder.
(d) Upon reasonable advance notice, Lessor and its agents shall
have the right to inspect each Property and all maintenance records
with respect thereto at any reasonable time during normal business
hours but shall not materially disrupt the business of Lessee.
(e) If, at any time, because of a condemnation, casualty or other
event or condition, Lessor has reason to believe that the appraised
value of any Property has materially decreased, then the Lessor or the
Agent (at Lessee's sole expense) may cause an additional Appraisal
(addressed to the Lessor and the Agent) to be prepared. In addition,
Lessor or the Agent (at Lessee's sole expense) may cause to be prepared
(at Lessee's sole expense) any additional Appraisals (or reappraisals)
as Lessor or the Agent may deem appropriate (i) if an Event of Default
has occurred and is continuing, (ii) if any one of Lessor, the Agent,
any Lender or any Holder is required pursuant to any applicable Legal
Requirement to obtain such an Appraisal (or reappraisal), or (iii) at
any time upon the request of the Agent or the Lessor, such a request
pursuant to this clause (iii) not to be made more frequently than once
every three (3) years for the same Property.
(f) Lessor shall under no circumstances be required to build any
improvements on any Property, make any repairs, replacements,
alterations or renewals of any nature or description to any Property,
make any expenditure whatsoever in connection with this Lease or
maintain any Property in any way. Lessor shall not be required to
maintain, repair or rebuild all or any part of any Property, and Lessee
waives the right to (i) require Lessor to maintain, repair, or rebuild
all or any part of any Property (unless such repairs are needed to cure
damage to a Property caused by the gross negligence or willful
misconduct of the
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Lessor), or (ii) make repairs at the expense of Lessor pursuant to any
Legal Requirement, Insurance Requirement, contract, agreement,
covenants, condition or restriction at any time in effect.
(g) Lessee shall, upon the expiration or earlier termination of
this Lease with respect to a Property, if Lessee shall not have
exercised its Purchase Option with respect to such Property, surrender
such Property to Lessor, or the third party purchaser, as the case may
be, subject to Lessee's obligations under this Lease (including without
limitation Sections 9.1, 10.1(a)-(f), 10.2, 11.1, 12.1, 22.1 and 23.1).
10.2 Environmental Inspection. If (a) Lessee has not given notice of
the exercise of its Purchase Option on the Expiration Date pursuant to Section
20.1(b), or (b) Lessee has given notice, pursuant to Section 20.1(b) of its
election to remarket the Properties on the Expiration Date or a Payment Date
pursuant to Section 22.1 then, in either case, not more than one hundred twenty
(120) days nor less than sixty (60) days prior to such Expiration Date or
Payment Date, Lessee shall, at its sole cost and expense, provide to Lessor and
the Agent a report by a reputable environmental consultant selected by Lessee,
which report shall be in form and substance reasonably satisfactory to Lessor
and the Agent and shall include without limitation a "Phase I" environmental
report (or update of a prior "Phase I" report that was previously delivered to
the Lessor and the Agent) on each of the Properties. If the report delivered
pursuant to the preceding sentence recommends that a "Phase II" report or other
supplemental report be obtained, the Lessee shall, at its own cost and expense,
not less than thirty (30) days prior to such Expiration Date or Payment Date,
provide to Lessor and the Agent such "Phase II" or other report, in form and
substance reasonably satisfactory to Lessor and the Agent.
ARTICLE XI
11.1 Modifications.
(a) Lessee at its sole cost and expense, at any time and from
time to time without the consent of Lessor may make alterations,
renovations, improvements and additions to any Property or any part
thereof and substitutions and replacements therefor (collectively,
"Modifications"); provided, that: (i) except for any Modification
required to be made pursuant to a Legal Requirement, no Modification
shall materially impair the value, utility or useful life of any
Property from that which existed immediately prior to such
Modification; (ii) the Modification shall be done expeditiously and in
a good and workmanlike manner; (iii) Lessee shall comply with all
material Legal Requirements (including all Environmental Laws) and
Insurance Requirements applicable to the Modification, including
without limitation the obtaining of all permits and certificates of
occupancy, and the structural integrity of any Property shall not be
adversely affected; (iv) to the extent required by Section 14.2(a),
Lessee shall maintain builders' risk insurance at all times when a
Modification is in progress; (v) subject to the terms of Article XIII
relating to permitted contests, Lessee shall pay all costs and expenses
and discharge any Liens (other than Permitted Liens) arising with
respect to the Modification; (vi) such Modification shall comply with
the requirements of this Lease (including without limitation Sections
8.2 and
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10.1); and (vii) no Improvements shall be demolished unless Lessee
shall finance the proposed Modification outside of this lease facility.
All Modifications shall become property of the Lessor and shall be
subject to this Lease, and title to any component of any Property
comprising any such Modifications shall immediately vest in Lessor.
(b) The construction process provided for in the Agency Agreement
is acknowledged by Lessor and the Agent to be consistent with and in
compliance with the terms and provisions of this Article XI.
ARTICLE XII
12.1 Warranty of Title.
(a) Lessee agrees that, except as otherwise provided herein and
subject to the terms of Article XIII relating to permitted contests,
Lessee shall not directly or indirectly create or allow to remain, and
shall promptly discharge at its sole cost and expense, (i) any Lien,
defect, attachment, levy, title retention agreement or claim upon any
Property or any Modifications or (ii) any Lien, attachment, levy or
claim with respect to the Rent or with respect to any amounts held by
the Agent pursuant to the Credit Agreement, in each case other than
Permitted Liens and Lessor Liens. Lessee shall promptly notify Lessor
in the event it receives actual knowledge that a Lien other than a
Permitted Lien or Lessor Lien has occurred with respect to a Property,
and Lessee represents and warrants to, and covenants with, Lessor that
the Liens in favor of the Lessor created by the Operative Agreements
are first priority perfected Liens subject only to Permitted Liens.
(b) Nothing contained in this Lease shall be construed as
constituting the consent or request of Lessor, expressed or implied, to
or for the performance by any contractor, mechanic, laborer,
materialman, supplier or vendor of any labor or services or for the
furnishing of any materials for any construction, alteration, addition,
repair or demolition of or to any Property or any part thereof. NOTICE
IS HEREBY GIVEN THAT LESSOR IS NOT AND SHALL NOT BE LIABLE FOR ANY
LABOR, SERVICES OR MATERIALS FURNISHED OR TO BE FURNISHED TO LESSEE, OR
TO ANYONE HOLDING A PROPERTY OR ANY PART THEREOF THROUGH OR UNDER
LESSEE, AND THAT NO MECHANIC'S OR OTHER LIENS FOR ANY SUCH LABOR,
SERVICES OR MATERIALS SHALL ATTACH TO OR AFFECT THE INTEREST OF LESSOR
IN AND TO ANY PROPERTY.
ARTICLE XIII
13.1 Permitted Contests Other Than in Respect of Indemnities. Except to
the extent otherwise provided for in Section 13 of the Participation Agreement,
Lessee, on its own or on Lessor's behalf but at Lessee's sole cost and expense,
may contest, by appropriate administrative or judicial proceedings conducted in
good faith and with due diligence, the amount, validity or application, in whole
or in part, of any Legal Requirement, or utility charges payable pursuant to
Section 4.1 or any Lien, attachment, levy, encumbrance or encroachment, and
Lessor agrees not to
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pay, settle or otherwise compromise any such item, provided that (a) the
commencement and continuation of such proceedings shall suspend the collection
of any such contested amount from, and suspend the enforcement thereof against,
the applicable Properties, Lessor, each Holder, the Agent and each Lender; (b)
there shall not be imposed a Lien (other than Permitted Liens) on any Property
and no part of any Property nor any Rent shall be in any danger of being sold,
forfeited, lost or deferred; (c) at no time during the permitted contest shall
there be a risk of the imposition of criminal liability or material civil
liability on Lessor, any Holder, the Agent or any Lender for failure to comply
therewith; and (d) in the event that, at any time, there shall be a material
risk of extending the application of such item beyond the end of the Term, then
Lessee shall deliver to Lessor an Officer's Certificate certifying as to the
matters set forth in clauses (a), (b) and (c) of this Section 13.1. Lessor, at
Lessee's sole cost and expense, shall execute and deliver to Lessee such
authorizations and other documents as may reasonably be required in connection
with any such contest and, if reasonably requested by Lessee, shall join as a
party therein at Lessee's sole cost and expense.
ARTICLE XIV
14.1 Public Liability and Workers' Compensation Insurance. During the
Term of each Property, Lessee shall procure and carry, at Lessee's sole cost and
expense, commercial general liability insurance for claims for injuries or death
sustained by persons or damage to property while on the Properties or the
premises where the Equipment is located and such other public liability
coverages as are then customarily carried by similarly situated companies
conducting business similar to that conducted by Lessee. Such insurance shall be
on terms and in amounts (and with deductibles and limitations on coverage) that
are no less favorable than insurance maintained by Lessee with respect to
similar properties and equipment that it owns and are then carried by similarly
situated companies conducting business similar to that conducted by Lessee. The
policies shall be endorsed to name Lessor (for itself and on behalf of the
Holders) and the Agent (for itself and on behalf of the Lenders) as additional
insureds. The policies shall also specifically provide that such policies shall
be considered primary insurance which shall apply to any loss or claim before
any contribution by any insurance which Lessor, any Holder, the Agent or any
Lender may have in force. Lessee shall, in the operation of the Properties,
comply with the applicable workers' compensation laws and protect Lessor, each
Holder, the Agent and each Lender against any liability under such laws.
14.2 Hazard and Other Insurance.
(a) During the Term for each Property, Lessee shall keep, or cause
to be kept, such Property insured against loss or damage by fire and
other risks and shall maintain builders' risk insurance during
construction of any Improvements or Modifications in amounts not less
than the replacement value from time to time of such Property and on
terms that (a) are no less favorable than insurance covering other
similar properties owned by Lessee and (b) are then carried by
similarly situated companies conducting business similar to that
conducted by Lessee. Lessee shall not be required to maintain separate
builder's insurance solely by reason of the Modifications to a Property
if the cost of such Modifications will not exceed $100,000 in the
aggregate. The policies shall be endorsed to
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name Lessor (for itself and on behalf of the Holders) and the Agent
(for itself and on behalf of the Lenders), to the extent of their
respective interests, as additional loss payees; provided, that so long
as no Lease Event of Default has occurred and is continuing, any loss
payable under the insurance policies required by this Section will be
paid to Lessee.
(b) If, during the Term with respect to a Property the area in
which such Property is located is designated a "flood-prone" area
pursuant to the Flood Disaster Protection Act of 1973, or any
amendments or supplements thereto, then Lessee shall comply with the
National Flood Insurance Program as set forth in the Flood Disaster
Protection Act of 1973. In addition, Lessee will fully comply with the
requirements of the National Flood Insurance Act of 1968 and the Flood
Disaster Protection Act of 1973, as each may be amended from time to
time, and with any other Legal Requirement concerning flood insurance
to the extent that it may apply to any such Property.
14.3 Coverage.
(a) As of the date of this Lease and annually thereafter, Lessee
shall furnish Lessor and the Agent with certificates prepared by the
insurers or insurance broker of Lessee showing the insurance required
under Sections 14.1 and 14.2 to be in effect, naming (except with
respect to workers' compensation insurance) Lessor (for itself and on
behalf of the Holders) and the Agent (for itself and on behalf of the
Lenders) as additional insureds and loss payees and evidencing the
other requirements of this Article XIV. All such insurance shall be at
the cost and expense of Lessee and provided by nationally recognized,
financially sound insurance companies. Such certificates shall include
a provision for thirty (30) days' advance written notice by the insurer
to Lessor and the Agent in the event of cancellation or material
alteration of such insurance. If a Lease Event of Default has occurred
and is continuing and Lessor so requests, Lessee shall deliver to
Lessor copies of all insurance policies required by Sections 14.1 and
14.2.
(b) Lessee agrees that any insurance policy required by Sections
14.1, 14.2(a) and 14.2(b) shall include an appropriate provision that
such policy will not be invalidated should Lessee waive, at any time,
any or all rights of recovery against any party for losses covered by
such policy or due to any breach of warranty, action or inaction by
Lessee or any Person acting on behalf of Lessee. Lessee hereby waives
any and all such rights against the Lessor, the Holders, the Agent and
the Lenders to the extent of payments made to any such Person under any
such policy.
(c) Neither Lessor nor Lessee shall carry separate insurance
concurrent in kind or form or contributing in the event of loss with
any insurance required under this Article XIV, except that Lessor may
carry separate liability insurance at Lessor's sole cost so long as (i)
Lessee's insurance is designated as primary and in no event excess or
contributory to any insurance Lessor may have in force which would
apply to a loss covered under Lessee's policy and (ii) each such
insurance policy will not cause Lessee's insurance required under this
Article XIV to be subject to a coinsurance exception of any kind.
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(d) Lessee shall pay as they become due all premiums for the
insurance required by Section 14.1 and Section 14.2, shall renew or
replace each policy prior to the expiration date thereof, and shall
otherwise maintain the coverage required by such Sections without any
lapse in coverage.
ARTICLE XV
15.1 Casualty and Condemnation.
(a) Subject to the provisions of this Article XV and Article XVI
(in the event Lessee delivers, or is obligated to deliver, a
Termination Notice), and prior to the occurrence and continuation of a
Lease Default or Lease Event of Default, Lessee shall be entitled to
receive (and Lessor hereby irrevocably assigns to Lessee all of
Lessor's right, title and interest in) any award, compensation or
insurance proceeds under Sections 14.2(a) or (b) hereof to which Lessee
or Lessor may become entitled by reason of their respective interests
in a Property (i) if all or a portion of such Property is damaged or
destroyed in whole or in part by a Casualty or (ii) if the use, access,
occupancy, easement rights or title to such Property or any part
thereof is the subject of a Condemnation; provided, however, if a Lease
Default or Lease Event of Default shall have occurred and be continuing
such award, compensation or insurance proceeds shall be paid directly
to Lessor or, if received by Lessee, shall be held in trust for Lessor,
and shall be paid over by Lessee to Lessor and held in accordance with
the terms of this paragraph (a). All amounts held by Lessor hereunder
on account of any award, compensation or insurance proceeds either paid
directly to Lessor or turned over to Lessor shall be held as security
for the performance of Lessee's obligations hereunder.
(b) Lessee may appear in any proceeding or action to negotiate,
prosecute, adjust or appeal any claim for any award, compensation or
insurance payment on account of any such Casualty or Condemnation and
shall pay all expenses thereof. At Lessee's reasonable request, and at
Lessee's sole cost and expense, Lessor and the Agent shall participate
in any such proceeding, action, negotiation, prosecution or adjustment.
Lessor and Lessee agree that this Lease shall control the rights of
Lessor and Lessee in and to any such award, compensation or insurance
payment.
(c) If Lessee shall receive notice of a Casualty or a possible
Condemnation of a Property or any interest therein where damage to the
affected Property is estimated to equal or exceed ten percent (10%) of
the Property Cost of such Property, Lessee shall give notice thereof to
the Lessor and to the Agent promptly after the receipt of such notice.
(d) In the event of a Casualty or a Condemnation (regardless of
whether notice thereof must be given pursuant to paragraph (c)), this
Lease shall terminate with respect to the applicable Property in
accordance with Section 16.1 if Lessee, within thirty (30) days after
such occurrence, delivers to Lessor and the Agent a Termination Notice
to such effect.
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(e) If, pursuant to this Section 15.1, this Lease shall continue
in full force and effect following a Casualty or Condemnation with
respect to the affected Property, Lessee shall, at its sole cost and
expense and using, if available, the proceeds of any award,
compensation or insurance with respect to such Casualty or Condemnation
(including, without limitation, any such award, compensation or
insurance which has been received by the Agent and which should be
turned over to Lessee pursuant to the terms of the Operative
Agreements, and if not available or sufficient, using its own funds),
promptly and diligently repair any damage to the applicable Property
caused by such Casualty or Condemnation in conformity with the
requirements of Sections 10.1 and 11.1, using the as-built plans and
specifications or manufacturer's specifications for the applicable
Improvements or Equipment (as modified to give effect to any subsequent
Modifications, any Condemnation affecting the Property and all
applicable Legal Requirements), so as to restore the applicable
Property to substantially the same condition, operation, function and
value as existed immediately prior to such Casualty or Condemnation. In
such event, title to the applicable Property shall remain with Lessor.
(f) In no event shall a Casualty or Condemnation with respect to
which this Lease remains in full force and effect under this Section
15.1 affect Lessee's obligations to pay Rent pursuant to Section 3.1.
(g) Notwithstanding anything to the contrary set forth in Section
15.1(a) or Section 15.1(e), if during the Term with respect to a
Property a Casualty occurs with respect to such Property or Lessee
receives notice of a Condemnation with respect to such Property, and
following such Casualty or Condemnation, (i) the applicable Property
cannot reasonably be restored, repaired or replaced on or before the
180th day prior to the Expiration Date (if such Casualty or
Condemnation occurs during the Term) to substantially the same
condition as existed immediately prior to such Casualty or
Condemnation, or (ii) on or before such day such Property is not in
fact so restored, repaired or replaced, then Lessee shall be required
to purchase such Property on the next Payment Date and pay Lessor the
Termination Value for such Property, plus any and all Rent then due and
owing, plus all other amounts then due and owing (including without
limitation amounts described in clause FIRST of Section 22.2).
15.2 Environmental Matters. Promptly upon Lessee's actual knowledge of
the presence of Hazardous Substances in any portion of any Property (or in any
other property that is not subject to this Lease if Lessee has reason to believe
that such Hazardous Substances may be caused by an emission from or on, or a
condition on, any Property) in concentrations and conditions that constitute an
Environmental Violation and as to which, in the reasonable opinion of Lessee,
the cost to undertake any legally required response, clean up, remedial or other
action might result in a cost to Lessee or loss in the value of such Property of
more than $100,000, Lessee shall notify Lessor in writing of such condition. In
the event of any Environmental Violation (regardless of whether notice thereof
must be given to Lessor pursuant to the preceding sentence), Lessee shall, not
later than sixty (60) days after Lessee has actual knowledge of such
Environmental Violation, either deliver to Lessor a Termination Notice with
respect to the applicable Property or Properties pursuant to Section 16.1, if
applicable, or, at Lessee's sole cost and expense, promptly and diligently
undertake and complete any response, clean up, remedial or other action
necessary to remove, cleanup or remediate
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the Environmental Violation in accordance with all Environmental Laws. If Lessee
does not deliver a Termination Notice with respect to such Property pursuant to
Section 16.1, Lessee shall, upon completion of remedial action by Lessee, cause
to be prepared by a reputable environmental consultant acceptable to Lessor a
report describing the Environmental Violation and the actions taken by Lessee
(or its agents) in response to such Environmental Violation, and a statement by
the consultant that the Environmental Violation has been remedied in full
compliance with applicable Environmental Law.
15.3 Notice of Environmental Matters. Promptly, but in any event within
thirty (30) days from the date Lessee has actual knowledge thereof, Lessee shall
provide to Lessor written notice of any pending or threatened Environmental
Claim involving any Environmental Law or any Release on or in connection with
any Property. All such notices shall describe in reasonable detail the nature of
the claim, action or proceeding and Lessee's proposed response thereto. In
addition, Lessee shall provide to Lessor, within five (5) Business Days of
receipt, copies of all material written communications with any Governmental
Authority relating to any Environmental Law in connection with any Property.
Lessee shall also promptly provide such detailed reports of any such material
Environmental Claims as may reasonably be requested by Lessor.
ARTICLE XVI
16.1 Termination Upon Certain Events. If any of the following occur:
(i) if the requirements of Section 15.1(c) are satisfied, or (ii) if the
requirements of Section 15.1(d) are satisfied and Lessee has determined pursuant
to such section that following the applicable Casualty or Condemnation this
Lease shall terminate with respect to the affected Property, or (iii) Lessee has
determined pursuant to the second sentence of Section 15.2 that, due to the
occurrence of an Environmental Violation, this Lease shall terminate with
respect to the affected Property, then Lessee shall be obligated to deliver,
within sixty (60) days of its receipt of notice of the applicable Condemnation
or the occurrence of the applicable Casualty or Environmental Violation, a
written notice to the Lessor in the form described in Section 16.2(a) (a
"Termination Notice") of the termination of this Lease with respect to the
applicable Property.
16.2 Procedures.
(a) A Termination Notice shall contain: (i) notice of termination
of this Lease with respect to the affected Property on a Payment Date
not more than sixty (60) days after Lessor's receipt of such
Termination Notice (the "Termination Date"); and (ii) a binding and
irrevocable agreement of Lessee to pay the Termination Value for the
applicable Property, any and all Rent then due and owing and all other
amounts then due and owing from Lessee under any of the Operative
Agreements (including without limitation amounts described in clause
FIRST of Section 22.2) and purchase such Property on such Termination
Date.
(b) On each Termination Date, Lessee shall pay to Lessor the
Termination Value for the applicable Property, any and all Rent then
due and owing and all other amounts then due and owing from Lessee
under any of the Operative Agreements (including without limitation
amounts described in clause FIRST of Section 22.2), and Lessor shall
convey such
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Property, or the remaining portion thereof, if any, to Lessee (or
Lessee's designee), all in accordance with Section 19.1.
ARTICLE XVII
17.1 Lease Events of Default. If any one or more of the following
events (each a "Lease Event of Default") shall occur:
(a) Lessee shall fail to make payment of (i) any Basic Rent
(except as set forth in clause (ii)) within three (3) days after the
same has become due and payable or (ii) any Termination Value, on the
date any such payment is due, or any payment of Basic Rent or
Supplemental Rent due on the due date of any such payment of
Termination Value, or any amount due on the Expiration Date;
(b) Lessee shall fail to make payment of any Supplemental Rent
(other than Supplemental Rent referred to in Section 17(a)(ii)) due and
payable within three (3) days after receipt of notice that such payment
is due;
(c) Lessee shall fail to maintain insurance as required by
Article XIV of this Lease;
(d) Lessee or Guarantor shall fail to observe or perform any
term, covenant or provision (including without limitation the
Incorporated Covenants) of Lessee or Guarantor under this Lease or any
other Operative Agreement to which Lessee or Guarantor is a party other
than those set forth in Sections 17.1(a), (b) (c) or (g) hereof, and
such failure shall remain uncured for a period of thirty (30) days
after the earlier of receipt of written notice from Lessor thereof or a
Responsible Officer of Lessee becomes aware of such failure;
(e) An Agency Agreement Event of Default shall have occurred and
be continuing;
(f) (i) Any default, which is not waived, in the payment of
any principal, interest, premium or other amount with respect to any
Indebtedness or Rate Hedging Obligation (as defined in the Existing
Wackenhut Corrections Credit Agreement) (other than obligations under
the Operative Agreements) of Lessee in an amount not less than
$2,500,000 in the aggregate outstanding, or (ii) any default, which is
not waived, in the performance, observance or fulfillment of any term
or covenant contained in any agreement or instrument under or pursuant
to which any such Indebtedness or Rate Hedging Obligation referred to
in clause (i) may have been issued, created, assumed, guaranteed or
secured by Lessee, or (iii) any other event of default as specified in
any agreement or instrument under or pursuant to which any such
Indebtedness or Rate Hedging Obligation may have been issued, created,
assumed, guaranteed or secured by Lessee, and any such default or event
of default specified in clauses (i), (ii) or (iii) shall continue for
more than the period of grace, if any, therein specified, or such
default or event of default shall permit the holder of any such
Indebtedness
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(or any agent or trustee acting on behalf of one or more holders) to
accelerate the maturity thereof; or
(g) The breach of any financial covenant incorporated by reference
in Article XXVIII hereof or Section 12 of the Guaranty;
(h) The Lessee shall be unable to pay its debts generally as they
become due; file a petition to take advantage of any insolvency
statute; make an assignment for the benefit of its creditors; commence
a proceeding for the appointment of a receiver, trustee, liquidator or
conservator of itself or of the whole or any substantial part of its
property; file a petition or answer seeking liquidation, reorganization
or arrangement or similar relief under the federal bankruptcy laws or
any other applicable law or statute;
(i) A court of competent jurisdiction shall enter an order,
judgment or decree appointing a custodian, receiver, trustee,
liquidator or conservator of the Lessee or of the whole or any
substantial part of its properties and such order, judgment or decree
continues unstayed and in effect for a period of sixty (60) days, or
approve a petition filed against the Lessee seeking liquidation,
reorganization or arrangement or similar relief under the federal
bankruptcy laws or any other applicable law or statute of the United
States of America or any state, which petition is not dismissed within
sixty (60) days; or if, under the provisions of any other law for the
relief or aid of debtors, a court of competent jurisdiction shall
assume custody or control of the Lessee or of the whole or any
substantial part of its properties, which control is not relinquished
within sixty (60) days; or if there is commenced against the Lessee any
proceeding or petition seeking liquidation, reorganization, arrangement
or similar relief under the federal bankruptcy laws or any other
applicable law or statute of the United States of America or any state
which proceeding or petition remains undismissed for a period of sixty
(60) days; or if the Lessee takes any action to indicate its consent to
or approval of any such proceeding or petition;
(j) The entering of any order in any proceedings against Lessee
decreeing the dissolution, divestiture or split-up of Lessee, and such
order remains in effect for more than sixty (60) days;
(k) Any representation, warranty or statement of fact contained in
any Operative Agreement in any writing, report, certificate, or
statement at any time furnished to Lessor, the Agent, any Holder or any
Lender by or on behalf of Lessee pursuant to or in connection with this
Lease or any other Operative Agreement or otherwise shall be false or
misleading in any material respect when given;
(l) One or more judgments or orders where the amount not covered
by insurance (or the amount as to which the insurer) is found not to be
liable for) is in excess of $500,000 is rendered against Lessee, or
(ii) there is any attachment, injunction or execution against any of
the Lessee's properties for any amount in excess of $500,000 in the
aggregate; and such judgment, attachment, injunction or execution
remains unpaid, unstayed, undischarged, unbonded or undismissed for a
period of thirty (30) days; or
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(m) Any material Environmental Violation shall have occurred and
be continuing;
(n) Any Wackenhut Corrections Credit Agreement Event of Default
shall have occurred and be continuing; or
(o) Any Operative Agreement shall cease to be in full force and
effect;
then, in any such event, Lessor may, in addition to the other rights and
remedies provided for in this Article XVII and in Section 18.1, terminate this
Lease by giving Lessee fifteen (15) days notice of such termination, and this
Lease shall terminate, and all rights of Lessee under this Lease shall cease.
Lessee shall, to the fullest extent permitted by law, pay as Supplemental Rent
all costs and expenses incurred by or on behalf of Lessor, including without
limitation reasonable fees and expenses of counsel, as a result of any Lease
Event of Default hereunder.
17.2 Surrender of Possession. If a Lease Event of Default shall have
occurred and be continuing, and whether or not this Lease shall have been
terminated pursuant to Section 17.1, Lessee shall, upon thirty (30) days written
notice, surrender to Lessor possession of the Properties. Lessor may enter upon
and repossess the Properties by such means as are available at law or in equity,
and may remove Lessee and all other Persons and any and all personal property
and Lessee's equipment and personalty and severable Modifications from the
Properties. Lessor shall have no liability by reason of any such entry,
repossession or removal performed in accordance with applicable law. Upon the
written demand of Lessor, Lessee shall return the Properties promptly to Lessor,
in the manner and condition required by, and otherwise in accordance with the
provisions of, Section 22.1(c) hereof.
17.3 Reletting. If a Lease Event of Default shall have occurred and be
continuing, and whether or not this Lease shall have been terminated pursuant to
Section 17.1, Lessor may, but shall be under no obligation to, relet any or all
of the Properties, for the account of Lessee or otherwise, for such term or
terms (which may be greater or less than the period which would otherwise have
constituted the balance of the Term) and on such conditions (which may include
concessions or free rent) and for such purposes as Lessor may determine, and
Lessor may collect, receive and retain the rents resulting from such reletting.
Lessor shall not be liable to Lessee for any failure to relet any Property or
for any failure to collect any rent due upon such reletting.
17.4 Damages. Neither (a) the termination of this Lease as to all or
any of the Properties pursuant to Section 17.1; (b) the repossession of all or
any of the Properties; nor (c) the failure of Lessor to relet all or any of the
Properties, the reletting of all or any portion thereof, nor the failure of
Lessor to collect or receive any rentals due upon any such reletting, shall
relieve Lessee of its liabilities and obligations hereunder, all of which shall
survive any such termination, repossession or reletting. If any Lease Event of
Default shall have occurred and be continuing and notwithstanding any
termination of this Lease pursuant to Section 17.1, Lessee shall forthwith pay
to Lessor all Rent and other sums due and payable hereunder to and including the
date of such termination. Thereafter, on the days on which the Basic Rent or
Supplemental Rent, as applicable, are payable under this Lease or would have
been payable under this Lease if the same had not been terminated pursuant to
Section 17.1 and until the end of the Term hereof or what would have been
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the Term in the absence of such termination, Lessee shall pay Lessor, as current
liquidated damages (it being agreed that it would be impossible accurately to
determine actual damages) an amount equal to the Basic Rent and Supplemental
Rent that are payable under this Lease or would have been payable by Lessee
hereunder if this Lease had not been terminated pursuant to Section 17.1,
provided that Lessee's obligation to make payments of Basic Rent and
Supplemental Rent under this Section 17.4 shall continue only so long as Lessor
shall not have received the amounts specified in Section 17.5. The amount of
Lessee's liabilities and obligations under this Lease shall not be reduced or
offset by any proceeds Lessor may receive from any reletting of any Property,
except that the net proceeds, if any, which are actually received by Lessor from
reletting of any Property shall be offset against the final liquidated damages
amount specified in Section 17.5. In calculating the amount of such net proceeds
from reletting, there shall be deducted all of Lessor's, any Holder's, the
Agent's and any Lender's reasonable expenses in connection therewith, including
repossession costs, brokerage or sales commissions, fees and expenses of counsel
and any necessary repair or alteration costs and expenses incurred in
preparation for such reletting. To the extent Lessor receives any damages
pursuant to this Section 17.4, such amounts shall be regarded as amounts paid on
account of Rent. Lessee specifically acknowledges and agrees that its
obligations under this Section 17.4 shall be absolute and unconditional under
any and all circumstances and shall be paid or performed, as the case may be,
without notice or demand and without any abatement, reduction, diminution,
setoff, defense, counterclaim or recoupment whatsoever.
17.5 Final Liquidated Damages. If a Lease Event of Default shall have
occurred and be continuing, whether or not this Lease shall have been terminated
pursuant to Section 17.1 and whether or not Lessor shall have collected any
current liquidated damages pursuant to Section 17.4, Lessor shall have the right
to recover, by demand to Lessee and at Lessor's election, and Lessee shall pay
to Lessor, as and for final liquidated damages, but exclusive of the indemnities
payable under Section 13 of the Participation Agreement, and in lieu of all
current liquidated damages beyond the date of such demand (it being agreed that
it would be impossible accurately to determine actual damages) the sum of (a)
the Termination Value for all Properties remaining under this Lease, plus (b)
all other amounts owing in respect of Rent, Supplemental Rent and other amounts
then due and payable under this Lease or any other Operative Agreement. It is
intended and agreed that the foregoing amount is and will be liquidated damages
and not a penalty. Upon payment of the amount specified pursuant to the first
sentence of this Section 17.5, Lessee shall be entitled to receive from Lessor,
either at Lessee's request or upon Lessor's election, in either case at Lessee's
cost, an assignment of Lessor's entire right, title and interest in and to the
Properties, the Improvements, Fixtures, Modifications and Equipment, in each
case in recordable form and otherwise in conformity with local custom and free
and clear of the Lien of this Lease (including the release of any memoranda of
Lease or the Lease Supplement recorded in connection therewith) and any Lessor
Liens. The Properties shall be conveyed to Lessee "AS IS" and in their then
present physical condition. If any statute or rule of law shall limit the amount
of such final liquidated damages to less than the amount agreed upon, Lessor
shall be entitled to the maximum amount allowable under such statute or rule of
law; provided, however, Lessee shall not be entitled to receive an assignment of
Lessor's interest in the Properties, the Improvements, Fixtures, Modifications
or Equipment or documents unless Lessee shall have paid in full the Termination
Value and all other amounts due and owing hereunder and under the other
Operative Agreements. Lessee specifically acknowledges and agrees that its
obligations under this Section 17.5 shall be absolute and unconditional under
any
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and all circumstances and shall be paid or performed, as the case may be,
without notice or demand (except as otherwise specifically provided herein) and
without any abatement, reduction, diminution, setoff, defense, counterclaim or
recoupment whatsoever.
17.6 Waiver of Certain Rights. If this Lease shall be terminated
pursuant to Section 17.1, Lessee waives, to the fullest extent permitted by law,
(a) any notice of re-entry or the institution of legal proceedings to obtain
re-entry or possession; (b) any right of redemption, re-entry or possession; (c)
the benefit of any laws now or hereafter in force exempting property from
liability for rent or for debt; and (d) any other rights which might otherwise
limit or modify any of Lessor's rights or remedies under this Article XVII.
17.7 Assignment of Rights Under Contracts. If a Lease Event of Default
shall have occurred and be continuing, and whether or not this Lease shall have
been terminated pursuant to Section 17.1, Lessee shall upon Lessor's demand
immediately assign, transfer and set over to Lessor all of Lessee's right, title
and interest in and to each agreement executed by Lessee in connection with the
purchase, construction, development, use or operation of the Properties
(including, without limitation, all right, title and interest of Lessee with
respect to all warranty, performance, service and indemnity provisions), as and
to the extent that the same relate to the purchase, construction, use and
operation of the Properties.
17.8 Environmental Costs. If a Lease Event of Default shall have
occurred and be continuing, and whether or not this Lease shall have been
terminated pursuant to Section 17.1, Lessee shall pay directly to any third
party (or at Lessor's election, reimburse Lessor) for the cost of any
environmental testing or remediation work undertaken respecting any Property as
such testing or work is deemed appropriate in the reasonable judgment of Lessor.
Lessee shall pay all amounts referenced in the immediately preceding sentence
within ten (10) days of any request by Lessor for such payment.
17.9 Remedies Cumulative. The remedies herein provided shall be
cumulative and in addition to (and not in limitation of) any other remedies
available at law, equity or otherwise, including, without limitation, any
mortgage foreclosure remedies.
17.10 Notice of Default or Event of Default. Lessee shall promptly
notify the Lessor and the Agent if any Responsible Officer of Lessee has
received notice, or has actual knowledge, of any Default or Event of Default.
17.11 Option to Purchase or Sell All Properties Upon Certain Changes of
Control. If (a) a Change of Control has occurred and is continuing, (b) such
Change of Control has not been consented to by, and is not otherwise within the
control of, any Wackenhut Control Group Member, and (c) no Lease Event of
Default (other than such Change of Control) has occurred and is continuing on
the date of the applicable Election Notice or Sale Date, then notwithstanding
anything to the contrary in this Article XVII, Lessee may within ten (10) days
of such Change of Control give the Lessor and the Agent the Election Notice
pursuant to Section 20.1(b), and may (on a Payment Date occurring not more than
180 and not less than 120 days after such Election Notice) purchase or remarket
all of the Properties in accordance with, and subject to the conditions set
forth in, Section
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20.1(b) and Article XXII. Provided no Lease Event of Default (other than such
Change of Control) has occurred and is continuing, then during the ten (10)-day
period described in this paragraph for delivery of Lessee's Election Notice,
Lessor shall not remarket the Properties without Lessee's consent.
17.12 Lessee's Purchase Option During Default. If a Lease Event of
Default that is not within the control of Lessee has occurred and is continuing,
and such Lease Event of Default could not reasonably be cured by Lessee within
any applicable grace period, and Lessee exercises its option to purchase a
Property (the "affected Property") in accordance with Section 20.1 (without
regard to the limitations contained in the first sentence of Section 20.1(a)
regarding the absence of Lease Events of Default) within fifteen (15) days of
the occurrence of such Lease Event of Default, the purchase of the affected
Property within such fifteen (15)-day period shall be deemed to have cured such
Lease Event of Default to the extent such Lease Event of Default is no longer
continuing with respect to any other Property remaining subject to this Lease
after such purchase of the affected Property.
ARTICLE XVIII
18.1 Lessor's Right to Cure Lessee's Lease Defaults. Lessor, without
waiving or releasing any obligation or Lease Event of Default, may (but shall be
under no obligation to) remedy any Lease Event of Default for the account and at
the sole cost and expense of Lessee, including the failure by Lessee to maintain
the insurance required by Article XIV, and may, to the fullest extent permitted
by law, and notwithstanding any right of quiet enjoyment in favor of Lessee,
enter upon any Property, or real property owned or leased by Lessee and take all
such action thereon as may be necessary or appropriate therefor. No such entry
shall be deemed an eviction of any lessee. All reasonable out-of-pocket costs
and expenses so incurred (including without limitation reasonable fees and
expenses of counsel), together with interest thereon at the Overdue Rate from
the date on which such sums or expenses are paid by Lessor, shall be paid by
Lessee to Lessor on demand.
ARTICLE XIX
19.1 Provisions Relating to Lessee's Exercise of its Purchase Option.
Subject to Section 19.2, in connection with any termination of this Lease with
respect to any Property pursuant to the terms of Section 16.2, or in connection
with Lessee's exercise of its Purchase Option or its option to purchase a
Property pursuant to Section 20.1(a), upon the date on which this Lease is to
terminate with respect to a Property or all of the Properties, and upon tender
by Lessee of the amounts set forth in Sections 16.2(b), 20.1 or 20.2, as
applicable, Lessor shall execute and deliver to Lessee (or to Lessee's designee)
at Lessee's cost and expense an assignment of Lessor's entire interest in the
applicable Property, in each case in recordable form and otherwise in conformity
with local custom and free and clear of the Lien of this Lease and any Lessor
Liens attributable to Lessor but without any other warranties (of title or
otherwise) from the Lessor. The applicable Property shall be conveyed to Lessee
"AS IS" "WHERE IS" and in then present physical condition. In addition, Lessor
shall, upon Lessee's request and at Lessee's expense, execute and deliver any
documents (including any appropriate releases of or amendments to financing
statements or recorded memoranda of this Lease) necessary to release the Lien of
this Lease on the applicable Property.
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19.2 No Termination With Respect to Less than All of a Property. Lessee
shall not be entitled to exercise its Purchase Option separately with respect to
Property consisting of Land, Equipment and Improvements but shall be required to
exercise its Purchase Option with respect to an entire Property.
ARTICLE XX
20.1 Individual Purchase Option.
(a) Subject to the restrictions set forth in this paragraph and
provided no Default or Event of Default shall have occurred and be
continuing and provided that the Election Notice referred to in Section
20.2 has not been delivered, Lessee shall have the option, exercisable
by giving the Agent and Lessor no more than one hundred twenty (120)
days and no less than thirty (30) days written notice of Lessee's
election to exercise such option, to purchase any Property on a
Business Day as identified in such written notice, at a price equal to
the Termination Value for such Property and all Rent then due and owing
and all other amounts then due and owing (by the Lessee or the
Construction Agent) under this Lease or under any other Operative
Agreement (including without limitation amounts, if any, described in
clause FIRST of Section 22.2) (which the parties do not intend to be a
"bargain" purchase price); and, upon receipt of such amount, Lessor
shall transfer to Lessee all of Lessor's right, title and interest in
and to such Property in accordance with Section 19.1 as of the Business
Day on which such purchase occurs. The foregoing notwithstanding,
Lessee may not purchase any Property or Properties pursuant to this
Section 20.1 if the Property Cost of the Property or Properties to be
purchased (as identified in the Lessee's notice referred to in the
preceding sentence) (collectively, the "Intended Acquisition
Properties") plus the aggregate Property Cost of all Properties then or
previously purchased by Lessee or the Construction Agent (including
without limitation purchases pursuant to, as a result of or otherwise
relating to any exercise of the purchase option pursuant to this
Section 20.1, any Default, any Event of Default, any Casualty, any
Condemnation or any Environmental Violation) on a cumulative basis
exceeds 25% of the aggregate of the Maximum Expected Property Costs (as
of the date of determination) of all properties that have at any time
been Properties (including without limitation any Intended Acquisition
Properties and any other Properties then or previously purchased by the
Lessee or retained by the Lessor), unless the Agent (at Lessee's sole
expense) obtains Appraisals of the remaining Properties (excluding any
Intended Acquisition Properties) showing an aggregate appraised value
equal to or greater than 85% of the aggregate Maximum Expected Property
Costs of such remaining Properties, and such Appraisals are dated not
more than one (1) year earlier than the date of Lessee's purchase of
such Intended Acquisition Properties. For the purposes of this
paragraph, "Maximum Expected Property Cost" with respect to any
Property, as of the date of determination, shall mean (A) with respect
to any Property then subject to the Lease, the Property Cost of such
Property, or (B) with respect to any Construction Period Property, the
greater of the Property cost or expected maximum Property Cost (based
on the applicable Construction Budgets) for such Property, or (C) with
respect to any property that was previously, but is not then, a
Property, the highest Property Cost of such property when it was a
Property. If Lessee gives the Agent or Lessor a notice of Lessee's
election of the option to
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purchase any Property or Properties pursuant to this paragraph and
subsequently revokes such notice prior to the date of purchase, Lessee
shall not be required to consummate such purchase, but shall be
required to pay the Agent a revocation fee of $20,000, plus all costs
and expenses (including without limitation attorney's fees) incurred by
the Agent or the Lessor in preparing for or cancelling such sale and
purchase.
(b) In addition to the option granted Lessee pursuant to the
foregoing Section 20.1(a), and provided no Default or Event of Default
shall have occurred and be continuing and provided that the Election
Notice referred to in Section 20.2 has not been delivered, Lessee shall
have the option, exercisable by giving the Agent and Lessor no more
than one hundred twenty (120) days and no less than thirty (30) days
written notice of Lessee's election to exercise such option, to
purchase all (but not less than all) of the Properties then subject to
the Lease on a Business Day as identified in such written notice, at a
price equal to the Termination Value for such Properties and all Rent
then due and owing and all other amounts then due and owing (by the
Lessee or the Construction Agent) under this Lease or under any other
Operative Agreement (including without limitation amounts, if any,
described in clause FIRST of Section 22.2) (which the parties do not
intend to be a "bargain" purchase price); and, upon receipt of such
amount, Lessor shall transfer to Lessee all Lessor's right, title and
interest in and to such Properties in accordance with Section 19.1 as
of the Business Day on which such purchase occurs (such date being
referred to herein as the "Property Value Reset Date"). Effective on
and as of the Property Value Reset Date, the Maximum Expected Property
Cost of (i) each Property purchased by Lessee on such date, and (ii)
all Properties theretofore purchased by Lessee pursuant to Section
2.01(a), shall, for purposes of application of Section 2.01(a) to
Properties thereafter made subject to this Lease, be deemed to be Zero
Dollars ($0.00). In the event that Lessee shall purchase all Properties
subject to the Lease on more than one occasion, references herein to
the Property Value Reset Date shall be deemed to refer to the most
recent date on and as of which there were no Properties subject to this
Lease. If Lessee gives the Agent or Lessor a notice of Lessee's
election of the option to purchase any Property or Properties pursuant
to this paragraph and subsequently revokes such notice prior to the
date of purchase, Lessee shall not be required to consummate such
purchase, but shall be required to pay the Agent a revocation fee of
$20,000, plus all costs and expenses (including without limitation
attorney's fees) incurred by the Agent or the Lessor in preparing for
or cancelling such sale and purchase.
20.2 Purchase or Sale Option. Not less than 120 days and no more than
180 days prior to the Expiration Date or any Payment Date occurring after the
Construction Period Termination Date, Lessee may give Lessor and Agent
irrevocable written notice (the "Election Notice") that Lessee is electing to
exercise either (a) the option to purchase all, but not less than all, of the
Properties on such Expiration Date or Payment Date (the "Purchase Option") or
(b) the option to remarket all of the Properties and cause a sale of all of the
Properties pursuant to the terms of Section 22.1 (the "Sale Option"), such sale
to occur on such Expiration Date or Payment Date. If Lessee does not give an
Election Notice indicating the Sale Option at least 120 days and not more than
180 days prior to the Expiration Date, then Lessee shall be deemed to have
elected the Purchase Option for the Expiration Date. Lessor shall have no
obligation to sell any Property unless all of the Properties are sold on the
respective Expiration Date or Payment Date. If Lessee shall (i) elect (or be
deemed to elect) to
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exercise the Purchase Option, or (ii) elect to remarket all of the Properties
pursuant to Section 22.1 and fail to deliver the environmental report required
by Section 10.2 at the time specified in such Section, or (iii) elect to
remarket all of the Properties pursuant to Section 22.1 and fail to cause all of
the Properties to be sold in accordance with the terms of Section 22.1 on the
respective Expiration Date or Payment Date on which such a sale of all of the
Properties is required in connection with such election, then in each case,
Lessee shall pay to Lessor on such Expiration Date or Payment Date an amount
(the "Purchase Option Price") equal to the Termination Value for all the
Properties (which the parties do not intend to be a "bargain" purchase) plus all
Rent and other amounts then due and payable under this Lease or under any other
Operative Agreement (including without limitation the amounts described in
clause FIRST of Section 22.2), and, upon receipt of such amount, Lessor shall
transfer to Lessee all of Lessor's right, title and interest in and to the
Properties in accordance with Section 19.1. Lessee may not elect the Sale
Option, and Lessor shall have no obligation to sell any Property pursuant to
Section 22.1, if a Lease Event of Default has occurred and is continuing on the
date of the Election Notice or the Sale Date. Upon any purchase or sale of all
the Properties pursuant to this Section 20.2 or Section 22.1, the Expiration
Date shall be deemed to have occurred on the date of such purchase or sale.
20.3 Accounting Changes. Although neither Lessor, the Agent, NCMI, nor
any Lender or Holder makes any representation or warranty with respect to the
Lessee's accounting treatment of this transaction, Lessee represents that a
material incentive for Lessee to enter into this Lease is the advice of the
Lessee's independent auditors that this Lease may be treated as an operating
lease for financial accounting purposes under the applicable rules and
interpretations of the Financial Accounting Standards Board and/or the
Securities Exchange Commission (the "Lease Accounting Rules") in effect as of
the date of this Lease. In the event that Lessee's independent auditors shall
determine that any subsequent change in the Lease Accounting Rules will preclude
the Lessee (or raise a substantial question as to whether the Lessee is
precluded) from continuing to account for this Lease as an operating lease with
substantially the same financial accounting benefits as before the change in
Lease Accounting Rules, then the Lessee shall so notify the Lessor and the Agent
in writing of such determination by its auditors; and Lessee may elect (by
delivery of irrevocable written notice of such election to the Lessor and the
Agent) to purchase all of the Properties or to cause all of the Properties to be
transferred to a third party transferee designated by Lessee (such purchase or
transfer to be consummated on a date (the "Accounting Change Transfer Date")
specified by Lessee in such notice and in any event within sixty (60) days after
the date of such notice). On the Accounting Change Transfer Date (whether the
Properties are to be purchased by Lessee or transferred to a third party),
Lessee shall pay to Lessor an amount equal to the Termination Value for all the
Properties (which the parties do not intend to be a "bargain" purchase) plus all
Rent and other amounts then due and payable under this Lease or under any other
Operative Agreement (including without limitation the amounts described in
clause FIRST of Section 22.2), and, upon receipt of such amount, Lessor shall
transfer to Lessee (or to the third party designated by Lessee) all of Lessor's
right, title and interest in and to the Properties in accordance with Section
19.1 and the Expiration Date shall be deemed to have occurred on the date of
such transfer (without giving Lessee the right to remarket Properties pursuant
to Section 22.1).
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ARTICLE XXI
21.1 Renewal.
(a) Provided that no Lease Event of Default shall have occurred
and be continuing at the Basic Term Expiration Date or at the
expiration of any Extended Term, Lessee, with the unanimous consent of
the Agent and all Lenders and Holders (which consent the Agent and each
such Lender and Holder may withhold in its sole and absolute
discretion), may renew this Lease (the "Renewal Options") for up to two
successive Extended Terms of one year each with respect to all, but not
less than all Properties (excluding Properties previously repurchased
by Lessee pursuant to Section 20.1), provided that the Agent, the
Lenders and the Holders have consented (in their sole discretion) that
the Maturity Date be extended to the last day of such Extended Term,
and provided further that the Term shall not be extended pursuant to
this Section 21.1(a) beyond December 18, 2004. In order to exercise the
first Renewal Option to extend the Term through December 18, 2003,
Lessee must give written notice of its request for such extension to
Lessor not more than one hundred twenty (120) days and not less than
sixty (60) days prior to December 18, 1998, and must have obtained the
necessary consents of the Agent, Lenders and Holders not later than
December 18, 1998. In order to exercise the second Renewal Option to
extend the Term through December 18, 2004, Lessee must give written
notice of its request for such extension to Lessor not more than one
hundred twenty (120) days and not less than sixty (60) prior to
December 18, 1999, must have obtained the necessary consents of the
Agent, Lenders and Holders not later than December 18, 1999, and must
have previously exercised the first Renewal Option in accordance with
clause (i) above.
(b) Each renewal of this Lease for an Extended Term pursuant
to Section 21.1(a) shall be on the same terms and conditions as those
set forth in this Lease for the original Basic Term (which the parties
do not intend to be "bargain" renewals).
ARTICLE XXII
22.1 Sale Procedure.
(a) During the Marketing Period, Lessee, on behalf of the Lessor,
shall obtain bids for the cash purchase of all of the Properties in
connection with a sale to one or more purchasers (other than Lessee or
any Affiliate of Lessee) to be consummated on the applicable Expiration
Date or Payment Date for the highest price available, shall notify
Lessor promptly of the name and address of each prospective purchaser
and the cash price which each prospective purchaser shall have offered
to pay for any Property and shall provide Lessor with such additional
information about the bids and the bid solicitation procedure as Lessor
may reasonably request from time to time. Lessor may reject any and all
bids and may assume sole responsibility for obtaining bids by giving
Lessee written notice to that effect; provided, however, that
notwithstanding the foregoing, Lessor may not reject the highest bids
for the Properties submitted by the Lessee if (i) such bids, in the
aggregate, are greater than or equal to the sum of the Limited Recourse
Amount for all of the Properties,
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plus all reasonable costs and expenses referred to in clause FIRST of
Section 22.2 and represent bona fide offers from one or more third
party purchasers, and (ii) prior to Lessor's acceptance of any such
bid, Lessee has delivered to the Agent cash collateral in an amount not
less than the anticipated Deficiency Balance (as defined in Section
22.1(b) below) as determined by the Agent. If the price which a
prospective purchaser or purchasers shall have offered to pay for the
Properties is less than the sum of the Limited Recourse Amount plus all
reasonable costs and expenses referred to in clause FIRST of Section
22.2, Lessor may elect to retain the Properties by giving Lessee prior
written notice of Lessor's election to retain the Properties, and upon
receipt of such notice, Lessee shall surrender the Properties to Lessor
pursuant to Section 10.1. Unless Lessor shall have elected to retain
the Properties pursuant to the preceding sentence, Lessee shall arrange
for Lessor to sell the Properties free and clear of the Lien of this
Lease and any Lessor Liens attributable to it, without recourse or
warranty (of title or otherwise), for cash on the last day of the
Marketing Period (such date being hereafter referred to as the "Sale
Date") to the purchaser or purchasers identified by Lessee or Lessor,
as the case may be; provided, however, solely as to Lessor or the Trust
Company, in its individual capacity, any Lessor Lien shall not
constitute a Lessor Lien so long as Lessor or the Trust Company, in its
individual capacity, is diligently contesting such Lessor Lien by
appropriate proceedings in good faith; and provided further that
(except as expressly permitted by Section 17.11) Lessor shall have no
obligation to sell any Property if a Lease Event of Default has
occurred and is continuing on the Date of the Election Notice or the
Sale Date. Lessee shall surrender the Property so sold or subject to
such documents to each purchaser in the condition specified in Section
10.1. Lessee shall not take or fail to take any action which would have
the effect of unreasonably discouraging bona fide third party bids for
any Property. Lessor shall have no obligation to sell any Property on
the Sale Date unless all of the Properties are sold (and Lessor has
received full payment therefor in cash in the amount required pursuant
to this Section 22.1) on the Sale Date. If all of the Properties are
not either (i) sold on the Sale Date in accordance with the terms of
this Section 22.1, or (ii) retained by the Lessor pursuant to an
affirmative election made by the Lessor pursuant to the third sentence
of this Section 22.1(a), then the Lessee shall be obligated to pay the
Lessor on the Sale Date an amount equal to the Termination Value for
all of the Properties (plus all Rent and other amounts then due and
payable under this Lease and any other Operative Agreements) in
accordance with the terms of Section 20.2.
(b) If the Properties are sold on the Sale Date to one or more
third party purchasers in accordance with the terms of Section 22.1(a)
and the aggregate purchase price paid for the Properties minus the sum
of all costs and expenses referred to in clause FIRST of Section 22.2
is less than the sum of the aggregate Termination Values for all of the
Properties plus all Rent and other amounts then due and payable under
this Lease and under any other Operative Agreements (hereinafter such
difference shall be referred to as the "Deficiency Balance"), then the
Lessee hereby unconditionally promises to pay to the Lessor on the Sale
Date the lesser of (i) the Deficiency Balance, or (ii) the Maximum
Residual Guarantee Amount for all of the Properties. If the Properties
are retained by the Lessor pursuant to an affirmative election made by
the Lessor pursuant to the third sentence of Section 22.1(a), then the
Lessee hereby unconditionally promises to pay to the Lessor on the
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Sale Date an amount equal to the Maximum Residual Guarantee Amount for
all of the Properties.
(c) In the event that the Properties are either sold to one or
more third party purchasers on the Sale Date or retained by the Lessor
in connection with an affirmative election made by the Lessor pursuant
to the third sentence of Section 22.1(a), then in either case on the
Sale Date the Lessee shall provide Lessor or such third party
purchasers with (i) all permits, certificates of occupancy,
governmental licenses and authorizations necessary to use and operate
such Property for its intended purposes, (ii) such easements, licenses,
rights-of-way and other rights and privileges in the nature of an
easement as are reasonably necessary or desirable in connection with
the use, repair, access to or maintenance of such Property for its
intended purpose or otherwise as the Lessor shall reasonably request,
and (iii) a services agreement covering such services as Lessor or such
third party purchaser may request in order to use and operate a
Property for its intended purposes at such rates (not in excess of
arm's-length fair market rates) as shall be acceptable to Lessee and
Lessor or such third party purchaser. All assignments, licenses,
easements, agreements and other deliveries required by clauses (i) and
(ii) of this paragraph (c) shall be in form reasonably satisfactory to
the Lessor or such third party purchaser, as applicable, and shall be
fully assignable (including both primary assignments and assignments
given in the nature of security) without payment of any fee, cost or
other charge.
22.2 Application of Proceeds of Sale. The Lessor shall apply the
proceeds of sale of any Property in the following order of priority:
(a) FIRST, to pay or to reimburse Lessor for the payment of all
reasonable costs and expenses incurred by Lessor in connection with the
sale;
(b) SECOND, so long as the Participation Agreement, the Credit
Agreement or the Trust Agreement is in effect and any Loan, Holder
Advance or any other amount is owing to the Lenders, the Holders or any
other Person under any Operative Agreement, to the Agent to be applied
pursuant to inter-creditor provisions between the Lenders and the
Holders contained in the Operative Agreements; and
(c) THIRD, to the Lessee.
22.3 Indemnity for Excessive Wear. If the proceeds of the sale
described in Section 22.1 with respect to the Properties, less all expenses
incurred by Lessor in connection with such sale, shall be less than the Limited
Recourse Amount with respect to the Properties, and at the time of such sale it
shall have been reasonably determined (pursuant to the Appraisal Procedure) that
the Fair Market Sales Value of the Properties, shall have been impaired by
greater than expected wear and tear during the term of the Lease, Lessee shall
pay to Lessor within ten (10) days after receipt of Lessor's written statement
(i) the amount of such excess wear and tear determined by the Appraisal
Procedure or (ii) the amount of the Net Sale Proceeds Shortfall, whichever
amount is less.
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22.4 Appraisal Procedure. For determining the Fair Market Sales Value
of any Property or any other amount which may, pursuant to any provision of any
Operative Agreement, be determined by an appraisal procedure, Lessor and Lessee
shall use the following procedure (the "Appraisal Procedure"). Lessor and Lessee
shall endeavor to reach a mutual agreement as to such amount for a period of ten
(10) days from commencement of the Appraisal Procedure under the applicable
section of the Lease, and if they cannot agree within ten (10) days, then two
qualified appraisers, one chosen by Lessee and one chosen by Lessor, shall
mutually agree thereupon, but if either party shall fail to choose an appraiser
within twenty (20) days after notice from the other party of the selection of
its appraiser, then the appraisal by such appointed appraiser shall be binding
on Lessee and Lessor. If the two appraisers cannot agree within twenty (20) days
after both shall have been appointed, then a third appraiser shall be selected
by the two appraisers or, failing agreement as to such third appraiser within
(30) days after both shall have been appointed, by the American Arbitration
Association. The decisions of the three appraisers shall be given within twenty
(20) days of the appointment of the third appraiser and the decision of the
appraiser most different from the average of the other two shall be discarded
and such average shall be binding on Lessor and Lessee; provided that if the
highest appraisal and the lowest appraisal are equidistant from the third
appraisal, the third appraisal shall be binding on Lessor and Lessee. The fees
and expenses of the appraiser appointed by Lessee shall be paid by Lessee; the
fees and expenses of the appraiser appointed by Lessor shall be paid by Lessor
(such fees and expenses not being indemnified pursuant to Section 13 of the
Participation Agreement); and the fees and expenses of the third appraiser shall
be divided equally between Lessee and Lessor.
22.5 Certain Obligations Continue. During the Marketing Period, the
obligation of Lessee to pay Rent with respect to the Properties (including the
installment of Basic Rent due on the applicable Expiration Date or Payment Date)
shall continue undiminished until payment in full to Lessor of the sale
proceeds, if any, the Maximum Residual Guarantee Amount, the amount due under
Section 22.3, if any, and all other amounts due to Lessor with respect to all
Properties. Lessor shall have the right, but shall be under no duty, to solicit
bids, to inquire into the efforts of Lessee to obtain bids or otherwise to take
action in connection with any such sale, other than as expressly provided in
this Article XXII.
ARTICLE XXIII
23.1 Holding Over. If Lessee shall for any reason remain in possession
of a Property after the expiration or earlier termination of this Lease as to
such Property (unless such Property is conveyed to Lessee), such possession
shall be as a tenancy at sufferance during which time Lessee shall continue to
pay Supplemental Rent that would be payable by Lessee hereunder were the Lease
then in full force and effect with respect to the Property and Lessee shall
continue to pay Basic Rent at 110% of the Basic Rent that would otherwise be due
and payable at such time. Such Basic Rent shall be payable from time to time
upon demand by Lessor and such additional 10% amount shall be applied by the
Lessor to the payment of the Loans pursuant to the Credit Agreement and the
Holder Advances pursuant to the Trust Agreement pro rata between the Loans and
the Holder Advances. During any period of tenancy at sufferance, Lessee shall,
subject to the first sentence of this paragraph, be obligated to perform and
observe all of the terms, covenants and conditions of this Lease, but shall have
no rights hereunder other than the right, to the extent given by law to tenants
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at sufferance, to continue their occupancy and use of such Property. Nothing
contained in this Article XXIII shall constitute the consent, express or
implied, of Lessor to the holding over of Lessee after the expiration or earlier
termination of this Lease as to any Property (unless such Property is conveyed
to Lessee) and nothing contained herein shall be read or construed as preventing
Lessor from maintaining a suit for possession of such Property or exercising any
other remedy available to Lessor at law or in equity.
ARTICLE XXIV
24.1 Risk of Loss. During the Term, unless Lessee shall not be in
actual possession of the Property in question solely by reason of Lessor's
exercise of its remedies of dispossession under Article XVII, the risk of loss
or decrease in the enjoyment and beneficial use of such Property as a result of
the damage or destruction thereof by fire, the elements, casualties, thefts,
riots, wars or otherwise is assumed by Lessee, and Lessor shall in no event be
answerable or accountable therefor.
ARTICLE XXV
25.1 Assignment.
(a) Subject to Section 2.5 above, Lessee may not assign this Lease
or any of its rights or obligations hereunder in whole or in part to
any Person without the prior written consent of the Agent and the
Lessor, with such consent to be given or withheld in the sole
discretion of each such party.
(b) No such assignment or other relinquishment of possession to
any Property shall in any way discharge or diminish any of the
obligations of Lessee to Lessor hereunder and Lessee shall remain
directly and primarily liable under this Lease.
25.2 Subleases.
(a) Promptly but in any event within five (5) days following the
execution and delivery of any sublease permitted by this Article XXV,
Lessee shall notify Lessor and the Agent of the execution of such
sublease. As of the date of each Lease Supplement, Lessee shall lease
the respective Properties described in such Lease Supplement from
Lessor, and any existing tenant respecting such Property shall
automatically be deemed to be a subtenant of Lessee and not a tenant of
Lessor.
(b) Lessee may, without the consent of Lessor, sublet not more
than twenty percent (20%) of the square footage of the Improvements on
any specific Property to sublessees who use the sublet portion of the
Improvements only for educational purposes, job training, food and
commissary services or maintenance purposes; provided that in any
event, Lessee shall remain fully liable for all obligations (including
without limitation all Rent and other obligations with respect to such
subleased Properties and any other Properties) under this Lease, each
Lease Supplement and the other Operative Agreements. Any such sublease
of any Property shall be on commercially reasonable terms and at market
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rates, and such Property shall continue to be used for the purposes set
forth in this paragraph and in the definition of "Property." Except as
set forth in this Section 25.2(b), Lessee may not sublet any Property
or portion thereof without first obtaining the prior written consent of
the Lessor and the Agent, which consent may be given or withheld in the
sole discretion of each such party.
(c) No such sublease or other relinquishment of possession to any
Property shall in any way discharge or diminish any of Lessee's
obligations to Lessor hereunder and Lessee shall remain directly and
primarily liable under this Lease as to the Property, or portion
thereof, so sublet.
(d) Any sublease of any Property or portion thereof shall be
subject, and expressly subordinate to the rights of the Lessor, the
Agent, the Lenders and the Holders under this Lease, the Security
Agreement, each Mortgage Instrument and all other Operative Agreements.
Each insurance policy carried by Lessee pursuant to Article XIV hereof
shall be endorsed to name each sublessee under any such sublease as an
additional insured. Prior to the effectiveness of any such sublease,
Lessee shall deliver a copy thereof to the Lessor and the Agent.
ARTICLE XXVI
26.1 No Waiver. No failure by Lessor or Lessee to insist upon the
strict performance of any term hereof or to exercise any right, power or remedy
upon a default hereunder, and no acceptance of full or partial payment of Rent
during the continuance of any such default, shall constitute a waiver of any
such default or of any such term. To the fullest extent permitted by law, no
waiver of any default shall affect or alter this Lease, and this Lease shall
continue in full force and effect with respect to any other then existing or
subsequent default.
ARTICLE XXVII
27.1 Acceptance of Surrender. No surrender to Lessor of this Lease or
of all or any portion of any Property or of any part of any thereof or of any
interest therein shall be valid or effective unless agreed to and accepted in
writing by Lessor and the Agent, and no act by Lessor or the Agent or any
representative or agent of Lessor or the Agent, other than a written acceptance,
shall constitute an acceptance of any such surrender.
27.2 No Merger of Title. There shall be no merger of this Lease or of
the leasehold estate created hereby by reason of the fact that the same Person
may acquire, own or hold, directly or indirectly, in whole or in part, (a) this
Lease or the leasehold estate created hereby or any interest in this Lease or
such leasehold estate, (b) any right, title or interest in any Property, (c) any
Notes, or (d) a beneficial interest in Lessor.
ARTICLE XXVIII
28.1 Incorporation of Covenants.
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(a) Reference is made to that certain Amended and Restated Credit
Agreement dated as of December 18, 1997 (the "Existing Wackenhut
Corrections Credit Agreement") among Wackenhut Corrections, the lenders
party thereto, and NationsBank, National Association, as agent. Further
reference is made to the covenants contained in Article VIII and
Article IX of the Existing Wackenhut Corrections Credit Agreement
(hereinafter referred to as the "Incorporated Covenants"). The Lessee
agrees with the Lessor that, effective as of the date hereof (whether
or not the Basic Term has commenced with respect to any Property), the
Incorporated Covenants (and all other relevant provisions of the
Existing Wackenhut Corrections Credit Agreement related thereto) are
hereby incorporated by reference into this Lease and into the Guaranty
Agreement to the same extent and with the same effect as if set forth
fully herein and therein and shall inure to the benefit of the Lessor,
without giving effect to any waiver, amendment, modification or
replacement of the Existing Wackenhut Corrections Credit Agreement or
any term or provision of the Incorporated Covenants occurring
subsequent to the date of this Lease, except to the extent otherwise
specifically provided in the following provisions of this paragraph. In
the event a waiver is granted under the Existing Wackenhut Corrections
Credit Agreement or an amendment or modification is executed with
respect to the Existing Wackenhut Corrections Credit Agreement, and
such waiver, amendment or modification affects the Incorporated
Covenants, then such waiver, amendment or modification shall be
effective with respect to the Incorporated Covenants as incorporated by
reference into this Lease only if consented to in writing by the
Majority Lenders and the Agent. In the event of any replacement of the
Existing Wackenhut Corrections Credit Agreement with a similar credit
facility (the "New Facility") the covenants contained in the New
Facility which correspond to the covenants contained in Articles VIII
and IX of the Existing Wackenhut Corrections Credit Agreement shall
become the Incorporated Covenants hereunder only if consented to in
writing by the Majority Lenders and the Agent, and, if such consent is
not granted, then the covenants contained in Articles VIII and IX of
the Existing Wackenhut Corrections Credit Agreement (together with any
modifications or amendments approved in accordance with this paragraph)
shall continue to be the Incorporated Covenants hereunder. If the
Existing Wackenhut Corrections Credit Agreement (or any such New
Facility, as the case may be) is terminated and not replaced, then the
covenants contained in Articles VIII and IX of the Existing Wackenhut
Corrections Credit Agreement (together with any modifications or
amendments thereto, or covenants of the New Facility, in each case
approved in accordance with this paragraph) shall continue to be the
Incorporated Covenants hereunder.
(b) Financial Information, Reports, Notices, Etc. Without limiting
the generality of the foregoing, from and after the date hereof
(whether or not the Basic Term has commenced with respect to any
Property), to the extent that the Incorporated Covenants require
Wackenhut Corrections or any of its Subsidiaries to deliver any
financial statement, certificate, notice, report, or other document or
information to the Existing Credit Agent (or any other agent under the
applicable credit facility), the Lessee shall, and shall cause
Wackenhut Corrections to, simultaneously deliver a copy of such
financial statement, certificate, notice, report, document or
information to the Agent, each Lender and (upon Lessor's request) the
Lessor.
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ARTICLE XXIX
29.1 Notices. All notices, demands, requests, consents, approvals and
other communications hereunder shall be in writing and delivered personally or
by a nationally recognized overnight courier service or mailed (by registered or
certified mail, return receipt requested, postage prepaid) or telecopied with a
confirming notice, addressed to the respective parties, as follows:
If to Lessee:
Wackenhut Corrections Corporation
4200 Wackenhut Drive, #100
Palm Beach Gardens, Florida 33410-4243
Attention: Mr. David Watson, Controller
and Chief Accounting Officer
Telephone No.: (800) 666-5640 Ext. 6646
Telecopy No.: (561) 691-6473
If to Lessor:
First Security Bank, National Association
79 South Main Street
Salt Lake City, Utah 84111
Attention: Val T. Orton
Telephone No.: (801) 246-5630
Telecopy No.: (801) 246-5053
with a copy to the Agent:
NationsBank, National Association
100 Southeast 2nd Street
FL7-950-14-02
Miami, Florida 33131
Attention: Maria Conroy
Telephone No.: (305) 533-2428
Telecopy No.: (305) 533-2437
or such additional parties or other address as such party may hereafter
designate, and shall be effective upon receipt or refusal thereof.
ARTICLE XXX
30.1 Miscellaneous. Anything contained in this Lease to the contrary
notwithstanding, all claims against and liabilities of Lessee or Lessor arising
from events commencing prior to the expiration or earlier termination of this
Lease shall survive such expiration or earlier termination. If any provision of
this Lease shall be held to be unenforceable in any jurisdiction, such
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unenforceability shall not affect the enforceability of any other provision of
this Lease and such jurisdiction or of such provision or of any other provision
hereof in any other jurisdiction.
30.2 Amendments and Modifications. Neither this Lease, any Lease
Supplement nor any provision hereof may be amended, waived, discharged or
terminated except by an instrument in writing in recordable form signed by
Lessor and Lessee.
30.3 Successors and Assigns. All the terms and provisions of this Lease
shall inure to the benefit of the parties hereto and their respective successors
and permitted assigns.
30.4 Headings and Table of Contents. The headings and table of contents
in this Lease are for convenience of reference only and shall not limit or
otherwise affect the meaning hereof.
30.5 Counterparts. This Lease may be executed in any number of
counterparts, each of which shall be an original, but all of which shall
together constitute one and the same instrument.
30.6 GOVERNING LAW. THIS LEASE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF FLORIDA WITHOUT REGARD TO ANY OTHERWISE
APPLICABLE PRINCIPLES OF CONFLICT OF LAWS.
30.7 Calculation of Rent. All calculation of Rent payable hereunder
shall be computed based on the actual number of days elapsed over a year of 360
days.
30.8 Memoranda of Lease and Lease Supplements. This Lease shall not be
recorded; provided Lessor and Lessee shall promptly record a Memorandum of this
Lease (in substantially the form of Exhibit C-1 attached hereto) regarding each
Property promptly after the acquisition thereof in the local filing office with
respect thereto in all cases at Lessee's cost and expense, and as required under
applicable law to sufficiently evidence this Lease or any such Lease Supplement
in the applicable real estate filing records.
30.9 Allocations between the Lenders and the Holders. Notwithstanding
any other term or provision of this Lease to the contrary, the allocations of
the proceeds of the Properties and any and all other Rent and other amounts
received hereunder shall be subject to the inter-creditor provisions between the
Lenders and the Holders contained in the Operative Agreements (or as otherwise
agreed among the Lenders and the Holders from time to time).
30.10 Limitations on Recourse. Notwithstanding anything contained in
this Lease to the contrary, Lessee agrees to look solely to Lessor's estate and
interest in the Properties for the collection of any judgment requiring the
payment of money by Lessor in the event of liability by Lessor, and no other
property or assets of Lessor or any shareholder, owner or partner (direct or
indirect) in or of Lessor, or any director, officer, employee, beneficiary,
Affiliate of any of the foregoing shall be subject to levy, execution or other
enforcement procedure for the satisfaction of the remedies of Lessee under or
with respect to this Lease, the relationship of Lessor and Lessee hereunder or
Lessee's use of the Properties or any other liability of Lessor to Lessee,
except to the
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extent expressly provided in Section 14.11(b) of the Participation Agreement.
Nothing in this Section shall be interpreted so as to limit the terms of
Sections 6.1 or 6.2.
30.11 WAIVERS OF JURY TRIAL. THE LESSOR AND THE LESSEE IRREVOCABLY AND
UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS LEASE OR ANY COUNTERCLAIM THEREIN.
30.12 Original Leases. The single executed original of this Lease
marked "THIS COUNTERPART IS THE ORIGINAL EXECUTED COUNTERPART" on the signature
page thereof and containing the receipt of the Agent therefor on or following
the signature page thereof shall be the original executed counterpart of this
Lease (the "Original Executed Counterpart"). To the extent that this Lease
constitutes chattel paper, as such term is defined in the Uniform Commercial
Code as in effect in any applicable jurisdiction, no security interest in this
Lease may be created through the transfer or possession of any counterpart other
than the Original Executed Counterpart.
30.13 Mortgage Grant and Remedies. Without limiting any other remedies
set forth in this Lease, in the event that a court of competent jurisdiction
rules that this Lease constitutes a mortgage, deed of trust, security deed or
other secured financing, as is the intent of the parties, then the Lessor and
the Lessee agree that the Lessee hereby grants, bargains, sells, conveys,
mortgages, and grants a security interest in each Property to Lessor WITH POWER
OF SALE to secure the payment of all sums due and owing by Lessee or the
Construction Agent hereunder or under any other Operative Agreement, and that,
upon the occurrence of any Event of Default, the Lessor shall have the power and
authority, to the extent provided by law or the Operative Agreements, after
prior notice and lapse of such time as may be required by law, to foreclose its
interest (or cause such interest to be foreclosed) in all or any part of any
Property, to appoint or obtain the appointment of a receiver for all or any part
of the Property, and to exercise any other right or remedy that may be available
under applicable law to the holder of a mortgage, deed of trust, security deed
or other secured financing.
30.14 Exercise of Lessor Rights. The Lessee hereby acknowledges and
agrees that the rights and powers of the Lessor under this Lease have been
collaterally assigned to the Agent pursuant to the terms of the Security
Agreement and the other Operative Agreements, and that the Lessor has encumbered
the Properties by various Mortgage Instruments made by the Lessor in favor of
the Agent, all as security for certain indebtedness and obligations described
therein of the Lessor to the Agent, the Lenders and the Holders under the
Operative Agreements. Lessee hereby consents to said assignment and said
Mortgage Instruments in favor of the Agent and further acknowledges and agrees
as follows:
(a) In the event that a court of competent jurisdiction rules that
this Lease constitutes a mortgage, deed of trust, security deed or
other secured financing as is the intent of the parties, then the
Lessor and the Lessee agree that the Lessor's collateral assignment of
this Lease to the Agent shall be deemed to be a collateral assignment
of such mortgage, deed of trust, security deed or other secured
financing, and the Agent as such collateral assignee shall be entitled
to exercise any and all rights and remedies of the Lessor set forth
herein during the existence of any Event of Default, including without
limitation the Lessor's rights to
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obtain a receiver, to obtain possession of the Properties and the rents
and revenues thereof, to foreclose this Lease, to sell the Lessee's
interest in the Properties, and to exercise any other rights or
remedies that may then be available to the Lessor under applicable law
on account of such Event of Default.
(b) Lessee's interest in the Properties is junior and subordinate
to the lien of any Mortgage Instruments made by the Lessor in favor of
the Agent against the respective Properties from time to time in
connection with the Operative Agreements; provided, however, that for
so long as no Event of Default shall have occurred and be continuing,
(i) the Agent shall not disturb Lessee's possession of the Properties
through any foreclosure or other remedial action against the Properties
under any Mortgage Instrument, and (ii) if Lessor's interest in any
Property shall be transferred to any Person other than the Lessee as
the result of the Agent's foreclosure or other remedial action under
any Mortgage Instrument, the Lessee shall (upon request of the Agent)
attorn to such transferee and recognize the transferee as the Lessee's
landlord under this Lease.
(c) During the existence of an Event of Default, the Agent as
holder of the Mortgage Instruments and as collateral assignee of this
Lease may exercise any and all rights and remedies that may then be
available under applicable law to the Agent in either or both
capacities, whether exercised singly, successively or concurrently.
Without limiting the generality of the foregoing, the Agent as
collateral assignee may enforce the Lessee's payment obligations under
this Lease (regardless of whether this Lease shall be deemed a
mortgage, deed of trust, security deed or other secured financing) even
if Lessee's interest and estate in any Property under this Lease shall
have been extinguished or forfeited under applicable law through the
foreclosure or other enforcement of any Mortgage Instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF, the parties have caused this Lease to be duly
executed and delivered as of the date first above written.
WITNESS: WACKENHUT CORRECTIONS
CORPORATION, as Lessee
By:_________________________ By:__________________________________
Name:_______________________ Name: John G. O'Rourke
Title: Senior Vice President/Treasurer/
Chief Financial Officer
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, not individually, but
solely as
Owner Trustee under the Wackenhut
Corrections
WITNESS: Trust 1997-1, as Lessor
By:_________________________ By:________________________________
Name:_______________________ Name:C. Scott Nielsen
Title: Vice President
Receipt of this original
counterpart of the foregoing
Lease is hereby acknowledged
as of the date hereof
NATIONSBANK, NATIONAL ASSOCIATION,
as Agent
By:_________________________
Name: Maria P. Conroy
Title: Senior Vice President
SIGNATURE PAGE 1 OF 1
<PAGE> 43
EXHIBIT A TO THE LEASE
LEASE SUPPLEMENT NO. __
THIS LEASE SUPPLEMENT NO. __ (this "Lease Supplement") dated as of
[__________] between FIRST SECURITY BANK, NATIONAL ASSOCIATION, not
individually, but solely as Owner Trustee under the Wackenhut Corrections Trust
1997-1, as lessor (the "Lessor"), and WACKENHUT CORRECTIONS CORPORATION, as
lessee (the "Lessee").
WHEREAS, the Lessor is the owner or will be the owner of the Property
described on Schedule I hereto (the "Leased Property") and wishes to lease the
same to Lessee;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
SECTION 1. DEFINITIONS; RULES OF USAGE. For purposes of this Lease
Supplement, capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to them in Appendix A to the Amended and Restated
Participation Agreement, dated as of June 19, 1997, among the WACKENHUT
CORRECTIONS CORPORATION, as Construction Agent, Lessee, the Lessor, not
individually, except as expressly stated therein, but solely as Owner Trustee
under the Wackenhut Corrections Trust 1997-1, the Holders party thereto, the
Lenders party thereto, and NationsBank, National Association, as Agent for the
Lenders (as such agreement may be amended, modified, supplemented or restated
from time to time).
SECTION 2. THE PROPERTIES. Attached hereto as Schedule I is the
description of the Leased Property, with an Equipment Schedule attached hereto
as Schedule I-A, an Improvement Schedule attached hereto as Schedule I-B and a
legal description of the Land for such Project attached hereto as Schedule I-C.
Effective upon the execution and delivery of this Lease Supplement by the Lessor
and the Lessee, the Leased Property shall be subject to the terms and provisions
of the Lease.
SECTION 3. USE OF PROPERTY. At all times during the Term with respect
to each Property, Lessee will comply with all obligations under and (to the
extent no Event of Default has occurred and is continuing and provided that such
exercise will not impair the value of such Property) shall be permitted to
exercise all rights and remedies under, all operation and easement agreements
and related or similar agreements applicable to such Property.
SECTION 4. RATIFICATION. Except as specifically modified hereby, the
terms and provisions of the Lease and the Operative Agreements are hereby
ratified and confirmed and remain in full force and effect.
SECTION 5. ORIGINAL LEASE SUPPLEMENT. The single executed original of
this Lease Supplement marked "THIS COUNTERPART IS THE ORIGINAL EXECUTED
COUNTERPART" on the signature page thereof and containing the receipt of the
Agent therefor on or following the
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<PAGE> 44
signature page thereof shall be the original executed counterpart of this Lease
Supplement (the "Original Executed Counterpart"). To the extent that this Lease
Supplement constitutes chattel paper, as such term is defined in the Uniform
Commercial Code as in effect in any applicable jurisdiction, no security
interest in this Lease Supplement may be created through the transfer or
possession of any counterpart other than the Original Executed Counterpart.
SECTION 6. GOVERNING LAW. THIS LEASE SUPPLEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF ________________
WITHOUT REGARD TO ANY OTHERWISE APPLICABLE PRINCIPLES OF CONFLICT OF LAWS AS TO
MATTERS RELATING TO THE CREATION, PERFECTION, AND FORECLOSURE OF LIENS, AND
ENFORCEMENT OF RIGHTS AND REMEDIES AGAINST THE LEASED PROPERTY. THE LEASE, THE
LEASE SUPPLEMENT AND THIS MEMORANDUM SHALL IN ALL OTHER RESPECTS BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF FLORIDA.
SECTION 7. MORTGAGE GRANT AND REMEDIES. Without limiting any other
remedies set forth in the Lease, in the event that a court of competent
jurisdiction rules that the Lease constitutes a mortgage, deed of trust,
security deed or other secured financing as is the intent of the parties, then
the Lessor and the Lessee agree that the Lessee hereby grants, bargains, sells,
conveys, mortgages, and grants a security interest in each Property to Lessor
WITH POWER OF SALE to secure the payment of all sums due and owing by Lessee or
the Construction Agent hereunder or under any other Operative Agreement, and
that, upon the occurrence of any Event of Default, the Lessor shall have the
power and authority, to the extent provided by law or the Operative Agreements,
after prior notice and lapse of such time as may be required by law, to
foreclose its interest (or cause such interest to be foreclosed) in all or any
part of any Property, to appoint or obtain the appointment of a receiver for all
or any part of the Property, and to exercise any other right or remedy that may
be available under applicable law to the holder of a mortgage, deed of trust,
security deed or other secured financing.
SECTION 8. EXERCISE OF LESSOR RIGHTS. The Lessee hereby acknowledges
and agrees that the rights and powers of the Lessor under the Lease have been
collaterally assigned to the Agent pursuant to the terms of the Security
Agreement and the other Operative Agreements, and that the Lessor has encumbered
the Properties by various Mortgage Instruments made by the Lessor in favor of
the Agent, all as security for certain indebtedness and obligations described
therein of the Lessor to the Agent, the Lenders and the Holders under the
Operative Agreements. Lessee hereby consents to said assignment and said
Mortgage Instruments in favor of the Agent and further acknowledges and agrees
as follows:
(i) In the event that a court of competent jurisdiction rules that
the Lease constitutes a mortgage, deed of trust, security deed or other
secured financing as is the intent of the parties, then the Lessor and
the Lessee agree that the Lessor's collateral assignment of the Lease
to the Agent shall be deemed to be a collateral assignment of such
mortgage, deed of trust, security deed or other secured financing, and
the Agent as such collateral assignee shall be entitled to exercise any
and all rights and remedies of the Lessor set forth herein during the
existence of any Event of Default, including without limitation the
Lessor's rights to
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obtain a receiver, to obtain possession of the Properties and the rents
and revenues thereof, to foreclose the Lease, to sell the Lessee's
interest in the Properties, and to exercise any other rights or
remedies that may then be available to the Lessor under applicable law
on account of such Event of Default.
(ii) Lessee's interest in the Properties is junior and subordinate
to the lien of any Mortgage Instruments made by the Lessor in favor of
the Agent against the respective Properties from time to time in
connection with the Operative Agreements; provided, however, that for
so long as no Event of Default shall have occurred and be continuing,
(i) the Agent shall not disturb Lessee's possession of the Properties
through any foreclosure or other remedial action against the Properties
under any Mortgage Instrument, and (ii) if Lessor's interest in any
Property shall be transferred to any Person other than the Lessee as
the result of the Agent's foreclosure or other remedial action under
any Mortgage Instrument, the Lessee shall (upon request of the Agent)
attorn to such transferee and recognize the transferee as the Lessee's
landlord under the Lease.
(iii) During the existence of an Event of Default, the Agent as
holder of the Mortgage Instruments and as collateral assignee of the
Lease may exercise any and all rights and remedies that may then be
available under applicable law to the Agent in either or both
capacities, whether exercised singly, successively or concurrently.
Without limiting the generality of the foregoing, the Agent as
collateral assignee may enforce the Lessee's payment obligations under
the Lease (regardless of whether the Lease shall be deemed a mortgage,
deed of trust, security deed or other secured financing) even if
Lessee's interest and estate in any Property under this Lease shall
have been extinguished or forfeited under applicable law through the
foreclosure or other enforcement of any Mortgage Instrument.
SECTION 9. COUNTERPART EXECUTION. This Lease Supplement may be executed
in any number of counterparts and by each of the parties hereto in separate
counterparts, all such counterparts together constituting but one and the same
instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
[IF NECESSARY, MODIFY TO PUT IN RECORDABLE FORM.]
40
<PAGE> 46
IN WITNESS WHEREOF, each of the parties hereto has caused this Lease
Supplement to be duly executed by an officer thereunto duly authorized as of the
date and year first above written.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, not individually, but solely as Owner
Trustee under the Wackenhut Corrections Trust 1997-1,
as Lessor
By:___________________________________________________
Name:_________________________________________________
Title:________________________________________________
LESSEE:
WACKENHUT CORRECTIONS CORPORATION,
as Lessee
By:___________________________________________________
Name:_________________________________________________
Title:________________________________________________
41
<PAGE> 47
Receipt of this original counterpart of the foregoing Lease Supplement is hereby
acknowledged as the date hereof.
NATIONSBANK, NATIONAL ASSOCIATION, as
Agent
By:___________________________________________________
Name:_________________________________________________
Title:________________________________________________
42
<PAGE> 48
STATE OF ________________ )
) ss:
COUNTY OF _______________ )
The foregoing Lease Supplement was acknowledged before me, the
undersigned Notary Public, in the County and State aforesaid of this ____ day of
___________, 199_, by _________ ______________, as __________ of FIRST SECURITY
BANK, NATIONAL ASSOCIATION, a national banking association, not individually,
but solely as Owner Trustee under the Wackenhut Corrections Trust 1997-1, on
behalf of the Owner Trustee.
[Notarial Seal] __________________________________________
Notary Public
My commission expires:__________
STATE OF ________________ )
) ss:
COUNTY OF _______________ )
The foregoing Lease Supplement was acknowledged before me, the
undersigned Notary Public, in the County and State aforesaid this ____ day of
__________, 199_, by ____________ ________________, as _____________ of
WACKENHUT CORRECTIONS CORPORATION, a Florida corporation, on behalf of the
corporation.
[Notarial Seal] __________________________________________
Notary Public
My commission expires:__________
STATE OF _________________ )
) ss:
COUNTY OF ________________ )
The foregoing Lease Supplement was acknowledged before me, the
undersigned Notary Public, in the County and State aforesaid this ____ day of
__________, 199_, by ____________ _________________, as _______________ of
NATIONSBANK, NATIONAL ASSOCIATION, a national banking association, as Agent.
[Notarial Seal] __________________________________________
Notary Public
My commission expires:__________
43
<PAGE> 49
SCHEDULE I
TO LEASE SUPPLEMENT NO. ___
44
<PAGE> 50
SCHEDULE I-A
TO LEASE SUPPLEMENT NO. ___
(Equipment)
45
<PAGE> 51
SCHEDULE I-B
TO LEASE SUPPLEMENT NO. ___
(Improvements)
46
<PAGE> 52
SCHEDULE I-C
TO LEASE SUPPLEMENT NO. ___
(Land)
47
<PAGE> 53
EXHIBIT B TO THE LEASE
[OTHER NAMES AND LOCATIONS OF LESSEE]
48
<PAGE> 54
ACKNOWLEDGMENT OF EXECUTION ON BEHALF OF
FIRST SECURITY BANK, NATIONAL ASSOCIATION, AS
OWNER TRUSTEE FOR THE WACKENHUT CORRECTIONS TRUST 1997-1
STATE OF NORTH CAROLINA
COUNTY OF GASTON
Before me, the undersigned, a Notary Public in and for said County and
State on this 18th day of December, 1997 A.D., personally appeared C. Scott
Nielsen, known to be the Vice President of First Security Bank, National
Association, as Owner Trustee for the Wackenhut Corrections Trust 1997-1 (the
"Lessor"), who, being by me duly sworn, says he works at 79 South Main Street,
Salt Lake City, Utah 84111, and that by authority duly given by, and as the act
of, the Lessor, the foregoing and annexed Amended and Restated Lease Agreement
dated as of June 19, 1997, was executed by him in the State and County aforesaid
as said Vice President on behalf of the Lessor.
Witness my hand and official seal this ____ day of December, 1997.
______________________________________
Notary Public
(SEAL)
My commission expires: ______________________
49
<PAGE> 55
ACKNOWLEDGMENT OF EXECUTION ON BEHALF OF
WACKENHUT CORRECTIONS CORPORATION
STATE OF NORTH CAROLINA
COUNTY OF GASTON
Before me, the undersigned, a Notary Public in and for said County and
State on this 18th day of December, 1997 A.D., personally appeared John G.
O'Rourke, known to be the Senior Vice President, Treasurer and Chief Financial
Officer of Wackenhut Corrections Corporation (the "Lessee"), who being by me
duly sworn, says he works at 4200 Wackenhut Drive, Suite #100, Palm Beach
Gardens, Florida 33410-4243, and that by authority duly given by, and as the act
of, the Lessee, the foregoing and annexed Amended and Restated Lease Agreement
dated as of June 19, 1997, was executed by him as said Senior Vice President,
Treasurer and Chief Financial Officer on behalf of the Lessee, in the aforesaid
State and County.
Witness my hand and official seal this ____ day of December, 1997.
______________________________________
Notary Public
(SEAL)
My commission expires: ______________________
50
<PAGE> 56
AFFIDAVIT OF C. SCOTT NIELSEN
The undersigned, being first duly sworn, deposes and says that:
1. He is a Vice President of First Security Bank, National Association,
and works at 79 South Main Street, Salt Lake City, Utah, 84111.
2. Reference is made to the Amended and Restated Lease Agreement (the
"Lease") dated as of June 19, 1997, of First Security Bank, National
Association, as Owner Trustee for the Wackenhut Corrections Trust 1997-1 (the
"Lessor") and Wackenhut Corrections Corporation (the "Lessee").
3. The Lease was executed by the undersigned on behalf of the Lessor
and delivered by the Lessor to NationsBank, National Association as collateral
assignee of the Lease, both execution and delivery occurring in Charlotte, North
Carolina as of June 19, 1997.
This the ____ day of December, 1997.
______________________________________
Name: C. Scott Nielsen
Title: Vice President
Acknowledgment of Execution
STATE OF NORTH CAROLINA
COUNTY OF GASTON
Before me, the undersigned, a Notary Public in and for said County and
State on this 18th day of December, 1997 A.D., personally appeared C. Scott
Nielsen who before me affixed his signature to the above Affidavit.
Witness my hand and official seal this ____ day of December, 1997.
______________________________________
Notary Public
(SEAL)
My Commission Expires: __________________
51
<PAGE> 57
AFFIDAVIT OF JOHN G. O'ROURKE
The undersigned, being first duly sworn, deposes and says that:
1. He is a Senior Vice President, Treasurer and Chief Financial Officer
of Wackenhut Corrections Corporation, and works at 4200 Wackenhut Drive, Suite
#100, Palm Beach Gardens, Florida 33410-4243.
2. Reference is made to the Amended and Restated Lease Agreement (the
"Lease") dated as of June 19, 1997, of First Security Bank, National
Association, as Owner Trustee for the Wackenhut Corrections Trust 1997-1 (the
"Lessor") and Wackenhut Corrections Corporation (the "Lessee").
3. The Lease was executed by the undersigned on behalf of the Lessee
and delivered by the Lessee to the Lessor, both execution and delivery occurring
in Charlotte, North Carolina as of June 19, 1997.
This the ____ day of December, 1997.
______________________________________
Name: John G. O'Rourke
Title: Senior Vice President/Treasurer/
Chief Financial Officer
Acknowledgment of Execution
STATE OF NORTH CAROLINA
COUNTY OF GASTON
Before me, the undersigned, a Notary Public in and for said County and
State on this 18th day of December, 1997 A.D., personally appeared John G.
O'Rourke who before me affixed his signature to the above Affidavit.
Witness my hand and official seal this ____ day of December, 1997.
______________________________________
Notary Public
(SEAL)
My Commission Expires: __________________
52
<PAGE> 1
GUARANTY AND SURETYSHIP AGREEMENT
THIS GUARANTY AND SURETYSHIP AGREEMENT (this "Guaranty Agreement" or
this "Guaranty"), dated as of December 18, 1997, is made by each of the
undersigned (each a "Guarantor" and collectively the "Guarantors") to
NATIONSBANK, NATIONAL ASSOCIATION, a national banking association, as a Lender
("NationsBank"), and NATIONSBANK, NATIONAL ASSOCIATION, a national banking
association, in its capacity as agent for the Lenders (in such capacity, and
together with any successors in such capacity, the "Agent") party to the Amended
and Restated Credit Agreement (as defined below).
W I T N E S S E T H:
WHEREAS, the Agent and the Lenders have agreed to provide Wackenhut
Corrections Corporation, a Florida corporation (the "Borrower"), revolving
credit and letter of credit facilities pursuant to the terms of that certain
Amended and Restated Credit Agreement dated as of December 18, 1997 among the
Borrower and the Agent (as from time to time amended, supplemented or restated,
the "Credit Agreement"); and
WHEREAS, each Guarantor is a Subsidiary of the Borrower and will
materially benefit from the Loans to be made and the Letters of Credit to be
issued under the Credit Agreement, and each Guarantor is willing to enter into
this Guaranty Agreement to provide an inducement for the Lenders to make Loans
and issue Letters of Credit thereunder;
NOW, THEREFORE, in order to induce the Agent and the Lenders to enter
into the Credit Agreement and the other Loan Documents and in consideration of
the premises and the mutual covenants contained herein, the parties hereto agree
as follows:
1. DEFINITIONS. All capitalized terms used but not otherwise defined
herein shall have the meanings ascribed to such terms in the Credit Agreement.
2. GUARANTY. Each Guarantor hereby jointly and severally,
unconditionally, absolutely, continually and irrevocably guarantees to the Agent
and the Lenders the payment in full of the Borrower's Liabilities (as defined
below). For all purposes of this Guaranty Agreement, "Borrower's Liabilities"
means: (a) the Borrower's prompt payment in full, when due or declared due and
at all such times, of all Obligations and all other amounts pursuant to the
terms of the Credit Agreement, the Notes, and all other Loan Documents executed
in connection with the Credit Agreement heretofore, now or at any time or times
hereafter owing, arising, due or payable from the Borrower to any one or more of
the Lenders, including without limitation principal, interest, premium or fee
(including, but not limited to, loan fees and attorneys' fees and expenses).
Each Guarantor agrees that it is jointly and severally, directly and primarily
liable for the Borrower's Liabilities. The Guarantors' obligations to the Agent
and the Lenders under this Guaranty Agreement are hereinafter collectively
referred to as the "Guarantors' Obligations".
<PAGE> 2
3. LIMIT OF LIABILITY. The obligations of the Guarantor hereunder shall
be limited to an aggregate amount equal to the largest amount that would not
render its obligations hereunder subject to avoidance under Section 548 of the
United States Bankruptcy Code or any comparable provisions of any applicable
state law.
4. PAYMENT. If the Borrower shall default in payment or performance of
any Borrower's Liabilities when and as the same shall become due, whether
according to the terms of the Credit Agreement, by acceleration, or otherwise,
or upon the occurrence of any other Event of Default under the Credit Agreement
that has not been cured or waived, then each Guarantor, upon demand thereof by
the Agent or its successors or assigns, will, as of the date of the Agent's
demand, fully pay to the Agent, for the benefit of itself and the Lenders,
subject to any restriction set forth in Section 3 hereof, an amount equal to all
Guarantor's Obligations then due and owing.
5. UNCONDITIONAL OBLIGATIONS. This is a guaranty of payment and not of
collection. The Guarantors' Obligations under this Guaranty Agreement shall be
joint and several, absolute and unconditional irrespective of the validity,
legality or enforceability of the Credit Agreement, the Notes or any other Loan
Document or any other guaranty of the Borrower's Liabilities, and shall not be
affected by any action taken under the Credit Agreement, the Notes or any other
Loan Document, any other guaranty of the Borrower's Liabilities, or any other
agreement between the Agent or the Lenders and the Borrower or any other person,
in the exercise of any right or power therein conferred, or by any failure or
omission to enforce any right conferred thereby, or by any waiver of any
covenant or condition therein provided, or by any acceleration of the maturity
of any of the Borrower's Liabilities, or by the release or other disposal of any
Collateral or other security for any of the Borrower's Liabilities, or by the
dissolution of the Borrower or the combination or consolidation of the Borrower
into or with another entity or any transfer or disposition of any assets of the
Borrower or by any extension or renewal of the Credit Agreement, any of the
Notes or any other Loan Document, in whole or in part, or by any modification,
alteration, amendment or addition of or to the Credit Agreement, any of the
Notes or any other Loan Document, any other guaranty of the Borrower's
Liabilities, or any other agreement between the Agent or the Lenders and the
Borrower or any other Person, or by any other circumstance whatsoever (with or
without notice to or knowledge of any Guarantor) which may or might in any
manner or to any extent vary the risks of any Guarantor, or might otherwise
constitute a legal or equitable discharge of a surety or guarantor; it being the
purpose and intent of the parties hereto that this Guaranty Agreement and the
Guarantors' Obligations hereunder shall be absolute and unconditional under any
and all circumstances and shall not be discharged except by payment as herein
provided.
6. CURRENCY AND FUNDS OF PAYMENT. Each Guarantor hereby guarantees that
the Guarantors' Obligations will be paid in (i) the same Alternative Currency in
the case of Loans made and Letters of Credit drawn in Alternative Currencies,
and (ii) in Dollars in all other cases and in immediately available funds,
regardless of any law, regulation or decree now or hereafter in effect that
might in any manner affect the Borrower's Liabilities, or the rights of the
Agent or any Lender with respect thereto as against the Borrower, or cause or
permit to be invoked any alteration in the time, amount or manner of payment by
the Borrower of any or all of the Borrower's Liabilities.
2
<PAGE> 3
7. EVENTS OF DEFAULT. In the event that (a) any Guarantor shall file a
petition to take advantage of any insolvency statute; (b) any Guarantor shall
commence or suffer to exist a proceeding for the appointment of a receiver,
trustee, liquidator or conservator of itself or of the whole or substantially
all of its property; (c) any Guarantor shall file a petition or answer seeking
reorganization or arrangement or similar relief under the Federal bankruptcy
laws or any other applicable law or statute of the United States of America or
any state or similar law of any other country; (d) a court of competent
jurisdiction shall enter an order, judgment or decree appointing a custodian,
receiver, trustee, liquidator or conservator of any Guarantor or of the whole or
substantially all of its properties, or approve a petition filed against any
Guarantor seeking reorganization or arrangement or similar relief under the
Federal bankruptcy laws or any other applicable law or statute of the United
States of America or any state or similar law of any other country, or if, under
the provisions of any other law for the relief or aid of debtors, a court of
competent jurisdiction shall assume custody or control of any Guarantor or of
the whole or substantially all of its properties and such order, judgment,
decree, approval or assumption remains unstayed or undismissed for a period of
thirty (30) consecutive days; (e) there is commenced against any Guarantor any
proceeding or petition seeking reorganization, arrangement or similar relief
under the Federal bankruptcy laws or any other applicable law or statute of the
United States of America or any state, which proceeding or petition remains
unstayed or undismissed for a period of thirty (30) consecutive days; (f) there
shall occur an Event of Default under the Credit Agreement; (g) any default
shall occur in the payment of amounts due hereunder; or (h) any other default in
compliance with the terms hereof shall occur which remains uncured or unwaived
for a period of thirty (30) days after the earlier of notice of such default
from the Agent or an officer of a Guarantor becomes aware of such default (each
of the foregoing an "Event of Default" hereunder), then notwithstanding any
Collateral or other security that the Agent or any Lender may process from
Borrower or any Guarantor or any other guarantor of the Borrower's Liabilities,
or any other party, at the Agent's election and without notice thereof or demand
therefor, so long as such Event of Default shall be continuing, the Guarantors'
Obligations shall immediately become due and payable.
8. SUITS. Each Guarantor from time to time shall pay to the Agent for
the benefit of itself and the Lenders, on demand, at the Agent's place of
business set forth in the Credit Agreement, the Guarantors' Obligations as they
become or are declared due, and in the event such payment is not made forthwith,
the Agent or any Lender or any of them may proceed to suit against any one or
more or all of the Guarantors. At the Agent's election, one or more and
successive or concurrent suits may be brought hereon by the Agent against any
one or more or all of the Guarantors, whether or not suit has been commenced
against the Borrower, any other guarantor of the Borrower's Liabilities, or any
other Person and whether or not the Agent or Lender has taken or failed to take
any other action to collect all or any portion of the Borrower's Liabilities.
9. SET-OFF AND WAIVER. Each Guarantor waives any right to assert
against the Agent or Lender as a defense, counterclaim, set-off or cross claim,
any defense (legal or equitable) or other claim which such Guarantor may now or
at any time hereafter have against the Borrower, the Agent or the Lenders,
without waiving any additional defenses, set-offs, counterclaims or other claims
otherwise available to such Guarantor. If at any time hereafter the Agent or any
Lender employs counsel for advice or other representation to enforce the
Guarantors' Obligations that arise out of an Event of Default, then, in any of
the foregoing events, all of the reasonable attorneys' fees arising
3
<PAGE> 4
from such services and all expenses, costs and charges in any way or respect
arising in connection therewith or relating thereto shall be jointly and
severally paid by the Guarantors to the Agent, for the benefit of itself and the
Lenders, on demand.
10. WAIVER; SUBROGATION; SUBORDINATION.
(a) Each Guarantor hereby waives notice of the following events or
occurrences: (i) the Agent's acceptance of this Guaranty Agreement; (ii) the
Lenders' heretofore, now or from time to time hereafter loaning monies or giving
or extending credit to or for the benefit of the Borrower, whether pursuant to
the Credit Agreement or the Notes or any amendments, modifications, or
supplements thereto, or replacements or extensions thereof; (iii) the Agent or
the Lenders or the Borrower heretofore, now or at any time hereafter, obtaining,
amending, substituting for, releasing, waiving or modifying the Credit
Agreement, the Notes or any other Loan Documents; (iv) presentment, demand,
notices of default, non-payment, partial payment and protest; (v) the Agent or
the Lenders heretofore, now or at any time hereafter granting to the Borrower
(or any other party liable to the Lenders on account of the Borrower's
Liabilities) any indulgence or extensions of time of payment of the Borrower's
Liabilities; and (vi) the Agent or the Lenders heretofore, now or at any time
hereafter accepting from the Borrower or any other person, any partial payment
or payments on account of the Borrower's Liabilities or any collateral securing
the payment thereof or the Agent settling, subordinating, compromising,
discharging or releasing the same. Each Guarantor agrees that the Agent and each
Lender may heretofore, now or at any time hereafter do any or all of the
foregoing in such manner, upon such terms and at such times as Agent or such
Lender, in its sole and absolute discretion, deems advisable, without in any way
or respect impairing, affecting, reducing or releasing such Guarantor from the
Guarantors' Obligations, and each Guarantor hereby consents to each and all of
the foregoing events or occurrences.
(b) Each Guarantor hereby agrees that payment or performance by such
Guarantor of the Guarantors' Obligations under this Guaranty Agreement may be
enforced by the Agent on behalf of itself and the Lenders upon demand by the
Agent to such Guarantor without the Agent being required, each Guarantor
expressly waiving any right it may have to require the Agent, to (i) prosecute
collection or seek to enforce or resort to any remedies against the Borrower or
any other Guarantor or any other guarantor of the Borrower's Liabilities, IT
BEING EXPRESSLY UNDERSTOOD, ACKNOWLEDGED AND AGREED TO BY EACH GUARANTOR THAT
DEMAND UNDER THIS GUARANTY AGREEMENT MAY BE MADE BY THE AGENT, AND THE
PROVISIONS HEREOF ENFORCED BY THE AGENT, EFFECTIVE AS OF THE FIRST DATE ANY
EVENT OF DEFAULT OCCURS AND IS CONTINUING UNDER THE CREDIT AGREEMENT, or (ii)
seek to enforce or resort to any remedies with respect to any, Liens or
encumbrances granted to the Agent by the Borrower or any other Person on account
of the Borrower's Liabilities or any guaranty thereof. Neither the Agent nor any
Lender shall have any obligation to protect, secure or insure any of the
foregoing security interests, Liens or encumbrances on the properties or
interests in properties subject thereto. The Guarantors' Obligations shall in no
way be impaired, affected, reduced, or released by reason of the Agent's or any
Lender's failure or delay to do or take any of the acts, actions or things
described in this Guaranty Agreement including, without limiting the generality
of the foregoing, those acts, actions and things described in this Section 10.
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<PAGE> 5
(c) Each Guarantor further agrees with respect to this Guaranty
Agreement that it shall have no right of subrogation, reimbursement or
indemnity, nor any right of recourse to security for the Borrower's Liabilities
in each case until after all the Borrower's Liabilities have been paid in full.
This waiver is expressly intended to prevent the existence of any claim in
respect to such reimbursement by the Guarantor against the estate of Borrower
within the meaning of Section 101 of the Bankruptcy Code, and to prevent the
Guarantor from constituting a creditor of Borrower in respect of such
reimbursement within the meaning of Section 547(b) of the Bankruptcy Code in the
event of a subsequent case involving the Borrower.
(d) Until the Guarantors' Obligations are paid in full and the Lenders
are under no further obligation to lend or extend funds or credit which would
constitute Guarantors' Obligations, each Guarantor hereby unconditionally
subordinates all present and future debts, liabilities or obligations of the
Borrower to the Guarantor to the Guarantors' Obligations, and all amounts due
under such debts, liabilities, or obligations shall, upon the occurrence and
during the continuance of an Event of Default, be collected and paid over
forthwith to the Lenders on account of the Guarantors' Obligations and, pending
such payment, shall be held by each Guarantor as agent and bailee of the Lenders
separate and apart from all other funds, property and accounts of the Guarantor.
Each Guarantor, at the reasonable request of the Lenders, shall execute such
further documents in favor of the Lenders to further evidence and support the
purpose of this Section 10(d).
11. EFFECTIVENESS; ENFORCEABILITY. This Guaranty Agreement shall be
effective as of the date of the initial Advance under the Credit Agreement and
shall continue in full force and effect until the Borrower's Obligations are
fully paid and the Credit Agreement has terminated. The Agent shall give each
Guarantor written notice of such termination at each Guarantor's address set
forth below such Guarantor's execution hereof on the signature pages of this
Guaranty or such other address for the Guarantor as such Guarantor shall give
notice to the Agent in the manner provided for the giving of notices under the
Credit Agreement (the "Guarantor's Address"). This Guaranty Agreement shall be
binding upon and inure to the benefit of each Guarantor, the Agent and the
Lenders and their respective successors and assigns. Notwithstanding the
foregoing, no Guarantor may, without the prior written consent of the Agent,
assign any rights, powers, duties or obligations hereunder. Any claim or claims
that the Agent and the Lenders may at any time hereafter have against any
Guarantor under this Guaranty Agreement may be asserted by the Agent or any
Lender by written notice directed to any one or more or all of the Guarantors at
the applicable Guarantor's Address.
12. REPRESENTATIONS AND WARRANTIES. Each Guarantor represents and
warrants to the Agent for the benefit of itself and the Lenders that it is duly
authorized to execute, deliver and perform this Guaranty Agreement, that this
Guaranty Agreement is legal, valid, binding and enforceable against such
Guarantor in accordance with its terms except as enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
the enforcement of creditors' rights generally and by general equitable
principles; and that such Guarantor's execution, delivery and performance of
this Guaranty Agreement do not violate or constitute a breach of its certificate
of incorporation or charter or governance documents or any agreement to which
such Guarantor is a party, or any applicable laws.
5
<PAGE> 6
13. EXPENSES. Each Guarantor agrees to be jointly and severally liable
for the payment of all reasonable fees and expenses, including attorney's fees,
incurred by the Agent in connection with the enforcement of this Guaranty
Agreement.
14. REINSTATEMENT. Each Guarantor agrees that this Guaranty Agreement
shall continue to be effective or be reinstated, as the case may be, at any time
payment received by the Agent under the Credit Agreement or this Guaranty
Agreement is rescinded or must be restored for any reason.
15. COUNTERPARTS. This Guaranty Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original as against any
party whose signature appears thereon, and all of which shall constitute one and
the same instrument.
16. RELIANCE. Each Guarantor represents and warrants to the Agent, for
the benefit of the Agent and the Lenders, that: (a) such Guarantor has adequate
means to obtain from Borrower, on a continuing basis, information concerning
Borrower and Borrower's financial condition and affairs and has full and
complete access to Borrower's books and records; (b) such Guarantor is not
relying on the Agent or any Lender, its or their employees, agents or other
representatives, to provide such information, now or in the future; (c) such
Guarantor is executing this Guaranty Agreement freely and deliberately, and
understands the obligations and financial risk undertaken by providing this
Guaranty; (d) such Guarantor has relied solely on the Guarantor's own
independent investigation, appraisal and analysis of Borrower and Borrower's
financial condition and affairs in deciding to provide this Guaranty and is
fully aware of the same; and (e) such Guarantor has not depended or relied on
the Agent or any Lender, its or their employees, agents or representatives, for
any information whatsoever concerning Borrower or Borrower's financial condition
and affairs or other matters material to such Guarantor's decision to provide
this Guaranty or for any counseling, guidance, or special consideration or any
promise therefor with respect to such decision. Each Guarantor agrees that
neither the Agent nor any Lender has any duty or responsibility whatsoever, now
or in the future, to provide to any Guarantor any information concerning
Borrower or Borrower's financial condition and affairs, other than as expressly
provided herein, and that, if such Guarantor receives any such information from
the Agent or any Lender, its or their employees, agents or other
representatives, such Guarantor will independently verify the information and
will not rely on the Agent or any Lender, its or their employees, agents or
other representatives, with respect to such information.
17. NOTICES. Any notice shall be conclusively deemed to have been
received by any party hereto and be effective (i) on the day on which delivered
(including hand delivery by commercial courier service) to such party (against
receipt therefor), (ii) on the date of receipt at such telefacsimile number for
such party and the receipt of such message is verified by the sender's
telefacsimile machine, (iii) on the fifth Business Day after the day on which
mailed, if sent prepaid by certified or registered mail, return receipt
requested, in each case delivered, transmitted or mailed, as the case may be, to
the Guarantor's Address or telefacsimile number, as appropriate.
18. TERMINATION. This Guaranty Agreement and all obligations of the
Guarantors hereunder shall terminate without delivery of any instrument or
performance of any act by any party
6
<PAGE> 7
on the date when all of the Obligations have been fully paid and the Credit
Agreement has terminated.
19. GOVERNING LAW; WAIVERS OF TRIAL BY JURY, ETC.
(A) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF FLORIDA APPLICABLE TO
CONTRACTS EXECUTED, AND TO BE FULLY PERFORMED, IN SUCH STATE.
(B) EACH PARTY HEREBY EXPRESSLY AND IRREVOCABLY AGREES AND CONSENTS
THAT ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREIN MAY BE INSTITUTED IN
ANY STATE OR FEDERAL COURT SITTING IN THE COUNTY OF BROWARD, STATE OF
FLORIDA, UNITED STATES OF AMERICA AND, BY THE EXECUTION AND DELIVERY OF
THIS AGREEMENT, EXPRESSLY WAIVES ANY OBJECTION THAT IT MAY HAVE NOW OR
HEREAFTER TO THE LAYING OF THE VENUE OR TO THE JURISDICTION OF ANY SUCH
SUIT, ACTION OR PROCEEDING, AND IRREVOCABLY SUBMITS GENERALLY AND
UNCONDITIONALLY TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUCH SUIT,
ACTION OR PROCEEDING.
(C) EACH PARTY AGREES THAT SERVICE OF PROCESS MAY BE MADE BY
PERSONAL SERVICE OF A COPY OF THE SUMMONS AND COMPLAINT OR OTHER LEGAL
PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING, OR BY REGISTERED OR
CERTIFIED MAIL (POSTAGE PREPAID) TO THE GUARANTOR'S ADDRESS (AS HEREIN
DEFINED) OR BY ANY OTHER METHOD OF SERVICE PROVIDED FOR UNDER THE
APPLICABLE LAWS IN EFFECT IN THE STATE OF FLORIDA.
(D) NOTHING CONTAINED IN SUBSECTIONS (B) OR (C) HEREOF SHALL
PRECLUDE ANY PARTY FROM BRINGING ANY SUIT, ACTION OR PROCEEDING ARISING
OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS IN THE
COURTS OF ANY PLACE WHERE ANY OTHER PARTY OR ANY OF SUCH PARTY'S
PROPERTY OR ASSETS MAY BE FOUND OR LOCATED. TO THE EXTENT PERMITTED BY
THE APPLICABLE LAWS OF ANY SUCH JURISDICTION, EACH PARTY HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT AND EXPRESSLY
WAIVES, IN RESPECT OF ANY SUCH SUIT, ACTION OR PROCEEDING, THE
JURISDICTION OF ANY OTHER COURT OR COURTS WHICH NOW OR HEREAFTER, BY
REASON OF ITS PRESENT OR FUTURE DOMICILE, OR OTHERWISE, MAY BE
AVAILABLE TO IT.
(E) IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS OR
REMEDIES UNDER OR RELATED TO THIS AGREEMENT OR
7
<PAGE> 8
ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR THAT MAY
IN THE FUTURE BE DELIVERED IN CONNECTION WITH THE FOREGOING, EACH PARTY
HEREBY AGREES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, THAT ANY SUCH
ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A
JURY AND EACH PARTY HEREBY WAIVES, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, ANY OBJECTION THAT IT MAY HAVE THAT EACH ACTION OR
PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
[SIGNATURES ON FOLLOWING PAGE]
8
<PAGE> 9
IN WITNESS WHEREOF, the parties have duly executed this Guaranty
Agreement on the day and year first written above.
GUARANTOR:
WCC RE HOLDINGS, INC.
WITNESS:
_________________________ By:_____________________________________
Name: John G. O'Rourke
_________________________ Title: Senior Vice President
Address for Notices:
4200 Wackenhut Drive, #100
Palm Beach Gardens, Florida 33410
Telefacsimile: (561) 691-6740
9
<PAGE> 10
WITNESS: NATIONSBANK, NATIONAL ASSOCIATION, as Agent
_________________________ By:______________________________________
Name: Maria Conroy
_________________________ Title: Senior Vice President
10
<PAGE> 1
THIRD AMENDED AND RESTATED TRUST AGREEMENT
dated as of June 19, 1997
among
NATIONSBANK, NATIONAL ASSOCIATION,
and the other financial institutions parties thereto,
as Holders,
and
FIRST SECURITY BANK, NATIONAL ASSOCIATION, as Owner Trustee
WACKENHUT CORRECTIONS TRUST 1997-1
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I DEFINITIONS; AMENDED AND RESTATED AGREEMENT
SECTION 1.1 Definitions............................................... 1
ARTICLE II AUTHORITY TO EXECUTE AND PERFORM VARIOUS
DOCUMENTS; DECLARATION OF TRUST BY TRUST COMPANY
SECTION 2.1 Authority To Execute and Perform Various
Documents................................................. 2
SECTION 2.2 Declaration of Trust by Trust Company..................... 2
ARTICLE III CONTRIBUTIONS AND PAYMENTS
SECTION 3.1 Procedure for Holder Fundings; Certificates............... 3
SECTION 3.2 Certificate Yield......................................... 4
SECTION 3.3 Scheduled Return of Holder Fundings....................... 4
SECTION 3.4 Early Return of Holder Fundings........................... 5
SECTION 3.5 Payments from Trust Estate Only........................... 5
SECTION 3.6 Method of Payment......................................... 5
SECTION 3.7 Computation of Yield...................................... 5
SECTION 3.8 Conversion and Continuation Options....................... 6
SECTION 3.9 Increased Costs, Illegality, etc.......................... 7
SECTION 3.10 Contribution Indemnity.................................... 8
SECTION 3.11 Notice of Amounts Payable; Mandatory
Assignment................................................ 8
SECTION 3.12 Taxes..................................................... 9
SECTION 3.13 Holder Overdue Rate....................................... 10
ARTICLE IV COLLECTIONS AND DISTRIBUTIONS
SECTION 4.1 Collections and Remittances by the Owner
Trustee................................................... 11
SECTION 4.2 Priority of Distributions................................. 11
SECTION 4.3 Excepted Payments......................................... 11
SECTION 4.4 Distributions after Default............................... 11
ARTICLE V DUTIES OF THE OWNER TRUSTEE
SECTION 5.1 Notice of Certain Events.................................. 12
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C> <C>
SECTION 5.2 Action Upon Instructions.................................. 12
SECTION 5.3 Indemnification........................................... 12
SECTION 5.4 No Duties Except as Specified In Trust
Agreement or Instructions................................. 13
SECTION 5.5 No Action Except Under Specified
Documents or Instructions................................. 13
SECTION 5.6 Absence of Duties......................................... 13
SECTION 5.7 Owner Trustee's Annual Certification...................... 14
ARTICLE VI THE OWNER TRUSTEE
SECTION 6.1 Acceptance of Trust and Duties............................ 14
SECTION 6.2 Furnishing of Documents................................... 15
SECTION 6.3 No Representations or Warranties as to the Properties or
Operative Agreements...................................... 15
SECTION 6.4 No Segregation of Moneys; No Interest..................... 15
SECTION 6.5 Reliance; Advice of Counsel............................... 15
SECTION 6.6 Liability With Respect to Documents....................... 16
SECTION 6.7 Not Acting In Individual Capacity......................... 16
SECTION 6.8 Books and Records; Tax Returns............................ 16
SECTION 6.9 Substitute Owner Trustee; Owner Trustee Advisor.......... 17
SECTION 6.10 Maintain Character of Holder Fundings..................... 17
ARTICLE VII INDEMNIFICATION OF THE OWNER TRUSTEE
SECTION 7.1 Indemnification Generally................................. 18
SECTION 7.2 Compensation and Expenses................................. 18
ARTICLE VIII TERMINATION OF TRUST AGREEMENT
SECTION 8.1 Termination of Trust Agreement............................ 18
SECTION 8.2 Termination at Option of the Holders...................... 18
SECTION 8.3 Termination at Option of the Owner
Trustee................................................... 19
SECTION 8.4 Actions by the Owner Trustee Upon
Termination............................................... 19
ARTICLE IX SUCCESSOR OWNER TRUSTEES, CO-OWNER TRUSTEES
AND SEPARATE OWNER TRUSTEES
SECTION 9.1 Resignation of the Owner Trustee; Appointment
of Successor.............................................. 19
SECTION 9.2 Co-Trustees and Separate Trustees......................... 20
SECTION 9.3 Notice.................................................... 23
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C> <C>
ARTICLE X SUPPLEMENTS AND AMENDMENTS
SECTION 10.1 Supplements and Amendments................................ 23
SECTION 10.2 Limitation on Amendments.................................. 24
ARTICLE XI MISCELLANEOUS
SECTION 11.1 No Legal Title to Trust Estate in
the Holders............................................... 24
SECTION 11.2 Sale of Properties by the Owner Trustee is
Binding................................................... 24
SECTION 11.3 Certification of Authorization............................ 24
SECTION 11.4 Limitations on Rights of Others........................... 24
SECTION 11.5 Notices................................................... 24
SECTION 11.6 Severability.............................................. 25
SECTION 11.7 Limitation on the Holders' Liability...................... 25
SECTION 11.8 Separate Counterparts..................................... 25
SECTION 11.9 Successors and Assigns.................................... 25
SECTION 11.10 Headings.................................................. 25
SECTION 11.11 Governing Law............................................. 25
SECTION 11.12 Performance by the Holders................................ 25
SECTION 11.13 Conflict with Agreements.................................. 25
SECTION 11.14 No Implied Waiver......................................... 26
</TABLE>
EXHIBIT A FORM OF HOLDER CERTIFICATE
iii
<PAGE> 5
THIRD AMENDED AND RESTATED TRUST AGREEMENT
THIS THIRD AMENDED AND RESTATED TRUST AGREEMENT, dated as of June 19,
1997, is among the Beneficiaries and Holders party hereto from time to time
parties hereto (each a "Beneficiary" or a "Holder"), and FIRST SECURITY BANK,
NATIONAL ASSOCIATION, in its individual capacity ("Trust Company"), and in its
capacity as trustee hereunder, together with its successors and assigns (the
"Owner Trustee").
WHEREAS, in order to provide a portion of the funds for the acquisition or
leasing of the Properties and for carrying out the other transactions
contemplated by the Operative Agreements, each Holder will make its respective
Holder Fundings pursuant to this Trust Agreement and the Participation
Agreement (as defined below); and
WHEREAS, the Holders desire to provide for the Trust to exist for the
purpose of purchasing the Properties and leasing such Properties to the Lessee,
and carrying out certain transactions contemplated by the Indemnification
Agreement(as defined below) and the Operative Agreements; and
WHEREAS, Trust Company is willing to act as trustee hereunder and to
accept the trust created hereby (the "Trust").
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements herein contained and of other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS; AMENDED AND
RESTATED AGREEMENT
SECTION 1.1 DEFINITIONS. For purposes of this Trust Agreement (including
the "WHEREAS" clauses set forth above), capitalized terms used in this Trust
Agreement and not otherwise defined herein shall have the meanings assigned to
them in that certain Amended and Restated Participation Agreement dated as of
the date hereof (as such agreement may be amended, modified, supplemented or
restated from time to time in accordance with the terms thereof, "Participation
Agreement") among Wackenhut Corrections Corporation, as Construction Agent and
as Lessee, the Owner Trustee, the Holders party thereto, the Lenders party
thereto , and NationsBank, National Association, (successor by merger to
NationsBank, N.A. (South); "NationsBank") as Administrative Agent. Unless
otherwise indicated, references in this Trust Agreement to articles, sections,
paragraphs, clauses, appendices, schedules and exhibits are to the same
contained in this Trust Agreement.
<PAGE> 6
ARTICLE II
AUTHORITY TO EXECUTE AND PERFORM VARIOUS DOCUMENTS;
DECLARATION OF TRUST BY TRUST COMPANY
SECTION 2.1 AUTHORITY TO EXECUTE AND PERFORM VARIOUS DOCUMENTS. Each
Holder hereby authorizes and directs the Owner Trustee (i) to execute and
deliver, as trustee for and on behalf of each such Holder, the Indemnification
Agreement dated as of March 14, 1997 by and among Owner Trustee, Guarantor and
NationsBank (as amended, modified, supplemented or restated, the
"Indemnification Agreement"), the Promissory Note dated as of March 14, 1997 in
the face principal amount of $10,000,000 executed by Owner Trustee in favor of
NationsBank (as amended, modified, supplemented or restated, the "Bridge
Note"), each Operative Agreement to which the Owner Trustee is a party and any
other agreements, instruments, certificates or documents related to the
transactions contemplated hereby or thereby to which the Owner Trustee is a
party, (ii) to take whatever action shall be required to be taken by the Owner
Trustee by the terms of, and exercise its rights and perform its duties under,
each of the documents, agreements, instruments and certificates referred to in
clause (i) above as set forth in such documents, agreements and certificates,
and (iii) subject to the terms of this Trust Agreement, to take such other
action in connection with the foregoing as the Holders may from time to time
direct.
SECTION 2.2 DECLARATION OF TRUST BY TRUST COMPANY.
(a) Trust Company hereby declares that it will hold all estate, right,
title and interest of the Owner Trustee in and to the Properties, the
Indemnification Agreement, each Holder Funding, the Operative Agreements
and any other property contributed by any Holder, including, without
limitation, all amounts of Rent, insurance proceeds and condemnation
awards, indemnity or other payments of any kind (collectively, the "Trust
Estate") as Owner Trustee upon the trusts set forth herein and for the use
and benefit of each Holder, subject, however, to the provisions of the
Credit Agreement and the Security Documents. The name of the Trust shall
be Wackenhut Corrections Trust 1997-1.
(b) The purpose of the Trust is to hold title to the Trust Estate for
the benefit of the Holders and to engage in activities ancillary and
incidental thereto as the Holders shall determine to be desirable. Except
in connection with the foregoing, the Owner Trustee shall not (i) engage in
any business activity, (ii) have any property, rights or interest, whether
real or personal, tangible or intangible, (iii) incur any legal liability
or obligation, whether fixed or contingent, matured or unmatured, other
than in the normal course of the administration of the Trust or (iv)
subject any of its property or assets for any mortgage, Lien, security
interest or other claim or encumbrance, other than in favor of the Lenders
or the Holders pursuant to the provisions of the Operative Agreements and
this Trust Agreement. THIS TRUST IS NOT A BUSINESS TRUST. THE SOLE
PURPOSE OF THE TRUST IS TO ACQUIRE AND HOLD TITLE TO THE TRUST ESTATE,
SUBJECT TO THE RIGHTS OF THE LENDERS, FOR THE BENEFIT OF THE HOLDERS. THE
OWNER TRUSTEE MAY NOT TRANSACT BUSINESS OF ANY
2
<PAGE> 7
KIND WITH RESPECT TO THE PROPERTY COMPRISING THE TRUST ESTATE NOR SHALL
THIS AGREEMENT BE DEEMED TO BE, OR CREATE OR EVIDENCE THE EXISTENCE OF A
CORPORATION DE FACTO OR DE JURE, OR A MASSACHUSETTS TRUST, OR ANY OTHER
TYPE OF BUSINESS TRUST, ASSOCIATION OR JOINT VENTURE AMONG THE OWNER
TRUSTEE, THE HOLDERS, THE ADMINISTRATIVE AGENT AND THE LENDERS.
ARTICLE III
CONTRIBUTIONS AND PAYMENTS
SECTION 3.1 PROCEDURE FOR HOLDER FUNDINGS; CERTIFICATES.
(a) Upon receipt from the Construction Agent by the Owner Trustee and
the Administrative Agent of the Requisition specified in Section 5.2 of the
Participation Agreement, and subject to the terms and conditions of the
Participation Agreement, the Owner Trustee shall request from each Holder
an advance and each Holder shall make an advance under the Holder
Commitment of such Holder on each date Fundings are made pursuant to
Section 5 of the Participation Agreement provided that, after giving effect
to any Holder Funding (i) the outstanding amount of all Holder Fundings by
such Holder shall not exceed its Holder Commitment, and (ii) the aggregate
outstanding amount of Holder Fundings by all Holders shall not exceed the
Total Holder Funding Commitment. The Owner Trustee may request an advance
under the Holder Commitments during the Commitment Period on any date that
an Advance may be requested pursuant to the terms of Section 5.2(a) of the
Participation Agreement, provided that the Owner Trustee shall give each
Holder irrevocable notice (which notice must be received by each Holder (i)
prior to 11:00 A.M., Charlotte, North Carolina time, three Business Days
prior to the requested date of advance if all or any part of the requested
advance is to be a Eurodollar Holder Funding or (ii) prior to 11:00 A.M.,
Charlotte, North Carolina time one Business Day prior to the requested date
of advance with respect to any advance that is to be a Base Rate Holder
Funding), specifying (A) the amount to be advanced, (B) the requested date
of advance, (C) whether the advance is to be a Eurodollar Holder Funding or
a Base Rate Holder Funding or a combination thereof, and (D) if the advance
is to be a combination of Eurodollar Holder Fundings and Base Rate Holder
Fundings, the respective amounts of each type of advance; provided,
however, that prior to the Completion Date for any specified Property (1)
there shall be only two (2) Interest Periods in effect at any specified
date, which Interest Periods shall apply to all Eurodollar Holder Fundings
then outstanding with respect to such Property, and which Interest Periods
shall be one month in length (subject to the adjustments set forth in the
definition of "Interest Period"), (2) the first Interest Period shall
commence on the date that the first Eurodollar Holder Advance is made
hereunder, (3) each succeeding Interest Period shall begin on the last day
of one of the two (2) permitted Interest Periods, and (4) any amounts
advanced or converted hereunder which are to bear Holder Yield based on the
Eurodollar Rate may only be advanced or converted on the first day of a
permitted Interest Period. Pursuant to the terms of Section 5.2 and
Section 11.2 of the Participation Agreement, the Owner
3
<PAGE> 8
Trustee shall be deemed to have delivered such notice upon the delivery of
a notice by the Lessee or the Construction Agent containing such required
information.
(b) Upon receipt of the Requisition and the notice delivered pursuant
to Section 3.1(a), each Holder shall make the amount of its Holder Funding
available to the Owner Trustee at the office of the Owner Trustee referred
to in Section 11.4 prior to 2:00 P.M., Charlotte, North Carolina time on
the date requested by the Lessee in funds immediately available to the
Owner Trustee.
(c) The Eurodollar Holder Funding shall have an Interest Period of
one, two, three, six or nine months, as specified in the definition of
"Interest Period," subject only to the limitations specified in such
definition and to the provisions of Sections 3.1(a), 3.7(c), 3.8 and 3.9.
Any Holder Funding other than a Eurodollar Holder Funding shall constitute
a Base Rate Holder Funding.
(d) On each date which is three Business Days prior to any Scheduled
Interest Payment Date, the Owner Trustee shall be deemed to have requested
a Eurodollar Holder Funding pursuant to Section 3.1(a) in an amount equal
to the aggregate amount of Allocated Return due and payable on such date
with respect to the Construction Period Properties. The date such Holder
Funding shall be made with respect to any such request shall be the
relevant Scheduled Interest Payment Date and the proceeds of such Holder
Funding shall be applied to pay such Allocated Return. On each such date,
the Holder Property Cost and Holder Construction Property Cost of each
Construction Period Property shall be increased by an amount equal to the
Allocated Return paid on such date with the proceeds of such Holder
Funding.
(e) The Holder Fundings made by each Holder to the Trust Estate shall
be evidenced by a Certificate of the Owner Trustee, substantially in the
form of Exhibit A hereto, issued in the name of the Holder and in an amount
equal to the Holder Commitment of such Holder. Each Certificate shall (i)
be dated as of the Initial Closing Date and (ii) bear a yield on the unpaid
Holder Amount thereof from time to time outstanding at the Holder Yield.
SECTION 3.2 CERTIFICATE YIELD. The Owner Trustee shall pay to each
Holder, from the Trust Estate, its pro rata portion of Holder Yield on Holder
Fundings made hereunder. Payment of Holder Yield on each Holder Funding shall
be made in arrears on each Payment Date. If the date on which such payment of
Holder Yield shall be due shall not be a Business Day, such payment shall be
made on the next succeeding Business Day.
SECTION 3.3 SCHEDULED RETURN OF HOLDER FUNDINGS. Except in the case of
early return of advances as set forth in Section 3.4 below or upon default, no
return of the principal amount of the Holder Fundings shall be due prior to the
Maturity Date. On the Maturity Date, subject to the terms of the Credit
Agreement, the Owner Trustee shall pay to each Holder its aggregate unpaid
Holder Amount together with all accrued but unpaid Holder Yield
4
<PAGE> 9
and all other amounts due the Holders from the Owner Trustee hereunder or under
the Operative Agreements.
SECTION 3.4 EARLY RETURN OF HOLDER FUNDINGS. As contemplated by and
pursuant to the terms of the Lease, the Lessee shall be required or may elect
under certain circumstances as described in the Lease to pay the Termination
Value with respect to one or more Properties or purchase one or more Properties
and upon such purchase or payment the amounts paid by the Lessee in connection
therewith shall be distributed in accordance with the terms of Section 8 of the
Credit Agreement. Any such amounts received by the Owner Trustee shall be paid
over by the Owner Trustee to each Holder in an amount equal to such Holder's
pro rata portion of the Holder Amount relating to the applicable Property or
Properties. Notwithstanding the provisions set forth in this Section 3.4, any
prepayment of the Certificates shall be in accordance with the provisions of
Sections 2.6 and 8.1(b)(i) of the Credit Agreement so that so long as any
amount of the Loans is outstanding the aggregate amount of the outstanding
Holder Fundings as evidenced by the Certificates shall be equal to or greater
than three percent (3%) of the Property Cost. Any amounts of any Holder
Funding which are repaid to the Holders may be readvanced hereunder at any time
prior to the Construction Period Termination Date subject to any conditions on
Holder Fundings (and the limit on the aggregate number of Properties) set forth
herein and in the other Operative Agreements.
SECTION 3.5 PAYMENTS FROM TRUST ESTATE ONLY. All payments to be made by
the Owner Trustee under this Trust Agreement (including, without limitation,
any payments pursuant to Section 3.10) shall be made only from the income and
proceeds from the Trust Estate and only to the extent that the Owner Trustee
shall have received income or proceeds from the Trust Estate to make such
payments in accordance with the terms hereof, except as specifically provided
in Section 6.1. Each Holder agrees that it will look solely to the income and
proceeds from the Trust Estate to the extent available for payment as herein
provided and that, except as specifically provided herein, Trust Company shall
not be liable to any Holder for any amounts payable under this Trust Agreement
and shall not be subject to any liability under this Trust Agreement.
SECTION 3.6 METHOD OF PAYMENT. All amounts payable to a Holder pursuant
to this Trust Agreement shall be paid or caused to be paid by the Owner Trustee
to, or for the account of, such Holder, or its nominee, by transferring such
amount in immediately available funds to a bank institution or banking
institutions with bank wire transfer facilities for the account of such Holder
or as otherwise instructed in writing from time to time by such Holder.
SECTION 3.7 COMPUTATION OF YIELD.
(a) Holder Yield shall be calculated on the basis established in
Section 14.16 of the Participation Agreement, with respect to length of a
"year" and number of days for which interest is accrued. Any change in the
Holder Yield resulting from a change in the Base Rate, Eurodollar Reserve
Percentage, or otherwise, shall become effective as of the opening of
business on the day on which such change would become effective under the
Existing Wackenhut Corrections Credit Agreement.
5
<PAGE> 10
(b) Pursuant to Section 14.14 of the Participation Agreement, the
calculation of Holder Yield under this Section 3.7 shall be made by the
Administrative Agent. Each determination of an interest rate by the
Administrative Agent shall be conclusive and binding on the Owner Trustee
and the Holders in the absence of manifest error.
(c) If the Eurodollar Rate cannot be determined by the Administrative
Agent in the manner specified in the definition of the term "Eurodollar
Rate", the Owner Trustee shall give telecopy or telephonic notice thereof
to the Holders as soon as practicable after receipt of same from the
Administrative Agent. Until such time as the Eurodollar Rate can be
determined by the Administrative Agent in the manner specified in the
definition of such term, no further Eurodollar Holder Fundings shall be
made or continue as such at the end of the then current Interest Period and
all Holder Fundings shall continue as Base Rate Holder Fundings.
SECTION 3.8 CONVERSION AND CONTINUATION OPTIONS.
(a) Subject to the restrictions set forth in Sections 3.1, 3.7(c) and
3.9, the Owner Trustee may elect from time to time to convert Base Rate
Holder Fundings to Eurodollar Holder Fundings by giving each Holder at
least three Business Days' prior irrevocable notice of such election. All
or any part of outstanding Holder Fundings may be converted as provided
herein, provided that (i) no Base Rate Holder Funding may be converted into
a Eurodollar Holder Funding when any Event of Default has occurred and is
continuing, (ii) no Base Rate Holder Funding may be converted into a
Eurodollar Holder Funding which matures after the Maturity Date, (iii)
during the Commitment Period such conversion may only occur on the first
day of an Interest Period permitted pursuant to the terms of Section 3.1
hereof and (iv) such notice of conversion shall contain an election by the
Owner Trustee of an Interest Period for such Eurodollar Holder Funding to
be created by such conversion and such Interest Period shall satisfy the
conditions of the definition of the term "Interest Period" as set forth in
Appendix A to the Participation Agreement.
(b) Subject to the restrictions set forth in Sections 3.1, 3.7(c) and
3.9 hereof, any Eurodollar Holder Funding may be continued as such upon the
expiration of the then current Interest Period with respect thereto by the
Owner Trustee giving irrevocable notice to each Holder in accordance with
the applicable provisions of the definition of the term "Interest Period"
as set forth in Appendix A to the Participation Agreement; provided that no
Eurodollar Holder Funding may be continued as such (i) when any Event of
Default has occurred and is continuing or (ii) if such Eurodollar Holder
Funding would mature after the Maturity Date and provided, further, that if
the Owner Trustee shall fail to give any required notice as described above
in this paragraph or if such continuation is not permitted pursuant to the
preceding provision, such Holder Funding shall be automatically converted
to a Base Rate Holder Funding on the last day of such then expiring
Interest Period.
6
<PAGE> 11
SECTION 3.9 INCREASED COSTS, ILLEGALITY, ETC.
(a) If, due to either (i) the introduction of or any change (other
than any change by way of imposition or increase of reserve requirements
that are expressly included in the calculation of the Eurodollar Reserve
Rate) in or in the interpretation of any law or regulation or (ii) the
compliance with any guideline or request hereafter adopted, promulgated or
made, by any central bank or other Governmental Authority (whether or not
having the force of law), there shall be any increase in the cost to any
Holder of agreeing to make or making, funding or maintaining Holder
Fundings, then the Owner Trustee shall from time to time, upon demand by
such Holder, pay to such Holder additional amounts sufficient to compensate
such Holder for such increased cost. A certificate as to the amount of
such increased cost, submitted to the Owner Trustee by such Holder, shall
be conclusive and binding for all purposes, absent manifest error.
(b) If any Holder determines that compliance with any law or
regulation or any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law, but in each
case promulgated or made after the date hereof) affects or would affect the
amount of capital required or expected to be maintained by such Holder or
any corporation controlling such Holder and that the amount of such capital
is increased by or based upon the existence of such Holder's commitment to
make Holder Fundings hereunder and other commitments of this type, then,
upon demand by such Holder, the Owner Trustee shall immediately pay to such
Holder, from time to time as specified by such Holder, additional amounts
sufficient to compensate such Holder or such corporation in the light of
such circumstances, to the extent that such Holder reasonably determines
such increase in capital to be allocable to the existence of such Holder's
commitment to make Holder Fundings hereunder. A certificate as to such
amounts submitted to the Owner Trustee by such Holder shall be conclusive
and binding for all purposes, absent manifest error.
(c) Without affecting its rights under Section 3.9(a) or 3.9(b) or any
other provision of this Trust Agreement, each Holder agrees that if there
is any increase in any cost to or reduction in any amount receivable by
such Holder with respect to which the Owner Trustee would be obligated to
compensate such Holder pursuant to Section 3.9(a) or 3.9(b) or 2.10(b),
such Holder shall use reasonable efforts to select an alternative office
from which to fund Holder Fundings which would not result in any such
increase in any cost to or reduction in any amount receivable by such
Holder; provided, however, that no Holder shall be obligated to select such
an alternate office if such Holder determines that (i) as a result of such
selection such Holder would be in violation of any applicable law,
regulation, treaty, or guideline, or would incur additional costs or
expenses or (ii) such selection would be inadvisable for regulatory reasons
or would impose an unreasonable burden or additional costs on such Holder.
(d) Notwithstanding any other provision of this Trust Agreement, if
any Holder shall notify the Owner Trustee that the introduction of or any
change in any law or regulation, or in the interpretation of any law or
regulation makes it unlawful, or any
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<PAGE> 12
central bank or other Governmental Authority asserts that it is unlawful,
for any Holder to perform its obligations hereunder to make or maintain
Eurodollar Holder Fundings then (i) each Eurodollar Holder Funding will
automatically, at the end of the Interest Period for such Eurodollar Holder
Funding, convert into a Base Rate Holder Funding and (ii) the obligation of
the Holders to make, convert or continue Eurodollar Holder Fundings shall
be suspended until such Holder shall notify the Owner Trustee that such
Holder has determined that the circumstances causing such suspension no
longer exist.
SECTION 3.10 CONTRIBUTION INDEMNITY. Subject to the provisions of Section
3.11, the Owner Trustee agrees to indemnify each Holder and to hold each Holder
harmless from any loss or reasonable expense which such Holder may sustain or
incur as a consequence of (a) failure of the Owner Trustee to accept any Holder
Funding hereunder after the Owner Trustee has given a notice requesting the
same in accordance with the provisions of this Trust Agreement(other than by
reason of the failure of a Holder or Holders to make funds available without
cause), (b) failure of the Owner Trustee to make any prepayment of a Holder
Funding after the Owner Trustee has given a notice thereof in accordance with
the provisions of this Trust Agreement, or (c) the making of a voluntary or
involuntary prepayment of a Eurodollar Holder Funding on a day which is not the
last day of an Interest Period with respect thereto. Such indemnification
shall be in an amount equal to the excess, if any, of (i) the amount of Holder
Yield which would have accrued on the amount so prepaid, or not accepted,
converted or continued for the period from the date of such prepayment or of
such failure to accept, convert or continue to the last day of such Interest
Period (or, in the case of a failure to accept, convert or continue, the
Interest Period that would have commenced on the date of such failure) in each
case at the applicable Holder Yield rate for such Holder Fundings provided for
herein over (ii) the amount of yield (as determined by such Holder) which would
have accrued to such Holder on such amount by placing such amount on deposit
for a comparable period with leading banks in the relevant interest rate
market. This covenant shall survive the termination of this Trust Agreement
and the payment of all other amounts payable hereunder.
SECTION 3.11 NOTICE OF AMOUNTS PAYABLE; MANDATORY ASSIGNMENT.
(a) Notice. In the event that any Holder becomes aware that any
amounts are or will be owed to it pursuant to Section 3.9,3.10 or 3.12 or
that it is unable to make Holder Fundings which bear a yield based on the
Eurodollar Rate, then it shall promptly notify the Owner Trustee thereof
and, as soon as possible thereafter, such Holder shall submit to the Owner
Trustee a certificate indicating the amount owing to it and the calculation
thereof. The amounts set forth in such certificate shall be prima facie
evidence of the obligations of the Owner Trustee hereunder.
(b) Mandatory Assignment. In the event that any Holder delivers to the
Owner Trustee a certificate pursuant to Section 3.11(a) in connection with
amounts payable pursuant to Section 3.9 or Section 3.10, or such Holder is
required to make Holder Fundings as Base Rate Holder Fundings in accordance
with Section 3.9(d) then the Owner Trustee may, at its own expense and in
its sole discretion, (i) require such Holder
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to transfer or assign, in whole or in part, without recourse (in accordance
with Section 12.1 of the Participation Agreement), all or part of its
interests, rights (except for rights to be indemnified for actions taken
while a party hereunder) and obligations under this Agreement to a
replacement bank or institution if the Owner Trustee, with the full
cooperation of such Holder, can identify a Person who is ready, willing and
able to be such replacement bank or institution with respect thereto and
such replacement bank or institution (which may be another Holder) shall
assume such assigned obligations, or (ii) during such time as no Default or
Event of Default has occurred and is continuing, terminate the Holder
Commitment of such Holder and prepay all outstanding Holder Fundings of
such Holder; provided, however, that (x) the Owner Trustee or such
replacement bank or institution, as the case may be, shall have paid to
such Holder in immediately available funds the principal amount of and
Holder Yield accrued to the date of such payment on the Holder Fundings
made by it hereunder and all other amounts owed to it hereunder (and, if
such Holder is also a Lender, the principal amount of all Loans and all
interest accrued and unpaid thereon), (y) any termination of Holder
Commitments shall be accompanied by a pro rata reduction of Commitments for
Loans subject to the terms of Section 2.5(a) of the Credit Agreement and
(z) such assignment or termination of the Holder Commitment of such Holder
and prepayment of Holder Fundings does not conflict with any law, rule or
regulation or order of any court or other Governmental Authority.
SECTION 3.12 TAXES.
(a) All payments made by the Owner Trustee under this Trust Agreement
and the Certificates shall be made free and clear of, and without deduction
or withholding for or on account of, any present or future income,
documentary stamp or other taxes, levies, imposts, duties, charges, fees,
deductions or withholdings, now or hereafter imposed, levied, collected,
withheld or assessed by any Governmental Authority, excluding net income
taxes and franchise taxes (imposed in lieu of net income taxes) imposed on
any Holder as a result of a present or former connection between such
Holder and the jurisdiction of the Governmental Authority imposing such tax
or any political subdivision or taxing authority thereof or therein (other
than any such connection arising solely from such Holder having executed,
delivered or performed its obligations or received a payment under, or
enforced, this Trust Agreement, any Certificate or any other Operative
Document). If any such non-excluded taxes, levies, imposts, duties,
charges, fees, deductions or withholdings ("Non-Excluded Taxes") are
required to be withheld from any amounts payable to any Holder hereunder or
under the Certificates, the amounts so payable to such Lender shall be
increased to the extent necessary to yield to such Holder (after payment of
all Non-Excluded Taxes) Holder Yield or any such other amounts payable
hereunder at the rates or in the amounts specified in this Trust Agreement
and the Certificates, provided, however, that the Owner Trustee shall not
be required to increase any such amounts payable to any Holder that is not
organized under the laws of the U.S. or a state thereof if such Holder
fails to comply with the requirements of paragraph (b) of
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this Section 3.12. Whenever any Non-Excluded Taxes are payable by the
Owner Trustee, then as promptly as possible thereafter the Owner Trustee
shall send to such Holder a certified copy of an original official receipt
received by the Owner Trustee showing payment thereof. If the Owner
Trustee fails to pay any Non-Excluded Taxes when due to the appropriate
taxing authority or fails to remit to such Holder the required receipts or
other required documentary evidence, the Owner Trustee shall indemnify the
Holder for any incremental taxes, interest, costs or penalties that may
become payable by any Holder as a result of any such failure. The
agreements in this Section 3.12(a) shall survive the termination of this
Trust Agreement and the payment of the Certificates and all other amounts
payable hereunder.
(b) Each Holder that is not incorporated under the laws of the U.S. or
a state thereof shall:
(i) deliver to the Owner Trustee and the Administrative Agent (A)
the duly completed copies of IRS Form 1001 or 4224, or successor
applicable form, as the case may be, and (B) an IRS Form W-8 or W-9,
or successor applicable form, as the case may be;
(ii) deliver to the Owner Trustee and the Administrative Agent
two further copies of any such form or certification on or before the
date that any such form or certification expires or becomes obsolete
and after the occurrence of any event requiring a change in the most
recent form previously delivered by it to the Owner Trustee; and
(iii) obtain such extensions of time for filing and complete such
forms or certifications as may reasonably be requested by Owner
Trustee or the Administrative Agent;
unless in any such case an event (including, without limitation, any change
in treaty, law or regulation or administrative or judicial interpretation
of any of the foregoing) has occurred prior to the date on which any such
delivery would otherwise be required which renders all such forms
inapplicable or which would prevent such Holder from duly completing and
delivering any such form with respect to it and such Holder so advises the
Owner Trustee and the Administrative Agent. Such Holder shall certify (i)
in the case of a Form 1001 or 4224, that it is entitled to receive payments
under this Trust Agreement without deduction or withholding of any U.S.
federal income taxes and (ii) in the case of a Form W-8 or W-9, that it is
entitled to an exemption from U.S. backup withholding tax.
SECTION 3.13 HOLDER OVERDUE RATE. If all or a portion of (i) the
principal amount of any Holder Funding, (ii) any Holder Yield payable on any
Holder Funding, or (iii) any other amount payable hereunder shall not be paid
when due (subject to applicable grace periods) (whether at the stated maturity,
by acceleration or otherwise), such amount shall bear interest at a rate per
occurrence which is the lesser of (x) the Holder Yield applicable to such
Holder Funding
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plus 2% (or in the case of clause (iii) above, the Base Rate plus 3%) and (y)
the highest interest rate permitted by applicable law, in each case from the
date of such non-payment until such amount is paid in full (whether after or
before judgment).
ARTICLE IV
COLLECTIONS AND DISTRIBUTIONS
SECTION 4.1 COLLECTIONS AND REMITTANCES BY THE OWNER TRUSTEE. The Owner
Trustee agrees that, subject to the provisions of this Trust Agreement, it will
during the term of this Trust administer the Trust Estate and, at the direction
of the Holders (or, so long as the Credit Agreement shall continue, subject to
the provisions of the Credit Agreement and the Security Documents), take steps
to collect all Rent and other sums payable to the Owner Trustee by the Lessee
under the Lease. The Owner Trustee agrees to distribute all proceeds received
from the Trust Estate in accordance with Article III and Sections 4.2 and 4.3.
The Owner Trustee shall make such distribution promptly upon receipt of such
proceeds (provided such proceeds are available for distribution) by the Owner
Trustee, it being understood and agreed that the Owner Trustee shall not be
obligated to make such distribution until the funds for such distribution have
been received by the Owner Trustee in cash or its equivalent reasonably
acceptable to the Owner Trustee.
SECTION 4.2 PRIORITY OF DISTRIBUTIONS. Subject to the terms and
requirements of the Operative Agreements, all payments and amounts received by
Trust Company as Owner Trustee or on its behalf shall be distributed to the
Administrative Agent for allocation by the Administrative Agent in accordance
with the terms of Section 8 of the Credit Agreement or, if such payments or
amounts are received by the Owner Trustee from the Administrative Agent, then
they shall be distributed forthwith upon receipt in the following order of
priority: first, in accordance with the Holder Yield protection provisions set
forth in Article III; and, second, the balance, if any, of such payment or
amount remaining thereafter shall be distributed to the Holders pro rata.
SECTION 4.3 EXCEPTED PAYMENTS. Anything in this Article IV, or elsewhere
in this Trust Agreement to the contrary notwithstanding, any Excepted Payment
received at any time by the Owner Trustee shall be distributed promptly to the
Person entitled to receive such Excepted Payment.
SECTION 4.4 DISTRIBUTIONS AFTER DEFAULT. Subject to the terms of Section
5.1 hereof, the proceeds received by the Owner Trustee from the exercise of any
remedy under the Lease shall be distributed pursuant to Section 4.2 above.
This Trust shall cease and terminate in accordance with the terms set forth in
Section 8.1 and upon the final disposition by the Owner Trustee of all of the
Trust Estate pursuant to this Section 4.4.
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ARTICLE V
DUTIES OF THE OWNER TRUSTEE
SECTION 5.1 NOTICE OF CERTAIN EVENTS. In the event the Owner Trustee
shall have knowledge of any default under the terms of the Indemnification
Agreement or the Bridge Note, or any Lease Default, Lease Event of Default,
Credit Agreement Default, Credit Agreement Event of Default, Agency Agreement
Default or Agency Agreement Event of Default, the Owner Trustee shall give
written notice thereof within five (5) Business Days to each Holder, the Lessee
and the Administrative Agent unless such Default or Event of Default no longer
exists before the giving of such notice. Subject to the provisions of Section
5.3, the Owner Trustee shall take or refrain from taking such action as the
Administrative Agent shall direct so long as the Credit Agreement is in effect
(and as more specifically provided in Section 10.2(j) of the Participation
Agreement) and thereafter as the Holders shall jointly direct, in each case by
written instructions to the Owner Trustee. If the Owner Trustee shall have
given the Administrative Agent and the Holders notice of any event and shall
not have received written instructions as above provided within 30 days after
mailing notice of such event to the Administrative Agent and the Holders, the
Owner Trustee may, but shall be under no duty to, and shall have no liability
for its failure or refusal to, take or refrain from taking any action with
respect thereto, not inconsistent with the provisions of the Bridge Note, the
Indemnification Agreement or the Operative Agreements, as the Owner Trustee
shall deem advisable and in the best interests of the Holders. Lenders and the
Holders. For all purposes of this Trust Agreement, in the absence of actual
knowledge of a Responsible Officer in the Corporate Trust Department of Trust
Company, the Owner Trustee shall be deemed not to have knowledge of any Default
or Event of Default unless a Responsible Officer of the Corporate Trust
Department of Trust Company receives notice thereof given by or on behalf of a
Holder, the Lessee or the Administrative Agent.
SECTION 5.2 ACTION UPON INSTRUCTIONS. Subject to the provisions of
Sections 5.1 and 5.3, upon the written instructions of the Administrative Agent
or the Holders (as applicable) or, as permitted expressly by the Operative
Agreements, the Lessee, as the case may be, the Owner Trustee will take or
refrain from taking such action or actions as may be specified in such
instructions.
SECTION 5.3 INDEMNIFICATION. The Owner Trustee shall not be required to
take or refrain from taking any action under this Trust Agreement, the Bridge
Note, the Indemnification Agreement or any Operative Agreement (other than the
actions specified in the first sentence of Section 5.1 and in the last sentence
of Section 5.4) unless Trust Company shall have been indemnified by the Lessee
or, if Trust Company reasonably believes such indemnity to be inadequate, by
either the Lenders or the Holders in manner and form reasonably satisfactory to
Trust Company, against any liability, fee, cost or expense (including
reasonable attorneys' fees and expenses) that may be incurred or charged in
connection therewith, other than such as may result from the willful misconduct
or gross negligence of the Owner Trustee; and, if the Administrative Agent or
the Holders shall have directed the Owner Trustee to take or refrain from
taking any action under the Bridge Note, the Indemnification Agreement or any
Operative Agreement, the Lenders or the Holders, as applicable, agree to
furnish such indemnity by a
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written undertaking of indemnification and, in addition, to pay the reasonable
compensation of Trust Company for the services performed or to be performed by
the Owner Trustee pursuant to such direction. The Owner Trustee shall not be
required to take any action under the Bridge Note, the Indemnification
Agreement or any Operative Agreement if Trust Company shall reasonably
determine, or shall have been advised by counsel, that such action (a) is
likely to result in personal liability for which Trust Company has not been and
will not be adequately indemnified, (b) is contrary to the terms hereof, the
Bridge Note, the Indemnification Agreement or of any Operative Agreement to
which the Owner Trustee is a party, or (c) is otherwise contrary to law. The
Owner Trustee shall be under no liability with respect to any action taken or
omitted to be taken by the Owner Trustee in accordance with instructions of the
Administrative Agent or the Holders pursuant to Section 5.2 hereof.
SECTION 5.4 NO DUTIES EXCEPT AS SPECIFIED IN TRUST AGREEMENT OR
INSTRUCTIONS. The Owner Trustee shall not have any duty or obligation to
manage, control, use, make any payment in respect of, register, record, insure,
inspect, sell, dispose of or otherwise deal with the Properties or any other
part of the Trust Estate, or to otherwise take or refrain from taking any
action under or in connection with the Bridge Note, the Indemnification
Agreement or any Operative Agreement to which the Owner Trustee is a party,
except as expressly provided by the terms of this Trust Agreement or in written
instructions from the Administrative Agent or the Holders, as applicable,
received pursuant to Section 5.1, 5.2 or 8.4; and no implied duties or
obligations shall be read into this Trust Agreement against the Owner Trustee.
The Owner Trustee shall have no duty or obligation to supervise or monitor the
performance of the Construction Agent pursuant to the Agency Agreement, which
Construction Agent for all purposes shall be an independent contractor. Trust
Company nevertheless agrees that it will, at its own cost and expense, promptly
take all action as may be necessary to discharge any liens arising by or
through the Trust Company or the Owner Trustee on any part of the Trust Estate.
SECTION 5.5 NO ACTION EXCEPT UNDER SPECIFIED DOCUMENTS OR INSTRUCTIONS.
The Owner Trustee agrees that it will not manage, control, use, sell, dispose
of or otherwise deal with the Properties or any other part of the Trust Estate
except (i) as required by the terms of the Bridge Note, the Indemnification
Agreement or the Operative Agreements, (ii) in accordance with the powers
granted to, or the authority conferred upon, it pursuant to this Trust
Agreement or (iii) in accordance with the express terms hereof or with written
instructions from the Administrative Agent or the Holders, as applicable,
pursuant to Section 5.1, 5.2 or 8.4.
SECTION 5.6 ABSENCE OF DUTIES.
(a) Except in accordance with written instructions furnished pursuant
to Section 5.1, 5.2 or 8.4, and without limitation of the generality of
Section 5.4, the Owner Trustee shall not have any duty to (i) file, record
or deposit any Operative Agreement or any other document, or to maintain
any such filing, recording or deposit or to refile, rerecord or redeposit
any such document; (ii) obtain insurance on the Properties or effect or
maintain any such insurance, other than to receive and forward to each
Holder any notices, policies, certificates or binders furnished to the
Owner Trustee pursuant to the Lease; (iii) maintain the Properties; (iv)
pay or discharge any Tax or any Lien owing with
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respect to or assessed or levied against any part of the Trust Estate,
except as provided in the last sentence of Section 5.4, other than to
forward notice of such Tax or Lien received by the Owner Trustee to each
Holder and the Administrative Agent; (v) confirm, verify, investigate or
inquire into the failure to receive any reports or financial statements of
the Lessee; (vi) inspect the Properties at any time or ascertain or inquire
as to the performance or observance of any of the covenants of the Lessee
or any other Person under the Bridge Note, the Indemnification Agreement or
any Operative Agreement with respect to the Properties; or(vii) manage,
control, use, sell, dispose of or otherwise deal with the Properties or any
part thereof or any other part of the Trust Estate, except as provided in
Section 5.5.
(b) The Owner Trustee, in the exercise or administration of the trusts
and powers hereunder, including its obligations under Section 5.2 hereof,
may, at the expense of the Lessee, employ agents, attorneys, accountants,
and auditors and enter into agreements with any of them, and Trust Company
shall not be liable, either in its individual capacity or in its capacity
as Owner Trustee, for the default or misconduct of any such agents,
attorneys, accountants or auditors if such agents, attorneys, accountants
or auditors shall have been selected by it in good faith.
SECTION 5.7 OWNER TRUSTEE'S ANNUAL CERTIFICATION.
The Owner Trustee, upon written request of the Lessee received not less
than thirty (30) days nor more than sixty (60) days prior to each December 31st
during the Term of the Lease, shall provide to the Lessee a certification to
the effect that (i) the character of the Holder Fundings as evidenced by the
Certificates has not changed from the nature of the same as provided in this
Trust Agreement and the Participation Agreement as of the Initial Closing Date
and (ii) the Holder Fundings as evidenced by the Certificates equal or exceed
three percent (3%) of the Property Cost. With respect to the representation
provided for in clause (ii) of the immediately preceding sentence, Owner
Trustee shall be entitled to rely upon the representation of the Agent
respecting the amount of the Property Cost and the Loans.
ARTICLE VI
THE OWNER TRUSTEE
SECTION 6.1 ACCEPTANCE OF TRUST AND DUTIES. Trust Company accepts the
trust hereby created and agrees to perform the same, but only upon the terms of
this Trust Agreement. Trust Company agrees to receive, manage and disburse all
moneys constituting part of the Trust Estate actually received by it as Owner
Trustee in accordance with the terms of this Trust Agreement. Trust Company
shall not be answerable or accountable under any circumstances, except for (i)
its own willful misconduct or gross negligence, (ii) the inaccuracy of any of
its representations or warranties contained in Section 6.3 of this Trust
Agreement or Section 7.2 of the Participation Agreement, (iii) its failure to
perform obligations expressly undertaken by it in the last sentence of Section
5.4 of this Trust Agreement or in Section 10.2(a) of the Participation
Agreement, (iv) Taxes based on or measured by any fees, commissions or
compensation received by it for acting as Owner Trustee in connection with any
of the
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transactions contemplated by the Bridge Note, the Indemnification Agreement or
the Operative Agreements, or (v) its failure to use ordinary care to receive,
manage and disburse moneys actually received by it in accordance with the terms
hereof.
SECTION 6.2 FURNISHING OF DOCUMENTS. The Owner Trustee will furnish to
each Holder and to the Administrative Agent, promptly upon receipt thereof,
duplicates or copies of all reports, notices, requests, demands, opinions,
certificates, financial statements and any other instruments or writings
furnished to the Owner Trustee hereunder or under the Indemnification Agreement
or the Operative Agreements, unless by the express terms of the Indemnification
Agreement or any Operative Agreement a copy of the same is required to be
furnished by some other Person directly to the Holders or the Administrative
Agent, or the Owner Trustee shall have determined that the same has already
been furnished to the Holders and the Administrative Agent.
SECTION 6.3 NO REPRESENTATIONS OR WARRANTIES AS TO THE PROPERTIES OR
OPERATIVE AGREEMENTS. TRUST COMPANY MAKES (i) NO REPRESENTATION OR WARRANTY,
EITHER EXPRESS OR IMPLIED, AS TO THE TITLE, VALUE, USE, CONDITION, DESIGN,
OPERATION, MERCHANTABILITY OR FITNESS FOR USE OF ANY PROPERTY (OR ANY PART
THEREOF), OR ANY OTHER REPRESENTATION, WARRANTY OR COVENANT WHATSOEVER, EXPRESS
OR IMPLIED, WITH RESPECT TO ANY PROPERTY (OR ANY PART THEREOF) AND TRUST
COMPANY SHALL NOT BE LIABLE FOR ANY LATENT, HIDDEN, OR PATENT DEFECT THEREIN OR
THE FAILURE OF ANY PROPERTY, OR ANY PART THEREOF, TO COMPLY WITH ANY LEGAL
REQUIREMENT except that Trust Company hereby represents, warrants and covenants
to each Holder that it will comply with the last sentence of Section 5.4, and
(ii) no representation or warranty as to the validity or enforceability of the
Bridge Note, the Indemnification Agreement or any Operative Agreement or as to
the correctness of any statement made by a Person other than Trust Company or
the Owner Trustee contained in any thereof, except that Trust Company
represents, warrants and covenants to each Holder that this Trust Agreement has
been and each of the Bridge Note, the Indemnification Agreement and the other
Operative Agreements which contemplates execution thereof by the Owner Trustee
has been or will be executed and delivered by its officers who are, or will be,
duly authorized to execute and deliver documents on its behalf.
SECTION 6.4 NO SEGREGATION OF MONEYS; NO INTEREST.
Except as otherwise provided herein or in any of the other Operative
Agreements, moneys received by the Owner Trustee hereunder need not be
segregated in any manner except to the extent required by law, and may be
deposited under such general conditions as may be prescribed by law, and
neither Trust Company nor the Owner Trustee shall be liable for any interest
thereon, except as may be agreed to in writing by Trust Company or the Owner
Trustee.
SECTION 6.5 RELIANCE; ADVICE OF COUNSEL. Trust Company shall not incur
any liability to any Person in acting upon any signature, instrument, notice,
resolution, request, consent, order, certificate, report, opinion, bond or
other document or paper believed by it to be genuine and believed by it in good
faith to be signed by the proper party or parties. Trust Company may accept
and rely upon, a certified copy of a resolution of the board of directors or
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other governing body of any corporate party as conclusive evidence that each
resolution has been duly adopted by such body and that the same is in full
force and effect. As to any fact or matter the manner of ascertainment of
which is not specifically prescribed herein, Trust Company may for all purposes
hereof rely on an Officers' Certificate of the relevant party, as to such fact
or matter, and such certificate shall constitute full protection to Trust
Company for any action taken or omitted to be taken by it in good faith in
reliance thereon. In the administration of the trusts hereunder, the Owner
Trustee may execute any of the trusts or powers hereof and perform its powers
and duties hereunder directly or through agents or attorneys and may consult
with counsel, accountants and other skilled Persons to be selected and employed
by it, and Trust Company shall not be liable for anything done, suffered or
omitted in good faith by it in accordance with the advice or opinion of any
such counsel, accountants or other skilled Persons and not contrary to this
Trust Agreement.
SECTION 6.6 LIABILITY WITH RESPECT TO DOCUMENTS. The Owner Trustee, either
in its trust or individual capacities, shall not incur any liability to any
Person for or in respect of (a) the recitals herein, (b) the validity or
sufficiency of this Trust Agreement, (c) the due execution hereof by any Holder,
(d) the form, character, genuineness, sufficiency, value or validity of the
Properties, or (e) the validity or sufficiency of the Bridge Note, the
Indemnification Agreement or any of the Operative Agreements; and the Owner
Trustee, either in its trust or individual capacities, shall in no event assume
or incur any liability, duty or obligation to any Person or to any Holder, other
than as expressly provided for herein or in the Bridge Note, the Indemnification
Agreement or any of the other Operative Agreements.
SECTION 6.7 NOT ACTING IN INDIVIDUAL CAPACITY. All Persons having any
claim against Trust Company by reason of the transactions contemplated by the
Operative Agreements shall look only to the Trust Estate (or a part thereof, as
the case may be) for payment or satisfaction thereof, except as specifically
provided in this Article VI and except to the extent that Trust Company shall
otherwise expressly agree in the Bridge Note, the Indemnification Agreement or
any Operative Agreement to which it is a party.
SECTION 6.8 BOOKS AND RECORDS; TAX RETURNS.
(a) The Owner Trustee shall be responsible for the keeping of all
appropriate books and records relating to the receipt and disbursement of
all moneys that it may receive hereunder, or under the Bridge Note, the
Indemnification Agreement or any other Operative Agreement. The Owner
Trustee shall, at the expense of the Owner Trustee, file an application
with the Internal Revenue Service for a taxpayer identification number with
respect to the trust created hereby. The Owner Trustee shall, at the
expense of the Owner Trustee, prepare or cause to be prepared and the Owner
Trustee shall sign or file the federal fiduciary tax return with respect to
Taxes due and payable by the trust created hereby in connection with the
transactions contemplated hereby and by the Bridge Note, the
Indemnification Agreement or any other Operative Agreement. Each Holder
shall furnish the Owner Trustee with all such information as may be
reasonably required from such Holder in connection with the preparation of
such tax returns. The Owner Trustee shall keep copies of all returns
delivered to or filed by it.
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(b) The Owner Trustee, either in its trust or individual capacities,
shall be under no obligation to appear in, prosecute or defend any action,
which in its opinion may require it to incur any out-of-pocket expense or
any liability unless it shall be furnished with such reasonable security
and indemnity against such expense or liability as it may require. The
Owner Trustee may, but shall be under no duty to, undertake such action as
it may deem necessary at any and all times, without any further action by
the Administrative Agent or any Holder to protect the Properties and the
rights and interests of the Holders pursuant to the terms of this Trust
Agreement; provided, however, that Trust Company may obtain reimbursement
for the out-of-pocket expenses and costs of such actions, undertakings or
proceedings from the Lessee.
SECTION 6.9 SUBSTITUTE OWNER TRUSTEE; OWNER TRUSTEE ADVISOR. First
Security Bank, National Association, has entered into this Trust Agreement and
the other Operative Agreements not individually, except as expressly stated
herein or therein (as the case may be), but solely as Owner Trustee under the
Trust; provided, notwithstanding the foregoing provisions of this Section 6.9,
solely to the extent that the Louisiana Trust Code (L.A. R.S. 9:1721 et seq.)
is deemed to apply to the Trust, then (a) Mr. Val T. Orton, a resident of Davis
County, Utah shall be deemed to be a Co-owner Trustee (as defined in Section
9.2 hereof) with First Security Bank, National Association with respect to the
Trust and (b) First Security Bank, National Association (and any replacement or
successor thereto appointed by the Holder with the consent of the Majority
Lenders) shall be deemed to a Co-Owner Trustee and the Owner Trustee Advisor.
To the extent not prohibited by the relevant provisions of the Louisiana Trust
Code, in his capacity as Co-owner Trustee, Mr. Val T. Orton shall act in
accordance with the express, written directions of the Owner Trustee Advisor
and any actions not in accordance with such directions shall be deemed null and
void and of no force or effect under this Trust Agreement and the other
Operative Agreements. In its capacity as Owner Trustee Advisor, First Security
Bank, National Association shall act (x) in accordance with the directions,
limitations, terms and provisions of this Trust Agreement and the other
Operative Agreements applicable to the Owner Trustee and (y) to the extent this
Trust Agreement and the other Operative Agreements do not contain any
direction, limitation, term or provision with regard to any particular
situation, in accordance with the written instructions of the Holders. Actions
taken by the Owner Trustee Advisor which are not in accordance with the
requirements of the immediately preceding sentence shall be deemed null and
void and of no force or effect under this Trust Agreement and the other
Operative Agreements. In the event Mr. Val T. Orton shall become a Co-owner
Trustee, he shall not be required to post a bond of any kind. To the extent the
Louisiana Trust Code is deemed to apply to the Trust, Mr. Val T. Orton hereby
accepts the trust and duties hereby created and agrees to perform the same, but
only upon the terms of this Trust Agreement.
SECTION 6.10 MAINTAIN CHARACTER OF HOLDER FUNDINGS. The Owner Trustee shall
at all times maintain the character of the Holder Fundings as evidenced by the
Certificates and as provided in this Trust Agreement and the Participation
Agreement to the end that the Holder Fundings shall at all times be "at-risk"
and shall not permit the same to be replaced by nonrecourse debt.
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ARTICLE VII
INDEMNIFICATION OF THE OWNER TRUSTEE
SECTION 7.1 INDEMNIFICATION GENERALLY. The Owner Trustee and Trust
Company are indemnified for matters related to the transactions described
herein by the Lessee pursuant to the Indemnification Agreement and Section 13
of the Participation Agreement. Except as may be specifically provided from
time to time hereafter in writing by the Holders, neither the Owner Trustee nor
Trust Company shall have any right of indemnification from any Holder with
respect to the transactions described herein or in the Bridge Note, the
Indemnification Agreement or any of the other Operative Agreements.
SECTION 7.2 COMPENSATION AND EXPENSES. Pursuant to the Guaranty, the
Guarantor has guaranteed, among other things, the payment of various fees,
costs and expenses of the Owner Trustee and Trust Company as provided in
Section 9.3 of the Indemnification Agreement. Additionally, the Lessee has
agreed to pay the fees and reasonable expenses of the Owner Trustee and Trust
Company as provided in Section 9.3 of the Participation Agreement.
ARTICLE VIII
TERMINATION OF TRUST AGREEMENT
SECTION 8.1 TERMINATION OF TRUST AGREEMENT. This Trust Agreement and the
trusts created hereby shall terminate, and the Trust Estate shall, subject to
the provisions of the Participation Agreement, the other Operative Agreements
and Article IV hereof, be distributed pro rata to the Holders, and this Trust
Agreement shall be of no further force or effect, upon the earliest to occur of
(i) the joint written request of the Holders following the sale or other final
disposition by the Owner Trustee of all property constituting part of the Trust
Estate and the final distribution by the Owner Trustee of all moneys or other
property or proceeds constituting part of the Trust Estate in accordance with
the terms of Article IV; or (ii) the sale or other final disposition by the
Owner Trustee of all property constituting the Trust Estate and the final
disposition by the Owner Trustee of all moneys or other property or proceeds
constituting part of the Trust Estate in accordance with the terms hereof;
provided, however, that the Trust Estate shall not be subject to sale or other
final disposition by the Owner Trustee prior to the payment in full and
discharge of the Loans and all other indebtedness secured by the Credit
Documents, the release of the Credit Documents and the liens and security
interest granted thereby and the payment in full of the Holder Amount and
Holder Yield thereon and all other amounts owing to the Holders under any of
the Operative Agreements; and (iii) 50 years after the date hereof.
SECTION 8.2 TERMINATION AT OPTION OF THE HOLDERS. Notwithstanding Section
8.1, this Trust Agreement and the trusts created hereby shall terminate and the
Trust Estate shall be distributed pro rata to the Holders, and this Trust
Agreement shall be of no further force and effect, upon the joint election of
the Holders by notice to the Owner Trustee, if such notice shall be accompanied
by the written agreement of each Holder assuming all the obligations of the
Owner Trustee under or contemplated by the Operative Agreements and all other
obligations of
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<PAGE> 23
the Owner Trustee incurred by it as trustee hereunder; provided, however, that
each Holder agrees for the express benefit of the Administrative Agent and the
Lenders, that without the consent of the Administrative Agent, no such election
shall be effective until the Liens and security interests of the Security
Documents on the Collateral shall have been released and until full payment of
the principal of, and interest on the Loans and all other sums due to the,
Lenders shall have been made. Such written agreement shall be reasonably
satisfactory in form and substance to the Owner Trustee and shall release the
Owner Trustee from all further obligations of the Owner Trustee hereunder and
under the agreements and other instruments mentioned in the preceding sentence.
SECTION 8.3 TERMINATION AT OPTION OF THE OWNER TRUSTEE. Notwithstanding
any other section hereof, at any time that the Lease shall no longer be in full
force and effect, and the Administrative Agent shall have confirmed in writing
to the Owner Trustee that the Lenders have received payment in full of the
principal of and interest on the Loans and that all other sums due to the
Administrative Agent and the Lenders under the Operative Documents shall have
been paid, and the Holders shall have received payment in full of all Holder
Yield and other amounts due to the Holders under the Operative Documents, then
the Holders hereby authorize the Owner Trustee to: (a) terminate this Trust
Agreement and the trusts created hereby and (b) distribute and convey the Trust
Estate pro rata to the Holders by executing the necessary transfer documents as
contemplated by Section 8.4 hereof. The exercise of such option by the Owner
Trustee shall cause this Trust Agreement to be of no further force and effect
and shall release the Owner Trustee from all further obligations of the Owner
Trustee hereunder and under the agreements and other instruments mentioned in
the preceding sentence.
SECTION 8.4 ACTIONS BY THE OWNER TRUSTEE UPON TERMINATION. Upon
termination of this Trust Agreement and the trusts created hereby pursuant to
Section 8.1, Section 8.2 or Section 8.3, the Owner Trustee shall upon notice of
such event take such action as may be necessary or as may be requested by the
Holders to transfer the Trust Estate pro rata to the Holders, including,
without limitation, the execution of instruments of transfer or assignment with
respect to any of the Operative Agreements to which the Owner Trustee is a
party.
ARTICLE IX
SUCCESSOR OWNER TRUSTEES, CO-OWNER TRUSTEES
AND SEPARATE OWNER TRUSTEES
SECTION 9.1 RESIGNATION OF THE OWNER TRUSTEE; APPOINTMENT OF SUCCESSOR.
(a) The Owner Trustee may resign at any time without cause by giving
at least 30 days' prior written notice to each Holder, the Administrative
Agent and the Lessee; provided, however that such resignation shall not be
effective until the acceptance of appointment by a successor Owner Trustee
under Section 9.1(b). The Owner Trustee may be removed with or without
cause at any time by the Holders upon consent to such removal by the
Administrative Agent and with 60 days' prior written notice to the Owner
Trustee, a copy of which notice shall be concurrently delivered by the
Holders to the
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<PAGE> 24
Administrative Agent and the Lessee. Any such removal shall be effective
upon the acceptance of appointment by a successor Owner Trustee under
Section 9.1(b). In case of the resignation or removal of the Owner
Trustee, the Holders may appoint a successor Owner Trustee by an instrument
signed by each Holder; provided, however, that such successor Owner Trustee
must be approved by the Administrative Agent. If a successor Owner Trustee
shall not have been appointed within 30 days after the giving of written
notice of such resignation or the delivery of the written instrument with
respect to such removal, the Owner Trustee or any Holder may apply to any
court of competent jurisdiction to appoint a successor Owner Trustee to act
until such time, if any, as a successor shall have been appointed and shall
have accepted its appointment as above provided. Any successor Owner
Trustee so appointed by such court shall immediately and without further
act be superseded by any successor Owner Trustee appointed as above
provided within one year from the date of the appointment by such court.
(b) Any successor Owner Trustee, however appointed, shall execute and
deliver to the predecessor Owner Trustee an instrument accepting such
appointment, and thereupon such successor Owner Trustee, without further
act shall become vested with all the estates, properties, rights, powers,
duties and trusts of the predecessor Owner Trustee in the trusts hereunder
with like effect as if originally named an Owner Trustee herein; but, the
foregoing notwithstanding, upon the written request of such successor Owner
Trustee, such predecessor Owner Trustee shall execute and deliver an
instrument transferring to such successor Owner Trustee, upon the trusts
herein expressed, all the estates, properties, rights, powers, duties and
trusts of such predecessor Owner Trustee, and such predecessor Owner
Trustee shall duly assign, transfer, deliver and pay over to such successor
Owner Trustee all moneys or other property then held by such predecessor
Owner Trustee upon the trusts herein expressed.
(c) Any successor Owner Trustee, however appointed, shall, to the
extent the provisions of the Louisiana Trust Code shall then be deemed to
apply to the Trust, be an individual, and otherwise a bank or trust company
incorporated and doing business within the United States of America and
having a combined capital and surplus of at least $50,000,000, if there be
such an institution willing, able and legally qualified to perform the
duties of Owner Trustee hereunder upon reasonable or customary terms.
(d) Any corporation into which the Owner Trustee may be merged or
converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Owner
Trustee shall be a party, or any corporation to which substantially all the
corporate trust business of the Owner Trustee may be transferred, shall,
subject to the terms of Section 9.1(c), be the Owner Trustee under this
Trust Agreement without further act.
SECTION 9.2 CO-TRUSTEES AND SEPARATE TRUSTEES. Whenever (a) the Owner
Trustee or the Holders (i) shall deem it necessary or prudent in order to
conform to any law of any jurisdiction in which all or any part of the Trust
Estate shall be situated or to which it may be subject, or to make any claim or
bring any suit with respect to the Trust Estate or any Operative
20
<PAGE> 25
Agreement, or (ii) shall be advised by counsel satisfactory to the Trustee or
the Holders, as the case may be, that it is so necessary or prudent, or (b) the
Owner Trustee shall have been directed to do so by the Holders and the
Administrative Agent, then the Owner Trustee and the Holders shall execute and
deliver an agreement supplemental hereto and all other instruments and
agreements, and shall take all other action, necessary or proper to constitute
one or more Persons who need not meet the requirements of Section 9.1(c) (and
the Owner Trustee may appoint one or more of its officers) either as co-trustee
or co-trustees (the "Co-Owner Trustee"), jointly with the Owner Trustee, of all
or any part of the Trust Estate, or as separate trustee or separate trustees of
all or any part of the Trust Estate, and to vest in such Persons, in such
capacity, such title to the Trust Estate or any part thereof and such rights or
duties as may be necessary or desirable, all for such period and under such
terms and conditions as are satisfactory to the Owner Trustee and the Holders.
In accordance with the foregoing:
(a) Trust Company shall appoint a Co-Owner Trustee hereunder in part
so that if, under any present or future law of any State where the
Properties are located or of any jurisdiction in which it may be necessary
to perform any act in carrying out the trusts herein created, Trust Company
or any of its successors may be incompetent or unqualified or incapacitated
or unwilling to perform certain acts as such Owner Trustee, then upon the
written request of Trust Company of any of its successors received by any
Co-Owner Trustee, all of such acts required to be performed in such
jurisdiction in the execution of the trust hereby created, shall and will
be performed by such Co-Owner Trustee, or any of his successors, in trust
acting alone, as if he or such successor had been specifically authorized
to do so or had been the sole Owner Trustee hereunder. Any Co-Owner
Trustee shall continue to perform such acts until otherwise directed in
writing by Trust Company or any of its successors. Any request in writing
by Trust Company or any of its successors to a Co-Owner Trustee shall be
sufficient warrant for him to take such action as may be so requested.
(b) Except to the extent it may be deemed necessary for any Co-Owner
Trustee or any of his successors solely or jointly to execute the trusts
herein created, Trust Company or any of its successors shall alone possess
and exercise the powers, and shall be solely charged with the performance
of the duties herein declared to be possessed, exercised or performed by
the Owner Trustee; and no Co-Owner Trustee shall be liable therefor. Any
Co-Owner Trustee or any of his successors may delegate to Trust Company or
its successor hereunder the exercise of any power or discretion conferred
by any provision of this Trust Agreement.
(c) Any act of the Owner Trustee herein required or authorized shall
and will be jointly or separately performed by Trust Company or its
successors hereunder and by any Co-Owner Trustee or any of his successors
appointed hereunder, if such joint performance or separate performance
shall be necessary to the legality of such act and when so acting all
references herein to "First Security Bank, National Association" shall be
deemed to be references to such Co-Owner Trustee in its individual capacity
and all references to "Owner Trustee" shall be deemed to be references to
such Co-Owner Trustee, and such Co-Owner Trustee shall be entitled to all
the protection,
21
<PAGE> 26
indemnification, immunity and compensation herein provided to Trust Company
acting singly in reference to such acts (subject to the limitations to such
a protection, indemnification, immunity and compensation set forth herein).
(d) Trust Company or its successor in trust shall have and is hereby
given the power at any time by an instrument in writing duly executed by a
Vice President, and under its corporate seal, to remove any Co-Owner
Trustee or his successor, from his position as Co-Owner Trustee hereunder.
In the case of death, resignation, removal, incapacity or inability to act
hereunder of the Co-Owner Trustee, or his successor as Co-Owner Trustee,
(i) any adult citizen of the United States of America may be appointed
Co-Owner Trustee hereunder by a person who shall at the time be a Vice
President of the corporation then acting as Owner Trustee hereunder, by an
instrument in writing duly executed, and (ii) subject to its right to
revoke such appointment or to appoint another person, Trust Company shall
appoint a successor Co-Owner Trustee, such appointment to be immediately
effective. In the event a vacancy occurs in the office of the Co-Owner
Trustee, either by reason of resignation, removal, incapacity or inability
to act and no successor is appointed pursuant to the foregoing provisions
within 30 days after such vacancy occurs, the Holders and the
Administrative Agent may jointly appoint a successor to the Co-Owner
Trustee in the same manner as is provided for the appointment of a
successor to the Co-Owner Trustee hereunder.
(e) At any time or times, for the purposes of meeting the legal
requirements of any jurisdiction in which any part of the Trust Estate
hereunder may at the time be located, or to avoid any violation of law or
imposition of taxes not otherwise imposed on the Owner Trustee, or if the
Owner Trustee shall deem it desirable for its own protection, Trust Company
shall have power to appoint one or more persons (who may be officers of
Trust Company) either to act as an additional co-trustee, jointly with
Trust Company, of all or any part of the Trust Estate hereunder, or of any
property constituting part thereof, or to act as separate trustee of any
part of the Trust Estate, in either case with such powers as may be
provided in the instrument of appointment and are consistent with the terms
hereof, and to vest in such person or persons (in such capacity as
co-trustee or separate trustee), any property, title, right or power deemed
necessary or desirable, subject to the remaining provisions of this Section
9.2.
(f) Notwithstanding any provision of this Trust Agreement to the
contrary, any Co-Owner Trustee or co-trustee shall act upon and be subject
to the following terms and conditions:
All rights, powers, duties and obligations conferred or imposed
upon the Owner Trustee shall be conferred or imposed solely upon and
solely exercised and performed by Trust Company except to the extent
that under any law of any jurisdiction in which any particular act or
acts are to be performed Trust Company or the Owner Trustee shall be
incompetent or unqualified to perform such act or acts or to avoid any
violation of law or imposition of taxes not otherwise imposed on the
Owner Trustee, or if the Owner Trustee shall deem it desirable for its
own
22
<PAGE> 27
protection, in which event such rights, powers, duties and obligations
shall be exercised and performed by such co-trustee or Co-Owner
Trustee.
(g) No power granted by this Trust Agreement to, or which this Trust
Agreement provides may be exercised by, the Owner Trustee in respect of the
custody, control and management of moneys may be exercised by any Co-Owner
Trustee or any subsequently appointed co-trustee except jointly with, or
with the consent in writing of, Trust Company for disbursement or
application in accordance with the terms hereof.
(h) All moneys which may be received or collected by any Co-Owner
Trustee or such subsequently appointed co-trustees shall be paid over to
Trust Company to be distributed in accordance with this Trust Agreement and
the other Operative Agreements.
(i) Any Co-Owner Trustee, or any subsequently appointed co-trustee to
the extent permitted by law, does hereby constitute Trust Company or its
successors hereunder his or her agent or attorney in fact, with full power
and authority to do any and all acts and things and exercise any and all
discretion authorized or permitted by the Co-Owner Trustee or such
subsequently appointed co-trustee, in its behalf or in its name.
(j) No trustee hereunder shall be personally liable by reason of any
act or omission of any other trustee hereunder.
SECTION 9.3 NOTICE. At all times that a successor Owner Trustee is
appointed pursuant to Section 9.1, an Owner Trustee resigns pursuant to Section
9.1 or the Co-Owner Trustee, a co-trustee or separate trustee, is appointed
pursuant to Section 9.2, the Holders shall give joint notice of such fact
within 15 days of its occurrence to (x) the Lessee, if the Lease is then in
effect and (y) the Administrative Agent, if the Credit Agreement is in effect.
ARTICLE X
SUPPLEMENTS AND AMENDMENTS
SECTION 10.1 SUPPLEMENTS AND AMENDMENTS. Subject to Section 6 of the
Indemnification Agreement, Section 10.2 of this Trust Agreement, and Section
10.2 of the Participation Agreement, at the written request of any Holder, this
Trust Agreement shall be amended by a written instrument signed by Trust
Company and each Holder, but if in the opinion of Trust Company or any
non-requesting Holder, any instrument required to be so executed adversely
affects any right, duty or liability of, or immunity or indemnity in favor of,
such non-requesting Holder or the Owner Trustee under this Trust Agreement or
any of the other Operative Agreements to which the Owner Trustee is a party, or
would cause or result in any conflict with or breach of any terms, conditions
or provisions of, or default under, the charter documents or by-laws of such
non-requesting Holder or any document contemplated hereby to which it or the
Owner Trustee is a party, then Trust Company or such other Holder, as the case
may be, may in its sole discretion decline to execute such instrument, unless
it shall have been provided an indemnity satisfactory to it by the Holder so
requesting the amendment.
23
<PAGE> 28
SECTION 10.2 LIMITATION ON AMENDMENTS. Notwithstanding Section 10.1,
Trust Company shall not, without the consent of the Administrative Agent,
execute any amendment (i) that might result in the trusts created hereunder
being terminated prior to the satisfaction and discharge of the Lien and
security interest of the Security Documents on the Collateral or prior to the
payment in full of the principal of and interest on the Loans, and any other
amounts due to the Administrative Agent or any Lender under any Credit
Document, and (ii) other than in accordance with the terms of the Credit
Agreement.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1 NO LEGAL TITLE TO TRUST ESTATE IN THE HOLDERS. The Holders
shall not have legal title to any part of the Trust Estate; provided, however,
that each Holder has a pro rata beneficial interest in the Trust Estate. No
transfer, by operation of law or otherwise, of any right, title or interest of
a Holder in and to the Trust Estate or hereunder shall operate to terminate
this Trust Agreement or the Trust or the trusts hereunder or entitle any
successor or transferee to an accounting or to the transfer to it of legal
title to any part of the Trust Estate.
SECTION 11.2 SALE OF PROPERTIES BY THE OWNER TRUSTEE IS BINDING. Any
sale, transfer, or other conveyance of the Properties or any part thereof by
the Owner Trustee made pursuant to the terms of this Trust Agreement, the
Indemnification Agreement or any other Operative Agreement shall bind the
Holders and shall be effective to sell, transfer and convey all right, title
and interest of the Owner Trustee and the Holders in and to the Properties or
any part thereof. No purchaser or other grantee shall be required to inquire
as to the authorization, necessity, expediency or regularity of such sale or
conveyance or as to the application of any sale or other proceeds with respect
thereto by the Owner Trustee.
SECTION 11.3 CERTIFICATION OF AUTHORIZATION. Third persons may
conclusively rely on a statement signed by the Owner Trustee to establish the
authenticity of any records of the Trust or the authority of any person to act
on behalf of the Trust.
SECTION 11.4 LIMITATIONS ON RIGHTS OF OTHERS. Nothing in this Trust
Agreement whether express or implied, shall be construed to give to any Person,
other than Trust Company, the Owner Trustee and each Holder, any legal or
equitable right, remedy or claim under or in respect of this Trust Agreement,
any covenants, conditions or provisions contained herein or in the Trust
Estate; but this Trust Agreement shall be held for the sole and exclusive
benefit of the Owner Trustee and the Holders. The Administrative Agent shall
have the right to enforce the provisions of Sections 5.1, 5.2, 5.3, 5.4, 5.5,
6.2, 6.8, 8.1, 8.2, 8.3, 9.1, 9.2, 9.3, 10.1 and 10.2 hereof.
SECTION 11.5 NOTICES. Unless otherwise expressly specified or permitted
by the terms hereof, all notices hereunder shall be given as provided in the
Participation Agreement.
24
<PAGE> 29
SECTION 11.6 SEVERABILITY. Any provision of this Trust Agreement that may
be determined by competent authority to be prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
SECTION 11.7 LIMITATION ON THE HOLDERS' LIABILITY. No Holder shall have
any liability for the performance of this Trust Agreement except as expressly
set forth herein.
SECTION 11.8 SEPARATE COUNTERPARTS. This Trust Agreement may be executed
by the parties hereto in separate counterparts, each of which when so executed
and delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 11.9 SUCCESSORS AND ASSIGNS. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, Trust
Company, the Owner Trustee and its successors and assigns and each Holder and
its successors and assigns, all as herein provided. Any request, notice,
direction, consent, waiver or other instrument or action by a Holder shall bind
the successors and assigns of such Holder.
SECTION 11.10 HEADINGS. The headings of the various articles and sections
herein are for convenience of reference only and shall not define or limit any
of the terms or provisions hereof.
SECTION 11.11 GOVERNING LAW. THIS TRUST AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
FLORIDA, WITHOUT REGARD TO ANY OTHERWISE APPLICABLE PRINCIPLES OF CONFLICT OF
LAWS.
SECTION 11.12 PERFORMANCE BY THE HOLDERS. Any obligation of the Owner
Trustee hereunder or under the Bridge Note, the Indemnification Agreement or
any Operative Agreement or other document contemplated herein may be performed
by the Holders (or by one of them with the written consent of the other) and
any such performance shall not be construed as a revocation of the trusts
created hereby.
SECTION 11.13 CONFLICT WITH AGREEMENTS. If this Trust Agreement (or any
instructions given by a Holder pursuant hereto) shall require that any action
be taken with respect to any matter and the Bridge Note, the Indemnification
Agreement or any other Operative Agreement (or any instructions duly given in
accordance with the terms thereof) shall require that a different action be
taken with respect to such matter, and such actions shall be mutually
exclusive, the provisions of the Bridge Note, the Indemnification Agreement or
such other Operative Agreement (as applicable) shall control in respect
thereof.
25
<PAGE> 30
SECTION 11.14 NO IMPLIED WAIVER. No term or provision of this Trust
Agreement may be changed, waived, discharged or terminated orally, but only by
an instrument in writing entered into as provided in Section 10.1; and any such
waiver of any term hereof shall be effective only in the specific instance and
for the specific purpose given.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
26
<PAGE> 31
IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement to
be duly executed by their respective officers hereunto duly authorized, as of
the date set forth above.
OWNER TRUSTEE:
FIRST SECURITY BANK, NATIONAL
ASSOCIATION
<TABLE>
<S> <C>
____________________________ By: _______________________________
Witness Name: Val T. Orton
Title: Vice President
____________________________
Witness
AGREED TO:
____________________________ ____________________________
Witness Val T. Orton, in his individual capacity
____________________________
Witness
</TABLE>
(Wackenhut Corrections Trust 1997-1)
Signature Page 1
<PAGE> 32
NATIONSBANK, NATIONAL ASSOCIATION, as
a Holder
____________________________ By:________________________________
Witness Name: Maria P. Conroy
Title: Senior Vice President
____________________________
Witness
Signature Page 2
<PAGE> 33
SCOTIABANC INC., as a Holder
By:_______________________________________
Name:_____________________________________
Title:____________________________________
Address for Notices:
600 Peachtree Street, N.E.
Suite 2700
Atlanta, Georgia 30308
Wire Transfer Instructions:
The Bank of Nova Scotia
New York, New York
ABA #026002532
Attention: Further Credit #0735639
ScotiaBanc Inc.
Reference: Wackenhut Corrections Corporation
Signature Page 3
<PAGE> 34
BARNETT BANK, N.A., as a Holder
By:______________________________________
Name:____________________________________
Title:___________________________________
Address for Notices:
625 N. Flagler Drive
West Palm Beach, Florida 33401
Wire Transfer Instructions:
Barnett Bank, N.A.
ABA #063000047
Account #06000074838
Attention: Wire Wash Acct 1396-10231
(Participation)
Reference: Wackenhut Corrections Corporation
Signature Page 4
<PAGE> 35
SUNTRUST BANK, SOUTH FLORIDA, N.A., as a
Holder
By:____________________________________
Name:__________________________________
Title:_________________________________
Address for Notices:
222 Lakeview Avenue
Suite 305
West Palm Beach, Florida 33401
Wire Transfer Instructions:
SunTrust Bank, South Florida, N.A.
Fort Lauderdale, Florida
ABA #067-006-076
Attention: Jennifer Campbell
Reference: Wackenhut Corrections Corporation
Signature Page 5
<PAGE> 36
EXHIBIT A
FORM OF HOLDER CERTIFICATE
FIRST SECURITY BANK, NATIONAL ASSOCIATION
TRUSTEE UNDER
SECOND AMENDED AND RESTATED TRUST AGREEMENT DATED AS OF JUNE 19,
1997
HOLDER CERTIFICATE
WACKENHUT CORRECTIONS TRUST 1997-1
$_________________________ _______________, 199_
Holder:___________________
First Security Bank, National Association, as trustee (in such capacity
the "Trustee") under that certain Third Amended and Restated Trust Agreement
(the "Trust Agreement") dated as of June 19, 1997, between NationsBank,
National Association and the other Holders party thereto, and the Trustee,
hereby certifies as follows: (i) this Holder Certificate is the Holder
Certificate referred to in the Section 3.1(d) of the Trust Agreement, which
Holder Certificate has been issued to the Holder named herein by the Trustee
pursuant to the Trust Agreement and (ii) subject to the prior payment of, and
the assignment, pledge or mortgage of the Trust Estate to secure the Notes as
set forth in the applicable Operative Agreements, the holder of this Holder
Certificate has an undivided beneficial interest in properties of
the Trustee constituting part of the Trust Estate and is entitled to receive as
provided in the Trust Agreement, a portion of the Rent received or to be
received by the Trustee for the Properties, as well as a portion of certain
other payments which may be received by the Trustee pursuant to the terms of
the Operative Agreements as more particularly set forth therein. (Capitalized
terms not otherwise defined herein shall have the respective meanings assigned
to them in the Trust Agreement.)
All amounts payable hereunder and under the Trust Agreement shall be paid
only from the income and proceeds from the Trust Estate and only to the extent
that the Trustee shall have received sufficient income or proceeds from the
Trust Estate to make such payments in accordance with the terms of the Trust
Agreement, except as specifically provided in Section 6.1 of the Trust
Agreement; and the holder hereof, by its acceptance of this Holder Certificate,
agrees that it will look solely to the income and proceeds from the Trust
Estate to the extent available for distribution to the holder hereof as
provided in the Trust Agreement and the other Operative Agreements and that,
except as specifically provided in the Trust Agreement and the other Operative
Agreements, the Trustee is not personally liable to the holder hereof for any
amount payable under this Holder Certificate or the Trust Agreement.
<PAGE> 37
The amounts payable to the holder hereof pursuant to the Trust Agreement
shall be paid or caused to be paid by the Owner Trustee to, or for the account
of, such Holder, or its nominee, by transferring such amount in immediately
available funds to one or more banking institutions with bank wire transfer
facilities for the account of such Holder or as otherwise instructed in writing
from time to time by such Holder.
This Holder Certificate shall mature, and all amounts payable to the
holder hereof pursuant to the Trust Agreement shall be due on, the Maturity
Date.
The Holder Fundings outstanding from time to time under this Holder
Certificate shall bear a yield on the unpaid amount hereof at the Holder Yield
as provided in the Trust Agreement. The Holder Yield on this Holder
Certificate shall be computed as provided in the Trust Agreement and shall be
payable at the rates, at the times and from the dates specified in the Trust
Agreement.
From and after the execution of the Participation Agreement, the rights of
the holder of this Holder Certificate under the Trust Agreement as well as the
beneficial interest of the holder of this Holder Certificate in and to the
properties of the Trustee constituting part of the Trust Estate, are subject
and subordinate to the rights of the holders of the Notes to the extent
provided in the applicable Operative Agreements. The Trust Estate has been or
will be assigned, pledged and mortgaged to the Administrative Agent, on behalf
of the Lenders, as security for the Notes. Reference is hereby made to the
Trust Agreement, the Participation Agreement, the Credit Agreement, the
Security Agreement and the Notes for statements of the rights of the holder of
this Holder Certificate and of the rights of the holders of, and the nature and
extent of the security for, the Notes, as well as for a statement of the terms
and conditions of the trusts created by the Trust Agreement; and the holder
hereof, by its acceptance of this Holder Certificate, agrees to all such terms
and conditions.
The holder hereof, by its acceptance of this Holder Certificate, agrees
not to transfer this Holder Certificate except in accordance with the terms of
the Trust Agreement and the other Operative Agreements.
THIS HOLDER CERTIFICATE SHALL BE INTERPRETED AND THE RIGHTS AND LIABILITIES
OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE INTERNAL LAWS (AS
OPPOSED TO CONFLICTS OF LAW PROVISIONS) AND DECISIONS OF THE STATE OF FLORIDA.
WHENEVER POSSIBLE EACH PROVISION OF THIS HOLDER CERTIFICATE SHALL BE INTERPRETED
IN SUCH MANNER AS TO BE EFFECTIVE AND VALID UNDER APPLICABLE LAW, BUT IF ANY
PROVISION OF THIS HOLDER CERTIFICATE SHALL BE PROHIBITED BY OR INVALID UNDER
APPLICABLE LAW, SUCH PROVISION SHALL BE INEFFECTIVE TO THE EXTENT OF SUCH
PROHIBITION OR INVALIDITY, WITHOUT INVALIDATING THE REMAINDER OF SUCH PROVISION
OR THE REMAINING PROVISIONS OF THIS HOLDER CERTIFICATE.
IN WITNESS WHEREOF, the undersigned authorized officer of the Trustee has
executed this Holder Certificate as of the date first set forth above.
<PAGE> 38
FIRST SECURITY BANK, NATIONAL ASSOCIATION, as
Trustee
By:________________________________
Name: _____________________________
Title: ____________________________
<PAGE> 39
STATE OF NORTH CAROLINA
COUNTY OF _________________
I, the undersigned, a Notary Public of said County and State, do hereby
certify that _______________________________ the _______________ of
NationsBank, National Association personally appeared before me this day and,
with authority duly given, he signed the foregoing instrument on behalf of the
corporation.
WITNESS my hand and official seal or stamp, this the ___ day of
_____________, 1997.
_________________________
Notary Public
My Commission Expires:
[SEAL or STAMP]
<PAGE> 40
STATE OF NORTH CAROLINA
COUNTY OF _________________
I, the undersigned, a Notary Public of said County and State, do hereby
certify that _______________________________ the _______________ of First
Security Bank, National Association personally appeared before me this day and,
with authority duly given, he signed the foregoing instrument on behalf of the
corporation.
WITNESS my hand and official seal or stamp, this the ____ day of
___________, 1997.
_________________________
Notary Public
My Commission Expires:
[SEAL or STAMP]
<PAGE> 41
STATE OF NORTH CAROLINA
COUNTY OF __________
I, the undersigned, a Notary Public of said County and State, do hereby
certify that Val T. Orton personally appeared before me this day and
acknowledged the due execution of the foregoing instrument.
WITNESS my hand and official seal or stamp, this the ____ day of
___________, 1997.
_________________________
Notary Public
My Commission Expires:
[SEAL or STAMP]
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AT DECEMBER 28, 1997 AND THE CONSOLIDATED STATEMENT
OF INCOME FOR THE FISCAL YEAR ENDED DECEMBER 28, 1997, AND IS QUALIFIED IN ITS
ENTIRETY BE REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-28-1997
<PERIOD-START> DEC-30-1996
<PERIOD-END> DEC-28-1997
<CASH> 28,960
<SECURITIES> 0
<RECEIVABLES> 36,755
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 75,172
<PP&E> 43,727
<DEPRECIATION> 4,973
<TOTAL-ASSETS> 139,203
<CURRENT-LIABILITIES> 26,596
<BONDS> 225
0
0
<COMMON> 222
<OTHER-SE> 102,073
<TOTAL-LIABILITY-AND-EQUITY> 139,203
<SALES> 0
<TOTAL-REVENUES> 206,930
<CGS> 0
<TOTAL-COSTS> 178,334
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 17,996
<INCOME-TAX> 7,226
<INCOME-CONTINUING> 11,875
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,875
<EPS-PRIMARY> .54
<EPS-DILUTED> .52
</TABLE>
