1
EXHIBIT 10.4
RIGHT TO PURCHASE AGREEMENT
THIS RIGHT TO PURCHASE AGREEMENT (the "Agreement"), dated as of
July 7, 1997,is made and entered into by and between CORRECTIONS
CORPORATION OF AMERICA, a Delaware corporation (hereinafter referred to as
"CCA"), and CCA PRISON REALTY TRUST, a Maryland real estate investment trust
(hereinafter referred to as the "Company").
RECITALS
WHEREAS, the Company has as of the date herewith agreed to acquire
from CCA or certain of its affiliates the property described in Exhibit A
attached hereto, consisting of certain land, improvements, appurtenances and
fixtures thereon or thereto, which are operated by CCA as correctional or
detention facilities (hereinafter referred to as the "Leased Facilities") and
the Company has an option to acquire and lease back to CCA certain other
correctional or detention facilities (the "Option Facilities") pursuant to
certain Option Agreements of even date herewith (the "Option Agreements"); and
WHEREAS, in addition to the Leased Facilities, CCA has or will have an
ownership interest in certain other existing correctional or detention
facilities and is developing or intending to develop or acquire additional
correctional and detention facilities in the future; and
WHEREAS, CCA desires to grant to the Company herewith a right of first
refusal under certain circumstances to purchase all Existing Facilities and
Future Facilities pursuant to the terms of this Agreement; and
WHEREAS, CCA further desires to grant the Company herewith a right of
first refusal to finance CCA's future acquisition of certain facilities,
pursuant to the terms of this Agreement; and
WHEREAS, CCA desires to grant to the Company herewith an option under
certain circumstances to purchase Future Facilities;
NOW, THEREFORE, in consideration of the sum of Ten Dollars ($10.00),
the mutual covenants and agreements contained herein, in the Option Agreements,
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, CCA and the Company agree as follows:
1. Right of First Refusal (Purchase). The Company shall have a
right of first refusal to purchase (hereinafter referred to as the "Purchase
Refusal Right") any correctional or detention facility owned by CCA or any of
its Affiliates (as defined herein), including the Option Facilities
2
(hereinafter referred to as the "Existing Facilities") and any correctional or
detention facility which is acquired or developed in the future, and owned, by
CCA or any of its Affiliates (hereinafter referred to as the "Future
Facilities"), subject to the terms and conditions hereof. If, following the
date hereof, CCA shall receive a bona fide third party offer to Transfer any
Existing Facilities or Future Facilities, then, prior to accepting such third
party offer, CCA shall send written notice and a copy thereof to the Company
("CCA's Sale Notice"). The Company shall have ninety (90) days after receipt
of CCA's Sale Notice to exercise the Company's Purchase Refusal Right, by
giving CCA written notice thereof. Failure of the Company to exercise the
Purchase Refusal Right within such time period set forth above shall be deemed
to extinguish the Purchase Refusal Right for a period of one hundred eighty
(180) days. Thereafter, prior to the expiration of such one hundred eighty
(180) days, CCA may Transfer such Existing Facility or Future Facility provided
however, that the Transfer of the Existing Facility or Future Facility is at a
price equal to or greater than the price contained in CCA's Sale Notice, and
otherwise consistent in all material respects with the terms and conditions set
forth in CCA's Sale Notice. The Company's Purchase Refusal Right shall revive
in the event that CCA fails to Transfer the Existing Facility or Future
Facility within said one hundred eighty (180) days. In the event that the
Company elects to exercise the Purchase Refusal Right and to acquire the
Existing Facility or Future Facility thereby, the Company shall acquire such
Existing Facility or Future Facility on the same terms and conditions and
subject to all time periods and other limitations as provided in CCA's Sale
Notice (provided, however, the Company shall in all events have not less than
ninety (90) days to close its acquisition of the Existing Facility or Future
Facility following its written notice exercising its Purchase Refusal Right).
Notwithstanding the foregoing provisions, the Purchase Refusal Right
shall not be applicable to any Transfer of an Existing Facility or a Future
Facility to any Affiliate of CCA.
2. Right of First Refusal (Financing). The Company shall have a
right of first refusal to provide CCA with first mortgage financing for CCA's
costs of acquiring, developing or financing any correctional or detention
facility (the " Financed Facilities"), subject to the terms and conditions
hereof. If, following the date hereof, CCA determines to acquire, develop or
finance any Financed Facility and receives a proposal or commitment from a
third party lender to provide financing for at least ninety percent (90%) of
the costs of such acquisition or development (or 90% of the value of the
Financed Facility in the case of a financing of a facility not being acquired
or developed) secured by a first mortgage on such Financed Facility, CCA shall
send written notice and a copy thereof to the Company ("Financing Notice") and
further setting forth in reasonable detail the anticipated terms and conditions
of such acquisition, development or financing and such other information
regarding the Financed Facility as is reasonably available to CCA. If the
Company, within thirty (30) days after receipt of such Financing Notice,
provides a financing commitment on terms substantially similar or more
favorable to CCA than that set forth in such Financing Notice (the "Financing
Commitment"), CCA shall accept the Financing Commitment and acquire, develop or
finance the subject Financed Facility, and the financing shall proceed to close
in accordance with terms of the Financing Commitment. If the Company does not
provide a Financing Commitment, CCA may proceed to acquire, develop or finance
the Financed Facility and may obtain such alternative first mortgage financing
for such acquisition, development or financing as it shall desire provided, the
terms,
2
3
conditions and costs of any such alternative first mortgage financing shall be
no less favorable to CCA than those contained in such Financing Notice, unless
CCA shall have again presented the Company with a Financing Notice and complied
with the provisions of this Section 2 with respect thereto.
3. Option. The Company shall have an option to acquire any
Future Facility for a period of three (3) years following the date CCA first
receives inmates in such Future Facility ("Service Commencement Date"). The
price at which Company may acquire such Future Facility shall be the fair
market value of the Future Facility, as reasonably and mutually determined by
Company and CCA, provided, Company and CCA agree that for the first two (2)
years following the Service Commencement Date the fair market value of any such
Future Facility shall be deemed to be equal to CCA's actual costs and expenses
to acquire, develop, design, construct and equip such Future Facility ("CCA's
Cost"), as reflected on the books of CCA, plus five percent (5%) of CCA's Cost.
Company's exercise of such option shall require Company to acquire such Future
Facility on such terms and conditions as Company and CCA shall reasonably
agree, which shall be generally consistent with the terms and conditions of
Company's initial acquisition of the Leased Facilities on the date hereof.
Upon such acquisition, Company shall lease such Future Facility to CCA on the
same terms and conditions as the Leased Facilities are leased to CCA, and
Company and CCA shall execute a new lease, or an amendment to the existing
lease, with respect thereto (any such new lease or amendment to an existing
lease shall constitute an "operating lease" for all tax and accounting
purposes). For Future Facilities acquired pursuant to this paragraph 3 within
five(5) years of the date hereof, the Base Rent shall be the greater of (i)
the fair market rental value of such Future Facility, as reasonably and
mutually determined by Company and CCA and (ii) eleven percent (11%) of the
purchase price of such Future Facility. For Future Facilities acquired
pursuant to this paragraph 3 thereafter, the Base Rent shall be the fair market
rental value of such Future Facility, as reasonably and mutually determined by
the Company and CCA.
4. Definitions. An "Affiliate" as used herein shall mean any
Person directly or indirectly controlling, controlled by, or under common
control with that Person.
A "Person" as used herein shall mean and include natural persons,
corporations, limited partnerships, general partnerships, joint stock
companies, joint ventures, associations, companies, trusts, banks, trust
companies, land trusts, business trusts, Indian tribes or other organizations,
whether or not legal entities, and governments and agencies and political
subdivisions thereof.
A "Transfer" is any direct or indirect sale, conveyance or other
disposition, including any transfer of a controlling ownership interest in any
owning Person, and including any lease with a term in excess of five (5) years.
5. Term of the Agreement. This Agreement shall be effective upon
the closing of the Company's acquisition of the Leased Facilities and shall
expire on the earlier to occur of (i) the expiration or termination of all of
the Leases relating to any Existing Facilities or Future Facilities or (ii)
fifteen (15) years from the effective date hereof.
6. Remedies. In the event CCA breaches this Agreement, the
Company shall have all rights and remedies available at law or in equity and
the Company shall be entitled, and is expressly and irrevocably authorized by
CCA, to demand and obtain specific performance, including, without limitation,
temporary and permanent injunctive relief, and all other appropriate and
equitable relief
3
4
against CCA in order to enforce against CCA any of the covenants and agreements
contained in this Agreement and/or to prevent any breach or threat of breach by
CCA of the covenants and agreements of CCA contained in this Agreement. Should
the Company prevail in any action to enforce this Agreement, the Company shall
be entitled to recover all of its costs and expenses relating thereto,
including reasonable attorney's fees and expenses.
7. Notices. CCA and the Company hereby agree that all notices,
demands, requests and consents (hereinafter "Notices") required to be given
pursuant to the terms of this Agreement shall be in writing and shall be
addressed as follows:
If to CCA: Corrections Corporation of America 000
Xxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxxx
With a copy to: Xxxxxx & Xxxxxxxxxxx, P.A.
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxxxxx X. Xxxxx
If to the Company: CCA Prison Realty Trust
0000 Xxxxxx Xxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
With a copy to: Xxxxxxxx & Xxx, PLC
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxxx 00000
Attn: Xxx X. Xxxxx
and shall be served by (i) personal delivery, (ii) certified mail, return
receipt requested, postage prepaid, or (iii) nationally recognized overnight
courier. All Notices shall be deemed to be given upon the earlier of actual
receipt or three (3) days after mailing, or one (1) business day after deposit
with the overnight courier. Any Notices meeting the requirements of this
Section shall be effective, regardless of whether or not actually received.
CCA or the Company may change its notice address at any time by giving the
other party Notice of such change.
8 . Captions and Headings. The captions and headings are inserted
only as a matter of convenience and for reference and in no way define, limit
or describe the scope of this Agreement or the intent of any provision hereof.
9. Governing Law. This Agreement shall be construed under the
laws of the State of Tennessee.
4
5
10. Binding Effect. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective heirs,
executors, administrators, legal representatives, successors, and assigns.
11. Time is of the Essence. With respect to all provisions of
this Agreement, time is of the essence.
12. Recordation. At the option of CCA or the Company, this
Agreement, or a memorandum hereof, may be recorded in the real estate records
of any county which Landlord or Tenant deems appropriate in order to provide
legal notice of the existence hereof.
CORRECTIONS CORPORATION OF AMERICA
By: /s/ Doctor X. Xxxxxx
------------------------------
Title: Chairman of the Board and
Chief Executive Officer
---------------------------
CCA PRISON REALTY TRUST
By: /s/ Doctor X. Xxxxxx III
------------------------------
Title: President
---------------------------
5
6
STATE OF TENNESSEE
COUNTY OF DAVIDSON
Before me, Xxxxx X. Xxxxxxx, a Notary Public of the State and County
aforesaid, personally appeared Doctor X. Xxxxxx, with whom I am personally
acquainted (or proved to me on the basis of satisfactory evidence), and who,
upon oath, acknowledged himself to be Chairman of the Board and Chief Executive
Officer of CORRECTIONS CORPORATION OF AMERICA, the within named bargainor, a
Tennessee corporation, and that he as such Chairman of the Board and Chief
Executive Officer being authorized so to do, executed the foregoing instrument
for the purposes therein contained, by signing the name of the corporation by
himself as Chairman of the Board and Chief Executive Officer.
WITNESS my hand and official seal at Nashville, Davidson County, this 7th
day of July, 1997.
/s/ Xxxxx X. Xxxxxxx
---------------------------------------
Notary Public
My Commission Expires: July 25, 1998
STATE OF TENNESSEE
COUNTY OF DAVIDSON
Before me, Xxxxx X. Xxxxxxx, a Notary Public of the State and County
aforesaid, personally appeared Doctor X. Xxxxxx, III, with whom I am personally
acquainted (or proved to me on the basis of satisfactory evidence), and who,
upon oath, acknowledged himself to be President of CCA PRISON REALTY TRUST, the
within named bargainor, a Maryland real estate investment trust, and that he as
such President being authorized so to do, executed the foregoing instrument for
the purposes therein contained, by signing the name of the real estate
investment trust by himself as President.
WITNESS my hand and official seal at Nashville, Davidson County, Tennessee,
this 7th day of July, 1997.
/s/ Xxxxx X. Xxxxxxx
--------------------------------------
Notary Public
My Commission Expires: July 25, 1998
6
7
EXHIBIT A
The Leased Facilities
Location
Facility Name (City, State)
------------- -------------
Bridgeport Pre-Parole Transfer Facility Bridgeport, Texas
Central Arizona Detention Center Florence, Arizona
Houston Processing Center Houston, Texas
Laredo Processing Center Laredo, Texas
Leavenworth Detention Center Leavenworth, Texas
Mineral Xxxxx Pre-Parole Transfer Facility Mineral Wells, Texas
West Tennessee Detention Facility Mason, Tennessee
T. Xxx Xxxxx Correctional Facility Taylor, Texas
Xxxx Detention Facility Eloy, Arizona
