1
Exhibit 10.156
GUARANTY AGREEMENT
DATED AS OF JULY 10, 0000
XXXXX
XXXXXXXXXXX XXXXXXXXXXX XX XXXXXXX,
AS THE GUARANTOR,
EDEN CORRECTIONAL FACILITIES CORPORATION,
AS THE ISSUER
AND
LIBERTY BANK AND TRUST COMPANY OF
TULSA, NATIONAL ASSOCIATION,
AS THE TRUSTEE
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TABLE OF CONTENTS
Page
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PRELIMINARY STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I - DEFINITIONS; INTERPRETATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.2 Accounting Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 1.3 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE II - AGREEMENTS OF THE ISSUER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 2.1 Effectiveness of Guaranty. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 2.2 Guaranty Fee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 2.3 Payments to the Guarantor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 2.4 Subordinate Deed of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 2.5 Guarantor as Owner of the Facility; Assumption of Bond Obligations . . . . . . . . . . . . . . 12
ARTICLE III - GUARANTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 3.1 Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 3.2 Guaranty Absolute . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 3.3 Action by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 3.4 Renewals, Amendments and Other Security; Partial Releases . . . . . . . . . . . . . . . . . . 16
SECTION 3.5 Payments Free and Clear of Taxes, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 3.6 Effect of Debtor Relief Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 3.7 Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 3.8 Subordination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 3.9 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 3.10 Full Force and Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 3.11 Benefits of Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE IV - REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 4.1 Organization, Qualification, Authorization, Etc. . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 4.2 Financial Statements, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 4.3 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 4.4 Changes, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 4.5 Tax Returns and Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 4.6 Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 4.7 Franchises, Licenses, Agreements, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 4.8 Compliance with Applicable Law, Other Instruments, Etc. . . . . . . . . . . . . . . . . . . . 23
SECTION 4.9 Litigation, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
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SECTION 4.10 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 4.11 Governmental Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 4.12 Status Under Certain Federal Statutes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 4.13 Operating Agreement; Government Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 4.14 Chief Executive Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 4.15 Review of Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 4.16 Credit Decisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 4.17 Private Offering by Guarantor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE V - AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 5.1 Reporting Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 5.2 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 5.3 Payment of Taxes and Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 5.4 Indemnification for Breach of Representations or Covenants . . . . . . . . . . . . . . . . . . 27
SECTION 5.5 Performance of Operating Agreement, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 5.6 Service of Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE VI - FINANCIAL COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 6.1 Consolidated Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 6.2 Consolidated Fixed Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 6.3 Total Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE VII - GUARANTOR EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 7.1 Guarantor Events of Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 7.2 Other Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE VIII - BOND PURCHASE OPTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE IX - MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 9.1 Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 9.2 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 9.3 Amendment and Waivers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 9.4 Successors and Assigns. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 9.5 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 9.6 Separability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 9.7 Conflicts With Indemnity Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 9.8 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 9.9 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 9.10 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
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GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT is made and entered into as of July
10, 1996, by and among CORRECTIONS CORPORATION OF AMERICA, a corporation
organized and existing under the laws of the State of Delaware (the
"Guarantor"), EDEN CORRECTIONAL FACILITIES CORPORATION, a non-profit
corporation organized and existing under the laws of the State of Texas (the
"Issuer"), and LIBERTY BANK AND TRUST COMPANY OF TULSA, NATIONAL ASSOCIATION,
as trustee under the hereinafter defined Indenture (in such capacity together
with a successor trustee under the Indenture, the "Trustee"), a national
banking association having its principal corporate trust office located at
Tulsa, Oklahoma.
PRELIMINARY STATEMENTS
A. On October 24, 1995, the Issuer issued its Taxable
Detention Facility Revenue Bonds, Series 1995 (Eden Correctional Center
Project) (the "Bonds") in the original principal amount of $22,875,000 pursuant
to an Indenture of Trust dated as of October 24, 1995 between the Issuer and
the Trustee, as amended by the First Supplemental Indenture of Trust dated as
of the date hereof between the Issuer and the Trustee and consented to by
Xxxxxxxx Inc., an Arkansas corporation ("Xxxxxxxx"), the original purchaser of
the Bonds (the Indenture of Trust, as modified and supplemented by the First
Supplemental Indenture of Trust, the "Indenture") under and between the Issuer
and the Trustee, the proceeds of which were used for the purpose of financing
(i) the acquisition and equipping of a detention center located in Eden, Texas
known as the Eden Corrections Center (the "Facility"), (ii) certain costs of
issuance in connection with the Bonds, (iii) a debt service reserve fund, and
(iv) capitalized interest on the Bonds;
X. Xxxxxxxx now desires to sell the Bonds to Teachers
Insurance and Annuity Association of America ("TIAA");
C. The Guarantor is willing to enter into this Guaranty
(i) in consideration of the execution by the Issuer of that certain Purchase
Option Agreement dated as of the date hereof granting to the Guarantor an
option to purchase the Facility upon the terms and conditions specified therein
(the "Purchase Option Agreement"), that certain Indemnification Agreement
relating to Administrative Costs dated as of the date hereof (the "Indemnity
Agreement") and the Subordinate Deed of Trust, as defined herein, (ii) to
induce TIAA to purchase the Bonds from Xxxxxxxx, (iii) to enhance the
marketability of the Bonds and (iv) to induce the purchase of the Bonds by all
who shall at any time become owners of the Bonds;
NOW, THEREFORE, in consideration of the premises, the
Guarantor does hereby, subject to the terms hereof, covenant and agree with the
Issuer and the Trustee as follows:
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ARTICLE I
DEFINITIONS; INTERPRETATIONS
SECTION 1.1 Definitions. As used in this Guaranty the
following terms shall have the following meanings:
"AFFILIATE" means any Person directly or indirectly
controlling, controlled by, or under direct or indirect common control with,
the Company. A Person shall be deemed to control a corporation or other entity
if (a) such Person possesses, directly or indirectly, the power to direct or
cause the direction of the management and policies of such corporation or other
entity, whether through the ownership of voting securities, by contract or
otherwise or (b) such Person owns, directly or indirectly, five percent (5%) or
more of any class of Voting Stock of such Person.
"AGREEMENT" has the meaning specified in the Indenture.
"ASSUMPTION AGREEMENT" has the meaning specified in Section
2.5.
"ASSUMPTION TRANSACTIONS" has the meaning specified in Section
9.2.
"BANKRUPTCY CODE" means Title 11 of the United States Code, as
amended.
"BANKRUPTCY LAW" has the meaning specified in Section 7.1(g).
"BENEFIT ARRANGEMENT" means an employee benefit plan within
the meaning of section 3(3) of ERISA which is not a Plan or a Multiemployer
Plan and with respect to which the Company or a member of the ERISA Group has
an obligation, whether or not current or contingent, to make contributions.
"BOND OBLIGATIONS" has the meaning specified in the Indenture.
"BONDS" has the meaning specified in the Preliminary
Statements.
"BOP" means the United States Bureau of Prisons.
"BUSINESS DAY" means any day other than a Saturday, Sunday or
other day on which commercial banking institutions in New York, New York;
Tulsa, Oklahoma or; Nashville, Tennessee are authorized or required by law,
regulation or executive order to be closed.
"CAPITAL LEASE" means, as to any Person, any lease or rental
of real or personal property which, under generally accepted accounting
principles, is or will be required to be capitalized on the balance sheet of
such Person, taken at the amount thereof accounted for as indebtedness (net of
interest expense) in accordance with such principles.
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"CAPITAL LEASE OBLIGATION" means any rental obligation in
respect of a Capital Lease taken at the amount thereof accounted for as
indebtedness (net of interest expense) in accordance with generally accepted
accounting principles.
"CASH FLOW PROJECTIONS" means the cash flow projections of the
Facility based upon varying percentages of occupancy prepared on or about May
21, 1996 by Xxxxxxxxx Xxxxxxx X. Xxxxxx of the University of Florida.
"CERCLA" means the Federal Comprehensive Environmental
Response, Compensation and Liability Act.
"CITY" means the City of Eden, Texas, a political subdivision
within the State of Texas.
"CODE" means the Internal Revenue Code of 1986, as amended
from time to time.
"CONSOLIDATED FIXED CHARGE COVERAGE" means, at the end of any
fiscal quarter (a) twice the Consolidated Operating Cash Flow for such fiscal
quarter and the immediately preceding fiscal quarter divided by (b)
Consolidated Fixed Charges for the next succeeding four fiscal quarters.
"CONSOLIDATED FIXED CHARGES" means, for any period, the sum of
Consolidated Rentals and Consolidated Interest Expense for such period. In the
event that Consolidated Fixed Charges are to be determined for any future
period or periods and any component of Consolidated Rentals or Consolidated
Interest Expense may fluctuate or is determined on the basis of a rate or
criterion that may fluctuate during such period, Consolidated Rentals or
Consolidated Interest Expense, as the case my be, shall be calculated assuming
that such amount, rate or criterion in effect on the date such calculation is
made shall be in effect throughout such period.
"CONSOLIDATED INTEREST EXPENSE" means, for any period, total
interest, whether paid or accrued (including that attributable to Capital Lease
Obligations), of the Guarantor and the Restricted Subsidiaries on a
consolidated basis, including all commissions, discounts and other fees and
charges owed with respect to letters of credit and banker's acceptance
financing and net costs under interest rate exchange or cap agreement providing
interest rate protection, all as determined in conformity with generally
accepted accounting principles.
"CONSOLIDATED NET INCOME" means, for any period, the net
earnings (or losses) for the Guarantor and the Restricted Subsidiaries for such
period taken as a single accounting period determined in conformity with
generally accepted accounting principles consistently applied, but excluding:
(i) any gain or loss that under generally accepted
accounting principles consistently applied would be properly
classified as an extraordinary item;
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(ii) any gain arising from a sale of a capital asset that
is not made in the ordinary course of business of the Guarantor and
the Restricted Subsidiaries;
(iii) any gain arising from any write-up of assets;
(iv) the proceeds of any life insurance policy;
(v) earnings of any Person substantially all of the
assets of which have been acquired in any manner (whether through
merger or otherwise) to the extent that such earnings were realized
prior to the date of such acquisition; and
(vi) earnings of any Person to which substantially all the
assets of the Guarantor shall have been sold or transferred, into
which the Guarantor shall have been merged, or with which the
Guarantor shall have been consolidated, to the extent that such
earnings were realized prior to the date of such transfer, merger or
consolidation.
All losses (including any loss that, under generally accepted accounting
principles consistently applied, would be properly classified as an
extraordinary loss) shall be included in determining such net earnings (or
losses).
"CONSOLIDATED NET WORTH" means, as of the time of any
determination thereof, total stockholders' equity, as reported on the balance
sheet, less Redeemable Preferred Stock, all determined on a consolidated basis
for the Guarantor and the Restricted Subsidiaries in accordance with generally
accepted accounting principles, including the making of appropriate deductions
for minority interests, if any, in the Restricted Subsidiaries.
"CONSOLIDATED OPERATING CASH FLOW" means for any period,
without duplication, the sum of (a) Consolidated Net Income plus (b) to the
extent deducted in computing Consolidated Net Income, depreciation and
amortization and other similar non-cash charges, accrued income tax expenses,
Operating Lease payments, and interest expense of the Guarantor and the
Restricted Subsidiaries for such period.
"CONSOLIDATED RENTALS" means, for any period, all amounts
payable by the Guarantor and any Restricted Subsidiary as lessees or sublessee
relating to Operating Leases.
"CONSOLIDATED TOTAL ASSETS" means, at any date of
determination thereof, the consolidated total assets of the Guarantor and the
Restricted Subsidiaries as reflected on the most recent annual consolidated
balance sheet.
"CONSOLIDATED TOTAL CAPITALIZATION" means, as of the time of
any determination thereof, the sum of Consolidated Total Debt and Consolidated
Net Worth.
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"CONSOLIDATED TOTAL DEBT" means, as of the time of any
determination thereof, the consolidated Total Debt of the Guarantor and the
Restricted Subsidiaries.
"CURRENT DEBT" has the meaning specified in the definition of
"Funded Debt."
"DEBT" has the meaning specified in the definition of "Funded
Debt."
"ENVIRONMENTAL LAWS" means laws (including the common law),
regulations or rules, and any applicable judicial or administrative
interpretations thereof, as well as any applicable judicial or administrative
orders, decrees or judgments, relating to pollution, environmental, health,
safety, industrial hygiene or similar matters.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, or any successor statute thereto.
"ERISA GROUP" means all corporations, trades or businesses
(whether or not incorporated) and other persons or entities which, together
with the Guarantor, are treated as a single employer under section 414(b), (c),
(m) or (o) of the Code.
"EVENT OF DEFAULT" has the meaning specified in the Indenture.
"EXCHANGE ACT" means the Securities Exchange Act of 1934.
"EXISTING GOVERNMENT CONTRACTS" means, collectively, (a) the
Intergovernmental Agreement #010-9, as amended to date hereof, between the City
and the BOP relating to the Facility and (b) Intergovernmental Service
Agreement (IGSA-A/DLS 93-6079), as amended to the date hereof, between the City
and the INS relating to the Facility.
"FACILITY" has the meaning specified in the Preliminary
Statements.
"FINANCING DOCUMENTS" has the meaning specified in the
Indenture.
"FUNDED DEBT" means and includes without duplication (a) any
obligation payable more than one year from the date of the creation thereof
(including the current portion of Funded Debt), which under generally accepted
accounting principles is shown on the balance sheet as a liability (including
obligations under Capital Leases and excluding reserves for deferred income
taxes and other reserves to the extent that such reserves do not constitute an
obligation), (b) guarantees, endorsements (other than endorsements of
negotiable instruments for collection in the ordinary course of business) and
other contingent liabilities (whether direct or indirect) in connection with
the obligations, stock or dividends of any Person, including obligations under
contracts to supply funds to or in any other manner invest in any Person, (c)
obligations under any contract to purchase, sell or lease (as lessee or lessor)
property or to purchase or sell services, primarily for the purpose of enabling
a Person to make payment of obligations or to assure the Holder of such
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obligations against loss including obligations under any contract for the
purchase of materials, supplies or other property or service if such contract
(or any related document) requires that payment for such materials, supplies,
or other property or services shall be made regardless of whether or not
delivery of such materials, supplies or other property or services is ever made
or tendered, (d) obligations under any contract to pay or purchase obligations
of a Person, or to advance or supply funds for the payment or purchase of such
obligations, and (e) any agreement to assure a creditor of a Person against
loss. "Current Debt" means any obligation for borrowed money (including notes
payable and drafts accepted representing extensions of credit whether or not
representing obligations for borrowed money) payable on demand or within a
period of one year from the date of the creation thereof, provided that any
obligation shall be treated as Funded Debt, regardless of its terms, if such
obligation is renewable pursuant to the terms thereof or of a revolving credit
or similar agreement effective for more than one year after the date of
creation of such obligation, or may be payable out of the proceeds of a similar
obligation pursuant to the terms of such obligation or of any such agreement.
Any obligation secured by a Lien on, or payable out of the proceeds of
production from, property of the Guarantor or any Subsidiary shall be deemed to
be Funded Debt or Current Debt, as the case may be, of the Guarantor or such
Subsidiary even though such obligation shall not be assumed by the Guarantor or
such Subsidiary. "Debt" means Funded Debt and/or Current Debt, as the case may
be.
"GOVERNMENT CONTRACTS" means, collectively, (a) the Existing
Government Contracts, (b) all future agreements entered into by the City and
the BOP or INS, (c) any agreement entered into by any Transferring Entity to
house prisoners at the Facility and (d) all amendments to any of the agreements
described in clauses (a), (b) or (c).
"GOVERNMENTAL AUTHORITY" means (a) the government of any
federal, state, municipal or other political subdivision in which property of
the Guarantor or any Subsidiary, or any part thereof, is located and (b) any
other government exercising jurisdiction over the Guarantor or any Restricted
Subsidiary, in each case, including all agencies and instrumentalities of such
government.
"GOVERNMENTAL REQUIREMENTS" means laws, ordinances, statutes,
codes, rules, regulations, orders, decrees and judgments of any Governmental
Authority.
"GUARANTEED OBLIGATIONS" has the meaning specified in Section
3.1.
"GUARANTOR" has the meaning specified in the introduction to
this Guaranty.
"GUARANTOR DEFAULT" means any event or condition that
constitutes, or with the giving of notice or the lapse of time or both would
constitute, a Guarantor Event of Default.
"GUARANTOR EVENT OF DEFAULT" has the meaning specified in
Section 7.1.
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"GUARANTY" means this Guaranty Agreement, as amended,
supplemented or modified from time to time.
"HAZARDOUS MATERIALS" means any hazardous substance, hazardous
or toxic waste, pollutant, contaminant, oil, petroleum product, or other
substance (a) which is listed, regulated, or designated as toxic or hazardous
(or words of similar meaning and regulatory effect), or with respect to which
remedial obligations may be imposed, under any Environmental Laws, or (b)
exposure to which may pose a hazard to personal health or safety.
"HOLDER" has the meaning specified in the Indenture.
"INDEMNITEES" means the Trustee, the Holders from time to time
of the Bonds and their respective officers, directors, shareholders, partners,
employees, agents, servants, insurers, successors and assigns. "INDEMNITEE"
means one of the Indemnitees.
"INDEMNITY AGREEMENT" has the meaning specified in the
Preliminary Statements.
"INDENTURE" has the meaning specified in the Preliminary
Statements.
"INS" means the United States Immigration and Naturalization
Service.
"ISSUER" has the meaning specified in the introduction to this
Guaranty.
"LIEN" means any mortgage, pledge, security interest,
easement, restrictive covenant, encumbrance, lien or charge of any kind
(including any agreement to give any of the foregoing, any conditional sale or
other title retention agreement, any lease in the nature thereof, and the
filing of or agreement to give any financing statement under the Uniform
Commercial Code of any jurisdiction).
"MAKE-WHOLE AMOUNT" has the meaning specified in the
Indenture.
"MATERIAL ADVERSE EFFECT" means, relative to any occurrence of
whatever nature (including any adverse determination in any litigation,
arbitration or governmental investigation or proceeding), and after taking into
account actual insurance coverage and effective indemnification with respect to
such occurrence, (a) a material adverse effect on the financial condition,
business, operations or properties of the Guarantor and the Restricted
Subsidiaries taken as a whole, (b) the impairment of the ability of the
Guarantor to perform any of its payment or other material obligations hereunder
or under the Operating Agreement or the ability of the Trustee to enforce any
of such obligations or any of its remedies hereunder or (c) the subjection of
the Trustee or any of the Holders of the Bonds to any civil or criminal
liability.
"MORTGAGE" has the meaning specified in the Indenture.
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"MULTIEMPLOYER PLAN" means an employee pension benefit plan
within the meaning of section 4001(a)(3) of ERISA to which the Guarantor or any
member of the ERISA Group has an obligation, whether or not current or
contingent, to make contributions, including for this purpose any person who
used to be a member of the ERISA Group in this or the preceding five plan
years.
"OFFICER'S CERTIFICATE" means a certificate executed on behalf
of the Guarantor by its Chairman or its Chief Financial Officer.
"OPERATING AGREEMENT" means the Operation and Maintenance
Services Agreement dated as of October 24, 1995 among the City, the Issuer and
the Guarantor.
"OPERATING LEASES" means leases of real, personal or mixed
property other than Capital Leases.
"OTHER TAXES" has the meaning specified in Section 3.5.
"OUTSTANDING" has the meaning specified in the Indenture.
"PBGC" means the Pension Benefit Guaranty Corporation of any
governmental authority succeeding to any of its functions under ERISA.
"PERMITTED BUSINESS" means the design, construction,
ownership, start-up, management or operation of detention and correctional
facilities together with associated consulting services and ancillary services,
including prisoner transport services.
"PERSON" means and includes an individual, a partnership, a
joint venture, a corporation, a limited liability company, a trust, an
unincorporated organization, any other entity and a government or any
department or agency thereof.
"PLAN" means an employee pension benefit plan (other than a
Multiemployer Plan) which is covered by Title IV of ERISA or is subject to the
minimum funding standards under section 412 of the Code and either (a) is
maintained, or contributed to, by the Guarantor or any member of the ERISA
Group or (b) has at any time within the preceding six years been maintained, or
contributed to, by the Guarantor or any person which was at such time a member
of the ERISA Group.
"PRIVATE PLACEMENT MEMORANDUM" means the Private Placement
Memorandum including the exhibits thereto dated October 24, 1995 relating to
the private offering by the Issuer of the Bonds.
"PURCHASE DATE" has the meaning specified in Article VII.
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"PURCHASE OPTION" has the same meaning given the term
"Options" in the Purchase Option Agreement in effect on the date hereof.
"PURCHASER'S LETTER" has the meaning specified in the
Indenture.
"PURCHASE OPTION AGREEMENT" has the meaning specified in the
Preliminary Statements.
"PURCHASE PRICE" has the meaning specified in Article VII.
"RELEASE" has the meaning specified in CERCLA # 101(22) (42
U.S.A. # 9601(22)).
"REQUIRED HOLDERS" means the Holder or Holders of at least a
majority of the aggregate Outstanding principal amount of the Bonds at such
time.
"RESPONSIBLE OFFICER" means the Chairman, any Vice President,
the Chief Financial Officer or the Treasurer of the Guarantor.
"RESTRICTED SUBSIDIARY" means a Subsidiary (a) organized under
the laws of any state of the United States of America (i) at least 80% of the
total combined voting power of all classes of Voting Stock and (ii) not less
than 100% of the stock or equity interest of each other class of which, shall,
in each case, at the time as of which any determination is being made, be owned
by the Guarantor either directly or through any Restricted Subsidiary, (b)
engaged in a Permitted Business and (c) whose assets and operations are located
within the United States of America.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"XXXXXXXX" has the meaning specified in the Preliminary
Statements.
"SUBORDINATE DEED OF TRUST" has the meaning specified in
Section 2.4.
"SUBSIDIARY" means any corporation, partnership or other
entity of which (a) a majority of the total combined voting power of all
classes of Voting Stock and (b) not less than 100% of the stock or other equity
interest of every other class, in each case, at the time as of which any
determination is being made, is in each case owned by the Guarantor either
directly, through one or more Subsidiaries or both.
"SUPPLEMENT" has the meaning specified in Section 2.5.
"TAXES" has the meaning specified in Section 3.5.
"TERMINATION EVENT" means (a) a "Reportable Event" described
in section 4043 of ERISA and the regulations issued thereunder (other than a
Reportable Event not subject to the
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provision for 30-day notice to the PBGC under such regulations), or (b) the
withdrawal of the Guarantor or any member of the ERISA Group from a Plan
during a plan year in which it was a "substantial employer" as defined under
section 4001(a)(2) of ERISA, or (c) the filing of a notice of intent to
terminate a Plan or the treatment of a Plan amendment as a termination under
section 4041(c) of ERISA, or (d) the institution of proceedings to terminate a
Plan by the PBGC, or (e) the imposition of a lien pursuant to section 412(n) of
the Code, or (f) any other event or condition which might constitute grounds
under section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan.
"TIAA" has the meaning specified in the Preliminary
Statements.
"TOTAL DEBT" means, at the date of any determination thereof,
the sum of Current Debt and Funded Debt.
"TRANSACTION DOCUMENTS" mean the Financing Documents, the
Government Contracts, the Operating Agreement and any other document issued by
the Issuer, the City or the Guarantor in favor of the Trustee or any other
Person in connection with the issuance of Bonds or pursuant to the Indenture.
"TRANSFERRING ENTITY" means any one or more governmental
entities which may from time to time contract to transfer their inmates for
incarceration in the Facility.
"TRUSTEE" has the meaning specified in the Preliminary
Statements.
"TRUSTEE'S FEES AND EXPENSES" has the meaning specified in the
Indenture.
"UNFUNDED LIABILITIES" has the meaning specified in Section
7.01(n).
"VOTING STOCK" means, when used with respect to any
Subsidiary, any shares of stock or other ownership interests of such Subsidiary
having general voting power under ordinary circumstances to elect a majority of
the Board of Directors of such Subsidiary (irrespective of whether at the time
stock or ownership interests of any other class or classes shall have or might
have voting power by reason of the happening of any contingency).
"WHOLLY OWNED SUBSIDIARY" means any Subsidiary organized under
the laws of any state of the United States of America which conducts the major
portion of its business in the United States of America, and all of the stock
or other ownership interests of every class of which, except director's
qualifying shares shall, at the time as of which any determination is being
made, be owned by the Guarantor either directly or through Wholly Owned
Subsidiaries.
SECTION 1.2 Accounting Terms. All accounting terms not
otherwise defined herein have the meanings assigned to them in accordance with
generally accepted accounting principles and, except as otherwise herein
expressly provided, the generally accepted accounting
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principles which shall be applied under this Guaranty are those which
shall be in effect from time to time.
SECTION 1.3 Interpretation. (a) In this Guaranty, unless a
clear contrary intention appears:
(i) the singular number includes the plural number and
vice versa;
(ii) reference to any gender includes each other gender;
(iii) the words "herein," "hereof" and "hereunder" and
other words of similar import refer to this Guaranty as a whole and
not to any particular Article, Section or other subdivision;
(iv) reference to any Person includes such Person's
successors and assigns;
(v) reference to any agreement, document or instrument
means such agreement, document or instrument as in effect on the date
hereof and as the same may thereafter be amended, supplemented or
modified, provided, however, that reference to any Financing Document
or any other Transaction Document means such Financing Document or
Transaction Document, as amended, supplemented or modified in
accordance with the terms thereof;
(vi) unless the context indicates otherwise, reference to
any Article or Section means such Article or Section hereof;
(vii) the word "including" (and with correlative meaning
"include") means including, without limiting the generality of any
description preceding such term;
(viii) with respect to the determination of any period of
time, the word "from" means "from and including" and the word "to"
means "to but excluding"; and
(ix) reference to any law means such law as amended,
modified, codified or re-enacted, in whole or in part, and in effect
from time to time.
(b) The Article and Section headings herein are for
convenience only and shall not affect the construction hereof.
(c) No provision of this Guaranty shall be interpreted or
construed against any Person solely because that Person or its legal
representative drafted such provision.
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ARTICLE II
AGREEMENTS OF THE ISSUER
SECTION 2.1 Effectiveness of Guaranty. This Guaranty shall
become effective contemporaneously with the execution hereof by the Trustee,
the Corporation and the Guarantor and the sale of the Bonds by Xxxxxxxx to
TIAA.
SECTION 2.2 Guaranty Fee. The Issuer hereby agrees to pay
to the Guarantor a non-refundable guaranty fee for the period from and
including the date upon which the Guarantor ceases to be the operator of the
Facility until the expiration of the term hereof as provided in Article V
hereof, computed for the actual number of days elapsed during a year of 365 or
366 days, as the case may be, at the rate of one percent (1%) per annum,
calculated as a percentage of the principal amount of the Bonds from time to
time. The amount of the guaranty fee shall be determined as of the date upon
which the Guarantor ceases to be the operator of the Facility and thereafter as
of January 1 of each year and shall be payable in equal monthly installments on
or before the tenth of each month. The refusal, failure or inability of the
Issuer to pay all or any portion of such guaranty fee shall not effect the
obligations of the Guarantor hereunder.
SECTION 2.3 Payments to the Guarantor. After each and every
payment is made by the Guarantor under this Guaranty, the Issuer hereby agrees
to pay to the Guarantor, within five (5) Business Days after demand therefor by
the Guarantor, an amount equal to the amount paid by the Guarantor hereunder,
and to pay interest on any and all such amounts from the date of the
Guarantor's payment until payment in full thereof by the Issuer at the prime
lending rate of NationsBank of Texas, N.A., determined as of the date of the
Guarantors payment.
SECTION 2.4 Subordinate Deed of Trust. As security for the
Issuer's obligations to the Guarantor under Section 2.2 and Section 2.3, the
Issuer shall execute and acknowledge a deed of trust (the "Subordinate Deed of
Trust") granting a Lien on the Facility for the benefit of the Guarantor which
shall be expressly subordinate and inferior to the Deed of Trust and otherwise
in form and substance satisfactory to the Trustee and TIAA. Notwithstanding
anything in the Financing Documents to the contrary, the Guarantor may accept a
deed in lieu of foreclosure from the Corporation or may initiate foreclosure
proceedings and sell the Facility under the Subordinate Deed of Trust, as
provided therein, in either case, expressly subject to the Lien of the
Mortgage, but only if at the time of the execution of any deed by the Issuer to
the Guarantor or the initiation of foreclosure proceedings (and at all times
prior to any foreclosure sale of the Facility) neither any Guarantor Default
nor Guarantor Event of Default shall exist.
SECTION 2.5. Guarantor as Owner of the Facility; Assumption
of Bond Obligations. If at any time the Guarantor becomes the owner of the
Facility, whether pursuant to the Purchase Option Agreement, a deed executed by
the Issuer in lieu of foreclosure, under the Subordinate Deed of Trust or
otherwise, the Guarantor shall (a) immediately assume all of the Bond
Obligations and all other obligations of the Issuer under the Bonds, the
Indenture, the Mortgage, the Assignment of
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Leases and the Agreement pursuant to an assumption agreement (the "Assumption
Agreement"), executed by the Guarantor, dated as of the date the Guarantor
becomes the owner of the Facility and otherwise in form and substance
satisfactory to the Trustee and the Required Holders; provided, however, the
Assumption Agreement shall not require any increase in the rate of interest or
the Make-Whole Amount applicable to the Bonds, shorten the average life of the
Bonds, contain any representations, warranties or covenants other than those
set forth in Article IV, Article V and Article VI of this Guaranty or, except
as provided herein, require the payment of any additional fee to any Holder or
any other Person as a condition to the effectiveness of the Assumption
Agreement; (b) enter into a supplemental indenture of trust (the "Supplement")
with the Trustee, dated as of the date of the Assumption Agreement, amending
and supplementing the Indenture to include, (i) the covenants (and only the
covenants) contained in Article V and Article VI of this Guaranty, (ii) the
provisions of Section 7.1 of this Guaranty (set out in full and not by
reference) and (iii) any defined terms used in said Article V, Article VI and
Section 7.1; (c) deliver to the Trustee a certificate of an officer and of the
secretary or an assistant secretary of the Guarantor dated the date of the
Assumption Agreement certifying, (i) that the Board of Directors of the
Guarantor (or a duly authorized committee thereof) (A) has authorized the
execution, delivery and performance by the Guarantor of the Assumption
Agreement and the Supplement, (B) has approved the form of the Assumption
Agreement and the Supplement and (C) has authorized officers of such Guarantor
to execute and deliver the Assumption Agreement and the Supplement, (ii) the
incumbency and specimen signatures of the officers of the Guarantor executing
the Assumption Agreement and the Supplement and (iii)(A) that the
representations and warranties made by the Guarantor in this Guaranty were true
and correct in all material respects on the date when made and are true and
correct on the date of such certificate as though made on such date, (B) the
absence of any proceedings for the dissolution or liquidation of the Guarantor
and (C) the absence of the occurrence and continuance of any Event of Default
or other event that with the giving of notice or the passage of time or both
could become an Event of Default, in each case, under the Indenture as
supplemented and amended by the Supplement; (d) cause an opinion of counsel to
the Guarantor to be delivered to the Trustee, addressed to the Trustee and upon
which the Holders of the Bonds may expressly rely and otherwise in form and
substance reasonably satisfactory to the Trustee and the Required Holders,
covering, inter alia, the enforceability against the Guarantor of the
Assumption Agreement, the Indenture as supplemented by the Supplement, the
Bonds, the Mortgage, the Assignment of Leases and the Agreement; and (e) pay
all reasonable expenses of the Trustee, each Holder and the Issuer in
connection therewith.
ARTICLE III
GUARANTY
SECTION 3.1 Guaranty. (a) The Guarantor hereby
unconditionally and irrevocably guarantees the full and prompt payment in full
when due in lawful money of the United States, upon maturity by acceleration or
otherwise, and at all times thereafter, of (i) any and all of the Bond
Obligations, including all such amounts which would become due but for the
operation of the
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automatic stay under Section 362(a) of the Bankruptcy Code and the operation of
Sections 502(b) and 506(b) of the Bankruptcy Code, except as such sections are
applicable in connection with a bankruptcy proceeding initiated by or against
the Guarantor, (ii) all other amounts that the Issuer may from time to time owe
to the Trustee under the Indenture and the other Financing Documents and (iii)
all Trustees Fees and Expenses and all costs, expenses and liabilities
incurred, or resulting from any permitted or required action, by the Trustee
under the Financing Documents (including, without limitation, the performance
of its duties, the exercise of its rights and powers under, and the enforcement
of, the Financing Documents) and for which the Trustee is entitled to be
compensated, indemnified or reimbursed pursuant to the Indenture (the
obligations of the Guarantor described in clauses (i), (ii) and (iii) being
collectively, the "Guaranteed Obligations"). In addition, the Guarantor agrees
to pay the fees, costs and expenses described in Section 9.2. The Guarantor
agrees that this Guaranty constitutes a guaranty of payment when due and not of
collection and waives any right that any resort be had by the Trustee, any
Holder of a Bond or any other Person to any of the security held for payment of
any of the Bond Obligations or to any balance of any deposit account or credit
on the books of the Trustee, any Holder or any other Person in favor of the
Issuer or any other Person.
(b) The Guarantor further agrees, in furtherance of the
foregoing and not in limitation of any other right which the Trustee, any
Holder of a Bond or any other Person may have at law or in equity against the
Guarantor by virtue hereof, upon the failure of the Issuer to pay any of the
Bond Obligations and other obligations under the Financing Documents when and
as the same shall become due, whether by required prepayment, declaration or
otherwise (including amounts which would become due but for the operation of
the automatic stay under Section 362(a) of the Bankruptcy Code) (except as such
section is applicable in connection with a bankruptcy proceeding initiated by
or against the Guarantor), the Guarantor will forthwith pay, or cause to be
paid, in cash, to the Trustee for the ratable benefit of the Holders of the
Bonds, an amount in the aggregate equal to the sum of the unpaid principal
amount of the Guaranteed Obligations then due as aforesaid, accrued and unpaid
interest on the Bond Obligations and the other Guaranteed Obligations
(including interest which, but for the filing of a petition in bankruptcy with
respect to the Issuer, would accrue on the Bond Obligations) and all other
Guaranteed Obligations then owed to the Trustee and the Holders of the Bonds as
aforesaid.
SECTION 3.2 Guaranty Absolute. The Guarantor agrees that
the Guaranteed Obligations may be extended or renewed, in whole or in part,
without notice or further assent from it, and that the Guarantor will remain
bound upon this Guaranty notwithstanding any extension, renewal or other
alteration of any Guaranteed Obligation. To the extent permitted by applicable
law, the obligations of the Guarantor under this Guaranty shall not be subject
to any reduction, limitation, impairment or termination for any reason,
including, without limitation, any claim of waiver, release, surrender,
alteration or compromise of any of the Guaranteed Obligations, and shall not be
subject to any defense or setoff, counterclaim, recoupment or termination
whatsoever by reason of the invalidity, illegality or unenforceability of any
of the Guaranteed Obligations, discharge of the Issuer or any other Person
other than the Guarantor from any of the Guaranteed Obligations in a bankruptcy
or similar proceeding or otherwise. Without limiting the generality of the
foregoing, to
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the extent permitted by applicable law, the obligations of the Guarantor under
this Guaranty shall not be discharged, impaired or otherwise affected by:
(a) the compromise, settlement, release or termination of any or
all of the obligations, covenants or agreements of the Issuer under the
Indenture or any other Financing Document or the City or the Guarantor under
the Operating Agreement;
(b) the failure to give notice to the Guarantor of the occurrence
of a default under the terms and provisions of this Guaranty, the Indenture or
any other Transaction Document, except as specifically provided in this
Guaranty;
(c) the sale, assignment or mortgaging or the purported assignment
or mortgaging of all or any part of the interest of the Issuer in the Facility;
(d) the waiver of the payment, performance or observance by the
Issuer, the City or the Guarantor of any of the obligations, covenants, or
agreements of any of them contained in any Financing Document, the Operating
Agreement or this Guaranty;
(e) the extension of the time for payment of any of the Bond
Obligations or any of the other Guaranteed Obligations or of the time for
performance of any other obligations, covenants or agreements under or arising
out of this Guaranty or any of the other Transaction Documents or the extension
or the renewal of any thereof;
(f) any rescission, waiver, modification or amendment (whether
material or otherwise) of any of the terms or provisions of this Guaranty or
any other Financing Document;
(g) the taking or the failure to take any of the actions referred
to in any Transaction Document or under this Guaranty;
(h) any failure, omission, delay or lack on the part of the
Issuer, the Trustee or any Holder to assert any claim or demand against the
Guarantor hereunder or against the Guarantor or the Issuer under any
Transaction Document or to enforce, assert or exercise any right, power or
remedy conferred on the Issuer, the Trustee or any Holder in this Guaranty or
under any Transaction Document, or any other act or acts on the part of the
Issuer, the Trustee or any of the Holders from time to time of the Bonds;
(i) the voluntary or involuntary liquidation, dissolution,
marshaling of assets and liabilities, receivership, insolvency, bankruptcy,
assignment for the benefit of creditors, reorganization, arrangement,
composition with creditors or readjustment of, or other similar proceedings
affecting the Guarantor, the Issuer or the City or any of the assets of any of
them, or any allegation or contest of the validity of this Guaranty in any such
proceeding or the sale or other disposition of all or substantially all the
assets of the Issuer or the Guarantor;
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(j) the release or discharge of the Guarantor from the performance
or observance of any obligation, covenant or agreement contained in this
Guaranty by operation of law;
(k) the failure to perfect any security interest in, or the
release of, any collateral security held by the Trustee or any other Person for
the Bond Obligations and the other Guaranteed Obligations or any of them or any
Holder or any other Person to exercise any right or remedy against the Issuer
or against any other guarantor of any of the Bond Obligations and the other
Guaranteed Obligations;
(l) the default, failure or delay, willful or otherwise, in the
performance by the Guarantor or the Issuer to perform any of its obligations
set forth herein or by the Guarantor, the Issuer or any other Person to perform
any of its obligations set forth in any Transaction Document;
(m) any lack of validity or enforceability of the Indenture, any
of the other Financing Documents or the Operating Agreement or any other
agreement or instrument executed pursuant to the Indenture;
(n) any change in the time, manner or place of payment of, or in
any other term of, all or any part of the Bond Obligations or any other consent
to departure from any Transaction Document; or
(o) to the extent permitted by law, any other act or thing or
omission or delay to do any other act or thing which may or might in any manner
or to any extent vary the risk of the Guarantor or which would otherwise
operate as a discharge of the Guarantor as a matter of law or equity.
SECTION 3.3 Action by Trustee. In the event of a default
by the Issuer of its payment obligations under the Indenture and the other
Financing Documents, the Trustee, in its sole discretion, may proceed first and
directly against the Guarantor under this Guaranty without proceeding against
or exhausting any other remedies which it may have against the Issuer or any
other Person and without resorting to any collateral security held by it, and
in so proceeding against the Guarantor, no election of remedies shall be deemed
made as to the Issuer or this Guaranty or any collateral security or remedy.
SECTION 3.4 Renewals, Amendments and Other Security; Partial
Releases. The Trustee for the benefit of the Holders of the Bonds may, from
time to time, whether before or after any of the Guaranteed Obligations shall
become due and payable, without notice to the Guarantor or any other Person,
take any or all of the following actions: (a) retain or obtain a security
interest in any property to secure payment and performance of any of the Bond
Obligations or any of the other Guaranteed Obligations, (b) retain or obtain
the primary or secondary liability of any Person, in addition to the Guarantor,
with respect to any of the Bond Obligations or any of the other Guaranteed
Obligations, (c) create (pursuant to or as permitted by the Financing
Documents), extend or renew for any period (whether or not longer than the
original period) or alter or exchange any of the Bond Obligations or any of the
other Guaranteed Obligations or release or compromise any
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obligation of any nature of any Person with respect thereto, (d) release or
fail to perfect its security interest in, or surrender, release or permit any
substitutions or exchange for, all or any part of any property securing any of
the Bond Obligations or any of the other Guaranteed Obligations, or create,
extend or renew for any period (whether or not longer than the original period)
or release, compromise, alter or exchange any obligations of any nature of any
Person with respect to any such property, and (e) after the occurrence and
during the continuance of an Event of Default, enforce this Guaranty whether or
not it (i) shall have resorted to any collateral security or any other
property securing payment and performance of the Bond Obligations or any of the
other Guaranteed Obligations or (ii) shall have proceeded against any other
Person primarily or secondarily liable on any of the Bond Obligations or any of
the other Guaranteed Obligations (all of the actions referred to in the
preceding clauses (i) and (ii) being hereby expressly waived by the Guarantor
to the extent permitted by applicable law).
SECTION 3.5 Payments Free and Clear of Taxes, Etc. (a) Any
and all payments made by the Guarantor hereunder shall be made free and clear
of and without deduction for any present or future taxes, levies, imposts,
deductions, charges, or withholdings, and all liabilities with respect thereto,
excluding taxes imposed on net income and all income and franchise taxes of the
United States and any political subdivision thereof (all such non-excluded
taxes, levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as "Taxes"). If the Guarantor shall be required by law
to deduct any Taxes from or in respect of any sum payable hereunder, (i) the
sum payable shall be increased as may be necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section 3.5) each Holder shall receive an amount equal to the sum it
would have received had no such deductions been made, (ii) the Guarantor shall
make such deductions and (iii) the Guarantor shall pay the full amount
deducted to the relevant taxation authority or other authority in accordance
with applicable law.
(b) In addition, the Guarantor agrees to pay any present
or future stamp or documentary taxes, or any other excise or property taxes,
charges or similar levies which arise from any payment made hereunder or from
the execution, delivery or registration of, or otherwise with respect to, this
Guaranty (hereinafter referred to as "Other Taxes").
(c) The Guarantor will indemnify each Holder for the full
amount of Taxes or Other Taxes (including any Taxes or Other Taxes imposed by
any jurisdiction on amounts payable under this Section 3.5) paid by such Holder
and any liability (including penalties, interest and expenses) arising
therefrom or with respect thereto, whether or not such Taxes or Other Taxes
were correctly or legally asserted. This indemnification shall be made within
thirty (30) days from the date each Holder makes written demand therefor.
(d) Within thirty (30) days after the date of any payment
of Taxes, the Guarantor will furnish to each Holder, at its address set forth
in the Bond Register, the original or certified copy of a receipt evidencing
payment thereof. If no Taxes are payable in respect of any payment, the
Guarantor will furnish to each Holder a certificate from each appropriate
taxing authority, or an
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Opinion of Counsel acceptable to the Holders, in either case stating that such
payment is exempt from or not subject to Taxes.
(e) Without prejudice to the survival of any other
agreement of the Guarantor hereunder, the agreements and obligations of the
Guarantor contained in subsections (a) through (d) of this Section 3.5 shall
survive the payment in full of the Guaranteed Obligations.
SECTION 3.6. Effect of Debtor Relief Laws. If after receipt
of any payment of, or proceeds of any security applied (or intended to be
applied) to the payment of all or any part of the Guaranteed Obligations, the
Trustee or any Holder is for any reason compelled to surrender or voluntarily
surrenders, such payment or proceeds to any Person (a) because such payment or
application of proceeds is or may be avoided, invalidated, declared fraudulent,
set aside, determined to be void or voidable as a preference, fraudulent
conveyance, fraudulent transfer, impermissible set-off or a diversion of trust
funds or (b) for any other reason, including (i) any judgment, decree or order
of any court or administrative body having jurisdiction over the Trustee, any
Holder of a Bond or any of their respective properties or (ii) any settlement
or compromise of any such claim effected by the Trustee or any Holder of a Bond
with any such claimant, then the Guaranteed Obligations or part thereof
intended to be satisfied shall be reinstated and continue, and this Guaranty
shall continue in full force as if such payment or proceeds had not been
received, notwithstanding any revocation thereof or the cancellation of any
Bond or any other instrument evidencing all or any part of the Guaranteed
Obligations or otherwise; and the Guarantor shall be liable to pay the Trustee
and the Holders of the Bonds, and hereby does indemnify the Trustee and the
Holders of the Bonds and hold them harmless for the amount of such payment or
proceeds so surrendered and all expenses (including reasonable attorneys' fees,
court costs and expenses attributable thereto) incurred by the Trustee or any
Holder in the defense of any claim made against it that any payment or proceeds
received by the Trustee or any Holder of a Bond in respect of all or part of
the Guaranteed Obligations must be surrendered. The provisions of this
paragraph shall survive the termination of this Guaranty, and any satisfaction
and discharge of the Issuer by virtue of any payment, court order or any
federal or state law.
SECTION 3.7 Subrogation. Notwithstanding any payment or
payments made by the Guarantor hereunder, or any set-off or application by the
Trustee or any Holder of any security or of any credits or claims, the
Guarantor will not assert or exercise any rights of the Trustee or any Holder
against the Issuer to recover the amount of any payment made by the Guarantor
to the Trustee or any Holder hereunder by way of any claim, remedy or
subrogation, reimbursement, exoneration, contribution, indemnity, participation
or otherwise arising by contract, by statute, under common law or otherwise,
and the Guarantor shall not have any right of recourse to or any claim against
assets or property of the Issuer (other than pursuant to the Subordinate Deed
of Trust), until all of the obligations of the Issuer under the Financing
Documents are paid in full. If any amount shall nevertheless be paid to the
Guarantor by the Issuer prior to payment in full of the obligations of the
Guarantor and the Issuer under the Financing Documents, such amount shall be
held in trust for the benefit of the Trustee and the Holders and shall
forthwith be paid to the Trustee to be credited and applied to the Guaranteed
Obligations, whether matured or unmatured. The provisions of this
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paragraph shall survive the termination of this Guaranty and any satisfaction
and discharge of the Issuer by virtue of any payment, court order or any
federal or state law. Notwithstanding anything in this Section 3.7 to the
contrary, so long as no Guarantee Default or Guarantor Event of Default has
occurred and is continuing, the provisions of this Section 3.7 shall not impair
or otherwise affect the Guarantor's right or ability (a) to receive payments
pursuant to Sections 2.2 and 2.3 hereof, (b) to accept a deed in lieu of
foreclosure pursuant to the Subordinate Deed of Trust in accordance with
Sections 2.4 and 2.5 hereof, (c) to initiate foreclosure proceedings and sell
the Facility pursuant to the Subordinate Deed of Trust in accordance with
Sections 2.4 and 2.5 hereof, (d) to exercise, and acquire the Facility pursuant
to, the Purchase Option in accordance with Section 2.5 hereof, or (e) upon
exercise of the Purchase Option, to receive credit against the purchase price
as provided in Section 2 of the Purchase Option Agreement; provided, however,
no such credit shall in any manner diminish the obligations of the Guarantor
hereunder.
SECTION 3.8 Subordination. If the Guarantor is or becomes
the Holder of any indebtedness payable by the Issuer, the Guarantor hereby
subordinates all indebtedness and liabilities owing to it from the Issuer to
all indebtedness and liabilities of the Issuer to the Trustee and the Holders,
and agrees that during the continuance of any Event of Default or event that
with the giving of notice or the passage of time or both could become an Event
of Default, it shall not accept any payment on the same until payment in full
of the obligations of the Issuer under the Indenture and the other Financing
Documents, and shall in no circumstance whatsoever attempt to set-off or reduce
any obligations hereunder because of such indebtedness. If any amount shall
nevertheless be paid to the Guarantor by the Issuer prior to payment in full of
the Guaranteed Obligations, such amount shall be held in trust for the benefit
of the Trustee and the Holders and shall forthwith be paid to the Trustee to be
credited and applied to the Guaranteed Obligations, whether matured or
unmatured. Notwithstanding anything herein to the contrary, so long as no
Guarantee Default or Guarantor Event of Default has occurred and is continuing,
the provisions of this Section 3.8 shall not impair or otherwise affect the
Guarantor's right or ability (a) to receive payments pursuant to Sections 2.2
and 2.3 hereof, (b) to accept a deed in lieu of foreclosure pursuant to the
Subordinate Deed of Trust, (c) to initiate foreclosure proceedings and sell the
Facility pursuant to the Subordinate Deed of Trust in accordance with Sections
2.4 and 2.5 hereof, (d) to exercise, and acquire the Facility pursuant to, the
Purchase Option in accordance with Sections 2.4 and 2.5 hereof, or (e) upon
exercise of the Purchase Option, to receive credit against the purchase price
as provided in Section 2 of the Purchase Option Agreement; provided, however,
no such credit shall in any manner diminish the obligations of the Guarantor
hereunder.
SECTION 3.9 Waiver. The Guarantor hereby waives promptness,
diligence, notice of acceptance and any other notice with respect to any of the
Guaranteed Obligations and this Guaranty and waives presentment, demand of
payment, notice of intent to accelerate, notice of dishonor or nonpayment and
any requirement that the Trustee or any Holder of a Bond institute suit,
collection proceedings or take any other action to collect the Guaranteed
Obligations, including any requirement that the Trustee or any Holder of a Bond
protect, secure, perfect or insure any Lien against any property subject
thereto or exhaust any right or take any action against the Issuer or any other
Person or any collateral (it being the intention of the Trustee, the Holders of
the Bonds and the
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Guarantor that this Guaranty is to be a guaranty of payment and not
collection). It shall not be necessary for the Trustee or any Holder of a
Bond, in order to enforce any payment by the Guarantor hereunder, to institute
suit or exhaust its rights and remedies against the Issuer or any other Person,
including others liable to pay any Guaranteed Obligations, or to enforce its
rights against any security ever given to secure payment thereof. The
Guarantor hereby expressly waives to the maximum extent permitted by applicable
law each and every right to which it may be entitled by virtue of the
suretyship laws of the State of Texas, including any and all rights it may have
pursuant to Rule 31, Texas Rules of Civil Procedure, Section 17.001 of the
Texas Civil Practice and Remedies Code and Chapter 34 of the Texas Business
and Commerce Code. The Guarantor hereby waives marshaling of assets and
liabilities, notice by the Trustee or any Holder of a Bond of any indebtedness
or liability to which such Trustee or Holder applies or may apply any amounts
received by such Trustee or Holder, and of the creation, advancement, increase,
existence, extension, renewal, rearrangement or modification of the Guaranteed
Obligations. The Guarantor expressly waives, to the extent permitted by
applicable law, the benefit of any and all laws providing for exemption of
property from execution or for valuation and appraisal upon foreclosure.
SECTION 3.10 Full Force and Effect. This Guaranty is a
continuing guaranty and shall remain in full force and effect until all Bond
Obligations and other of the obligations of the Issuer under the Indenture and
the other Financing Documents and all other amounts payable under this Guaranty
have been paid in full. All rights, remedies and powers provided in this
guaranty may be exercised, and all waivers contained in this Guaranty may be
enforced, only to the extent that the exercise or enforcement thereof does not
violate any provisions of applicable law which may not be waived.
SECTION 3.11 Benefits of Guaranty. This Guaranty is entered
into by the Guarantor for the benefit of the Issuer and the Trustee and their
successors or assigns, and the Holders of the Bonds, all of whom shall be
entitled to enforce the performance and observance of this Guaranty to the same
extent as if they were parties signatory hereto.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Guarantor represents and warrants to the Issuer, the
Trustee and each Holder from time to time of any Bond as follows:
SECTION 4.1 Organization, Qualification, Authorization, Etc.
(a) The Guarantor is a corporation duly organized and existing in good standing
under the laws of the State of Delaware; each Subsidiary is duly organized and
existing in good standing under the laws of the jurisdiction in which it is
organized. The Guarantor and each Subsidiary have the corporate power to own
their respective properties and to carry on their respective businesses as now
being conducted. The Guarantor is qualified as a foreign corporation and is in
good standing in the States of Tennessee and Texas, and the Guarantor and all
Subsidiaries are duly qualified as foreign
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corporations to do business and are in good standing in each other jurisdiction
in which such qualification is required by law, other than those jurisdictions
as to which the failure to be so qualified or in good standing would not,
individually or in the aggregate, have a Material Adverse Effect.
(b) The Guarantor has full right, power and authority to
enter into and perform this Guaranty and to operate the Facility pursuant to
the Operating Agreement.
(c) The execution, delivery and performance by the
Guarantor of this Guaranty and the Operating Agreement have been duly
authorized by all necessary corporate action on the part of the Guarantor.
This Guaranty and the Operating Agreement have been duly executed and delivered
by the Guarantor and constitute legal, valid and binding obligations of the
Guarantor, enforceable in accordance with their respective terms, except as
limited by bankruptcy, moratorium, reorganization and other laws relating to or
affecting enforcement of creditors' rights generally and except as
enforceability is subject to judicial discretion under general principles of
equity and except as enforceability of indemnification or contribution
provisions to which this Guaranty relates may be limited, in whole or in part,
by applicable securities laws or public policy.
SECTION 4.2 Financial Statements, Etc. The Guarantor has
furnished the Trustee with the following financial statements: (i) consolidated
balance sheet of the Guarantor and the Subsidiaries as at December 31, 1995,
and the related consolidated statements of operations, stockholders' equity,
and cash flows of the Guarantor and the Subsidiaries for such year, certified
by Xxxxxx Xxxxxxxx LLP; and (ii) unaudited consolidated balance sheet of the
Guarantor and the Subsidiaries as at March 31, 1996 and the unaudited related
consolidated statements of operations, stockholder's equity and cash flows for
the period ended on such date, prepared by the Guarantor. Such financial
statements (including any related schedules and/or notes) are true and correct
in all material respects (subject, as to interim statements, to changes
resulting from audits and year-end adjustments), having been prepared in
accordance with generally accepted accounting principles consistently followed
throughout the periods involved and show all liabilities, direct and
contingent, of the Guarantor and the Subsidiaries required to be shown in
accordance with such principles. The balance sheets fairly present the
condition of the Guarantor and the Subsidiaries as at the dates thereof, and
the statements of operations and statements of cash flows fairly present the
results of the operations of the Guarantor and the Subsidiaries for the periods
indicated.
SECTION 4.3 Full Disclosure. (a) Neither this Guaranty,
the Operating Agreement, the Financing Documents, contains any untrue statement
of a material fact or omits to state a material fact necessary in order to make
the statements contained herein or therein not misleading in light of the
circumstances in which the same were made.
(b) There is no fact peculiar to the Guarantor or any of
the Subsidiaries which has a Material Adverse Effect or in the future may (so
far as the Guarantor can now foresee) have a Material Adverse Effect which has
not been set forth in this Guaranty or in the other documents,
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certificates and statements furnished to the Trustee by or on behalf of the
Guarantor prior to the date hereof in connection with the transactions
contemplated hereby.
SECTION 4.4 Changes, Etc. Since December 31, 1995, (a)
neither the Guarantor nor any Subsidiary has entered into any materially
adverse transactions not in the ordinary course of business, nor incurred any
material liabilities or obligations, direct or contingent, not shown in the
Guarantor's Annual Report (Form 10-K) for the fiscal year ended December 31,
1995 or in the Guarantor's Quarterly Report on (Form 10-Q) for the fiscal
quarter ended March 31, 1996, and (b) no events have occurred which,
individually or in the aggregate, have had, or in the future are likely to
have, a Material Adverse Effect. The Facility is not presently affected by any
fire, explosion, accident, labor controversy, strike, lockout or other dispute,
drought, storm, hail, earthquake, embargo, act of God or of the public enemy.
Neither the business nor the other properties of the Guarantor or any
Subsidiary are presently affected by any fire, explosion, accident, labor
controversy, strike, lockout or other dispute, drought, storm, hail,
earthquake, embargo, act of God or of the public enemy or other casualty which
could reasonably be expected to have a Material Adverse Effect, or if any such
existing event or condition were to continue for more than 30 additional days
(unless in the reasonable opinion of the Guarantor such event or condition is
not likely to continue for such period) could reasonably be expected to have a
Material Adverse Effect.
SECTION 4.5 Tax Returns and Payments. The Guarantor has
filed all federal tax returns and all other tax returns required by law to be
filed by it (or obtained extensions with respect thereto) that, in the case of
such other tax returns, if not filed (or extensions not obtained) would have a
Material Adverse Effect and has paid all federal income taxes and other taxes,
assessments and other governmental charges levied upon it or any of its
properties, assets, income or franchises which are due and payable, other than
those which are not past due or are presently being contested in good faith by
appropriate proceedings diligently conducted for which such reserves or other
appropriate provisions, if any, as shall be required by generally accepted
accounting principles, have been made or, except for any federal income taxes,
which if not paid would have a Material Adverse Effect.
SECTION 4.6 Debt. Other than the Debt represented by this
Guaranty and the Debt set forth in the Guarantor's Annual Report (Form 10-K)
for the fiscal year ended December 31, 1995 or in the Guarantor's Quarterly
Report (Form 10-Q) for the fiscal quarter ended March 31, 1996, neither the
Guarantor nor any Subsidiary has any secured or unsecured Debt outstanding. In
addition to this Guaranty, the only instruments or agreements to which the
Guarantor is a party or by which it is bound or which is applicable to it that
contain any restrictions on the incurrence by the Guarantor of additional Debt
are instruments or agreements entered into in connection with the Debt
disclosed in the annual and quarterly reports referred to in the preceding
sentence. There exists no default under the provisions of any instrument
evidencing such Debt or of any agreement relating thereto.
SECTION 4.7 Franchises, Licenses, Agreements, Etc. The
Guarantor and each Subsidiary are in possession of and operating in compliance
with all franchises, grants,
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authorizations, approvals, licenses, permits, easements, rights-of-way,
consents, certificates and orders and all patents, trademarks, service marks
and copyrights that are necessary in any material respect for the ownership,
maintenance and operation of the Facility.
SECTION 4.8 Compliance with Applicable Law, Other
Instruments, Etc. (a) The Guarantor is not in violation of any provision of
its certificate of incorporation or bylaws or any Governmental Requirement
affecting it or its properties, which violation, individually or collectively,
will not have a Material Adverse Effect or any agreement or instrument
evidencing indebtedness or any agreement relating thereto, and the execution,
delivery and performance of this Guaranty will not result in any violation of
or constitute a default under any agreement or instrument to which the
Guarantor is a party or result in the creation of (or impose any obligation on
the Guarantor to create) any Lien upon any of its properties or assets.
(b) Without limiting the foregoing, the Guarantor is not
in violation of any term of any agreement or instrument to which it is a party
or any Governmental Requirement affecting any of its other properties,
facilities or activities other than violations which, individually or
collectively, will not have a Material Adverse Effect.
(c) Neither the Guarantor nor any Subsidiary is a party
to, or otherwise subject to any provision contained in, any instruments
evidencing indebtedness of the Guarantor or such Subsidiary, any agreement
relating thereto or any other contract or agreement (including its certificate
of incorporation) which limits the amount of, or otherwise imposes restrictions
on the incurring of, Debt of the Guarantor of the type to be evidenced by this
Guaranty, except as to which any consent has been obtained.
SECTION 4.09 Litigation, Etc. There is no action, suit,
investigation or proceeding pending or, to the knowledge of the Guarantor,
threatened (a) against or affecting the Facility or arising out of or related
to any activity of the Guarantor with respect to the Facility by or before any
court, arbitrator or administrative or governmental body or (b) against the
Guarantor or any of its Subsidiaries, or any property or other rights of the
Guarantor or any of the Subsidiaries, by or before any court, arbitrator or
administrative or governmental body, in each case, which the Guarantor believes
is reasonably likely to be adversely determined against the Guarantor or such
Subsidiary and if so adversely determined would reasonably be likely to result
individually or in the aggregate in any Material Adverse Effect.
SECTION 4.10 ERISA. The Guarantor and each member of its
ERISA Group has timely fulfilled all its obligations under the minimum funding
standards of ERISA and the Code with respect to each Plan and is (and has been)
in compliance in all material respects with the applicable provisions of ERISA,
the Code and other law with respect to each Plan and Benefit Arrangement. Each
Plan and Benefit Arrangement is (and has been) maintained and operated in
compliance in all material respects with the applicable provisions of ERISA,
the Code and other law. Neither the Guarantor nor any member of its ERISA
Group (i) has sought (or is seeking) a waiver of the minimum funding standard
under section 412 of the Code in respect of any Plan, (ii) has failed to
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timely make any contribution or payment to any Plan or Multiemployer Plan or in
respect of any Benefit Arrangement, or made any amendment to any Plan, which
has resulted or could result in the imposition of a lien or the posting of a
bond or other security under ERISA or the Code, or (iii) has incurred (and no
event exists, including, without limitation, any contingent secondary liability
event under section 4204 of ERISA, which could result in) any liability under
Title IV of ERISA (other than a liability to the PBGC for premiums under
section 4007 of the ERISA). No litigation, investigation or claim (other than
a routine, undisputed claim for benefits) is pending or, to the knowledge of
the Guarantor, threatened or anticipated concerning any Plan, Multiemployer
Plan or Benefit Arrangement. There is no "amount of unfunded benefit
liabilities," as defined in section 4001(a)(18) of ERISA, under any Plan and,
with respect to each Multiemployer Plan, should a complete or partial
withdrawal occur with respect thereto, there would be no withdrawal liability.
The Guarantor and the members of the ERISA Group may terminate any and/or all
Plan(s) and/or Benefit Arrangement(s) without incurring a Material Adverse
Effect.
SECTION 4.11 Governmental Consent. Neither the nature of
the Guarantor or of any Subsidiary, nor any of their respective businesses or
properties, nor any relationship between the Guarantor or any Subsidiary and
any other Person, nor any circumstance in connection with the offering,
issuance or delivery of this Guaranty is such as to require any authorization,
consent, approval, exemption or other action by or notice to or filing with any
Person (other than routine filings after the date hereof, with the Securities
and Exchange Commission or state securities or Blue Sky authorities) in
connection with the execution and delivery of this Guaranty or fulfillment of
or compliance with the terms and provisions of this Guaranty and the Operating
Agreement.
SECTION 4.12 Status Under Certain Federal Statutes. Neither
the Guarantor nor any Subsidiary is subject to regulation under the Investment
Company Act of 1940, as amended, the Public Utility Holding Company Act of
1935, as amended, the Interstate Commerce Act, as amended, or the Federal Power
Act, as amended; provided, however, that Transcor America, Inc., a Subsidiary,
is subject to regulation under the Interstate Commerce Act, as amended.
SECTION 4.13 Operating Agreement; Government Contracts. (a)
The Operating Agreement is in full force and effect and no material term or
condition thereof has been amended, modified or waived from the terms and
conditions contained in the Operating Agreement. The Guarantor has, and, to
the Guarantor's knowledge, the City has, performed and complied in all material
respects with all of the terms and conditions set forth in the Operating
Agreement, and no default exists thereunder.
(b) The Existing Government Contracts are the only
Government Contracts in effect on the date hereof. Each of the Existing
Government Contracts is in full force and effect and no material term or
condition thereof has been amended, modified or waived from the terms and
conditions contained in such Existing Governmental Contract. The parties to
each of the Existing Government Contracts have performed and complied in all
material respects with all of the terms and conditions set forth in such
Existing Government Contract, and no default exists thereunder.
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SECTION 4.14 Chief Executive Office. The chief executive
office of the Guarantor and the office where it maintains its records is
located at 000 Xxxxxxxx Xxxxxxxxx, Xxxxxxxxx, Xxxxxxxxx 00000.
SECTION 4.15 Review of Documents. The Guarantor has
reviewed the Transaction Documents and confirms the rights, powers, privileges
and indemnities of the Trustee contained in the Indenture.
SECTION 4.16 Credit Decisions. The Guarantor has
independently and without reliance upon the Trustee or any Holder or TIAA and
based on its review of the Transaction Documents and other documents and
information as it has deemed appropriate, made its own credit analysis to enter
into this Guaranty.
SECTION 4.17. Private Offering by the Guarantor. The
Guarantor has not offered the Bonds, this Guaranty for sale to, or solicited
any offer to buy any of the same from, or otherwise approached or negotiated in
respect thereof with, any Person other than, in the case of the Guaranty,
Teachers and the Trustee. The Guarantor has not taken, and will not take, any
action which would subject the Bonds or the Guaranty to the registration
requirements of Section 5 of the Securities Act.
ARTICLE V
AFFIRMATIVE COVENANTS
The Guarantor hereby covenants and agrees with the Issuer, the
Trustee and each Holder from time to time of any Bond as follows:
SECTION 5.1 Reporting Requirements. So long as any Bond
remains unpaid, the Guarantor covenants that it will deliver in duplicate to
the Trustee and each Holder of a Bond:
(a) as soon as practicable and in any event within 45
days after the end of each quarterly period (other than the last quarterly
period) in each fiscal year, an unaudited consolidated statement of operations,
shareholders' equity and cash flows of the Guarantor and the Restricted
Subsidiaries for such quarterly period and for the period from the beginning of
the current fiscal year to the end of such quarterly period, and an unaudited
consolidated balance sheet of the Guarantor and the Restricted Subsidiaries as
at the end of such quarterly period, and setting forth in comparative form
figures for the corresponding periods in the preceding fiscal year, all in
reasonable detail and certified by an authorized financial officer of the
Guarantor, subject to changes resulting from year-end adjustments;
(b) as soon as practicable and in any event within 90
days after the end of each fiscal year, a consolidated statement of operations,
shareholders' equity and cash flows of the Guarantor and the Restricted
Subsidiaries for such year, and a consolidated balance sheet of the Guarantor
and the Restricted Subsidiaries as at the end of such year, and setting forth
in comparative
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form corresponding figures from the preceding annual audit, all in reasonable
detail and reported on by Xxxxxx Xxxxxxxx LLP or other independent public
accountants of recognized national standing selected by the Guarantor and
acceptable to the Trustee whose report shall (i) contain an opinion that shall
be unqualified as to the scope or limitations imposed by the Guarantor and
shall not be subject to any other material qualifications and (ii) shall state
that such financial statements present fairly, in all material respects, the
consolidated financial position of the Guarantor and the Restricted
Subsidiaries at the dates indicated and their cash flows and the results of
their operations and the changes in their financial position for the periods
indicated in conformity with generally accepted accounting principles;
Together with each delivery of financial statements required by clauses (a) and
(b) above, the Guarantor will deliver to each Holder of a Bond an Officer's
Certificate (i) demonstrating compliance by the Guarantor and the Restricted
Subsidiaries with the provisions of Sections 6.1, 6.2 and 6.3 (with
computations in reasonable detail) and (ii) stating that the signers have
reviewed this Guaranty and have made, or cause to be made under their
supervision, a review of the transactions and conditions of the Guarantor and
the Subsidiaries during the accounting period covered by such financial
statements and that such review has not disclosed the existence during or at
the end of such accounting period of any Guarantor Default or Guarantor Event
of Default or, if any, such Guarantor Default or Guarantor Event of Default
exists, specifying the nature and period of existence thereof and what action
the Guarantor proposes to take with respect thereto. Together with each
delivery of financial statements required by clause (b) above, the Guarantor
will deliver to the Trustee and each Holder of a Bond, a written statement of
such accountants stating that (i) their audit examination has included a review
of the terms of this Guaranty and that such review is sufficient to enable them
to make the statement referred to in clause (iii) of this sentence (it being
understood that no special audit procedures, other than those required by
generally accepted auditing standards, shall be required), (ii) whether in the
course of their audit examination, they obtained knowledge (and whether, as of
the date of such written statement, they have knowledge) of the existence of
any Guarantor Default or Guarantor Event of Default and, if so, specifying the
nature and period of existence thereof and (iii) they have reviewed the
Officer's Certificates delivered pursuant to the immediately preceding sentence
and that the matter set forth in such Officer's Certificates pursuant to clause
(i) of the immediately preceding sentence have been properly stated in
accordance with the terms of this Guaranty. Such accountants, however, shall
not be liable to any Person by reason of their failure to obtain knowledge of
any Guarantor Default or Guarantor Event of Default which would not be
disclosed in the course of an audit conducted in accordance with generally
accepted auditing standards.
SECTION 5.2 Further Assurances. The Guarantor shall cure
promptly any defects in the execution and delivery of this Guaranty.
SECTION 5.3 Payment of Taxes and Claims. The Guarantor
covenants that it will pay, and will cause each Subsidiary to pay, all taxes,
assessments and other governmental charges imposed upon it or any of its
properties or assets or in respect of any of its franchises, business, income
or profits before any penalty accrues thereon, and all claims (including,
without limitation,
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claims for labor, services, materials and supplies) for sums which have become
due and payable and which by law have or may become a Lien upon any of its
properties or assets, provided that no such tax, assessment, charge or claim
need be paid if (i) such charge or claim is being contested in good faith by
appropriate proceedings promptly initiated and diligently conducted, (ii) such
contest will not subject the Trustee or any Holder of a Bond to civil or
criminal liability and (iii) such reserves or other appropriate provision, if
any, as shall be required by generally accepted accounting principles shall
have been made therefor.
SECTION 5.4 Indemnification for Breach of Representations or
Covenants. The Guarantor shall indemnify each Indemnitee and hold each
Indemnitee harmless from and against all losses, costs, expenses (including
reasonable attorneys' fees), obligations, damages, penalties, disbursements and
liabilities which such Indemnitee may actually incur as a result of, in
connection with or arising out of (a) the breach of any representation or
warranty of the Guarantor or any Subsidiary contained herein or (b) the
nonfulfillment by the Guarantor or any Subsidiary of, or its failure to
perform, any of its covenants or agreements contained in this Guaranty. The
indemnity contained in this Section 5.4 shall survive the termination of this
Guaranty.
SECTION 5.5 Performance of Operating Agreement, Etc. The
Guarantor will perform each and every term and condition of the Operating
Agreement relating to the Facility so as to cause no default under any
Government Contract.
SECTION 5.6 Service of Process. The Guarantor agrees that
it is and will remain subject to service of process in the States of Delaware,
Tennessee and Texas so long as any of the Guaranteed Obligations remains
unpaid.
ARTICLE VI
FINANCIAL COVENANTS
The Guarantor covenants and agrees with the Trustee and each
Holder from time to time of any Bond as follows:
SECTION 6.1 Consolidated Net Worth. The Guarantor will not
permit Consolidated Net Worth at any time to be less than (a) $80,000,000
during the period from the date of this Guaranty through December 31, 1995 and
(b) an amount during each fiscal quarter thereafter equal to the sum of (i) the
amount of Consolidated Net Worth required hereunder for the immediately
preceding fiscal quarter plus (ii) if positive, 50% of Consolidated Net Income
for such immediately preceding fiscal quarter.
SECTION 6.2 Consolidated Fixed Charges. Consolidated Fixed
Charge Coverage shall not be less than 2.00 as at June 30, 1996 and as at the
end of each fiscal quarter occurring thereafter.
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SECTION 6.3 Total Debt. The Guarantor will not, and will
not permit Consolidated Total Debt to exceed 66 % of Consolidated Total
Capitalization at any time.
ARTICLE VII
GUARANTOR EVENTS OF DEFAULT
SECTION 7.1 Guarantor Events of Default. If any of the
following events (each such event being a "Guarantor Event of Default") shall
occur and be continuing for any reason whatsoever (and whether such occurrence
shall be voluntary or involuntary or come about or be effected by operation of
law or otherwise):
(a) the Guarantor defaults in the payment of any amount
due hereunder; or
(b) any representation or warranty made by or on behalf
of the Guarantor in this Guaranty or in any writing furnished in
connection with or pursuant to this Guaranty shall be false in any
material respect on the date as of which made; or
(c) the Guarantor fails to perform or observe any
agreement contained in Article VI; or
(d) the Guarantor fails to perform or observe any other
agreement, term or condition contained in this Guaranty and such
failure shall not be remedied within 30 consecutive days after the
earlier of (i) the date on which such failure shall first have become
known to any Responsible Officer or (ii) the date on which written
notice thereof shall have been received by a Responsible Officer of
the Guarantor from the Trustee or any Holder of any Bond; or
(e) the Guarantor or any Subsidiary (i) defaults in any
payment of principal of or interest on any other Debt beyond any
period of grace provided with respect thereto, or (ii) fails to
perform or observe any other agreement, term or condition contained in
any agreement under which any such Debt is created within any
applicable grace period provided therein (or if any other event
thereunder or under any such agreement shall occur and be continuing)
and the effect of such failure or other event is (A) to then cause
such Debt to become due prior to any stated maturity or (B) to then
permit the Holder or Holders of such Debt (or a trustee on behalf of
such Holder or Holders) to cause such Debt to become due prior to any
stated maturity, provided that the aggregate outstanding principal
amount of all Debt as to which such payment defaults shall occur and
be continuing or such failures or other events causing or permitting
acceleration shall occur and be continuing exceeds $1,000,000; or
(f) the Guarantor or any Subsidiary makes an assignment
for the benefit of creditors or is generally not paying its debts as
such debts become due; or
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(g) any decree or order for relief in respect of the
Guarantor or any Subsidiary is entered under any bankruptcy,
reorganization, compromise, arrangement, insolvency, readjustment of
debt, dissolution or liquidation or similar law, whether now or
hereafter in effect (herein called the "Bankruptcy Law"), of any
jurisdiction; or
(h) the Guarantor or any Subsidiary petitions or applies
to any tribunal for, or consents to, the appointment of, or taking
possession by, a trustee, receiver, custodian, liquidator or similar
official of the Guarantor or any Subsidiary, or of any substantial
part of the assets of the Guarantor or any Subsidiary, or commences a
voluntary case under the Bankruptcy Law of the United States of
America or any proceedings (other than proceedings for the voluntary
liquidation and dissolution of a Subsidiary that is not a Restricted
Subsidiary) relating to the Guarantor or any Subsidiary under the
Bankruptcy Law of any other jurisdiction; or
(i) any such petition or application is filed, or any
such proceedings as described in clause (h) above are commenced,
against the Guarantor or any Subsidiary and the Guarantor or such
Subsidiary by any act indicates its approval thereof, consent thereto
or acquiescence therein, or an order, judgment or decree is entered
appointing any such trustee, receiver, custodian, liquidator or
similar official, or approving the petition in any such proceedings,
and such order, judgment or decree remains unstayed and in effect for
more than 60 consecutive days; or
(j) any order, judgment or decree is entered in any
proceedings against the Guarantor or any Subsidiary decreeing the
dissolution, winding-up or liquidation of the Guarantor or such
Subsidiary and such order, judgment or decree remains unstayed and in
effect for more than 60 consecutive days; or
(k) any order, judgment or decree is entered in any
proceedings against the Guarantor or any Subsidiary decreeing a
split-up of the Guarantor or such Subsidiary which requires the
divestiture of assets representing a substantial part, or the
divestiture of the stock of or partnership or other ownership interest
in a Subsidiary whose assets represent a substantial part, of the
combined assets of the Guarantor and the Subsidiaries (determined in
accordance with generally accepted accounting principles) or which
requires the divestiture of assets, or stock of or partnership or
other ownership interest in a Subsidiary, which shall have contributed
a substantial part of the combined net income of the Guarantor and the
Subsidiaries (determined in accordance with generally accepted
accounting principles) for any of the three fiscal years then most
recently ended, and such order, judgment or decree remains unstayed
and in effect for more than 60 consecutive days; or
(l) a final judgment or final judgments (which are
nonappealable or have not been stayed pending appeal or as to which
all rights to appeal have been expired or exhausted) in an aggregate
amount in excess of $500,000 is rendered against the Guarantor or any
Subsidiary and, within 30 consecutive days after entry thereof, such
judgment is not
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discharged or execution thereof stayed pending appeal, or within 30
consecutive days after the expiration of any such stay, such judgment
is not discharged; or
(m) this Guaranty or any other Transaction Document shall
at any time, for any reason, cease to be in full force and effect or
shall be declared to be null and void in whole or in any material part
by the final judgment of any court or other Governmental Authority or
regulatory authority having jurisdiction in respect thereof, or the
validity or the enforceability of this Guaranty or any other
Transaction Document shall be contested by or on behalf of the
Guarantor, or the Guarantor shall renounce this Guaranty or any other
Transaction Document, or deny that it is bound by the terms hereof or
thereof or has any further liability hereunder or thereunder; or
(n) any Termination Event with respect to a Plan shall
have occurred, and, 30 days after a Responsible Officer shall become
aware, (i) such Termination Event (if correctable) shall not have been
corrected and (ii) the then present value of such Plan's benefit
liabilities exceeds the then current value of assets accumulated in
such Plan ("Unfunded Liabilities") by more than the amount of $500,000
(or in the case of a Termination Event involving the withdrawal of a
"substantial employer") (as defined in section 4001(a)(2) of ERISA),
the withdrawing employer's proportionate share of such excess shall
exceed such amount; or
(o) there shall have occurred a complete or partial
withdrawal from, or a default, within the meaning of section
4219(c)(5) of ERISA, with respect to one or more Multiemployer Plans
which could cause the Guarantor or one or more of the members of the
ERISA Group to incur a withdrawal liability in an aggregate amount in
excess of $500,000; or
(p) any member of the ERISA Group shall (i) engage in any
prohibited transaction described in section 406 of ERISA or section
4975 of the Code for which a statutory or class exemption is not
available or a private exemption has not been previously obtained from
the Department of Labor and which shall result in a Material Adverse
Effect; (ii) seek or permit to exist any accumulated funding
deficiency (as defined in section 412 of the Code), whether or not
waived, with respect to any Plan; (iii) fail to timely pay an amount
or amounts aggregating in excess of $500,000 which it is required to
pay to or with respect to any Multiemployer Plan and/or Benefit
Arrangement; or (iv) amend a Plan resulting in an increase in current
liability for the plan year such that security to such Plan is
required under section 401(a)(29) of the Code; or
(q) a Plan shall have Unfunded Liabilities in excess of
$5,000,000 or the aggregate of Unfunded Liabilities of all Plans
(excluding in such computation any Plan with assets greater than
benefit liabilities) exceeds $5,000,000; or
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(r) the Guarantor or any member of the ERISA Group shall
incur any liability for (or have an obligation or commitment to
provide) health benefits to any Person beyond such Person's retirement
or other termination of service, other than coverage mandated by Title
I, Subtitle B, Part 6 of ERISA, which coverage is fully paid by such
Person; or
(s) the occurrence of any Event of Default;
then, the Guarantor agrees that, to the fullest extent permitted by law, as
between the Guarantor, on the one hand, and the Trustee and the Holders of the
Bonds, on the other, (i) if such event is an Guarantor Event of Default
specified in clauses (f), (g), (h) or (i) of this Section 7.1, all of the Bond
Obligations and the other Guaranteed Obligations shall thereupon be and become
deemed to be automatically due and payable including all interest accrued
thereon and the Make- Whole Amount, if any, with respect to each Bond, without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Guarantor, notwithstanding any stay, injunction or other
prohibition preventing the Bond Obligations and the other Guaranteed
Obligations from becoming automatically due and payable and that, in the event
that the Bond Obligations being deemed to have become automatically due and
payable, the Bond Obligations and the other Guaranteed Obligations (whether or
not due and payable by the Issuer or any other Person) shall forthwith become
due and payable by the Guarantor for purposes of this clause (i), and (ii) if
such event is any other Event of Default, the Trustee may and, upon the request
of the Required Holders, shall by notice to the Guarantor, declare all of the
Bond Obligations and the other Guaranteed Obligations to be, and all of the
Bond Obligations and the other Guaranteed Obligations shall thereupon be and
become, immediately due and payable as provided in Section 6.2 of the Indenture
including all interest accrued thereon and the Make-Whole Amount, if any, with
respect to each Bond for purposes of this Section 7.1, notwithstanding any
stay, injunction or other prohibition preventing such declaration as against
the Issuer or any other Person and that, in the event of such declaration, the
Bond Obligations and the other Guaranteed Obligations (whether or not due and
payable by the Issuer or any other Person) shall forthwith become due and
payable by the Guarantor under this Guaranty without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by the
Guarantor.
SECTION 7.2 Other Remedies. If any Event of Default shall
occur and be continuing, the Trustee and each the Holder of any Bond may
proceed to protect and enforce its rights under this Guaranty, such Bond and
each other Financing Document by exercising such remedies as are available to
the Trustee or such Holder of a Bond in respect thereof under applicable law,
either by suit, in equity or by action at law, or both, whether for specific
performance of any covenant or other agreement contained in this Guaranty or
such other Bond Document or in aid of the exercise of any power granted in this
Guaranty. No remedy conferred in this Guaranty or any other Financing Document
upon the Trustee or any Holder of any Bond is intended to be exclusive of any
other remedy, and each and every such remedy shall be cumulative and shall be
in addition to every other remedy conferred herein or in any Financing Document
or now or hereafter existing at law or in equity or by statute or otherwise.
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ARTICLE VIII
BOND PURCHASE OPTION
During the existence of any Event of Default, the Guarantor
may, at its sole option, provide the Trustee and each Holder of the Bonds at
such Holder's address specified in the Bond Register with facsimile notice
(confirmed by a notice sent by overnight mail or overnight courier service)
that on the date specified in such notice (which date shall not be less than
five business days after receipt by the Trustee and such Holder of such notice
(such date being the "Purchase Date") Guarantor will purchase 100% of the
Outstanding Bonds for a price (the "Purchase Price") equal to the unpaid
principal and unpaid interest accrued on the Bonds to the Purchase Date
together with the Make-Whole Amount, if any, on the Bonds calculated to the
Purchase Date; provided, however, if the Purchase Date occurs after the Bonds
have been accelerated pursuant to Section 6.2 of the Indenture, the Make-Whole
Amount, if any, shall be calculated to the date of such acceleration. By
accepting the benefits of this Guaranty, each Holder of a Bond agrees that upon
receipt of the notice specified in the preceding sentence, it will sell its
Bonds to the Guarantor on the Purchase Date for the Purchase Price. On the
Purchase Date, the Guarantor shall irrevocably pay the Purchase Price to the
Trustee pursuant to Section 9.1 for the equal and ratable benefit of the
Holders and deliver to the Trustee a duly executed Purchaser's Letter against
receipt by the Guarantor from each Holder of (a) its Bonds together with bond
powers or other appropriate documents of transfer, transferring all of such
Holder's right, title and interest in its Bonds to the Guarantor and (b) a
certificate of such Holder certifying to the Guarantor (i) its ownership of the
Bonds to be transferred to the Guarantor free and clear of all Liens created by
such Holder and (ii) the outstanding principal and accrued interest on such
Bonds and the Make-Whole Amount, if any, on such Bonds calculated to the
Purchase Date.
ARTICLE IX
MISCELLANEOUS
SECTION. 9.1 Payments. All amounts payable or to be payable
to the Trustee or the Holders pursuant to this Guaranty (including payments
pursuant to Article VIII) shall be payable in lawful money of the United States
of America and shall be made by wire transfer of immediately available funds to
the Trustee as from time to time the Trustee shall have directed to the
Guarantor in writing, or, if no such direction shall have been given, by check
of the Guarantor payable to the order of the Trustee and mailed to the Trustee
in the manner and at the address set forth in Section 9.5.
SECTION 9.2 Expenses. (a) The Guarantor will pay all
reasonable costs and expenses incurred after the Closing Date by the Trustee or
any Holder of a Bond in connection with this Guaranty and any amendments,
waivers or consents under or in respect of this Guaranty (including any
amendment, waiver or consent that is requested but does not become effective)
and in connection with the preparation, execution and delivery of the
Assumption Agreement and the
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Supplement and the transactions referred to in Section 2.4 and Section 2.5 (the
preparation, execution and delivery of the Assumption Agreement, the Supplement
and the transactions referred to in Section 2.4 and Section 2.5 being
collectively, the "Assumption Transactions"). Such costs and expenses include,
but are not limited to:
(i) the reasonable fees, expenses and disbursements of
any counsel in connection with any amendments, waivers or consents
referred to above, and all out-of-pocket expenses incurred by the
Trustee and the Holders of the Bonds in connection with any such
amendments or waivers;
(ii) the reasonable fees, expenses and disbursements of
any counsel in connection with the Assumption Transactions, and all
out-of-pocket expenses incurred by the Trustee, the Issuer and the
Holders of the Bonds in connection with the Assumption Transactions;
(iii) all reasonable costs and expenses, including
reasonable attorneys' fees, incurred in enforcing (or determining
whether or how to enforce) any rights under this Guaranty or in
responding to any subpoena or other legal process or informal
investigative demand issued in connection with this Guaranty, or
otherwise in connection with the transactions contemplated hereby
(other than such costs and expenses related to responding to any such
subpoena, process or demand required of the Trustee or a Holder by its
regulators in the ordinary course of the Trustee's or such Holder's
business); and
(iv) all reasonable costs and expenses, including
reasonable attorneys' and financial advisors' fees, incurred in
connection with the insolvency or bankruptcy of the Guarantor or any
Subsidiary or in connection with any work-out or restructuring of the
transactions contemplated hereby and by the Bonds.
(b) The obligations of the Guarantor under this Section
9.2 shall survive the enforcement, amendment or waiver of any provision of this
Guaranty, and the termination of this Guaranty.
SECTION 9.3 Amendment and Waivers. Any provision of this
Guaranty may be amended or waived if, but only if, such amendment or waiver is
in writing and is signed by the Trustee and the Holders and, in the case of any
amendment, the Guarantor. No failure on the part of the Trustee to exercise,
and no delay in exercising, any right hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.
SECTION 9.4 Successors and Assigns. This Guaranty shall be
binding upon the Guarantor and its permitted successors and assigns and shall
inure to the benefit of the Trustee, the Holders from time to time of the Bonds
and their respective successors and assigns.
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SECTION 9.5 Notices. Any and all notices, requests or other
communications hereunder shall be given in writing and delivered by: (a)
regular, overnight, registered or certified mail (return receipt requested),
with first class postage prepaid; (b) hand delivery; (c) facsimile
transmission; or (d) overnight courier service, to the Guarantor and the
Trustee at the following address or facsimile number for such Person:
(i) if to the Guarantor, to it at:
000 Xxxxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: President
Facsimile Number: (000) 000-0000
Telephone Number: (000) 000-0000
(ii) if to the Trustee, to it at:
00 Xxxx 0xx Xxxxxx
Xxxxx, Xxxxxxxx 00000
Attention: Corporate Trust Department
Facsimile Number: (000) 000-0000
Telephone Number: (000) 000-0000
or at such other address or number as shall be designated by such Person in a
notice to the other parties given in accordance with this Section 9.5. Except
as otherwise provided in this Guaranty, all such communications shall be deemed
to have been duly given: (A) in the case of a notice sent by regular mail, on
the date actually received by the addressee; (B) in the case of a notice sent
by registered or certified mail, on the date receipted for (or refused) on the
return receipt; (C) in the case of a notice delivered by hand, when personally
delivered; (D) in the case of a notice sent by facsimile, upon transmission
subject to telephone confirmation of receipt; and (E) in the case of a notice
sent by overnight mail or overnight courier service, the date delivered at the
designated address, in each case given or addressed as aforesaid.
SECTION 9.6 Severability. Should any clause, sentence,
paragraph, subsection or section of this Guaranty be judicially declared to be
invalid, unenforceable or void, such decision will not have the effect of
invalidating or voiding the remainder of this Guaranty, and the parties hereto
agree that the part or parts of this Guaranty so held to be invalid,
unenforceable or void will be deemed to have been stricken herefrom by the
parties hereto, and the remainder will have the same force and effectiveness as
if such stricken part or parts had never been included herein.
SECTION 9.7 Conflicts With Indemnity Agreement. In the case
of any conflict or inconsistency between the provisions of this Guaranty and
the provisions of the Indemnity Agreement, the provisions of this Guaranty
shall prevail and shall be given effect.
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SECTION 9.8 Counterparts. This Guaranty may be executed in
any number of counterparts and by the parties hereto in separate counterparts,
each of which when so executed shall be deemed an original and all of which
taken together shall constitute but one and the same agreement.
SECTION 9.9 Entire Agreement. This Guaranty sets forth all
of the covenants, agreements, conditions, understandings, warranties and
representations among the Guarantor and the Trustee and the Holders relative to
the subject matter hereof, and any previous agreement among such parties with
respect to the subject matter hereof is superseded by this Guaranty.
SECTION 9.10 GOVERNING LAW. THIS GUARANTY SHALL BE GOVERNED
BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE
PARTIES SHALL BE GOVERNED BY, THE LAW OF THE STATE OF TEXAS.
IN WITNESS WHEREOF, the parties hereto have executed this Guaranty to
be executed effective as of the date first stated herein, by their respective
officers thereunto duly authorized.
CORRECTIONS CORPORATION OF AMERICA
By:
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Name:
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Title:
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EDEN CORRECTIONAL FACILITIES
CORPORATION
By:
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Name:
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Title: President of the Board of Directors
LIBERTY BANK AND TRUST COMPANY OF
TULSA, NATIONAL ASSOCIATION,
AS TRUSTEE
By:
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Name: Xxxxx X. Xxxxxxxxxx
Title: Senior Vice President and Trust Officer
