1
EXHIBIT 10.37
================================================================================
REGISTRATION RIGHTS AGREEMENT
by and between
PRISON REALTY CORPORATION
and
MDP VENTURES IV LLC
dated as of
December 31, 1998
================================================================================
2
TABLE OF CONTENTS
Section 1. Definitions...........................................................................................1
(a) "Agreement".....................................................................................1
(b) "Business Day"..................................................................................1
(c) "Commission"....................................................................................1
(d) "Company".......................................................................................1
(e) "Company Common Stock"..........................................................................1
(f) "Exchange Act"..................................................................................2
(g) "Investor"......................................................................................2
(h) "NASD"..........................................................................................2
(i) "Notes":........................................................................................2
(j) "Note Purchase Agreement".......................................................................2
(k) "Placed Offering"...............................................................................2
(l) "Registrable Securities"........................................................................2
(m) "Registration Expenses".........................................................................2
(n) "Registration Suspension Period"................................................................3
(o) "Required Interest".............................................................................3
(p) "Securities Act"................................................................................3
(q) "Shelf Registration"............................................................................3
(r) "Suspension Notice".............................................................................3
(s) "Underwritten/Placed Offering"..................................................................3
Section 2. Shelf Registration..............................................................................3
(a) Obligation to File and Maintain.................................................................3
(b) Black-Out Periods of Investor...................................................................4
(c) Notice..........................................................................................4
Section 3. Demand Registration.............................................................................4
(a) The Investor's Rights to Demand Registration....................................................4
(b) Black-Out Periods of Investor...................................................................5
(c) Notice..........................................................................................6
Section 4. Incidental Registrations........................................................................6
(a) Notification and Inclusion......................................................................6
(b) Cut-back Provisions.............................................................................6
(c) Duration of Effectiveness.......................................................................7
Section 5. Registration Procedures.........................................................................7
Section 6. Certain Underwritten Offerings.................................................................11
Section 7. Preparation; Reasonable Investigation..........................................................11
Section 8. Indemnification................................................................................11
3
(a) Indemnification by the Company.................................................................11
(b) Indemnification by Investor....................................................................12
(c) Notices of Claims, etc.........................................................................13
(d) Indemnification Payments.......................................................................13
(e) Contribution...................................................................................13
Section 9. Covenants Relating to Rule 144.................................................................14
Section 10. Miscellaneous..................................................................................14
(a) Expenses.......................................................................................14
(b) Counterparts...................................................................................14
(c) Governing Law..................................................................................15
(d) Entire Agreement...............................................................................15
(e) Notices........................................................................................15
(f) Successors and Assigns.........................................................................16
(g) Headings.......................................................................................16
(h) Amendments and Waivers.........................................................................16
(i) Interpretation; Absence of Presumption.........................................................16
(j) Severability...................................................................................17
(ii)
4
REGISTRATION RIGHTS AGREEMENT (the "Agreement"), dated as of December
31, 1998, by and between Prison Realty Corporation, a Maryland corporation (the
"Company"), and MDP Ventures IV LLC, a New York limited liability company
(together with any subsequent holder or holders of the Notes, the "Investor").
Capitalized terms not otherwise defined herein shall have the meaning ascribed
to them in the Note Purchase Agreement (as hereinafter defined).
WHEREAS, the Company, together with Investor, have entered into a Note
Purchase Agreement, dated as of December 31, 1998 (the "Note Purchase
Agreement"), pursuant to which the Company will sell and issue to Investor the
Notes, due on December 31, 2008, in the aggregate principal amount of
$40,000,000;
WHEREAS, pursuant to the Note Purchase Agreement, the Notes are
convertible into a certain number of shares (the "Shares") of Common Stock of
the Company ("Company Common Stock"); and
WHEREAS, in order to induce Investor to enter into the Note Purchase
Agreement, the Company has agreed to provide certain registration rights with
respect to the Shares of Company Common Stock, on such terms as are set forth
herein;
NOW, THEREFORE, in consideration of the premises and the covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and intending to be
legally bound hereby, the parties hereto hereby agree as follows:
Section 1. Definitions. As used herein, the following terms shall have
the following meanings:
(a) "Agreement": shall have the meaning set forth in the first
paragraph hereof.
(b) "Business Day": means each day other than a Saturday, a
Sunday or any other day on which banking institutions in the State of
New York (or such other location as the Company shall notify the
Investors is its principal place of business) are authorized or
obligated by law or executive order to be closed.
(c) "Commission": means the United States Securities and
Exchange Commission.
(d) "Company": shall have the meaning set forth in the first
paragraph hereof.
(e) "Company Common Stock": shall have the meaning set forth
in the recitals to this Agreement.
5
(f) "Exchange Act": means the Securities Exchange Act of 1934,
as amended, and the rules and regulations promulgated thereunder.
(g) "Investor": shall have the meaning set forth in the first
paragraph hereof.
(h) "NASD": the National Association of Securities Dealers,
Inc.
(i) "Notes": means the $40,000,000 of 9.5% Convertible
Subordinated Notes due December 31, 2008 that were or would be issued
pursuant to the Note Purchase Agreement.
(j) "Note Purchase Agreement": shall have the meaning set
forth in the recitals to this Agreement.
(k) "Placed Offering": a sale of securities of the Company to
a placement agent or agents for reoffering or through a placement agent
or agents for sale in each case in a transaction not registered under
the Securities Act.
(l) "Registrable Securities": (i) any and all of the Shares of
Company Common Stock held or owned by the Investor and (ii) any
securities issued or issuable with respect to any of the Shares of
Company Common Stock by way of conversion, exchange, stock dividend or
stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization or
otherwise including, without limitation, any shares of Company Common
Stock, issuable upon the redemption or exchange or conversion of the
Notes issued to Investor pursuant to the Note Purchase Agreement. As to
any particular Registrable Securities, once issued, such securities
shall cease to be Registrable Securities when (A) a registration
statement with respect to the sale of such securities shall have become
effective under the Securities Act and such securities shall have been
disposed of in accordance with such registration statement, or (B) such
securities shall have been sold in accordance with Rule 144 (or any
successor provision) under the Securities Act.
(m) "Registration Expenses": (i) the fees and disbursements of
counsel and independent public accountants for the Company incurred in
connection with the Company's performance of or compliance with this
Agreement, including the expenses of any special audits or "old
comfort" letters required by or incident to such performance and
compliance, and any premiums and other costs of policies of insurance
obtained by the Company against liabilities arising out of the sale of
any securities and (ii) all registration, filing and stock exchange or
NASD fees, other than underwriting discounts and commissions, all fees
and expenses of complying with securities or blue sky laws, all
printing expenses, messenger and delivery expenses, any fees and
disbursements of any common counsel retained by Investor and transfer
taxes, if any.
(n) "Registration Suspension Period": shall have the meaning
set forth in Section 2(b).
2
6
(o) "Required Interest": shall have the meaning set forth in
Section 3(a).
(p) "Securities Act": means the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
(q) "Shelf Registration": shall have the meaning set forth in
Section 2(a).
(r) "Suspension Notice": shall have the meaning set forth in
Section 2(b).
(s) "Underwritten/Placed Offering": a sale of securities of
the Company to an underwriter or underwriters for reoffering to the
public or on behalf of a person other than the Company through an agent
for sale to the public.
Section 2. Shelf Registration.
(a) Obligation to File and Maintain. No later than three
months prior to the date the Notes are first convertible into Company Common
Stock, the Company shall use its best efforts to cause to be filed with the
Commission a registration statement under the Securities Act for the offering on
a continuous or delayed basis in the future of all of the Registrable Securities
(the "Shelf Registration") and will use its best efforts to cause such Shelf
Registration to be declared effective by the Commission as soon as practicable
thereafter. The Shelf Registration shall provide (x) that upon any conversion of
the Notes pursuant to the Note Purchase Agreement that is satisfied with shares
of the Company Common Stock, Investor shall receive shares of Company Common
Stock that shall be registered under the Securities Act pursuant to the Shelf
Registration and (y) for the offer and sale on a continuous basis in the future
of all of the Registrable Securities. The Shelf Registration shall be on an
appropriate form and the Shelf Registration and any form of prospectus included
therein or prospectus supplement relating thereto shall reflect such plan of
distribution or method of sale as Investor may from time to time instruct the
Company, including the sale of some or all of the Registrable Securities in a
public offering or, if requested by Investor, subject to receipt by the Company
of such information (including information relating to purchasers) as the
Company reasonably may require, (i) in a transaction constituting an offering
outside the United States which is exempt from the registration requirements of
the Securities Act in which the Company undertakes to effect registration of
such shares, as soon as possible after the completion of such offering in order
to permit such shares to be freely tradeable in the United States, (ii) in a
transaction constituting a private placement under Section 4(2) of the
Securities Act in connection with which the Company undertakes to register such
shares, after the conclusion of such placement to permit such shares to be
freely tradeable by the purchasers thereof, or (iii) in a transaction under Rule
144A of the Securities Act in connection with which the Company undertakes to
register such shares after the conclusion of such transaction to permit such
shares to be freely tradeable by the purchasers thereof. The Company shall use
its best efforts to keep the Shelf Registration continuously effective for the
period beginning on the date on which the Shelf Registration is declared
effective and ending on the first date that there are no Registrable Securities
(it being understood that Investor shall promptly notify the Company of such
sale).
3
7
During the period during which the Shelf Registration is effective, the
Company shall supplement or make amendments to the Shelf Registration, if
required by the Securities Act or if reasonably requested by Investor or an
underwriter of Registrable Securities, including to reflect any specific plan of
distribution or method of sale, and shall use its reasonable best efforts to
have such supplements and amendments declared effective, if required, as soon as
practicable after filing. Notwithstanding the foregoing, Investor shall be
prohibited from utilizing this Shelf Registration for purposes of reselling any
Registrable Securities earlier than two years following the date hereof.
(b) Black-Out Periods of Investor. Notwithstanding the
foregoing, the Company shall not be required to file a registration statement or
to keep a registration statement effective if the negotiation or consummation of
a transaction is pending or an event has occurred, which negotiation,
consummation or event would require additional disclosure by the Company in the
registration statement of material information which the Company has a bona fide
business purpose for keeping confidential and the nondisclosure of which in the
registration statement might cause the registration statement to fail to comply
with applicable disclosure requirements; provided, however, that the Company may
not delay, suspend or withdraw a registration statement for such reason for more
than 60 days or more often than once during any period of 6 consecutive months.
Once any registration statement filed pursuant to Section 2(a) or as
set forth below in Section 3 has been declared effective, any period during
which the Company fails to keep such registration statement effective and usable
for resale of Registrable Securities shall be referred to as a "Registration
Suspension Period," which term shall not include any failure solely attributable
to the exercise of the Company's rights under this Section 2(b). A Registration
Suspension Period shall commence on and include the date that the Company gives
written notice to Investor of its determination that such registration statement
is no longer effective or usable for resale of Registrable Securities (the
"Suspension Notice") to and including the date when the Company notifies
Investor that the use of the prospectus included in such registration statement
may be resumed for the disposition of Registrable Securities.
(c) Notice. The Company shall give Investor prompt notice in
the event that the Company has suspended sales of Registrable Securities under
Section 2(b).
Section 3. Demand Registration.
(a) The Investor's Rights to Demand Registration. At any time
that a shelf registration statement is not filed and maintained as set forth in
Section 2(a) or there shall have occurred a Registration Suspension Period in
excess of 60 days, promptly upon the written request of Investor holding the
Required Interest, the Company will use its best efforts to effect such a
registration as soon as practicable and in any event to file a registration
statement or similar document under the Securities Act with respect to the
Registrable Securities held by Investor and the sale by Investor of Registrable
Securities (the "Demand Registration"). The Company will use its best efforts to
cause all Registrable Securities that such Investor has requested to be
registered under the Securities Act to be so registered within 120 days of such
4
8
request and maintain the effectiveness of such Demand Registration until the
earlier of (i) the sale of all of the Registrable Securities registered pursuant
thereto (it being understood that Investor shall promptly notify the Company of
such sale) and (ii) 180 days following the effectiveness of such registration
statement. The Demand Registration shall be on an appropriate form and the
Demand Registration and any form of prospectus included therein or prospectus
supplement relating thereto shall reflect such plan of distribution or method of
sale as Investor may from time to time notify the Company, including the sale of
some or all of the Registrable Securities in a public offering or, if requested
by Investor, subject to receipt by the Company of such information (including
information relating to purchasers) as the Company reasonably may require, (i)
in a transaction constituting an offering outside the United States which is
exempt from the registration requirements of the Securities Act in which the
Company undertakes to effect registration of such securities as soon as possible
after the completion of such offering in order to permit such securities to be
freely tradeable in the United States, (ii) in a transaction constituting a
private placement under Section 4(2) of the Securities Act in connection with
which the Company undertakes to register such securities after the conclusion of
such placement to permit such securities to be freely tradeable by the
purchasers thereof, or (iii) in a transaction under Rule 144A of the Securities
Act in connection with which the Company undertakes to register such securities
after the conclusion of such transaction to permit such securities to be freely
tradeable by the purchasers thereof. If Investor holds more than fifty percent
(50%) of the Registrable Securities (the "Required Interest"), it may exercise
its rights under this Section 3(a) twice during any twelve-month period;
provided, that Investor's second such demand registration right shall be
conditioned upon Investor having not exercised its second demand registration
right pursuant to Section 3(a) of this Agreement during such twelve-month
period. Notwithstanding anything to the contrary provided herein, Investor's
rights pursuant to this Section 3 shall be effective not earlier than two years
following the date hereof, and Investor shall be limited to two demand
registrations, in total, under this Section 3.
(b) Black-Out Periods of Investor. Notwithstanding the
foregoing, the Company shall not be required to file a registration statement or
to keep a registration statement effective if the negotiation or consummation of
a transaction is pending or an event has occurred, which negotiation,
consummation or event would require additional disclosure by the Company in the
registration statement of material information which the Company has a bona fide
business purpose for keeping confidential and the nondisclosure of which in the
registration statement might cause the registration statement to fail to comply
with applicable disclosure requirements; provided, however, that the Company may
not delay, suspend or withdraw a registration statement for such reason for more
than 60 days or more often than once during any period of 6 consecutive months.
(c) Notice. The Company shall give Investor prompt notice in
the event that the Company has suspended sales of Registrable Securities under
Section 3(b).
Section 4. Incidental Registrations.
5
9
(a) Notification and Inclusion. If at any time after the
second anniversary of the date of this Agreement (but without obligation to do
so) the Company proposes to register (x) for its own account or (y) pursuant to
a right to registration on request pursuant to this Agreement, any common equity
securities of the Company or any securities convertible into common equity
securities of the Company under the Securities Act in connection with the public
offering of such securities solely for cash (other than a registration relating
solely to the sale of securities to participants in a dividend reinvestment
plan, a registration on Form S-4 (or successor form) relating to a business
combination or similar transaction permitted to be registered on such Form S-4,
a registration on Form S-8 (or successor form) relating to the sale of
securities to participants in a stock or employee benefit plan, or a
registration permitted under Rule 462 under the Securities Act registering
additional securities of the same class as were included in a earlier
registration statement for the same offering and declared effective), then the
Company shall, at each such time, promptly give written notice of such
registration to Investor. Upon the written request of Investor holding the
Required Interest within 10 days (but in the case of a retail "spot" offering,
two Business Days so long as the Company has advised Investor that it is
considering effecting such an offering, and the material terms thereof, as
promptly as is practical for the Company to do so and in any event not less than
10 days prior to the beginning of such two Business Day period) after receipt of
such notice by Investor, the Company shall seek to include in such proposed
registration such Registrable Securities of the same class as is then being
registered by the Company as Investor holding the Required Interest shall
request be so included and shall use its best efforts to cause a registration
statement covering all of the Registrable Securities that Investor have so
requested to be registered to become effective under the Securities Act. The
Company shall be under no obligation to Investor to complete any offering of
securities it proposes to make under this Section 4 and shall incur no liability
(including under this Section 4 or under Section 5) to Investor for its failure
to do so. If, at any time after giving written notice of its intention to
register any securities as set forth in this Section 4(a) and prior to the
effective date of the registration statement filed in connection with such
registration, the Company shall determine for any reason not to register or to
delay registration of such securities, the Company may, at its election, give
written notice of such determination to Investor and, thereupon, (i) in the case
of a determination not to register, the Company shall be relieved of its
obligation to Investor to register any Registrable Securities in connection with
such registration (but not from its obligation to pay the Registration Expenses
incurred in connection therewith) pursuant to Section 4(a) hereof and (ii) in
the case of a determination to delay registering, the Company shall be permitted
to delay registering any Registrable Securities for the same period as the delay
in registering such other securities.
(b) Cut-back Provisions. If a registration pursuant to this
Section 4 involves an Underwritten/Placed Offering of the securities so being
registered, whether or not solely for sale for the account of the Company, which
securities are to be distributed by or through one or more underwriters of
recognized standing under underwriting terms customary for such transaction, and
the underwriter or the managing underwriter, as the case may be, of such
Underwritten/Placed Offering shall inform the Company of its belief that the
amount of securities requested to be included in such registration or offering
exceeds the amount which can be sold in (or during the time of) such offering
without delaying or jeopardizing the
6
10
success of the offering (including the price per share of the securities to be
sold), then the Company will include in such registration (i) first, all the
securities of the Company which the Company proposes to sell for its own account
and (ii) second, to the extent of the amount which the Company is so advised can
be sold in (or during the time of) such offering, Registrable Securities and
other securities requested to be included in such registration pro rata among
Investor and others exercising incidental registration rights on the basis of
the number of securities requested to be included by all such persons.
(c) Duration of Effectiveness. At the request of Investor
holding the Required Interest, the Company shall, subject to Section 2(b), use
its best efforts to keep any registration statement for which Registrable
Securities are included under this Section 4 effective and usable for up to 90
days (subject to extension for the length of any Registration Suspension
Period), unless the distribution of securities registered thereunder has been
earlier completed; provided, however, that in no event will the Company be
required to prepare or file audited financial statements with respect to any
fiscal year by a date prior to the date on which the Company would be so
required to prepare and file such audited financial statements if such
registration statement were no longer effective and usable.
Section 5. Registration Procedures.
(a) In connection with the filing of any registration
statement as provided in Sections 2 or 3 or subject to the terms and conditions
of Section 4, the Company shall use its best efforts to, as expeditiously as
reasonably practicable:
(i) prepare and file with the Commission the requisite
registration statement (including a prospectus therein) to effect such
registration and use its best efforts to cause such registration
statement to become effective, provided that before filing such
registration statement or any amendments or supplements thereto, the
Company will furnish to the counsel selected by Investor holding the
Required Interest copies of all such documents proposed to be filed,
which documents will be subject to the review of such counsel before
any such filing is made, and the Company will comply with any
reasonable request made by such counsel to make changes in any
information contained in such documents relating to Investor;
(ii) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to maintain the effectiveness
of such registration and to comply with the provisions of the
Securities Act with respect to the disposition of all securities
covered by such registration statement during the period in which such
registration statement is required to be kept effective;
(iii) furnish to Investor and the underwriter, if any, of the
securities being registered, without charge, such number of conformed
copies of such registration statement and of each such amendment and
supplement thereto (in each case including all exhibits) other than
those which are being incorporated into such registration
7
11
statement by reference, such number of copies of the prospectus
contained in such registration statements (including each complete
prospectus and any summary prospectus) and any other prospectus filed
under Rule 424 under the Securities Act, in conformity with the
requirements of the Securities Act, and such other documents, including
documents incorporated by reference, as Investor may reasonably
request;
(iv) register or qualify all Registrable Securities under such
other securities or blue sky laws of such jurisdictions as Investor and
the underwriters, of the securities being registered, if any, shall
reasonably request, to keep such registration or qualification in
effect for so long as such registration statement remains in effect,
and take any other action which may be reasonably necessary or
advisable to enable Investor to consummate the disposition in such
jurisdictions of the securities owned by Investor, except that the
Company shall not for any such purpose be required to qualify generally
to do business as a foreign corporation or register as a broker or
dealer in any jurisdiction wherein it would not but for the
requirements of this paragraph be obligated to be so qualified or
registered, or to consent to general service of process in any such
jurisdiction, or to subject the Company to any material tax in any such
jurisdiction where it is not then so subject;
(v) furnish to Investor a signed counterpart, addressed to the
underwriter if any, addressed to Investor (and the underwriters, if
any), of
(A) an opinion of counsel for the Company, dated the
effective date of such registration statement (and, if such
registration includes an underwritten public offering, dated
the date of the closing under the underwriting agreement),
reasonably satisfactory in form and substance to Investor, and
(B) to the extent permitted by then applicable rules
of professional conduct, a "comfort" letter, dated the
effective date of such registration statement (or, if such
registration includes an underwritten public offering, dated
the date of the closing under the underwriting agreement),
signed by the independent public accountants who have
certified the Company's financial statements included in such
registration statement, covering such matters with respect to
such registration statement and with respect to events
subsequent to the date of such financial statements,
all as are customarily covered in opinions of issuer's counsel and in
accountants' letters delivered to underwriters in connection with
underwritten public offerings of securities;
(vi) immediately notify Investor at any time when the Company
becomes aware that a prospectus relating thereto is required to be
delivered under the Securities Act, of the happening of any event as a
result of which the prospectus included in such registration statement,
as then in effect, includes an untrue statement of a material fact or
omits to state any material fact required to be stated therein or
necessary to make the
8
12
statements therein not misleading in the light of the circumstances
under which they were made, and, at the request of Investor, promptly
prepare and furnish to Investor a reasonable number of copies of a
supplement to or an amendment of such prospectus as may be necessary so
that, as thereafter delivered to the purchasers of such securities,
such prospectus shall not include an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of
the circumstances under which they were made;
(vii) comply or continue to comply in all material respects
with the Securities Act and the Exchange Act and with all applicable
rules and regulations of the Commission thereunder so as to enable
Investor to sell the Shares of Company Common Stock pursuant to Rule
144 promulgated under the Securities Act, and not file any amendment or
supplement to such registration statement or prospectus to which
Investor shall have reasonably objected on the grounds that such
amendment or supplement does not comply in all material respects with
the requirements of the Securities Act, having been furnished with a
copy thereof at least five Business Days prior to the filing thereof;
(viii) make available to its security holders, as soon as
reasonably practicable, an earnings statement covering the period of at
least 12 months, but not more than 18 months, beginning with the first
full calendar month after the effective date of such registration
statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act;
(ix) provide a transfer agent and registrar for all
Registrable Securities covered by such registration statement not later
than the effective date of such registration statement;
(x) cooperate with Investor to facilitate the timely
preparation and delivery of certificates representing Registrable
Securities to be sold and not bearing any Securities Act legend; and
enable certificates for such Registrable Securities to be issued for
such numbers of shares of Company Common Stock and registered in such
names as the selling Investor may reasonably request in writing at
least two Business Days prior to any sale of Registrable Securities;
(xi) apply for listing and use its best efforts to list all
Company Common Stock covered by such registration statement on any
securities exchange on which any of the Company Common Stock is then
listed and cause to be satisfied all requirements and conditions of
such securities exchange to the listing of such securities that are
reasonably within the control of the Company including, without
limitation, registering the applicable class of Company Common Stock
under the Exchange Act, if appropriate, and using its best efforts to
cause such registration to become effective pursuant to the rules of
the Commission;
9
13
(xii) in connection with any sale, transfer or other
disposition by any Existing Holder of any of the Shares of Company
Common Stock pursuant to Rule 144 promulgated under the Securities Act,
cooperate with such holder to facilitate the timely preparation and
delivery of certificates representing Company Common Stock to be sold
and not bearing any Securities Act legend, and enable certificates for
such Shares of Company Common Stock to be for such number of shares and
registered in such name as the selling Investor may reasonably request
in writing at least two Business Days prior to any sale of Registrable
Securities;
(xiii) notify Investor, promptly after it shall receive notice
thereof, of the time when such registration statement, or any
post-effective amendments to the registration statement, shall have
become effective, or a supplement to any prospectus forming part of
such registration statement has been filed;
(xiv) notify Investor of any request by the Commission for
the amendment or supplement of such registration statement or
prospectus for additional information; and
(xv) advise Investor, promptly after it shall receive notice
or obtain knowledge thereof, of (A) the issuance of any stop order by
the Commission suspending the effectiveness of such registration
statement or the initiation or threatening of any proceeding for such
purpose (and use all reasonable efforts to prevent the issuance of any
stop order or to obtain its withdrawal if such stop order should be
issued), and (B) the suspension of the registration of the subject
shares of the Company Common Stock in any state jurisdiction.
(b) It shall be a condition precedent to the obligation of the
Company to take any action pursuant to Section 3 in respect of the Registrable
Securities of the selling Investor that, in connection with the filing of any
registration statement covering Registrable Securities, the selling Investor
shall furnish in writing to the Company such information regarding Investor (and
any of its affiliates), the Registrable Securities to be sold, the intended
method of distribution of such Registrable Securities, and such other
information requested by the Company as is necessary or advisable for inclusion
in the registration statement relating to such offering pursuant to the
Securities Act and the rules of the Commission thereunder. Such writing shall
expressly state that it is being furnished to the Company for use in the
preparation of a registration statement, preliminary prospectus, supplementary
prospectus, final prospectus or amendment or supplement thereto, as the case may
be.
Investor agrees by acquisition of the Registrable Securities that upon
receipt of any notice from the Company of the happening of any event of the kind
described in paragraph (a)(vi) of this Section 5, Investor will forthwith
discontinue its disposition of Registrable Securities pursuant to the
registration statement relating to such Registrable Securities until Investor's
receipt of the copies of the supplemented or amended prospectus contemplated by
paragraph (a)(vi) of this Section 5.
10
14
Section 6. Certain Underwritten Offerings. If requested by the
underwriters for any underwritten offerings by Investor, under a registration
requested pursuant to Section 2(a), the Company will enter into a customary
underwriting agreement with such underwriters for such offering, to contain such
representations and warranties by the Company and such other terms as are
customarily contained in agreements of this type, including indemnities to the
effect and to the extent provided in Section 8. Investor shall be a party to
such underwriting agreement and may, at its option, require that any or all of
the conditions precedent to the obligations of such underwriters under such
underwriting agreement be conditions precedent to the obligations of Investor.
Investor shall not be required to make any representations or warranties to or
agreement with the Company or the underwriters other than representations,
warranties or agreements regarding such Investor and such Investor's intended
method of distribution and any other representation or warranty required by law.
The Company may decline (but not more than three times) to retain an underwriter
of Investor's choice. Investor shall only propose underwriters of nationally
recognized standing.
Section 7. Preparation; Reasonable Investigation. In connection with
the preparation and filing of the registration statement under the Securities
Act, the Company shall (i) not be required under Section 4 to include any of the
Investor's securities in such underwriting, unless the Investor accepts the
terms of the underwriting as agreed upon between the Company and the underwriter
selected by it and (ii) will give Investor, their underwriters, if any, and
their respective counsel, the opportunity to participate in the preparation of
such registration statement, each prospectus included therein or filed with the
Commission, and each amendment thereof or supplement thereto, and will give each
of them such access to its books and records and such opportunities to discuss
the business of the Company with its officers, its counsel and the independent
public accountants who have certified its financial statements as shall be
necessary, in the opinion of Investor and such underwriters' respective counsel,
to conduct a reasonable investigation within the meaning of the Securities Act.
11
15
Section 8. Indemnification. (a) Indemnification by the Company. In the
event of any registration of any Registrable Securities of the Company under the
Securities Act, the Company will, and hereby does, indemnify and hold harmless
Investor, its officers and directors and each person who controls such Investor
within the meaning of the Securities Act, each other person who participates as
an underwriter in the offering or sale of such securities and each other person
who controls any such underwriter within the meaning of the Securities Act,
against any losses, claims, damages, and expenses (including, without
limitation, reasonable attorneys fees) joint or several, to which Investor or
any such indemnitees may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages, liabilities and expenses (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out of
or are based upon any untrue statement or alleged untrue statement of any
material fact contained in the registration statement under which such
Registrable Securities were registered and sold under the Securities Act, any
preliminary prospectus, final prospectus or summary prospectus contained
therein, or any amendment or supplement thereto, or arising out of or based upon
any omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and the Company will
reimburse Investor for any reasonable legal or any other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, liability, action or proceedings; provided, however, that the Company
shall not be liable in any such case to the extent that any such loss, claim,
damage, liability (or action or proceeding in respect thereof) or expense arises
out of or is based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in such registration statement, any such
preliminary prospectus, final prospectus, summary prospectus, amendment or
supplement in reliance upon and in conformity with written information furnished
to the Company by Investor or any other person who participates as an
underwriter in the offering or sale of such securities, in either case,
specifically stating that it is for use in the preparation thereof, and
provided, further, that the indemnity obligation of the Company contained in
this Section 8 shall not apply to amounts paid in settlement of any loss, claim,
damage, liability (or action or proceeding in respect thereof) if such
settlement is effected without the consent of the Company (which consent shall
not be unreasonably withheld), nor shall the Company be liable to Investor or
any person who participates as an underwriter in the offering or sale of
Registrable Securities or any other person, if any, who controls such
underwriter within the meaning of the Securities Act in any such case to the
extent that any such loss, claim, damage, liability (or action or proceeding in
respect thereof) or expense arises out of such person's failure to send or give
a copy of the final prospectus or supplement to the persons asserting an untrue
statement or alleged untrue statement or omission or alleged omission at or
prior to the written confirmation of the sale of Registrable Securities to such
person if such statement or omission was corrected in such final prospectus or
supplement. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of Investor or any such underwriter or
controlling person and shall survive the transfer of such securities by
Investor.
(b) Indemnification by Investor. The Company may require, as a
condition to including any Registrable Securities in any registration statement
pursuant to Section 2 or Section 3, that the Company shall have received an
undertaking satisfactory to it from Investor
12
16
to indemnify and hold harmless (in the same manner and to the same extent as set
forth in paragraph (a) of this Section 8) the Company, each director of the
Company, each officer of the Company and each other person, if any, who controls
the Company within the meaning of the Securities Act, and each other person who
participates as an underwriter in the offering or sale of such securities and
each other person who controls any such underwriter within the meaning of the
Securities Act, with respect to any untrue statement or alleged untrue statement
of a material fact in or omission or alleged omission to state a material fact
from such registration statement, any preliminary prospectus, final prospectus
or summary prospectus contained therein, or any amendment or supplement thereto,
if such untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written information
furnished to the Company by Investor specifically stating that it is for use in
the preparation of such registration statement, preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement. Such indemnity shall
remain in full force and effect regardless of any investigation made by or on
behalf of the Company or any such director, officer, or controlling person and
shall survive the transfer of such securities by Investor.
(c) Notices of Claims, etc. Promptly after receipt by an
indemnified party of notice of the commencement of any action or proceeding
involving a claim referred to in the preceding paragraphs of this Section 8,
such indemnified party will, if a claim in respect thereof is to be made against
an indemnifying party, give written notice to the latter of the commencement of
such action; provided, however, that the failure of any indemnified party to
give notice as provided herein shall not relieve the indemnifying party of its
obligations under the preceding paragraphs of this Section 8, except to the
extent that the indemnifying party is actually prejudiced by such failure to
give notice. In case any such action is brought against an indemnified party,
unless in such indemnified party's reasonable judgment a conflict of interest
between such indemnified and indemnifying parties may exist in respect of such
claim, the indemnifying party shall be entitled to assume the defense thereof,
for itself, if applicable, together with any other indemnified party similarly
notified to the extent that it may wish, with counsel reasonably satisfactory to
such indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to the indemnified party for any legal or
other expenses subsequently incurred by the latter in connection with the
defense thereof.
(d) Indemnification Payments. To the extent that the
indemnifying party does not assume the defense of an action brought against the
indemnified party as provided in Section 8(c), the indemnified party (or parties
if there is more than one) shall be entitled to the reasonable legal expenses of
common counsel for the indemnified party (or parties). In such event, however,
the indemnifying party will not be liable for any settlement expected without
the written consent of such indemnifying party. The indemnification required by
this Section 8 shall be made by periodic payments of the amount thereof during
the course of an investigation or defense, as and when bills are received or
expense, loss, damage or liability is incurred.
(e) Contribution. If, for any reason, the foregoing indemnity
is unavailable, or is insufficient to hold harmless an indemnified party, then
the indemnifying party shall
13
17
contribute to the amount paid or payable by the indemnified party as a result of
the expense, loss, damage or liability, (i) in such proportion as is appropriate
to reflect the relative fault of the indemnifying party on the one hand and the
indemnified party on the other (determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or omission
relates to information supplied by the indemnifying party or the indemnified
party and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission), or (ii) if
the allocation provided by clause (i) above is not permitted by applicable law
or provides a lesser sum to the indemnified party than the amount hereinafter
calculated, in the proportion as is appropriate to reflect not only the relative
fault of the indemnifying party and the indemnified party, but also the relative
benefits received by the indemnifying party on the one hand and the indemnified
party on the other, as well as any other relevant equitable considerations. No
indemnified party guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any
indemnifying party who was not guilty of such fraudulent misrepresentation.
Section 9. Covenants Relating to Rule 144. The Company will file in a
timely manner, information, documents and reports in compliance with the
Exchange Act and will, at its expense, forthwith upon the request of Investor,
deliver to Investor a certificate, signed by the Company's principal financial
officer, stating (a) the Company's name, address and telephone number (including
area code), (b) the Company's Internal Revenue Service identification number,
(c) the Company's Commission file number, (d) the number of shares of Company
Common Stock outstanding as shown by the most recent report or statement
published by the Company, and (e) whether the Company has filed the reports
required to be filed under the Exchange Act for a period of at least 90 days
prior to the date of such certificate and in addition has filed the most recent
annual report required to be filed thereunder. If at any time the Company is not
required to file reports in compliance with either Section 13 or Section 15(d)
of the Exchange Act, the Company will, at its expense, forthwith upon the
written request of Investor, make available adequate current public information
with respect to the Company within the meaning of paragraph (c)(2) of Rule 144
of the General Rules and Regulations promulgated under the Securities Act.
Section 10. Miscellaneous.
(a) Expenses. All Registration Expenses incurred in connection
with any Shelf Registration or other registration which may be requested under
Sections 2, 3 or 4 (including all Registrable Expenses incurred in connection
with any registration of any securities other than those of Investor as referred
to in the first sentence of Section 4(a)) shall be borne by the Company.
(b) Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other party. Copies of executed
counterparts transmitted by telecopy, telefax or other
14
18
electronic transmission service shall be considered original executed
counterparts for purposes of this Section 10, provided receipt of copies of such
counterparts is confirmed.
(c) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE
TO THE CHOICE OF LAW PRINCIPLES THEREOF.
(d) Entire Agreement. This Agreement (including agreements
incorporated herein) contains the entire agreement between the parties with
respect to the subject matter hereof and there are no agreements or
understandings between the parties other than those set forth or referred to
herein. This Agreement is not intended to confer upon any person not a party
hereto (and their successors and assigns) any rights or remedies hereunder.
(e) Notices. All notices and other communications hereunder
shall be sufficiently given for all purposes hereunder if in writing and
delivered personally, sent by documented overnight delivery service or, to the
extent receipt is confirmed, telecopy, telefax or other electronic transmission
service to the appropriate address or number as set forth below. Notices to the
Company shall be addressed to:
Prison Realty Corporation
c/o CCA Prison Realty Trust
00 Xxxxxx Xxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx
Copy to:
Xxxxxx & Xxxxxxxxxxx, P.A.
000 Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxx, Xxxxxxxxx 00000-0000
Attn: Xxxxxxxxx X. Xxxxx, Esq.
or at such other address and to the attention of such other person as the
Company may designate by written notice to Investor. Notices to Investor shall
be addressed to:
MDP Ventures IV LLC
c/o Millennium Partners
0000 Xxxxxxxx, 0xx Xxxxx
Xxx Xxxx, X.X. 00000
Attn: Xxxxx X. Xxxxxxx
15
19
Copy to:
Battle Xxxxxx LLP
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxxxxxxx, Esq.
Telecopy Number: (000) 000-0000
(f) Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors. Each party hereto shall be permitted to assign any of its rights
hereunder to any third party, provided that (i) such transfer is effected in
accordance with applicable federal and state securities laws, (ii) such assignee
becomes a party to this Agreement or agrees in writing to be subject to the
terms hereof, and (iii) the Company is given written notice by Investor stating
the name and address of said assignee and identifying the securities with
respect to which such registration rights are being assigned.
(g) Headings. The Section and other headings contained in this
Agreement are inserted for convenience of reference only and will not affect the
meaning or interpretation of this Agreement. All references to Sections or other
headings contained herein mean Sections or other headings of this Agreement
unless otherwise stated.
(h) Amendments and Waivers. This Agreement may not be modified
or amended except by an instrument or instruments in writing signed by the party
against whom enforcement of any such modification or amendment is sought. Either
party hereto may, only by an instrument in writing, waive compliance by the
other party hereto with any term or provision hereof on the part of such other
party hereto to be performed or complied with. The waiver by any party hereto of
a breach of any term or provision hereof shall not be construed as a waiver of
any subsequent breach.
(i) Interpretation; Absence of Presumption. For the purposes
hereof, (i) words in the singular shall be held to include the plural and vice
versa and words of one gender shall be held to include the other gender as the
context requires, (ii) the terms "hereof", "herein", and "herewith" and words of
similar import shall, unless otherwise stated, be construed to refer to this
Agreement as a whole and not to any particular provision of this Agreement, and
Section, paragraph or other references are to the Sections, paragraphs, or other
references to this Agreement unless otherwise specified, (iii) the word
"including" and words of similar import when used in this Agreement shall mean
"including, without limitation," unless the context otherwise requires or unless
otherwise specified, (iv) the word "or" shall not be exclusive, and (v)
provisions shall apply, when appropriate, to successive events and transactions.
This Agreement shall be construed without regard to any presumption or
rule requiring construction or interpretation against the party drafting or
causing any instrument to be drafted.
16
20
(j) Severability. Any provision hereof which is invalid or
unenforceable shall be ineffective to the extent of such invalidity or
unenforceability, without affecting in any way the remaining provisions hereof.
[SIGNATURE PAGE FOLLOWS]
17
21
IN WITNESS WHEREOF, this Agreement has been signed by or on
behalf of each of the parties hereto as of the day first above written.
COMPANY:
PRISON REALTY CORPORATION
By: /s/ Doctor X. Xxxxxx
------------------------------------------------
Name: Doctor X. Xxxxxx
Title: Chief Executive Officer
Address: 00 Xxxxxx Xxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000
INVESTOR:
MDP VENTURES IV LLC, a New York limited liability
company
By: MDP Ventures II LLC, its sole member
By: Millennium Development Partners L.P., its
managing member
By: Millennium Development Associates,
L.P., its general partner
By: Millennium Development Corp., its
general partner
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------
Name: Xxxxx X. Xxxxxxx
Title: Vice President
Address: c/o Millennium Partners
0000 Xxxxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
18
