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EXHIBIT 1.1
FORM OF SALES AGENCY AGREEMENT
PRISON REALTY CORPORATION
SALES AGENCY AGREEMENT
STRUCTURED EQUITY SHELF PROGRAM
___________ SHARES (COMMON STOCK, $0.01 PAR VALUE PER SHARE)
________ __, 1999
[ADDRESSEE]
Dear ____________:
Prison Realty Corporation, a Maryland corporation (the "Company"),
confirms its agreement with ________________________ (the "Agent"), as follows:
ARTICLE I
DESCRIPTION OF SECURITIES
The Company proposes to issue and sell through the Agent, as sales agent,
up to _________ of the shares of common stock (the "Maximum Amount"), $0.01 par
value per share, of the Company (the "Shares"), on the terms set forth in
Article III below.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to, and agrees with, the Agent that:
(a) The Company meets the requirements for use of Form S-3 under the
Securities Act of 1933, as amended (the "Securities Act"), and the rules and
regulations thereunder (the "Rules and Regulations"). A registration statement
on Form S-3 (Registration Nos. 333-_____) with respect to, among other
securities, the Shares, including a form of prospectus, has been prepared by the
Company in conformity with the requirements of the Securities Act and the Rules
and Regulations and filed with the Securities and Exchange Commission (the
"Commission") and has become effective. Such registration statement and
prospectus may have been amended or supplemented prior to the date of this
Agreement. Any such amendment or supplement was so prepared and filed, and any
such amendment or supplement filed after the effective date of such
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registration statement has become effective. No stop order suspending the
effectiveness of the registration statement has been issued, and no proceeding
for that purpose has been instituted or threatened by the Commission. Copies of
such registration statement and prospectus and any such amendment or supplement
and all documents incorporated by reference therein that were filed with the
Commission on or prior to the date of this Agreement have been delivered to the
Agent. Such registration statement, as it may have heretofore been amended, is
referred to herein as the "Registration Statement," and the final form of
prospectus included in the Registration Statement, as amended or supplemented
from time to time, is referred to herein as the "Prospectus." Any reference
herein to the Registration Statement, the Prospectus, or any amendment or
supplement thereto shall be deemed to refer to and include the documents
incorporated (or deemed to be incorporated) by reference therein, and any
reference herein to the terms "amend," "amendment" or "supplement" with respect
to the Registration Statement or Prospectus shall be deemed to refer to and
include the filing after the execution hereof of any document with the
Commission deemed to be incorporated by reference therein.
(b) Each part of the Registration Statement, when such part became or
becomes effective, and the Prospectus and any amendment or supplement thereto,
on each Filing Date (as hereinafter defined), conformed or will conform in all
material respects with the requirements of the Securities Act and the Rules and
Regulations; each part of the Registration Statement, when such part became or
becomes effective, did not or will not contain 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; and the Prospectus and any
amendment or supplement thereto, on each Filing Date, did not or will not
include an untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; except that the foregoing shall not
apply to statements in or omissions from any such document in reliance upon, and
in conformity with, written information furnished to the Company by or on behalf
of the Agent, specifically for use in the Registration Statement, the Prospectus
or any amendment or supplement thereto.
(c) The documents incorporated by reference in the Registration
Statement or the Prospectus, or any amendment or supplement thereto, when they
became or become effective under the Securities Act or were or are filed with
the Commission under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as the case may be, conformed or will conform in all material
respects with the requirements of the Securities Act or the Exchange Act, as
applicable, and the rules and regulations of the Commission thereunder.
(d) The financial statements of the Company and its subsidiaries,
together with the related notes and schedules, set forth or incorporated by
reference in the Registration Statement and Prospectus fairly present the
financial condition and the results of operations and cash flows of the Company
and its subsidiaries as of the dates indicated or for the periods therein
specified and were prepared in conformity with generally accepted accounting
principles consistently applied throughout the periods involved (except as
otherwise stated therein).
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(e) The Company has been duly formed and is validly existing as a
corporation in good standing under the laws of the State of Maryland with power
and authority to own, lease and operate its properties and to conduct its
business as described in the Registration Statement and Prospectus; and the
Company is duly qualified to transact business and is in good standing in each
jurisdiction in which the laws of such jurisdiction require such qualification,
except where the failure to so qualify and be in good standing, considering all
such cases in the aggregate, would not have a material adverse effect on the
condition, financial or otherwise, or the earnings, business affairs or business
prospects of the Company and its subsidiaries considered as one enterprise.
(f) Each significant subsidiary (as defined in Section 1-02 of
Regulation S-X) of the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the jurisdiction of
its incorporation, has power and authority to own, lease and operate its
properties and conduct its business and is duly qualified to transact business
and is in good standing in each jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure to so qualify and be in good
standing would not have a material adverse effect on the condition, financial or
otherwise, or the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise; and all of the issued
and outstanding capital stock (or other equity interests) of each subsidiary has
been duly authorized and validly issued, is fully paid and nonassessable.
(g) The outstanding common stock of the Company and the Shares have
been duly authorized and are, or when issued as contemplated hereby will be,
validly issued, fully paid and nonassessable and conform, or when so issued will
conform, to the description thereof in the Prospectus. The shareholders of the
Company have no preemptive rights with respect to the Shares.
(h) Except as contemplated in the Prospectus, subsequent to the
respective dates as of which information is given in the Registration Statement
and the Prospectus, neither the Company nor any of its subsidiaries has incurred
any liabilities or obligations, direct or contingent, or entered into any
transactions, not in the ordinary course of business, that are material to the
Company and its subsidiaries considered as a whole, and there has not been any
material change in the capital shares, short-term debt or long-term debt of the
Company and its subsidiaries, or any material change, or any development
involving a prospective material change, in the condition, financial or
otherwise, or the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise.
(i) Except as set forth in the Prospectus, there is not pending or, to
the knowledge of the Company, threatened any action, suit or proceeding to which
the Company or any of its subsidiaries is a party, before or by any court or
governmental agency or body, that could reasonably be expected to result in any
material adverse change in the condition, financial or otherwise, or the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, or that could reasonably be expected
to materially and adversely affect the properties or assets thereof considered
as a whole.
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(j) There are no contracts or documents of the Company or any of its
subsidiaries that are required to be filed as exhibits to the Registration
Statement or to any of the documents incorporated by reference therein by the
Securities Act or the Exchange Act or by the rules and regulations of the
Commission thereunder that have not been so filed.
(k) All necessary action has been duly and validly taken by the Company
to authorize the execution, delivery and performance of this Agreement. This
Agreement has been duly and validly authorized, executed and delivered by the
Company and constitutes the legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and by general equitable principles.
(l) The performance of this Agreement and the consummation of the
transactions contemplated herein will not result in a breach or violation of any
of the terms and provisions of, or constitute a default under with giving of
notice or lapse of time or both, any agreement or instrument to which the
Company or any of its subsidiaries is a party or by which it is bound or to
which any of the property of the Company or any of its subsidiaries is subject
except for such breaches or defaults that would not in the aggregate have a
material adverse effect on the Company's ability to perform its obligations
under this Agreement or on the condition, financial or otherwise, or the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, nor will such action result in the
violation of the Company's declaration of trust or by-laws, or any statute or
any order, rule or regulation of any court or governmental agency or body having
jurisdiction over the Company or any of its subsidiaries or any of its
properties; no consent, approval, authorization or order of, or filing with, any
court or governmental agency or body is required for the consummation by the
Company of the transactions contemplated by this Agreement, except such as may
be required by state securities or blue sky laws.
(m) Each of the Company and its subsidiaries has (i) good and
indefeasible title to all of the properties and assets described in the
Prospectus as owned by it, free and clear of all liens, charges, encumbrances or
restrictions, except such as are described in the Prospectus or are not material
to the business, condition, financial or otherwise, or the earnings, business
affairs or business prospects of the Company and its subsidiaries considered as
one enterprise, (ii) peaceful and undisturbed possession under all material
leases to which it is party as lessee, (iii) all governmental or regulatory
licenses, certificates, permits, authorizations, approvals, franchises or other
rights necessary to engage in the business currently conducted by it, except
such as are not material to the business, condition, financial or otherwise, or
the earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, (iv) no reason to believe that any
governmental body or agency is considering limiting, suspending or revoking any
such license, certificate, permit, authorization, approval, franchise or right
and (v) not received any notice of and has no reason to believe that any
governmental body or agency is considering enacting, amending or repealing any
statute, law, ordinance or regulation required to be described in the
Registration Statement and Prospectus that is not so described as required. All
material leases to which the
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Company or any of its subsidiaries is a party are valid and binding and no
default has occurred and is continuing thereunder, and, to the best knowledge of
the Company, no material defaults by the landlord are existing under any such
leases.
(n) Each of the Company and its subsidiaries owns or possesses all of
the patents, patent rights, licenses, inventions, copyrights, know-how
(including trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), trademarks, service marks and
trade names presently employed by them in connection with the business now
operated by them, and neither the Company nor any of its subsidiaries has
received any notice of infringement of or conflict with asserted rights of
others with respect to any of the foregoing which, if singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding, would
result in any material adverse change in the condition, financial or otherwise,
or in the earnings, business affairs or business prospects of the Company and
its subsidiaries considered as one enterprise.
(o) The Company and its subsidiaries have not violated and, to its
knowledge, are in compliance in all material respects with all material laws,
statutes, ordinances, regulations, rules and orders of any foreign, federal,
state or local government and any other governmental department or agency, and
any judgment, decision, decree or order of any court or governmental agency,
department or authority, including, without limitation, environmental laws.
Neither the Company nor any of its subsidiaries has received any notice to the
effect that, or otherwise been advised that, it is not in compliance with any
such statutes, regulations, rules, judgments, decrees, orders, ordinances or
other laws, and the Company is not aware of any existing circumstances which are
likely to result in material violations of any of the foregoing.
(p) The Company is organized in conformity with the requirements for
qualification as, and operates in a manner that qualifies the Company as, a real
estate investment trust under the Internal Revenue Code of 1986, as amended (the
"Code"), and the rules and regulations thereunder and will be so qualified after
consummation of the transaction contemplated by this Agreement.
ARTICLE III
SALE AND DELIVERY OF SECURITIES
3.1. SALE AND DELIVERY OF SECURITIES. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Company agrees to issue and sell
through the Agent, as non-exclusive sales agent, and the Agent agrees to sell,
as non-exclusive sales agent for the Company, on a best efforts basis, up to the
Maximum Amount of Shares on the terms set forth herein.
The Shares, up to the Maximum Amount, are to be sold on a daily basis
or otherwise as shall be agreed to by the Company and the Agent. The Company
will designate the maximum amount
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of Shares to be sold by the Agent daily as reasonably agreed to by the Agent and
in any event not in excess of the amount available for issuance under the
currently effective Registration Statement. Subject to the terms and conditions
hereof, the Agent shall use its best efforts to sell all of the designated
Shares up to the Maximum Amount.
Notwithstanding the foregoing the Company may instruct the Agent by
telephone (confirmed promptly by telecopy) not to sell Shares if such sales
cannot be effected at or above the price designated by the Company in any such
instruction; furthermore, the Company shall not authorize the issuance and sale
of, and the Agent shall not be obligated to use its best efforts to sell, any
Shares at a price lower than the minimum price therefor designated from time to
time by the Company and notified to the Agent in writing. In addition, the
Company or the Agent may, upon notice to the other party hereto by telephone
(confirmed promptly by telecopy), suspend the offering of the Shares; provided,
however, that such suspension or termination shall not affect or impair the
parties' respective obligations with respect to the Shares sold hereunder prior
to the giving of such notice.
If either party has reason to believe that the exemptive provisions set
forth in Rule 101(c)(1) of Regulation M under the Exchange Act, are not
satisfied with respect to the Shares, the amount of the Shares that may be sold
on any day pursuant to this Agreement and any other sales agency agreement shall
not exceed 10% of the average daily trading volume of the Shares for the sixty
days prior to such day (provided, that any Shares purchased by the Agent as
principal during such period shall not be included in the calculation of trading
volume). Unless otherwise agreed by the Company and the Agent, the Agent shall
sell the Shares only by means of ordinary brokers' transactions on the New York
Stock Exchange (the "NYSE"). Unless otherwise agreed to by the Company and the
Agent, the Agent shall not solicit or arrange for the solicitation of customer's
orders in anticipation of or in connection with such transactions, nor shall it
sell short as principal Shares of the Company, except in connection with
customary market making activities in the Company's outstanding securities. The
Agent shall not engage in any special selling efforts or selling methods
relating to the Shares within the meaning of Rule 100 of Regulation M under the
Exchange Act. The Agent shall calculate on a weekly basis the average daily
trading volume of the Shares.
The compensation to the Agent for sales of Shares shall be ____ of the
gross sales price of the Shares sold, in the form of a commission. The remaining
proceeds, after further deduction for any transaction fees imposed by any
governmental or self-regulatory organization in respect of such sales, shall
constitute the net proceeds to the Company for such Shares (the "Net Proceeds").
The Agent shall provide written confirmation to the Company following
the close of trading on the NYSE each day in which Shares are sold under this
Agreement setting forth the amount of Shares sold on such day, the Net Proceeds
to the Company, and the compensation payable by the Company to the Agent with
respect to such sales.
Settlement for sales of Shares will occur on the third business day
following the date on which such sales are made (each such day, a "Settlement
Date"). On each Settlement Date, the
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Shares sold through the Agent for settlement on such date shall be delivered by
the Company to the Agent against payment of the Net Proceeds for the sale of
such Shares. Settlement for all Shares shall be effected by free delivery of
Shares to the Agent's account at The Depository Trust Corporation in return for
payments in same day funds delivered to the account designated by the Company.
If the Company shall default on its obligation to deliver Shares on any
Settlement Date, the Company shall (i) hold the Agent harmless against any loss,
claim or damage arising from or as a result of such default by the Company and
(ii) pay the Agent any commission to which it would otherwise be entitled absent
such default. If the Agent breaches this Agreement by failing to deliver
proceeds on any Settlement Date for Shares delivered by the Company, the Agent
will pay the Company interest based on the effective overnight Federal Funds
rate.
At each Settlement Date, the Company shall be deemed to have affirmed
each representation, warranty, covenant and other agreement contained in this
Agreement, and on each Filing Date (as defined below), the Company shall affirm
in writing each representation, warranty, covenant and other agreement contained
in this Agreement. The Company covenants and agrees with the Agent that on or
prior to the second business day after the end of each calendar week during
which sales of Shares were made by the Agent (each such week a "Reporting
Period"), the Company will (i) file a prospectus supplement with the Commission
under the applicable paragraph of Rule 424(b) (each a "Filing Date"), which
prospectus supplement will set forth, with regard to such Reporting Period, the
dates included within the Reporting Period, the amount of Shares sold through
the Agent, the Net Proceeds to the Company and the compensation payable by the
Company to the Agent with respect to sales of Shares pursuant to this Agreement
(all as provided in writing by the Agent for inclusion in each such prospectus
supplement) and (ii) deliver such number of copies of each such prospectus
supplement to the NYSE as are required by the NYSE. Any obligation of the Agent
to use its best efforts to sell the Shares shall be subject to the continuing
accuracy of the representations and warranties of the Company herein, to the
performance by the Company of its obligations hereunder and to the continuing
satisfaction of the additional conditions specified in Article V of this
Agreement.
ARTICLE IV
COVENANTS OF THE COMPANY
4.1. COVENANTS OF THE COMPANY. The Company covenants and agrees with
the Agent and the Company that:
(a) During the period in which a prospectus relating to the Shares is
required to be delivered under the Securities Act, the Company will notify the
Agent promptly of the time when any subsequent amendment to the Registration
Statement has become effective or any subsequent supplement to the Prospectus
has been filed and of any request by the Commission for any amendment or
supplement to the Registration Statement or Prospectus or for additional
information; it will prepare and file with the Commission, promptly upon the
Agent's request, any amendments or supplements to the Registration Statement or
Prospectus that, in the Agent's reasonable opinion,
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may be necessary or advisable in connection with the distribution of the Shares
by the Agent; and the Company will furnish to the Agent at the time of filing
thereof a copy of any document that upon filing is deemed to be incorporated by
reference in the Registration Statement or Prospectus; and the Company will
cause each amendment or supplement to the Prospectus to be filed with the
Commission as required pursuant to the applicable paragraph of Rule 424(b) of
the Rules and Regulations or, in the case of any document to be incorporated
therein by reference, to be filed with the Commission as required pursuant to
the Exchange Act, within the time period prescribed.
(b) The Company will advise the Agent, promptly after it shall receive
notice or obtain knowledge thereof, of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement, of the
suspension of the qualification of the Shares for offering or sale in any
jurisdiction, or of the initiation or threatening of any proceeding for any such
purpose; and it will promptly use its best efforts to prevent the issuance of
any stop order or to obtain its withdrawal if such a stop order should be
issued.
(c) Within the time during which a prospectus relating to the Shares is
required to be delivered under the Securities Act, the Company will comply as
far as it is able with all requirements imposed upon it by the Securities Act
and by the Rules and Regulations, as from time to time in force, so far as
necessary to permit the continuance of sales of or dealings in the Shares as
contemplated by the provisions hereof and the Prospectus. If during such period
any event occurs as a result of which the Prospectus as then amended or
supplemented or any document that is deemed to be incorporated by reference in
the Prospectus would include an untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in the light of
the circumstances then existing, not misleading, or if during such period it is
necessary to amend or supplement the Registration Statement or Prospectus or any
document that is deemed to be incorporated by reference in the Registration
Statement or Prospectus to comply with the Securities Act, the Company will
promptly notify the Agent to suspend the offering of Shares during such period
and the Company will amend or supplement the Registration Statement or
Prospectus or any document that is deemed to be incorporated by reference in the
Registration Statement or Prospectus (at the expense of the Company, unless the
misstatements or omissions in question were made solely in reliance or written
information furnished to the Company by the Agent expressly for use in the
Registration Statement or Prospectus, in which case such amendment or supplement
shall be at the expense of the Agent) so as to correct such statement or
omission or effect such compliance.
(d) The Company will use its best efforts to qualify the Shares for
sale under the securities laws of such jurisdictions as the Agent designates and
to continue such qualifications in effect so long as required for the
distribution of the Shares, except that the Company shall not be required in
connection therewith to qualify as a foreign entity or to execute a general
consent to service of process in any jurisdiction.
(e) The Company will furnish to the Agent and its counsel (at the
expense of the Company) copies of the Registration Statement, the Prospectus
(including all documents incorporated by reference therein) and all amendments
and supplements to the Registration Statement or Prospectus
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that are filed with the Commission during the period in which a prospectus
relating to the Shares is required to be delivered under the Securities Act
(including all documents filed with the Commission during such period that are
deemed to be incorporated by reference therein), in each case as soon as
available and in such quantities as the Agent may from time to time reasonably
request and, in the case when the Trading Market is a national securities
exchange, the Company will also furnish copies of the Prospectus to such
exchange in accordance with Rule 153 of the Rules and Regulations.
(f) The Company will make generally available to its security holders
as soon as practicable, but in any event not later than 15 months after the end
of the Company's current fiscal quarter, an earnings statement (which need not
be audited) covering a 12-month period that satisfies the provisions of Section
11(a) of the Act and Rule 158 of the Rules and Regulations.
(g) The Company, whether or not the transactions contemplated hereunder
are consummated or this Agreement is terminated, will pay all of its expenses
incident to the performance of its obligations hereunder (including, but not
limited to, any transaction fees imposed by any governmental or self-regulatory
organization with respect to transactions contemplated by this Agreement and any
blue sky fees) and will pay the expenses of printing all documents relating to
the offering. The Agent will pay its own out-of-pocket costs and expenses
incurred in connection with the entering into of this Agreement and the
transaction contemplated by this Agreement, and including, without limitation,
travel, reproduction, printing and similar expenses, as well as the fees and
disbursements of its legal counsel.
(h) The Company will not, directly or indirectly, offer or sell any
Shares or securities convertible into or exchangeable for, or any rights to
purchase or acquire, Shares during the period from the date of this Agreement
through the final Filing Date for the sale of Shares hereunder without (a)
giving the Agent at least three business days' prior written notice specifying
the nature of the proposed sale and the date of such proposed sale and (b)
suspending activity under this program for such period of time as may be
determined by the Company in its sole discretion; provided, however, that no
such notice and suspension shall be required in connection with the Company's
issuance or sale of (i) Shares pursuant to any employee or trustee share option
or benefits plan, share ownership plan, dividend reinvestment or share purchase
plan now in effect as such plans may be amended from time to time, (ii) Shares
issuable upon conversion of securities or the exercise of warrants, options or
other rights in effect or outstanding on the date hereof, and (iii) Shares to
institutional investors in privately negotiated transactions pursuant to the
Registration Statement.
(i) The Company will, at any time during the term of this Agreement, as
supplemented from time to time, advise the Agent immediately after it shall have
received notice or obtain knowledge thereof, of any information or fact that
would alter or affect any opinion, certificate, letter and other document
provided to the Agent pursuant to Article V herein.
(j) Each time that (i) the Registration Statement or the Prospectus
shall be amended or supplemented (other than a supplement filed pursuant to Rule
424(b) under the Securities Act that contains solely the information set forth
in the final paragraph of Article III of this Agreement) or
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(ii) there is filed with the Commission any documents incorporated by reference
into the Prospectus (other than any Quarterly Report on Form 10-Q or a Current
Report on Form 8-K unless the Agent shall otherwise reasonably request), the
Company shall furnish or cause to be furnished to the Agent forthwith a
certificate dated the date of filing with the Commission of such amendment,
supplement or other document, the date of effectiveness of such amendment, as
the case may be, in form satisfactory to the Agent to the effect that the
statements contained in the certificate referred to in Section 5.1(e) hereof
which were last furnished to the Agent are true and correct at the time of such
amendment, supplement, or filing, as the case may be, as though made at and as
of such time (except that such statements shall be deemed to relate to the
Registration Statement and the Prospectus as amended and supplemented to such
time) or, in lieu of such certificate, a certificate of the same tenor as the
certificate referred to in said Section 5.1(f), modified as necessary to relate
to the Registration Statement and the Prospectus as amended and supplemented to
the time of delivery of such certificate.
(k) Each time that (i) the Registration Statement or the Prospectus is
amended or supplemented (other than a supplement filed pursuant to Rule 424(b)
under the Securities Act that contains solely the information set forth in the
final paragraph of Article III of this Agreement) or (ii) there is filed with
the Commission any documents incorporated by reference into the Prospectus other
than any Quarterly Report on Form 10-Q or a Current Report on Form 8-K, unless
the Agent shall otherwise reasonably request, the Company shall furnish or cause
to be furnished forthwith to the Agent and to counsel to the Agent a written
opinion of Xxxxxx & Xxxxxxxxxxx, P.A., counsel to the Company (the "Company
Counsel"), dated the date of filing with the Commission of such amendment,
supplement or other document and the date of effectiveness of such amendment, as
the case may be, in form and substance satisfactory to the Agent, of the same
tenor as the opinion referred to in Section 5.1(d) hereof, but modified as
necessary to relate to the Registration Statement and the Prospectus as amended
and supplemented to the time of delivery of such opinion.
(l) Each time that the Registration Statement or the Prospectus shall
be amended or supplemented to include additional amended financial information
or there is filed with the Commission any document incorporated by reference
into the Prospectus which contains additional amended financial information, the
Company shall cause Xxxxxx Xxxxxxxx, L.L.P., or other independent accountants
satisfactory to the Agent, forthwith to furnish the Agent a letter, dated the
date of effectiveness of such amendment, or the date of filing of such
supplement or other document with the Commission, as the case may be, in form
satisfactory to the Agent, of the same tenor as the letter referred to in
Section 5.1(e) hereof but modified to relate to the Registration Statement and
the Prospectus, as amended and supplemented to the date of such letter.
(m) The Company hereby consents to the Agent trading in the Company's
Shares for its own account on the same side of the market and at the same time
as the Company's sale pursuant to this Agreement.
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ARTICLE V
CONDITIONS OF THE AGENT'S OBLIGATIONS
5.1. CONDITIONS OF AGENT'S OBLIGATIONS. The obligations of the Agent to
sell the Shares as provided herein shall be subject to the accuracy, as of the
date hereof, and as of each Settlement Date, of the representations and
warranties of the Company herein, to the performance by the Company of its
obligations hereunder and to the following additional conditions:
(a) No stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceeding for that purpose shall have
been instituted or, to the knowledge of the Company or the Agent, threatened by
the Commission, and any request of the Commission for additional information (to
be included in the Registration Statement or the Prospectus or otherwise) shall
have been complied with to the Agent's satisfaction.
(b) The Agent shall not have advised the Company that the Registration
Statement or Prospectus, or any amendment or supplement thereto, contains an
untrue statement of fact that in the Agent's reasonable opinion is material, or
omits to state a fact that in the Agent's reasonable opinion is material and is
required to be stated therein or is necessary to make the statements therein not
misleading.
(c) Except as contemplated in the Prospectus, subsequent to the
respective dates as of which information is given in the Registration Statement
and the Prospectus, there shall not have been any material change, on a
consolidated basis, in the capital shares of the Company and its subsidiaries,
or any material adverse change, or any development that may reasonably be
expected to cause a material adverse change, in the condition (financial or
other), business, prospects, net worth or results of operations of the Company
and its subsidiaries.
(d) The Agent shall have received at every date specified in Section
4.1(l) hereof, opinions of Company Counsel, dated as of such date, to the effect
that:
(i) The Company has been duly formed and is validly existing
as a real estate investment trust in good standing under the laws of
its jurisdiction of formation, has full power and authority to conduct
its business as described in the Registration Statement and Prospectus
and is duly qualified to do business in each jurisdiction set forth on
a schedule thereto; to their knowledge, such jurisdictions are the only
jurisdictions in which the Company's ownership or leasing of real
property or conduct of its business requires such qualification;
(ii) Each subsidiary of the Company has been duly incorporated
or formed and is validly existing as a corporation (or partnership or
real estate investment trust, as the case may be) in good standing
under the laws of the jurisdiction of its incorporation or formation,
has power and authority to own, lease and operate its properties and
conduct its business as
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described in the Registration Statement and Prospectus, and all of the
issued outstanding capital stock (or other equity interests) of each
such subsidiary has been duly authorized and validly issued, is fully
paid and nonassessable, and free and clear of any mortgage, pledge,
lien, encumbrance, claim or equity;
(iii) The Shares have been duly and validly authorized, and,
when issued and delivered to and paid for by the purchasers thereof
pursuant to this Agreement, will be fully paid and nonassessable and
conform to the description thereof in the Prospectus; and the
shareholders of the Company have no preemptive rights with respect to
the Shares; all corporate action required to be taken for the
authorization, issuance and sale of the Shares have been validly and
sufficiently taken; and the Shares are the subject of an effective
registration statement permitting their sale in the manner contemplated
by this Agreement;
(iv) The Registration Statement has become effective under the
Securities Act; to the knowledge of such counsel no stop order
suspending the effectiveness of the Registration Statement has been
issued and no proceeding for that purpose has been instituted or
threatened by the Commission;
(v) This Agreement has been duly authorized, executed and
delivered by the Company;
(vi) The execution, delivery and performance of this Agreement
by the Company and the consummation of the transactions contemplated
herein by the Company do not and will not result in a breach or
violation of any of the terms and provisions of, or constitute a
default under, any agreement or instrument known to such counsel to
which the Company or any of its subsidiaries is a party or by which it
is bound or to which any of the property of the Company or any of its
subsidiaries is subject except for such breaches or defaults that would
not in the aggregate have a material adverse effect on the Company's
ability to perform its obligations under this Agreement or on the
condition, financial or otherwise, or the earnings business affairs or
business prospects of the Company and its subsidiaries considered as
one enterprise, nor will such action result in the violation of the
Company's declaration of trust or by-laws, or any statute or any order,
rule or regulation known to such counsel of any court or governmental
agency or body having jurisdiction over the Company or any of its
subsidiaries or any of its properties; and no consent, approval,
authorization or order of, or filing with, any court or governmental
agency or body is required for the consummation of the transactions
contemplated by this Agreement in connection with the issuance or sale
of the Shares by the Company, except such as have been obtained under
the Act and such as may be required under state securities or blue sky
laws in connection with the sale and distribution of the Shares by the
Agent;
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(vii) Except for permits and similar authorizations required
under the securities or blue sky laws of certain states, no consent,
waiver, approval, authorization or other order of any regulatory body,
administrative agency or other governmental body is legally required
for the sale of the Shares by the Agent as contemplated hereby and by
the Prospectus;
(viii) Such counsel knows of no actions, suits or proceedings
pending or threatened against or affecting the Company or any of its
subsidiaries or the business, properties, business prospects, condition
(financial or otherwise) or results of operations of the Company or any
of its subsidiaries, or any of their respective officers in their
capacities as such, before or by any Federal or state or foreign court,
commission, regulatory body, wherein an unfavorable ruling, decision or
finding might materially and adversely affect the Company or any of its
subsidiaries or its business, properties, business prospects, condition
(financial or otherwise) or results of operations; and
(ix) The Company will be able to qualify as a REIT for
the taxable year beginning January 1, 1998, provided that after the
date hereof, the Company continues to be organized and operated as
described in the Registration Statement and according to
representations made to us in a certificate of an officer of the
Company and therefore continues to satisfy the income tests, and
distribution, shareholder, recordkeeping and other applicable REIT
requirements under the Code. The information presented in the
Registration Statement under the caption "Material Federal Income Tax
Consequences," to the extent it constitutes matters of law or legal
conclusions, is accurate in all material respects.
(e) The Agent shall have received from the Company a certificate, or
certificates, signed by the Chairman of the Board, the President, or the Chief
Operating Officer and by the principal financial or accounting officer of the
Company, dated as of the first business day following each Filing Date (each a
"Certificate Date"), to the effect that, to the best of their knowledge based
upon reasonable investigation:
(i) The representations and warranties of the Company in this
Agreement are true and correct, as if made at and as of the Certificate
Date, and the Company has complied with all the agreements and
satisfied all the conditions on its part to be performed or satisfied
at or prior to each such Certificate Date;
(ii) No stop order suspending the effectiveness of the
Registration Statement has been issued, and no proceeding for that
purpose has been instituted or, to the knowledge of such officer after
due inquiry, is threatened, by the Commission;
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(iii) Since the date of this Agreement there has occurred no
event required to be set forth in an amendment or supplement to the
Registration Statement or Prospectus that has not been so set forth and
there has been no document required to be filed under the Exchange Act
and the rules and regulations of the Commission thereunder that upon
such filing would be deemed to be incorporated by reference in the
Prospectus that has not been so filed; and
(iv) Since the date of this Agreement, there has not been any
material adverse change, on a consolidated basis, in the business,
financial condition or results of operations of the Company and its
subsidiaries considered as one enterprise which has not been described
in an amendment or supplement to the Registration Statement or
Prospectus (directly or by incorporation).
In addition, on each Certificate Date the certificate shall also state
that the Shares to be sold on that date have been duly and validly authorized by
the Company and that all corporate action required to be taken for the
authorization, issuance and sale of such Shares had been validly and
sufficiently taken.
ARTICLE VI
INDEMNIFICATION AND CONTRIBUTION
6.1.(a) The Company agrees to indemnify and hold harmless the Agent and
each person, if any, who controls the Agent within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act, as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto), or the omission or
alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein not misleading or
arising out of any untrue statement or alleged untrue statement of a
material fact contained in any preliminary prospectus or the Prospectus
(or any amendment or supplement thereto) or the omission or alleged
omission therefrom of a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened,
or of any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, if such
settlement is effected with the written consent of the Company; and
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(iii) against any and all expense whatsoever, as incurred
(including, subject to Section 6(c) hereof, the reasonable fees and
disbursements of counsel chosen by the Agent), reasonably incurred in
investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid under (i) or
(ii) above;
PROVIDED, HOWEVER, that this indemnity agreement shall not apply to any
loss, liability, claim, damage or expense to the extent arising out of any
untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with written information furnished to the
Company by the Agent expressly for use in the Registration Statement (or any
amendment thereto) or any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto).
(b) The Agent agrees to indemnify and hold harmless the Company and its
trustees and each officer of the Company who signed the Registration Statement,
and each person, if any, who controls the Company within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act against any and all
loss, liability, claim, damage and expense described in the indemnity contained
in subsection (a) of this Article, as incurred, but only with respect to untrue
statements or omissions, or alleged untrue statements or omissions, made in the
Registration Statement (or any amendments thereto) or any preliminary prospectus
or the Prospectus (or any amendment or supplement thereto) in reliance upon and
in conformity with written information furnished to the Company by the Agent
expressly for use in the Registration Statement (or any amendment thereto) or
such preliminary prospectus or the Prospectus (or any amendment or supplement
thereto).
(c) Any indemnified party that proposes to assert the right to be
indemnified under this Article VI will, promptly after receipt of notice of
commencement of any action against such party in respect of which a claim is to
be made against an indemnifying party or parties under this Article VI, notify
each such indemnifying party of the commencement of such action, enclosing a
copy of all papers served, but the omission so to notify such indemnifying party
will not relieve the indemnifying party from (i) any liability that it might
have to any indemnified party otherwise than under this Article VI and (ii) any
liability that it may have to any indemnified party under the foregoing
provision of this Article VI unless, and only to the extent that, such omission
results in the forfeiture of substantive rights or defenses by the indemnifying
party. If any such action is brought against any indemnified party and it
notifies the indemnifying party of its commencement, the indemnifying party will
be entitled to participate in and, to the extent that it elects by delivering
written notice to the indemnified party promptly after receiving notice of the
commencement of the action from the indemnified party, jointly with any other
indemnifying party similarly notified, to assume the defense of the action, with
counsel satisfactory to the indemnified party, and after notice from the
indemnifying party to the indemnified party of its election to assume the
defense, the indemnifying party will not be liable to the indemnified party for
any legal or other expenses except as provided below and except for the
reasonable costs of investigation subsequently incurred by the
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indemnified party in connection with the defense. The indemnified party will
have the right to employ its own counsel in any such action, but the fees,
expenses and other charges of such counsel will be at the expense of such
indemnified party unless (1) the employment of counsel by the indemnified party
has been authorized in writing by the indemnifying party, (2) the indemnified
party has reasonably concluded (based on advice of counsel) that there may be
legal defenses available to it or other indemnified parties that are different
from or in addition to those available to the indemnifying party, (3) a conflict
or potential conflict exists (based on advice of counsel to the indemnified
party) between the indemnified party and the indemnifying party (in which case
the indemnifying party will not have the right to direct the defense of such
action on behalf of the indemnified party) or (4) the indemnifying party has not
in fact employed counsel to assume the defense of such action within a
reasonable time after receiving notice of the commencement of the action, in
each of which cases the reasonable fees, disbursements and other charges of
counsel will be at the expense of the indemnifying party or parties. It is
understood that the indemnifying party or parties shall not, in connection with
any proceeding or related proceedings in the same jurisdiction, be liable for
the reasonable fees, disbursements and other charges of more than one separate
firm admitted to practice in such jurisdiction at any one time for all such
indemnified party or parties. All such fees, disbursements and other charges
will be reimbursed by the indemnifying party promptly as they are incurred. An
indemnifying party will not be liable for any settlement of any action or claim
effected without its written consent (which consent will not be unreasonably
withheld).
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in the foregoing
paragraphs of this Article VI is applicable in accordance with its terms but for
any reason is held to be unavailable from the Company or the Agent, the Company
and the Agent will contribute to the total losses, claims, liabilities, expenses
and damages (including any investigative, legal and other expenses reasonably
incurred in connection with, and any amount paid in settlement of, any action,
suit or proceeding or any claim asserted, but after deducting any contribution
received by the Company from persons other than the Agent, such as persons who
control the Company within the meaning of the Securities Act, officers of the
Company who signed the Registration Statement and trustees of the Company, who
also may be liable for contribution) to which the Company and the Agent may be
subject in such proportion as shall be appropriate to reflect the relative
benefits received by the Company on the one hand and the Agent on the other. The
relative benefits received by the Company on the one hand and the Agent on the
other hand shall be deemed to be in the same proportion as the total net
proceeds from the offering (before deducting expenses) received by the Company
bear to the total compensation (before deducting expenses) received by the Agent
from the sale of Shares on behalf of the Company. If, but only if, the
allocation provided by the foregoing sentence is not permitted by applicable
law, the allocation of contribution shall be made in such proportion as is
appropriate to reflect not only the relative benefits referred to in the
foregoing sentence but also the relative fault of the Company, on the one hand,
and the Agent, on the other, with respect to the statements or omission which
resulted in such loss, claim, liability, expense or damage, or action in respect
thereof, as well as any other relevant equitable considerations with respect to
such offering. Such relative fault shall be determined by reference to whether
the untrue or alleged untrue statement of
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a material fact or omission or alleged omission to state a material fact relates
to information supplied by the Company or the Agent, the intent of the parties
and their relative knowledge, access to information and opportunity to correct
or prevent such statement or omission. The Company and the Agent agree that it
would not be just and equitable if contributions pursuant to this Article VI
were to be determined by pro rata allocation or by any other method of
allocation which does not take into account the equitable considerations
referred to herein. The amount paid or payable by an indemnified party as a
result of the loss, claim, liability, expense or damage, or action in respect
thereof, referred to above in this Article VI shall be deemed to include, for
the purpose of this Article VI, any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the foregoing provisions of this Article VI,
the Agent shall not be required to contribute any amount in excess of the amount
by which the total actual sales price at which Shares sold by the Agent exceeds
the amount of any damages that the Agent has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission and no person found guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) will be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation. For
purposes of this Article VI, any person who controls a party to this Agreement
within the meaning of the Act will have the same rights to contribution as that
party, and each officer of the Company who signed the Registration Statement
will have the same rights to contribution as the Company, subject in each case
to the provisions hereof. Any party entitled to contribution, promptly after
receipt of notice of commencement of any action against such party in respect of
which a claim for contribution may be made under this Article VI, will notify
any such party or parties from whom contribution may be sought, but the omission
so to notify will not relieve that party or parties from whom contribution may
be sought from any other obligation it or they may have under this Article VI.
No party will be liable for contribution with respect to any action or claim
settled without its written consent (which consent will not be unreasonably
withheld).
(e) The indemnity and contribution provided by this Article VI shall
not relieve the Company and the Agent from any liability the Company and the
Agent may otherwise have (including, without limitation, any liability the Agent
may have for a breach of its obligations under Article III hereof).
ARTICLE VII
REPRESENTATIONS AND AGREEMENTS TO SURVIVE DELIVERY
7.1. REPRESENTATIONS AND AGREEMENTS TO SURVIVE DELIVERY. All
representations, warranties and agreements of the Company herein or in
certificates delivered pursuant hereto, and the agreements of the Agent
contained in Article VI hereof, shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of the Agent or any
controlling persons, or the Company (or any of their officers, trustees or
controlling persons), and shall survive delivery of and payment for the Shares.
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ARTICLE VIII
TERMINATION
8.1. (a) The Agent shall have the right, by giving notice as
hereinafter specified at any time at or prior to any Filing Date, to terminate
this Agreement if (i) any material adverse change, or any development that has
actually occurred and that is reasonably expected to cause material adverse
change, in the business, financial condition or results of operations of the
Company and its subsidiaries has occurred which, in the judgment of such Agent,
materially impairs the investment quality of the Shares, (ii) the Company shall
have failed, refused or been unable, at or prior to the Filing Date, to perform
any agreement on its part to be performed hereunder, (iii) any other condition
of the Agent's obligations hereunder is not fulfilled, (iv) any suspension or
limitation of trading in the Shares on the NYSE, or any setting of minimum
prices for trading of the Shares on the NYSE, shall have occurred, (v) any
banking moratorium shall have been declared by Federal or New York authorities
or (vi) an outbreak or material escalation of major hostilities in which the
United States is involved, a declaration of war by Congress, any other
substantial national or international calamity or any other event or occurrence
of a similar character shall have occurred since the execution of this Agreement
that, in the judgment of the Agent, makes it impractical or inadvisable to
proceed with the completion of the sale of and payment for the Shares to be sold
by the Agent on behalf of the Company. Any such termination shall be without
liability of any party to any other party except that the provisions of Section
4.1(g) and Articles VI and VII hereof shall remain in full force and effect
notwithstanding such termination. If the Agent elects to terminate this
Agreement as provided in this Article, the Agent shall provide the required
notice as specified herein.
(b) The Company shall have the right, by giving thirty (30) days' prior
written notice as hereinafter specified in Article IX, to terminate this
Agreement in its sole discretion at any time. Any such termination shall be
without liability of any party to any other party except that the provisions of
Section 4.1(g) and Articles VI and VII hereof shall remain in full force and
effect notwithstanding such termination.
(c) The Agent shall have the right, by giving thirty (30) days' prior
written notice as hereinafter specified in Article IX, to terminate this
Agreement in its sole discretion at any time. Any such termination shall be
without liability of any party to any other party except that the provisions of
Section 4.1(g) and Articles VI and VII hereof shall remain in full force and
effect notwithstanding such termination.
(d) This Agreement shall remain in full force and effect unless
terminated pursuant to Section 8.1(a), (b) or (c) above or otherwise by mutual
agreement of the parties; provided that any such termination by mutual agreement
shall in all cases be deemed to provide that Section 4.1(g) and Articles VI and
VII shall remain in full force and effect.
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(e) Any termination of this Agreement shall be effective on the date
specified in such notice of termination; provided that such termination shall
not be effective until the close of business on the date of receipt of such
notice by the Agent or the Company, as the case may be. If such termination
shall occur prior to the Settlement Date for sale of any Shares, such sale shall
settle in accordance with the provisions of the second-to-last paragraph of
Article III hereof.
ARTICLE IX
NOTICES
9.1. NOTICES. All notices or communications hereunder shall be in
writing and if sent to the Agent shall be mailed, delivered, telexed or
telecopied and confirmed to the Agent at _____________________________
____________________________________________________, or if sent to the Company,
shall be mailed, delivered, telexed or telecopied and confirmed to the Company
at 00 Xxxxxx Xxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxxxxx, Xxxxxxxxx 00000, Attention:
Xxxxx X. Xxxxxxxx. Each party to this Agreement may change such address for
notices by sending to the parties to this Agreement written notice of a new
address for such purpose.
ARTICLE X
MISCELLANEOUS
10.1. PARTIES. This Agreement shall inure to the benefit of and be
binding upon the Company and the Agent and their respective successors and the
controlling persons, officers and trustees referred to in Article VI hereof, and
no other person will have any right or obligation hereunder.
10.2. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
and supersedes all other prior and contemporaneous agreements and undertakings,
both written and oral, among the parties hereto with regard to the subject
matter hereof.
10.3. APPLICABLE LAW. This Agreement shall be governed by, and
construed in accordance with, the internal laws of the State of Tennessee
without regard to the principles or conflicts of laws.
10.4. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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If the foregoing correctly sets forth the understanding between the
Company and the Agent, please so indicate in the space provided below for that
purpose, whereupon this letter shall constitute a binding agreement between the
Company and the Agent. Alternatively, the execution of this Agreement by the
Company and its acceptance by or on behalf of the Agent may be evidenced by an
exchange of telegraphic or other written communications.
Very truly yours,
PRISON REALTY CORPORATION
By:
--------------------------
Title:
-----------------------
ACCEPTED as of this ______ day of
________, 1999:
________________________
By:
------------------------------
Title:
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