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EXHIBIT 10.1
MASTER AGREEMENT TO LEASE
BETWEEN
PRISON REALTY CORPORATION AND USCC, INC.
AND
CORRECTIONAL MANAGEMENT SERVICES CORPORATION, TENANT
DATED: JANUARY 1, 1999
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TABLE OF CONTENTS
ARTICLE I SEPARATE LEASE AGREEMENTS; PREMISES AND TERM................1
1.01 Separate Lease Agreements...................................1
1.02 Leased Property.............................................1
1.03 Term........................................................2
1.04 Holding Over................................................2
1.05 Surrender...................................................3
ARTICLE II RENT........................................................3
2.01 Base Rent...................................................3
2.02 Additional Rent.............................................3
2.02.01 Other Additional Rent.......................................3
2.03 Place(s) of Payment of Rent; Direct Payment of Other
Additional Rent.............................................4
2.04 Net Lease...................................................4
2.05 No Termination, Abatement, Etc..............................4
ARTICLE III IMPOSITIONS AND UTILITIES...................................5
3.01 Payment of Impositions......................................5
3.02 Definition of Impositions...................................6
3.03 Utilities...................................................6
3.04 Escrow of Impositions.......................................6
3.05 Discontinuance of Utilities.................................7
ARTICLE IV INSURANCE...................................................7
4.01 Property Insurance..........................................7
4.02 Liability Insurance.........................................8
4.03 Insurance Requirements......................................8
4.04 Replacement Cost............................................9
4.05 Blanket Policy..............................................9
4.06 No Separate Insurance.......................................9
4.07 Waiver of Subrogation......................................10
4.08 Mortgages..................................................10
ARTICLE V INDEMNITY; HAZARDOUS SUBSTANCES............................10
5.01 Tenant's Indemnification...................................10
5.02 Hazardous Substances or Materials..........................11
5.03 Limitation of Landlord's Liability.........................12
ARTICLE VI USE AND ACCEPTANCE OF PREMISES.............................12
6.01 Use of Leased Property.....................................12
6.02 Acceptance of Leased Property..............................12
6.03 Conditions of Use and Occupancy............................13
6.04 Financial Statements and Other Information.................13
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ARTICLE VII REPAIRS, COMPLIANCE WITH LAWS, AND MECHANICS'
LIENS......................................................13
7.01 Maintenance................................................13
7.02 Compliance with Laws.......................................13
7.03 Required Alterations.......................................14
7.04 Mechanics' Liens...........................................14
7.05 Replacements of Fixtures...................................14
ARTICLE VIII ALTERATIONS AND SIGNS; TENANT'S PROPERTY; CAPITAL
ADDITIONS TO THE LEASED PROPERTY...........................15
8.01 Tenant's Right to Construct................................15
8.02 Scope of Right.............................................15
8.03 Cooperation of Landlord....................................16
8.04 Commencement of Construction...............................16
8.05 Rights in Tenant Improvements..............................17
8.06 Personal Property..........................................17
8.07 Requirements for Personal Property.........................17
8.08 Signs......................................................18
8.09 Financings of Capital Additions to a Leased Property.......19
ARTICLE IX DEFAULTS AND REMEDIES......................................21
9.01 Events of Default..........................................21
9.02 Remedies...................................................23
9.03 Right of Set-Off...........................................25
9.04 Performance of Tenant's Covenants..........................25
9.05 Late Charge................................................25
9.06 Litigation; Attorneys' Fees................................25
9.07 Remedies Cumulative........................................26
9.08 Escrows and Application of Payments........................26
9.09 Power of Attorney..........................................26
ARTICLE X DAMAGE AND DESTRUCTION.....................................26
10.01 General....................................................26
10.02 Landlord's Inspection......................................27
10.03 Landlord's Costs...........................................27
10.04 Rent Abatement.............................................28
10.05 Substantial Damage During Lease Term.......................28
10.06 Damage Near End of Term....................................28
ARTICLE XI CONDEMNATION...............................................29
11.01 Total Taking...............................................29
11.02 Partial Taking.............................................29
11.03 Restoration................................................29
11.04 Landlord's Inspection......................................30
11.05 Award Distribution.........................................30
11.06 Temporary Taking...........................................30
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ARTICLE XII ASSIGNMENT AND SUBLETTING; ATTORNMENT......................30
12.01 Prohibition Against Subletting and Assignment..............30
12.02 Changes of Control.........................................31
12.03 Operating/Service Agreements...............................31
12.03.01 Permitted Agreements.......................................31
12.03.02 Terms of Agreements........................................31
12.03.03 Copies.....................................................32
12.03.04 Assignment of Rights in Agreements.........................32
12.03.05 Licenses, Etc..............................................32
12.04 Assignment.................................................32
12.05 REIT Limitations...........................................32
12.06 Attornment.................................................33
ARTICLE XIII ARBITRATION................................................33
13.01 Controversies..............................................33
13.02 Appointment of Arbitrators.................................33
13.03 Arbitration Procedure......................................33
13.04 Expenses...................................................34
13.05 Enforcement of the Arbitration Award.......................34
ARTICLE XIV QUIET ENJOYMENT, SUBORDINATION, ATTORNMENT,
ESTOPPEL CERTIFICATES......................................34
14.01 Quiet Enjoyment............................................34
14.02 Landlord Mortgages; Subordination..........................34
14.03 Attornment; Non-Disturbance................................35
14.04 Estoppel Certificates......................................35
ARTICLE XV MISCELLANEOUS..............................................36
15.01 Notices....................................................36
15.02 Advertisement of Leased Property...........................36
15.03 Landlord's Access..........................................36
15.04 Entire Agreement...........................................37
15.05 Severability...............................................37
15.06 Captions and Headings......................................37
15.07 Governing Law..............................................37
15.08 Memorandum of Lease........................................37
15.09 Waiver.....................................................37
15.10 Binding Effect.............................................37
15.11 Authority..................................................37
15.12 Transfer of Permits, Etc...................................38
15.13 Modification...............................................38
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15.14 Incorporation by Reference.................................38
15.15 No Merger..................................................38
15.16 Laches.....................................................38
15.17 Waiver of Jury Trial.......................................38
15.18 Permitted Contests.........................................39
15.19 Construction of Lease......................................39
15.20 Counterparts...............................................39
15.21 Relationship of Landlord and Tenant........................39
15.22 Landlord's Status as a REIT................................39
15.23 Sale of Real Estate Assets.................................40
ARTICLE XVI NONDISCLOSURE AND RELATED MATTERS..........................40
16.01 Covenant Not to Disclose...................................40
16.02 Non-Interference Covenant..................................40
16.03 Business Materials and Property Disclosure.................41
16.04 Breach by Landlord.........................................41
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MASTER AGREEMENT TO LEASE
THIS MASTER AGREEMENT TO LEASE ("Agreement") dated as of the 1st day of
January, 1999 by and between PRISON REALTY CORPORATION, a Maryland corporation
("Prison Realty") and USCC, INC., a direct subsidiary of Prison Realty ("USCC"
("Landlord"), and CORRECTIONAL MANAGEMENT SERVICES CORPORATION, a Tennessee
corporation ("Tenant").
RECITALS
WHEREAS, Landlord currently owns certain correctional and detention
facilities which Tenant desires to lease in order to engage in the business of
managing and operating correctional and detention facilities;
WHEREAS, Landlord may from time to time lease additional properties that
Landlord may acquire to Tenant;
WHEREAS, Landlord and Tenant desire that each of the properties listed on
Schedule A and each additional property that Landlord may lease to Tenant shall
be the subject of a separate and individual lease agreement describing said
property, the rent and various other terms of said lease (each such lease
agreement referred to individually as a "Lease," and the property that is the
subject of an individual Lease being referred to as "Leased Property"); and
WHEREAS, Landlord and Tenant desire to set forth in this Agreement certain
terms and conditions applicable to all Leases of all Leased Properties, except
as any individual Lease with respect to a particular Leased Property may
otherwise provide;
NOW, THEREFORE, in consideration of the premises and of their respective
agreements and undertakings herein and in each Lease, Landlord and Tenant agree
as follows:
ARTICLE I
SEPARATE LEASE AGREEMENTS; LANDLORD; PREMISES AND TERM
1.01 Separate Lease Agreements. Landlord and Tenant are concurrently
entering into a separate Lease for each of the Leased Properties referred to in
Schedule A hereto, and may in the future enter into one or more additional
separate Leases for one or more additional Leased Properties. Except as
specifically set forth in a separate Lease, or any amendment, supplement,
schedule or exhibit thereto, all of the provisions of this Agreement shall be
deemed to be incorporated into and made a part of each such separate Lease made
between the Landlord as landlord (or Lessor) and the Tenant as tenant (or
Lessee) during the term of such separate Lease. The parties to this Agreement
hereby agree that for all purposes of this Agreement, and for all purposes of
any Lease executed by USCC in connection herewith, the term "Landlord" shall
mean and refer collectively to Prison Realty and USCC, respectively, whose
obligations are joint and several under
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this Agreement and any Lease executed by. The obligation of USCC as Landlord
hereunder shall be limited to those representations, warranties, covenants and
agreements in this Agreement arising out of or relating to the Leases to which
(as the case may be) is a party and the Leased Properties owned by USCC (as the
case may be).
1.02 Leased Property. Except as set forth in an individual Lease (including
any schedule or exhibit thereto), the property that is the subject of each Lease
and that shall be considered as leased by the Landlord to the Tenant thereunder
shall consist of:
(a) The land described in the Lease, together with all rights,
titles, appurtenant interests, covenants, licenses, privileges and benefits
thereto belonging, and any easements, rights-of-way, rights of ingress or
egress or other interests in, on, or to any land, highway, street, road or
avenue, open or proposed, in, on, across, in front of, abutting or
adjoining such real property including, without limitation, any strips and
gores adjacent to or lying between such real property and any adjacent real
property (the "Land");
(b) All buildings, improvements, structures and Fixtures now located
or to be located or to be constructed on the Land, including, without
limitation, landscaping, parking lots and structures, roads, drainage and
all above ground and underground utility structures, equipment systems and
other so-called "infrastructure" improvements (the "Improvements");
(c) All equipment, machinery, fixtures, and other items of real
and/or personal property, including all components thereof, located in, on
or used in connection with, and permanently affixed to or incorporated
into, the Improvements, including, without limitation, all furnaces,
boilers, heaters, electrical equipment, heating, plumbing, lighting,
ventilating, refrigerating, incineration, air and water pollution control,
waste disposal, air-cooling and air-conditioning systems and apparatus,
sprinkler systems and fire and theft protection equipment, and similar
systems, all of which, to the greatest extent permitted by law, are hereby
deemed to constitute real estate, together with all replacements,
modifications, alterations and additions thereto (collectively the
"Fixtures");
(d) All furniture, equipment, inventory and other personal property
located on the Land and owned by Landlord (the "Personal Property"). For
purposes hereof, (i) Personal Property shall include all items of property
which Tenant is obligated to install, place, use, maintain, repair and/or
replace pursuant to the provisions of Sections 8.06 and 8.07 hereof,
however, such Personal Property is and shall remain the property of Tenant
until the expiration or termination of this Lease.
The Land, Improvements, Fixtures and Personal Property are hereinafter referred
to as the "Leased Property."
SUBJECT, HOWEVER, to the easements, liens, encumbrances, restrictions,
agreements, and other title matters existing as of date of this Agreement.
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1.03 Term. The term of each Lease shall be as set forth in the individual
Lease for a particular Leased Property, and the date on which the term of each
lease commences is referred to as the Commencement Date.
1.04 Holding Over. Should Tenant, without the express consent of Landlord,
continue to hold and occupy the Leased Property after the expiration of the
Term, such holding over beyond the Term and the acceptance or collection of Rent
by the Landlord shall operate and be construed as creating a tenancy from
month-to-month and not for any other term whatsoever. During any such holdover
period Tenant shall pay to Landlord for each month (or portion thereof) Tenant
remains in the Leased Property one hundred fifty percent (150%) of the Base Rent
in effect on the expiration date. Said month-to-month tenancy may be terminated
by Landlord by giving Tenant ten (10) days written notice, and at any time
thereafter Landlord may re-enter and take possession of the Leased Property.
1.05 Surrender. Except as a result of (i) Tenant Improvements and Capital
Additions (as such terms are defined in Section 8.01 hereof); (ii) normal and
reasonable wear and tear (subject to the obligation of Tenant to maintain the
Leased Property in good order and repair during the Term); and (iii) casualty,
taking or other damage and destruction not required to be repaired by Tenant,
Tenant shall surrender and deliver up the Leased Property, including all
Personal Property and replacements thereof required to be provided by Tenant
pursuant to the terms of Sections 8.06 and 8.07 hereof, at the expiration or
termination of the Term broom clean, free of all Tenant's personal property (but
not the Personal Property), and in as good order and condition as of the
Commencement Date.
ARTICLE II
RENT; DEFERRAL
2.01 Base Rent. Unless otherwise provided in an individual Lease, Tenant
shall pay Landlord annual base rent for each Leased Property that is the subject
of a Lease, without notice, demand, set-off or counterclaim, in advance, in
lawful money of the United States of America, in the amount specified therein
(the "Base Rent") for the Term in consecutive monthly installments payable on
the twenty-fifth (25th) day of each month during the Term, in accordance with
the Base Rent Schedule set forth in or attached to each individual Lease. The
Base Rent for each Leased Property shall be based on the fair market value of
such property.
2.02 Additional Rent. On each Rent Escalation Date (as defined in each
Lease), the Tenant shall pay Landlord an amount (the "Additional Rent") each
year equal to a percentage of the prior year Total Rent (for the purposes
hereof, Total Rent is Base Rent plus Additional Rent) under such Lease, such
percentage being the greater of (i) four percent (4%) or (ii) the percentage
which is twenty-five percent (25%) of the percentage increase in gross
management revenues realized by Tenant (or its predecessor in interest) from
operations at the applicable Leased Property for such prior year exclusive of
any such increase as is attributable to an expansion in the size or number of
beds in such Leased Property. The Additional Rent shall be payable monthly, in
advance, along with Base Rent, and otherwise in the manner as set forth in
Section 2.01 above. Tenant shall provide to Landlord, not
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later than thirty (30) days following each Rent Escalation Date, Tenant's
statement, certified by Tenant's chief financial officer, setting forth such
percentage increase in gross management revenues realized by Tenant for the
applicable Leased Facility for the prior year.
2.02.01 Other Additional Rent. In addition to Base Rent and Additional
Rent, Tenant shall pay all other amounts, liabilities, obligations and
Impositions (as hereinafter defined ) which Tenant assumes or agrees to pay
under this Agreement or any Lease and any fine, penalty, interest, charge and
cost which may be added for nonpayment or late payment of such items
(collectively the "Other Additional Rent").
2.03 Place(s) of Payment of Rent; Direct Payment of Other Additional Rent.
The Base Rent, Additional Rent and Other Additional Rent are hereinafter
referred to as "Rent." Landlord shall have all legal, equitable and contractual
rights, powers and remedies provided either in this Agreement, in any Lease or
by statute or otherwise in the case of nonpayment of the Rent. Tenant shall make
all payments of Base Rent and Additional Rent at Landlord's principal place of
business or as Landlord may otherwise from time to time direct in writing, and
all payments of Other Additional Rent directly to the person or persons to whom
such amount is owing at the time and times when such payments are due, and shall
give to Landlord such evidence of such direct payments as Landlord shall
reasonably request.
2.04 Net Lease. Each Lease shall be deemed and construed to be an "absolute
net lease" or "triple net lease," and Tenant shall pay all Rent, Impositions (as
hereinafter defined), and other charges and expenses in connection with each
Leased Property throughout the Term, without abatement, deduction or set-off.
2.05 No Termination, Abatement, Etc. Except as otherwise specifically
provided in this Agreement or a particular Lease, Tenant shall remain bound by
this Agreement or such Lease in accordance with its terms. Except as otherwise
specifically provided in the Agreement or a particular Lease, Tenant shall not,
without the prior written consent of Landlord, modify, surrender or terminate
the Agreement or such Lease, nor seek nor be entitled to any abatement,
deduction, deferment or reduction of Rent, or set-off against the Rent. Except
as specifically provided in this Agreement or a particular Lease, the
obligations of Landlord and Tenant shall not be affected by reason of (i) the
lawful or unlawful prohibition of, or restriction upon, Tenant's use of the
Leased Property, or any part thereof, the interference with such use by any
person, corporation, partnership or other entity, or by reason of eviction by
paramount title; (ii) any claim which Tenant has or might have against Landlord
or by reason of any default or breach of any warranty by Landlord under this
Agreement or a particular Lease or any other agreement between Landlord and
Tenant, or to which Landlord and Tenant are parties; (iii) any bankruptcy,
insolvency, reorganization, composition, readjustment, liquidation, dissolution,
winding up or other proceeding affecting Landlord or any assignee or transferee
of Landlord; or (iv) any other cause, whether similar or dissimilar to any of
the foregoing, other than a discharge of Tenant from any such obligations as a
matter of law. Except as otherwise specifically provided in this Agreement or a
particular Lease, and to the maximum extent permitted by law, Tenant hereby
specifically waives all rights, including but not limited to any rights under
any statute relating to rights of tenants in any state in which any Leased
Property is located, arising from any occurrence whatsoever, which may now or
hereafter be conferred upon it by law (a) to modify,
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surrender or terminate any Lease or quit or surrender the Leased Property or any
portion thereof; or (b) entitling Tenant to any abatement, reduction, suspension
or deferment of the Rent or other sums payable by Tenant hereunder. The
obligations of Landlord and Tenant hereunder shall be separate agreements and
the Rent and all other sums shall continue to be payable in all events unless
the obligations to pay the same shall be terminated pursuant to the express
provisions of this Agreement or a particular Lease or by termination of this
Agreement or a particular Lease other than by reason of an Event of Default.
2.06 Deferral of Base Rent and Additional Rent. So long as, and only so
long as, that certain Credit Agreement (the "Credit Agreement"), dated as of
December 31, 1998 among Tenant, as Borrower, certain Credit Parties thereto, the
Persons signatory thereto, as Lender and General Electric Capital Corporation,
as agent, for Lenders ("GECC") is outstanding and has not been terminated, the
following provisions shall apply hereunder, notwithstanding any other provisions
hereof:
Upon the occurrence and during the existence of a Triggering Event (as
defined below), ten percent (10%) of the Base Rent and the Additional
Rent under each Lease shall be deferred (collectively, the "Deferred
Rent") and shall not be due and payable by Tenant during the existence
of a Triggering Event. At such time as a Triggering Event ceases to
exist (as described below), the Deferred Rent shall then become due
and payable by Tenant on a quarterly basis in the amount (if any) by
which the Tenant's EBITDA (without giving effect to any deferral of
rents) is in excess of the Target EBITDA (as defined below) for the
four quarter period ending immediately prior to the date of such
payment. The Deferred Rent shall continue to accrue and shall remain
an obligation of Tenant hereunder, however, the same shall not be due
and payable during the existence of a Triggering Event and the failure
to pay the same during the existence of a Triggering Event shall not
constitute an Event of Default.
For purposes of this Section 2.06, the Triggering Event shall occur
two months after the end of any trailing four quarter period in which
the Tenant's EBITDA is less than the Minimum EBITDA (as set forth on
Annex I attached hereto),, with respect to such period, and such
Triggering Event shall be deemed to continue to exist until two months
(or such later date that the applicable financial statements are
delivered) after the end of any subsequent trailing four quarter
period in which Tenant's EBITDA (without giving effect to any deferral
of rents) is equal to or greater than the Target EBITDA (as set forth
on Annex I hereto).
Capitalized terms used herein, but not otherwise defined herein, shall
have the meanings ascribed to such terms in the Credit Agreement.
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ARTICLE III
IMPOSITIONS AND UTILITIES
3.01 Payment of Impositions. Subject to the adjustments set forth herein,
Tenant shall pay, as Other Additional Rent, all Impositions (as hereinafter
defined) that may be levied or become a lien on the Leased Property or any part
thereof at any time (whether prior to or during the Term), without regard to
prior ownership of said Leased Property, before the same becomes delinquent.
Tenant shall furnish to Landlord on an annual basis copies of official receipts
or other satisfactory proof evidencing such payments. Tenant's obligation to pay
such Impositions shall be deemed absolutely fixed upon the date such Impositions
become a lien upon the Leased Property or any part thereof. Tenant, at its
expense, shall prepare and file all tax returns and reports in respect of any
Imposition as may be required by governmental authorities, provided, Landlord
shall be responsible for the preparation and filing of any such tax returns or
reports in respect of any real or personal property owned by Landlord. Tenant
shall be entitled to any refund due from any taxing authority if no Event of
Default (as hereinafter defined) shall have occurred hereunder and be
continuing. Landlord shall be entitled to any refund from any taxing authority
if an Event of Default has occurred and is continuing. Any refunds retained by
Landlord due to an Event of Default shall be applied as provided in Section
9.08. Landlord and Tenant shall, upon request of the other, provide such data as
is maintained by the party to whom the request is made with respect to the
Leased Property as may be necessary to prepare any required returns and reports.
In the event governmental authorities classify any property covered by this
Lease as personal property, Landlord and Tenant shall file all personal property
tax returns in such jurisdictions where they may legally so file with respect to
their respective owned personal property. Landlord, to the extent it possesses
the same, and Tenant, to the extent it possess the same, will provide the other
party, upon request, with cost and depreciation records necessary for filing
returns for any property so classified as personal property. Where Landlord is
legally required to file personal property tax returns, Tenant will be provided
with copies of assessment notices indicating a value in excess of the reported
value in sufficient time for Tenant to file a protest. Tenant may, upon notice
to Landlord, at Tenant's option and at Tenant's sole cost and expense, protest,
appeal, or institute such other proceedings as Tenant may deem appropriate to
effect a reduction of real estate or personal property assessments and Landlord,
at Tenant's expense as aforesaid, shall fully cooperate with Tenant in such
protest, appeal, or other action. Tenant shall provide Landlord copies of all
materials filed or presented in connection with any such proceeding. Tenant
shall promptly reimburse Landlord for all personal property taxes paid by
Landlord upon receipt of xxxxxxxx accompanied by copies of a xxxx therefor and
payments thereof which identify the personal property with respect to which such
payments are made. Impositions imposed in respect to the tax-fiscal period
during which the Term commences and terminates shall be adjusted and prorated
between Landlord and Tenant on a per diem basis, with Tenant being obligated to
pay its pro rata share from and including the Commencement Date to and including
the expiration or termination date of the Term, whether or not such Imposition
is imposed before or after such commencement or termination, and Tenant's
obligation to pay its prorated share thereof shall survive such termination.
Tenant shall also pay to Landlord a sum equal to the amount which Landlord may
be caused to pay of any privilege tax, sales tax, gross receipts tax, rent tax,
occupancy tax or like tax (excluding any tax based on net income), hereinafter
levied, assessed, or imposed by any federal, state, county or
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municipal governmental authority, or any subdivision thereof, upon or measured
by rent or other consideration required to be paid by Tenant under this
Agreement.
3.02 Definition of Impositions. "Impositions" means, collectively, (i)
taxes (including without limitation, all real estate and personal property ad
valorem (whether assessed as part of the real estate or separately assessed as
unsecured personal property), sales and use, business or occupation, single
business, gross receipts, transaction, privilege, rent or similar taxes, but not
including income or franchise or excise taxes payable with respect to Landlord's
receipt of Rent); (ii) assessments (including without limitation, all
assessments for public improvements or benefits, whether or not commenced or
completed prior to the date hereof and whether or not to be completed within the
Term); (iii) ground rents, water, sewer or other rents and charges, excises, tax
levies, and fees (including without limitation, license, permit, inspection,
authorization and similar fees); (iv) to the extent they may become a lien on
the Leased Property all taxes imposed on Tenant's operations of the Leased
Property including without limitation, employee withholding taxes, income taxes
and intangible taxes; and (v) all other governmental charges, in each case
whether general or special, ordinary or extraordinary, or foreseen or unforseen,
of every character in respect of the Leased Property or any part thereof and/or
the Rent (including all interest and penalties thereon due to any failure in
payment by Tenant), which at any time prior to, during or in respect of the Term
hereof may be assessed or imposed on or in respect of or be a lien upon (a)
Landlord or Landlord's interest in the Leased Property or any part thereof; (b)
the Leased Property or any part thereof or any rent therefrom or any estate,
right, title or interest therein; or (c) any occupancy, operation, use or
possession of, or sales from, or activity conducted on, or in connection with
the Leased Property or the leasing or use of the Leased Property or any part
thereof. Tenant shall not, however, be required to pay (i) any tax based on net
income (whether denominated as a franchise or capital stock or other tax)
imposed on Landlord; or (ii) except as provided in Section 13.01, any tax
imposed with respect to the sale, exchange or other disposition by Landlord of
any Leased Property or the proceeds thereof; provided, however, that if any tax,
assessment, tax levy or charge which Tenant is obligated to pay pursuant to the
first sentence of this definition and which is in effect at any time during the
Term hereof is totally or partially repealed, and a tax, assessment, tax levy or
charge set forth in clause (i) or (ii) immediately above is levied, assessed or
imposed expressly in lieu thereof Tenant shall then pay such tax, levy, or
charge set forth in said clause (i) or (ii).
3.03 Utilities. Tenant shall contract for, in its own name, and will pay,
as Other Additional Rent all taxes, assessments, charges/deposits, and bills for
utilities, including without limitation charges for water, gas, oil, sanitary
and storm sewer, electricity, telephone service, trash collection, and all other
utilities which may be charged against the occupant of the Improvements during
the Term. Tenant shall at all times maintain that amount of heat necessary to
ensure against the freezing of water lines. Tenant hereby agrees to indemnify
and hold Landlord harmless from and against any liability or damages to the
utility systems and the Leased Property that may result from Tenant's failure to
maintain sufficient heat in the Improvements.
3.04 Escrow of Impositions. In the event Tenant persistently fails to
timely pay Impositions with respect to any Leased Facility, then, upon thirty
(30) days written notice from Landlord to Tenant, Tenant shall thereafter
deposit with Landlord on the first day of each month during the remaining Term
hereof and any extended Term, a sum equal to one-twelfth (1/12th) of the
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Impositions assessed against such Leased Property which sums shall be used by
Landlord toward payment of such Impositions. If, at the end of any applicable
tax year, any such funds held by Landlord are insufficient to make full payment
of taxes or other Impositions for which such funds are held, Tenant, on demand,
shall pay to Landlord any additional funds necessary to pay and discharge the
obligations of Tenant pursuant to the provisions of this section. If, however,
at the end of any applicable tax year, such funds held by Landlord are in excess
of the total payment required to satisfy taxes or other Impositions for which
such funds are held, Landlord shall apply such excess amounts to Tenant's tax
and Imposition escrow fund for the next tax year. If any such excess exists
following the expiration or earlier termination of any Lease, and subject to
Section 9.08 below, Landlord shall promptly refund such excess amounts to
Tenant. The receipt by Landlord of the payment of such Impositions by and from
Tenant shall only be as an accommodation to Tenant and the taxing authorities,
and shall not be construed as rent or income to Landlord, Landlord serving, if
at all, only as a conduit for delivery purposes. All such deposits by Tenant
shall be held in an interest-bearing account with one or more national banks
having total assets of not less than $1,000,000,000, with all interest thereon
accruing in favor of Tenant. In lieu of making escrow deposits as aforesaid,
Tenant may elect to provide Landlord with a letter of credit, or a payment bond,
in the face amount of one year's Impositions on the subject Leased Property,
issued by a national bank or reputable bonding or surety company, in all
respects reasonably acceptable to Landlord. Said letter of credit or payment
bond shall be drawable or callable, as the case may be, upon Tenant's failure to
timely pay any such Impositions, for the sole purpose of providing the funds
necessary to pay such Impositions, and shall otherwise be in form and substance
reasonably satisfactory to Landlord.
For purposes hereof, "persistently fails to timely pay Impositions" shall
mean failure to timely pay any Imposition with respect to any Leased Premises
for any two (2) Lease Years in any five (5) Lease Year Period, notwithstanding
Tenant's subsequent payment of such Impositions.
3.05 Discontinuance of Utilities. Landlord will not be liable for damages
to person or property or for injury to, or interruption of, business for any
discontinuance of utilities nor will such discontinuance in any way be construed
as an eviction of Tenant or cause an abatement of Rent or operate to release
Tenant from any of Tenant's obligations under this Lease.
ARTICLE IV
INSURANCE
4.01 Property Insurance. Tenant shall, at Tenant's expense, keep the
Improvements, Fixtures, and other components of the Leased Property insured
against the following risks:
(a) Loss or damage by fire, vandalism and malicious mischief,
sprinkler leakage and all other physical loss perils commonly covered by
"All Risk" insurance in an amount not less than one hundred percent (100%)
of the then full replacement cost thereof (as hereinafter defined). Such
policy shall include an agreed amount endorsement if available at a
reasonable cost. Such policy shall also include endorsements for contingent
liability for operation of building laws, demolition costs, and increased
cost of construction.
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(b) Loss or damage by explosion of steam boilers, pressure vessels,
or similar apparatus, now or hereafter installed on the Leased Property, in
commercially reasonable amounts acceptable to Landlord.
(c) Loss of rent under a rental value or business interruption
insurance policy covering risk of loss during the first six (6) months of
reconstruction necessitated by the occurrence of any hazards described in
Sections 4.01(a) or 4.01(b), above, and which causes an abatement of Rent
as provided in Article X hereof, in an amount sufficient to prevent
Landlord or Tenant from becoming a co-insurer, containing endorsements for
extended period of indemnity and premium adjustment, and written with an
agreed amount clause, if the insurance provided for in this clause (c) is
available.
(d) If the Land is located in whole or in part within a designated
flood plain area, loss or damage caused by flood in commercially reasonable
amounts acceptable to Landlord.
(e) Loss or damage commonly covered by blanket crime insurance
including employee dishonesty, loss of money orders or paper currency,
depositor's forgery, and loss of property accepted by Tenant for
safekeeping, in commercially reasonable amounts acceptable to Landlord.
(f) In connection with any repairs or rebuilding by Tenant under
Article X hereof, Tenant shall maintain (or cause its contractor to
maintain) appropriate builder's risk insurance covering any loss or
casualty to the subject Improvements during the course of such repairs or
rebuilding.
4.02 Liability Insurance. Tenant shall, at Tenant's expense, maintain
liability insurance against the following:
(a) Claims for personal injury or property damage commonly covered by
comprehensive general liability insurance with endorsements for blanket,
contractual, personal injury, owner's protective liability, real property,
fire damage, legal liability, broad form property damage, and extended
bodily injury, with commercially reasonable amounts for bodily injury and
property damage acceptable to Landlord, but with a combined single limit of
not less than Five Million Dollars ($5,000,000.00) per occurrence and Ten
Million Dollars ($10,000,000.00) in the aggregate. At Landlord's request,
such $5,000,000.00 and $10,000,000.00 minimum requirements shall be
increased by up to four percent (4%) per year.
(b) Claims commonly covered by worker's compensation insurance for
all persons employed by Tenant on the Leased Property. Such worker's
compensation insurance shall be in accordance with the requirements of all
applicable local, state, and federal law.
4.03 Insurance Requirements. The following provisions shall apply to all
insurance coverages required hereunder:
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(a) The carriers of all policies shall have a Best's Rating of "A-"
or better and a Best's Financial Category of XII or larger and shall be
authorized to do insurance business in the state in which the Leased
Property is located.
(b) Tenant shall be the "named insured" and Landlord and any
mortgagee of Landlord shall be an "additional named insured" on each
policy.
(c) Tenant shall deliver to Landlord certificates or policies showing
the required coverages and endorsements. The policies of insurance shall
provide that the policy may not be canceled or not renewed, and no material
change or reduction in coverage may be made, without at least thirty (30)
days' prior written notice to Landlord.
(d) The policies shall contain a severability of interest and/or
cross-liability endorsement, provide that the acts or omissions of Tenant
will not invalidate the Landlord's coverage, and provide that Landlord
shall not be responsible for payment of premiums.
(e) All loss adjustment shall require the written consent of Landlord
and Tenant, as their interests may appear.
(f) At least ten (10) days prior to the expiration of each policy,
Tenant shall deliver to Landlord a certificate showing renewal of such
policy and payment of the annual premium therefor.
Landlord shall have the right to review the insurance coverages required
hereunder with Tenant from time to time, to obtain the input of third party
professional insurance advisors (at Landlord's expense) with respect to such
insurance coverages, and to consult with Tenant in Tenant's annual review and
renewal of such insurance coverages. All insurance coverages hereunder shall be
in such form, substance and amounts as are customary or standard in Tenant's
industry.
4.04 Replacement Cost. The term "full replacement cost" means the actual
replacement cost thereof from time to time including increased cost of
construction, with no reductions or deductions. Tenant shall, not later than
thirty (30) days after the anniversary of each policy of insurance, of the Term,
increase the amount of the replacement cost endorsement for the Improvements. If
Tenant makes any Permitted Alterations (as hereinafter defined) to the Leased
Property, Landlord may have such full replacement cost redetermined at any time
after such Permitted Alterations are made, regardless of when the full
replacement cost was last determined.
4.05 Blanket Policy. Tenant may carry the insurance required by this
Article under a blanket policy of insurance, provided that the coverage afforded
Tenant will not be reduced or diminished or otherwise be different from that
which would exist under a separate policy meeting all of the requirements of
this Agreement.
4.06 No Separate Insurance. Tenant shall not take out separate insurance
concurrent in form or contributing in the event of loss with that required in
this Article, or increase the amounts of any then existing insurance by securing
an additional policy or additional policies, unless all parties
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having an insurable interest in the subject matter of the insurance, including
Landlord and any mortgagees, are included therein as additional named insureds
or loss payees, the loss is payable under said insurance in the same manner as
losses are payable under this Agreement, and such additional insurance is not
prohibited by the existing policies of insurance. Tenant shall immediately
notify Landlord of the taking out of such separate insurance or the increasing
of any of the amounts of the existing insurance by securing an additional policy
or additional policies. The term "mortgages" as used in this Agreement includes
Deeds of Trust and the term "mortgagees" includes trustees and beneficiaries
under a Deed of Trust.
4.07 Waiver of Subrogation. Each party hereto hereby waives any and every
claim which arises or may arise in its favor and against the other party hereto
during the Term or any extension or renewal thereof, for any and all loss of, or
damage to, any of its property located within or upon, or constituting a part
of, the Leased Property, which loss or damage is covered by valid and
collectible insurance policies, to the extent that such loss or damage is
recoverable under such policies. Said mutual waiver shall be in addition to, and
not in limitation or derogation of, any other waiver or release contained in
this Lease with respect to any loss or damage to property of the parties hereto.
Inasmuch as the said waivers will preclude the assignment of any aforesaid claim
by way of subrogation (or otherwise) to an insurance company (or any other
person), each party hereto agrees immediately to give each insurance company
which has issued to it policies of insurance, written notice of the terms of
said mutual waivers, and to have such insurance policies properly endorsed, if
necessary, to prevent the invalidation of said insurance coverage by reason of
said waivers, so long as such endorsement is available at a reasonable cost.
4.08 Mortgages. The following provisions shall apply if Landlord now or
hereafter places a mortgage on the Leased Property or any part thereof: (i)
Tenant shall obtain a standard form of mortgage clause insuring the interest of
the mortgagee; (ii) Tenant shall deliver evidence of insurance to such
mortgagee; (iii) loss adjustment shall require the consent of the mortgagee; and
(iv) Tenant shall obtain such other coverages and provide such other information
and documents as may be reasonably required by the mortgagee.
ARTICLE V
INDEMNITY; HAZARDOUS SUBSTANCES
5.01 Tenant's Indemnification. Subject to Section 4.07, Tenant hereby
agrees to indemnify and hold harmless Landlord, its agents, and employees from
and against any and all demands, claims, causes of action, fines, penalties,
damages (including consequential damages), losses, liabilities (including strict
liability), judgments, and expenses (including, without limitation, attorneys'
fees, court costs, and the costs set forth in Section 9.06) incurred in
connection with or arising from: (i) the use, condition, operation or occupancy
of, or maintenance or repair by Tenant of, each Leased Property; (ii) any
activity, work, or thing done, or permitted or suffered by Tenant in or about
the Leased Property; (iii) any acts, omissions, or negligence of Tenant or any
person claiming under Tenant, or the contractors, agents, employees, invitees,
or visitors of Tenant or any such person; (iv) any claim of any person
incarcerated in the Leased Premises, including claims alleging breach or
violation of such person's civil or legal rights; (v) any breach, violation, or
nonperformance by Tenant
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or any person claiming under Tenant or the employees, agents, contractors,
invitees, or visitors of Tenant or of any such person, of any term, covenant, or
provision of this Agreement or any Lease or any law, ordinance, or governmental
requirement of any kind; (vi) any injury or damage to the person, property or
business of Tenant, its employees, agents, contractors, invitees, visitors, or
any other person entering upon the Leased Property under the express or implied
invitation of Tenant; (vii) and any accident, injury to or death of persons or
loss or damage to any item of property occurring at the Leased Property; and
(viii) any Impositions; (x) any liability Landlord may incur or suffer as a
result of any permitted contest by Tenant under any Lease. If any action or
proceeding is brought against Landlord, its employees, or agents by reason of
any such claim, Tenant, upon notice from Landlord, will defend the claim at
Tenant's expense with counsel reasonably satisfactory to Landlord. In the event
Landlord reasonably determines that its interests and the interests of Tenant in
any such action or proceeding are not substantially the same and that Tenant's
counsel cannot adequately represent the interests of Landlord therein, Landlord
shall have the right to hire separate counsel in any such action or proceeding
and the reasonable costs thereof shall be paid for by Tenant.
5.02 Hazardous Substances or Materials. Tenant shall not, either with or
without negligence, injure, overload, deface, damage or otherwise harm any
Leased Property or any part or component thereof; commit any nuisance; permit
the emission of any hazardous agents or substances; allow the release or other
escape of any biologically or chemically active or other hazardous substances or
materials so as to impregnate, impair or in any manner affect, even temporarily,
any element or part of any Leased Property, or allow the storage or use of such
substances or materials in any manner not sanctioned by law or by the highest
standards prevailing in the industry for the storage and use of such substances
or materials; nor shall Tenant bring onto any Leased Property any such materials
or substances; permit the occurrence of objectionable noise or odors; or make,
allow or suffer any waste whatsoever to any Leased Property. Landlord may
inspect the Leased Property from time to time, and Tenant will cooperate with
such inspections. Without limitation, "hazardous substances" for the purpose of
this Section 5.02 shall include any substances regulated by any local, state or
federal law relating to environmental conditions and industrial hygiene,
including, without limitation, the Resource Conservation and Recovery Act of
1976 ("RCRA"), the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 ("CERCLA"), as amended by the Superfund Amendments and
Reauthorization Act of 1986 ("XXXX"), the Hazardous Materials Transportation
Act, the Federal Water Pollution Control Act, the Clean Air Act, the Clean Water
Act, the Toxic Substances Control Act, the Safe Drinking Water Act, and all
similar federal, state and local environmental statutes, ordinances and the
regulations, orders, or decrees now or hereafter promulgated thereunder.
Notwithstanding the foregoing, Tenant anticipates using, storing and disposing
of certain hazardous substances in connection with operation of correctional or
detention facilities which are not in violation of the foregoing laws. Such
substances include, but are not limited to the following: medical wastes, diesel
fuel, maintenance and janitorial supplies, and waste from reprographic
activities. Upon request by Landlord, Tenant shall submit to Landlord annual
reports regarding Tenant's use, storage, and disposal of any of the foregoing
materials, said reports to include information regarding continued hazardous
materials inspections, personal interviews, and federal, state and local agency
listings. In addition, Tenant shall execute affidavits, representations and the
like from time to time at Landlord's request concerning Tenant's best knowledge
and belief regarding the presence or absence of hazardous materials on the
Leased Property. Other than for circumstances involving Landlord's gross
negligence or intentional misconduct, Tenant shall
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indemnify and hold harmless Landlord and any holder of a mortgage, deed of trust
or other security agreement on the Lease Property from and against all
liabilities (including punitive damages), costs and expenses (including
reasonable attorneys' fees) imposed upon or asserted against the Landlord or the
Leased Property on account of, among other things, any applicable federal, state
or local law, ordinance, regulation, order, permit, decree or similar items
relating to hazardous substances, human health or the environment (collectively,
"Environmental Laws") (irrespective of whether there has occurred any violation
of any Environmental Law), in respect of the Leased Property, including (a)
liability for response costs and for costs of removal and remedial action
incurred by the United States Government, any state or local governmental unit
to any other person or entity, or damages from injury to or destruction or loss
of natural resources, including the reasonable costs of assessing such injury,
destruction or loss, incurred pursuant to any Environmental Law, (b) liability
for costs and expenses of abatement, investigation, removal, remediation,
correction or clean-up, fines, damages, response costs or penalties which arise
from the provisions of any Environmental Law, (c) liability for personal injury
or property damage arising under any statutory or common-law tort theory,
including damages assessed for the maintenance of a public or private nuisance
or for carrying on of a dangerous activity or (d) by reason of a breach of an
environmental representation or warranty by Tenant.
5.03 Limitation of Landlord's Liability. Landlord, its agents and
employees, will not be liable for any loss, injury, death, or damage (including
consequential damages) to persons, property, or Tenant's business occasioned by
theft, act of God, public enemy, injunction, riot, strike, insurrection, war,
court order, requisition, order of governmental body or authority, fire,
explosion, falling objects, steam, water, rain or snow, leak or flow of water
(including water from the elevator system), rain or snow from any Leased
Property or into any Leased Property or from the roof, street, subsurface or
from any other place, or by dampness or from the breakage, leakage, obstruction,
or other defects of the pipes, sprinklers, wires, appliances, plumbing, air
conditioning, or lighting fixtures of the Leased Property, or from construction,
repair, or alteration of the Leased Property or from any acts or omissions of
any other occupant or visitor of the Leased Property, or from the presence or
release of any hazardous substance or material on or from the Leased Property or
from any other cause beyond Landlord's control.
ARTICLE VI
USE AND ACCEPTANCE OF PREMISES
6.01 Use of Leased Property. Tenant shall use and occupy each Leased
Property exclusively as a correctional or detention facility or other purpose
for which the Leased Property is being used at the Commencement Date of the
Term, and for no other purpose without the prior written consent of the
Landlord. Tenant shall obtain and maintain all approvals, licenses, and consents
needed to use and operate each Leased Property for such purposes. Tenant shall
promptly deliver to Landlord complete copies of surveys, examinations,
certification and licensure inspections, compliance certificates, and other
similar reports issued to Tenant by any governmental agency.
6.02 Acceptance of Leased Property. Except as otherwise specifically
provided in this Agreement or in any individual Lease, Tenant acknowledges that
(i) Tenant and its agents have had
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an opportunity to inspect the Leased Property; (ii) Tenant has found the Leased
Property fit for Tenant's use; (iii) delivery of the Leased Property to Tenant
is in an "as-is" condition; (iv) Landlord is not obligated to make any
improvements or repairs to the Leased Property; and (v) the roof, walls,
foundation, heating, ventilating, air conditioning, telephone, sewer,
electrical, mechanical, utility, plumbing, and other portions of the Leased
Property are in good working order. Tenant waives any claim or action against
Landlord with respect to the condition of the Leased Property. LANDLORD MAKES NO
WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, IN RESPECT OF THE LEASED
PROPERTY OR ANY PART THEREOF, EITHER AS TO ITS FITNESS FOR USE, DESIGN OR
CONDITION FOR ANY PARTICULAR USE OR PURPOSE OR OTHERWISE, AS TO QUALITY OR THE
MATERIAL OR WORKMANSHIP THEREIN, LATENT OR PATENT, IT BEING AGREED THAT ALL SUCH
RISKS ARE TO BE BORNE BY TENANT.
6.03 Conditions of Use and Occupancy. Tenant agrees that during the Term it
shall use and keep the Leased Property in a careful, safe and proper manner; not
commit or suffer waste thereon; not use or occupy the Leased Property for any
unlawful purposes; not use or occupy the Leased Property or permit the same to
be used or occupied, for any purpose or business deemed extra hazardous on
account of fire or otherwise; keep the Leased Property in such repair and
condition as may be required by the local board of health, or other city, state
or federal authorities, free of all cost to Landlord; not permit any acts to be
done which will cause the cancellation, invalidation, or suspension of any
insurance policy; and permit Landlord and its agents to enter upon the Leased
Property at all reasonable times after notice to Tenant to examine the condition
thereof.
6.04 Financial Statements and Other Information. Tenant shall provide
Landlord certain financial information and other information as follows:
(a) As soon as practicable and in any event within forty-five (45)
days after the end of each fiscal quarter, an unaudited consolidated balance
sheet of the Tenant and its subsidiaries as of the close of such fiscal quarter
and unaudited consolidated statements of income and cash flows for the fiscal
quarter then ended and that portion of the fiscal year then ended, all in
reasonable detail setting forth in comparative form the corresponding figures
for the preceding fiscal year and prepared by the Tenant in accordance with
generally accepted accounting principles consistently applied ("GAAP") and, if
applicable, containing disclosure of the effect on the financial position or
results of operations of any change in the application of accounting principles
and practices during the period, and certified by the chief financial officer of
Tenant to present fairly in all material respects the financial condition of the
Tenant as of their respective dates and the results of operations of the Tenant
for the respective periods then ended, subject to normal year-end adjustments.
(b) Additionally, as soon as practicable and in any event within
ninety (90) days after the end of each fiscal year, an audited consolidated
balance sheet of the Tenant and its subsidiaries as of the close of such fiscal
year and audited consolidated statements of income, retained earnings and cash
flows for the fiscal year then ended, including the notes thereto, all in
reasonable detail setting forth in comparative form the corresponding figures
for the preceding fiscal year and prepared by an independent certified public
accounting firm acceptable to the Landlord in accordance with GAAP and, if
applicable, containing disclosure of the effect of the financial position or
results of operation of any change in the application of accounting principles
and practices during the year, and
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accompanied by a report thereon by such certified public accountants that is not
qualified with respect to scope or limitations imposed by Tenant with respect to
accounting principles followed by Tenant not in accordance with GAAP.
(c) Tenant shall provide Landlord at the same time Tenant provides
copies of its quarterly and annual reports as aforesaid (or more often as may be
reasonably requested by Landlord in writing), the following additional financial
information for each calendar quarter hereafter, with respect to each Leased
Property: gross revenues, average occupancy rates and total cash flow (i.e.,
operating income plus depreciation and amortization plus Base Rent plus
Additional Rent hereunder).
(d) Prompt (but in no event later than ten (10) days after an officer
of Tenant obtains knowledge thereof) telephonic and written notice of:
(i) any notice of any violation relative to the Leased Property
received by Tenant or any subsidiary of Tenant from any
governmental authority including, without limitation, any
notice of violation of Environmental Laws;
(ii) any attachment, judgment, lien, levy or order relating to
the Leased Property that may be assessed against or
threatened against Tenant or any subsidiary thereof;
(iii) any Event of Default or any event which constitutes or
which with the passage of time or giving of notice or both
would constitute an Event of Default; and
(iv) any event which makes any of the representations or
warranties of Tenant set forth herein inaccurate in any
material respect.
(e) Within ten (10) days after each fiscal quarter, a certificate of
the Tenant's chief financial officer or president certifying (A) the occupancy
rates for each Leased Facility and (B) whether (i) an Event of Default or event
which constitutes or which with the passage of time or giving of notice or both
would constitute an Event of Default has occurred and is continuing or (ii) any
default, breach or event of default, or event which constitutes or which with
the passage of time or the giving of notice or both would constitute a default,
breach, or event of default, has occurred under or with respect to any credit
agreement, commitment to extend credit, loan agreement or loan document to which
Tenant or any of its affiliates is a party.
(f) All written information, reports, statements and other papers and
data furnished by or on behalf of Tenant to the Landlord whether pursuant to
this Article VI or any other provision of this Agreement, shall be, at the time
the same is so furnished, complete and correct in all material respects to the
extent necessary to give the Landlord or any lender for Landlord complete, true
and accurate knowledge of the subject matter based on the Tenant's knowledge
thereof. Further, Tenant hereby authorizes Landlord to furnish any such
information, reports, statements and other papers and data to any lender or to
investor in Landlord, as Landlord deems necessary or appropriate.
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ARTICLE VII
REPAIRS, COMPLIANCE WITH LAWS, AND MECHANICS' LIENS
7.01 Maintenance. Tenant shall maintain each Leased Property in good order,
repair and appearance, and repair each Leased Property, including without
limitation, all interior and exterior, structural and nonstructural repairs and
replacements to the roof, foundations, exterior walls, building systems, HVAC
systems, parking areas, sidewalks, water, sewer and gas connections, pipes, and
mains. Tenant shall pay as Other Additional Rent the full cost of maintenance,
repairs, and replacements. Tenant shall maintain all drives, sidewalks, parking
areas, and lawns on or about the Leased Property in a clean and orderly
condition, free of accumulations of dirt, rubbish, snow and ice. Tenant shall
permit Landlord to inspect the Leased Property at all reasonable times, and
shall implement all reasonable suggestions of the Landlord as to the maintenance
and replacement of the Leased Property.
7.02 Compliance with Laws. Tenant shall comply with all laws, ordinances,
orders, rules, regulations, and other governmental requirements relating to the
use, condition, or occupancy of each Leased Property, whether now or hereafter
enacted and in force including without limitation, (i) licensure requirements
for operation as a correctional or detention facility, (ii) requirements of any
board of casualty insurance underwriters or insurance service office for any
other similar body having jurisdiction over the Leased Property, and (iii) all
zoning and building codes and Environmental Laws. At Landlord's request, from
time to time, Tenant shall deliver to Landlord copies of certificates or permits
evidencing compliance with such laws, including without limitation, copies of
the correctional or detention facility licenses, certificates of occupancy and
building permits. Tenant shall provide Landlord with copies of any notice from
any governmental authority alleging any non-compliance by Tenant or any Leased
Facility with any of the foregoing requirements and such evidence as Landlord
may reasonably require of Tenant's remediation thereof. Tenant hereby agrees to
defend, indemnify and hold Landlord harmless from and against any loss,
liability (including strict liability), claim, damage (including consequential
damages), cost and expense (including attorneys' fees) resulting from any
failure by Tenant to comply with any laws, ordinances, rules, regulations, and
other governmental requirements.
7.03 Required Alterations. Tenant shall, at Tenant's sole cost and expense,
make any additions, changes, improvements or alterations to each Leased
Property, including structural alterations, which may be required by any
governmental authorities, including those required to continue licensure
requirements as a correctional or detention facility, whether such changes are
required by Tenant's use, changes in the law, ordinances, or governmental
regulations, defects existing as of the date of this Lease, or any other cause
whatsoever. Tenant shall provide prior written notice to Landlord of any changes
to each Leased Property pursuant to this Section 7.03 which involve changes to
the structural integrity of such Leased Property or materially affect the
operational capabilities or rated capacity of the Leased Facility. All such
additions, changes, improvements or alterations shall be deemed to be a Tenant
Improvement and shall comply with all laws requiring such alterations and with
the provisions of Section 8.01.
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7.04 Mechanics' Liens. Tenant shall have no authority to permit or create a
lien against Landlord's interest in the Leased Property, and Tenant shall post
notices or file such documents as may be required to protect Landlord's interest
in the Leased property against liens. Tenant hereby agrees to defend, indemnify,
and hold Landlord harmless from and against any mechanics' liens against the
Leased Property by reason of work, labor services or materials supplied or
claimed to have been supplied on or to the Leased Property. Tenant shall
immediately remove, bond-off, or otherwise obtain the release of any mechanics'
lien filed against the Leased Property. Tenant shall pay all expenses in
connection therewith, including without limitation, damages, interest, court
costs and reasonable attorneys' fees.
7.05 Replacements of Fixtures. Tenant shall not remove Fixtures from any
Leased Property except to replace the Fixtures by other similar items of equal
quality and value. Items being replaced by Tenant may be removed and shall
become the property of Tenant and items replacing the same shall be and remain
the property of the Landlord. Tenant shall execute, upon written request from
Landlord, any and all documents necessary to evidence Landlord's ownership of
the Fixtures and replacements therefor. Tenant may finance replacements for the
Fixtures by equipment lease or by a security agreement and financing statement;
provided, however, that for any item of Fixtures or Personal Property having a
cost greater than or equal to Twenty Thousand Dollars ($20,000.00), Tenant may
not finance replacements by security agreement or equipment lease unless (i)
Landlord has consented to the terms and conditions of the equipment lease or
security agreement; (ii) the equipment lessor or lender has entered into a
nondisturbance agreement with the Landlord upon terms and conditions acceptable
to Landlord, including without limitation, the following: (a) Landlord shall
have the right (but not the obligation) to assume such security agreement or
equipment lease upon the occurrence of an Event of Default by Tenant under any
Lease; (b) the equipment lessor or lender shall notify Landlord of any default
by Tenant under the equipment lease or security agreement and give Landlord a
reasonable opportunity to cure such default; and (c) Landlord shall have the
right to assign its rights under the equipment lease, security agreement, or
nondisturbance agreement; and (iii) Tenant shall, within thirty (30) days after
receipt of an invoice from Landlord, reimburse Landlord for all costs and
expenses incurred in reviewing and approving the equipment lease, security
agreement, and nondisturbance agreement, including without limitation,
reasonable attorneys' fees and costs.
ARTICLE VIII
ALTERATIONS AND SIGNS; TENANT'S PROPERTY;
CAPITAL ADDITIONS TO THE LEASED PROPERTY
8.01 Tenant's Right to Construct. During the Term of this Agreement, so
long as no Event of Default shall have occurred and be continuing as to the
Leased Property that is the subject of such improvements, Tenant may make
Capital Additions (as defined herein), or other alterations, additions, changes
and/or improvements to any Leased Property as deemed necessary or useful to
operate the Leased Property as a correction or detention facility (the "Primary
Intended Use") (individually, a "Tenant Improvement," or collectively, "Tenant
Improvements") with the prior written consent of the Landlord, which will not be
unreasonably withheld or delayed. "Capital Additions" shall mean the
construction of one or more new buildings or one or more additional structures
annexed to any portion
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of any of the Improvements on a particular Leased Property, which are
constructed on any parcel of land or portion of the Land of a particular Leased
Property during the Term of any individual Lease, including the construction of
a new floor, or the repair, replacement, restoration, remodeling or rebuilding
of the Improvements or any portion thereof on any Leased Property which are not
normal, ordinary or recurring to maintain the Leased Property. Except as
otherwise agreed to by Landlord in writing, any such Tenant Improvement shall be
made at Tenant's sole expense and shall become the property of Landlord upon
termination of this Lease. Unless made on an emergency basis to prevent injury
to person or property, Tenant will submit plans to Landlord for Landlord's prior
approval, such approval not to be unreasonably withheld or delayed, for any
Tenant Improvement which is not a Capital Addition and which has a cost of more
than $500,000 or a cost which, when aggregated with the costs of all such Tenant
Improvements for any individual Leased Facility in the same Lease Year, would
cause the total costs of all such Tenant Improvements to exceed $1,000,000. Such
$500,000 and $1,000,000 amounts shall be increased by four percent (4%) per
annum, cumulatively for each subsequent Lease Year. Additionally, in connection
with any Tenant Improvement, including any Capital Addition, Tenant shall
provide Landlord with copies of any plans and specification therefor, Tenant's
budget relating thereto, any required government permits or approvals, any
construction contracts or agreements relating thereto, and any other information
relating to such Tenant Improvement as Landlord shall reasonably request.
8.02 Scope of Right. Subject to Section 8.01 herein and Section 7.03
concerning required alterations, at Tenant's cost and expense, Tenant shall have
the right to:
(a) seek any governmental approvals, including building permits,
licenses, conditional use permits and any certificates of need that Tenant
requires to construct any Tenant Improvement;
(b) erect upon the Leased Property such Tenant Improvements as Tenant
deems desirable;
(c) make additions, alterations, changes and improvements in any
Tenant Improvement so erected; and
(d) engage in any other lawful activities that Tenant determines are
necessary or desirable for the development of the Leased Property in
accordance with its Primary Intended Use;
provided, however, Tenant shall not make any Tenant Improvement which would, in
Landlord's reasonable judgment, impair the value or Primary Intended Use of any
Leased Property without Landlord's prior written consent and provided, further
that Tenant shall not be permitted to create a mortgage, lien or any other
encumbrance on any individual Leased Property without Landlord's prior written
consent.
8.03 Cooperation of Landlord. Landlord shall cooperate with Tenant and take
such actions, including the execution and delivery to Tenant of any applications
or other documents, reasonably requested by Tenant in order to obtain any
governmental approvals sought by Tenant to construct any
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Tenant Improvement within ten (10) business days following the later of (a) the
date Landlord receives Tenant's request, or (b) the date of delivery of any such
application or document to Landlord, so long as the taking of such action,
including the execution of said applications or documents, shall be without cost
to Landlord (or if there is a cost to Landlord, such cost shall be reimbursed by
Tenant), and will not cause Landlord to be in violation of any law, ordinance or
regulation.
8.04 Commencement of Construction. Tenant agrees that:
(a) Tenant shall diligently seek all governmental approvals relating
to the construction of any Tenant Improvement;
(b) Once Tenant begins the construction of any Tenant Improvement,
Tenant shall diligently prosecute any such construction to completion in
accordance with applicable insurance requirements and the laws, rules and
regulations of all governmental bodies or agencies having jurisdiction over
the Leased Property;
(c) Landlord shall have the right at any time and from time to time
to post and maintain upon the Leased Property such notices as may be
necessary to protect Landlord's interest from mechanics' liens, material
men's liens or liens of a similar nature;
(d) Tenant shall not suffer or permit any mechanics' liens or any
other claims or demands arising from the work or construction of any Tenant
Improvement to be enforced against the Leased Property or any part thereof,
and Tenant agrees to hold Landlord and said Leased Property free and
harmless from all liability from any such liens, claims or demands,
together with all costs and expenses in connection therewith;
(e) All work shall be performed in a good and workmanlike manner
consistent with standards in the industry; and
(f) Subject to Section 8.09 in the case of Capital Additions, Tenant
shall not secure any construction or other financing for the Tenant
Improvements which is secured by a portion of the Leased Property without
Landlord's prior written consent, and any such financing (i) shall not
exceed the cost of the Tenant Improvements, (ii) shall be subordinate to
any mortgage or encumbrance now existing or hereinafter created with
respect to the Leased Property, and (iii) shall be limited solely to
Tenant's interest in the Leased Property that is the subject of the
improvements.
8.05 Rights in Tenant Improvements. Notwithstanding anything to the
contrary in this Lease, all Tenant Improvements constructed pursuant to Section
8.01, any and all subsequent additions thereto and alterations and replacements
thereof, shall be the sole and absolute property of Tenant during the Term of
the particular Lease. Upon the expiration or early termination of any Lease, all
such Tenant Improvements shall become the property of Landlord. Without limiting
the generality of the foregoing, Tenant shall be entitled to all federal and
state income tax benefits associated with any Tenant Improvement during the Term
of this Agreement.
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8.06 Personal Property. Tenant shall install, place, and use on the Leased
Property such fixtures, furniture, equipment, inventory and other personal
property in addition to the Fixtures as may be required or as Tenant may, from
time to time, deem necessary or useful to operate the Leased Property as a
correctional or detention facility.
8.07 Requirements for Personal Property. Tenant shall comply with all of
the following requirements in connection with Personal Property:
(a) With respect to each Leased Property, Tenant shall notify
Landlord within one hundred twenty (120) days after each Lease Year of any
additions, substitutions, or replacements of an item of Personal Property
at such Leased Property which individually has a cost of more than
$25,000.00 and shall furnish Landlord with such other information as
Landlord may reasonably request from time to time.
(b) The Personal Property shall be installed in a good and
workmanlike manner, in compliance with all governmental laws, ordinances,
rules, and regulations and all insurance requirements, and be installed
free and clear of any mechanics' liens.
(c) Tenant shall, at Tenant's sole cost and expense, maintain,
repair, and replace the Personal Property.
(d) Tenant shall, at Tenant's sole cost and expense, keep Personal
Property insured against loss or damage by fire, vandalism and malicious
mischief, sprinkler leakage, and other physical loss perils commonly
covered by fire and extended coverage, boiler and machinery, and difference
in conditions insurance in an amount not less than ninety percent (90%) of
the then full replacement cost thereof. Tenant shall use the proceeds from
any such policy for the repair and replacement of Personal Property. The
insurance shall meet the requirements of Section 4.03.
(e) Tenant shall pay all taxes applicable to Personal Property.
(f) If Personal Property is damaged or destroyed by fire or any other
case, Tenant shall promptly repair or replace Personal Property unless
Tenant is entitled to and elects to terminate the Lease pursuant to Section
10.05.
(g) Unless an Event of Default (or any event which, with the giving
of notice of lapse of time, or both, would constitute an Event of Default)
has occurred and remains uncured beyond any applicable grace period, Tenant
may remove Personal Property from the Leased Property from time to time
provided that (i) the items removed are not required to operate the Leased
Property as a licensed correctional or detention facility (unless such
items are being replaced by Tenant); and (ii) Tenant repairs any damage to
the Leased Property resulting from the removal of Personal Property.
(h) Tenant shall remove any of Tenant's personal property which does
not constitute Personal Property hereunder, upon the termination or
expiration of the Lease and
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shall repair any damage to the Leased Property resulting from the removal
of Tenant's personal property. If Tenant fails to remove Tenant's personal
property within ninety (90) days after the termination or expiration of the
Lease, then Tenant shall be deemed to have abandoned Tenant's personal
property, Tenant's personal property shall become the property of Landlord,
and Landlord may remove, store and dispose of Tenant's personal property.
In such event, Tenant shall have no claim or right against Landlord for
such property or the value thereof regardless of the disposition thereof by
Landlord. Tenant shall pay Landlord, upon demand, all expenses incurred by
Landlord in removing, storing, and disposing of Tenant's personal property
and repairing any damage caused by such removal. Tenant's obligations
hereunder shall survive the termination or expiration of the Lease.
Notwithstanding the foregoing, it is understood and agreed that all
property constituting Personal Property hereunder shall be and/or become
the sole and exclusive property of Landlord upon the expiration or
termination of the Lease.
(i) Tenant shall perform its obligations under any equipment lease or
security agreement for Personal Property.
8.08 Signs. Tenant may, at its own expense, erect and maintain
identification signs at the Leased Property, provided such signs comply with all
laws, ordinances, and regulations. Upon the occurrence of an Event of Default or
the termination or expiration of a Lease, Tenant shall, within thirty (30) days
after notice from Landlord, remove the signs and restore the applicable Leased
Property to its original condition.
8.09 Financings of Capital Additions to a Leased Property.
(a) Landlord may, but shall be under no obligation to, provide or
arrange construction, permanent or other financing for a Capital Addition
proposed to be made to any Leased Property by Tenant. Within thirty (30)
days of receipt of such a request by Tenant, Landlord shall notify Tenant
as to whether it will finance the proposed Capital Addition and, if so, the
terms and conditions upon which it would do so, including the terms of any
amendment to an individual Lease or a new lease agreement for such proposed
Capital Addition.
(b) If Landlord agrees to finance the proposed Capital Addition of
Tenant, Tenant shall provide Landlord with the following:
(i) all customary or other required loan documentation which may
be required by the Landlord;
(ii) any information, certificates, licenses, permits or
documents requested by either Landlord or any lender with whom
Landlord has agreed or may agree to provide financing which are
necessary to confirm that Tenant will be able to use the Capital
Addition upon completion thereof in accordance with the Primary
Intended Use (as defined in Section 8.01), including all required
federal, state or local government licenses and approvals;
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(iii) a certificate from Tenant's architect, setting forth in
reasonable detail the projected (or actual, if available) cost of the
proposed Capital Addition;
(iv) an amendment to this Lease, or a new lease agreement, duly
executed and acknowledged, in form and substance satisfactory to
Landlord and Tenant, and containing such provisions as may be
necessary or appropriate, including without limitation, any
appropriate changes in the legal description of the Land, the Rent,
and other changes with respect to the Capital Addition;
(v) a deed conveying title to Landlord to any land acquired for
the purpose of constructing the Capital Addition, free and clear of
any liens or encumbrances except those approved by Landlord and, both
prior to and following completion of the Capital Addition, an as-built
survey thereof satisfactory to Landlord;
(vi) endorsements to any outstanding policy of title insurance
covering the Leased Property or a supplemental policy of title
insurance covering the Leased Property satisfactory in form and
substance to Landlord (a) updating the same without any additional
exceptions, except as may be permitted by Landlord; and (b) increasing
the coverage thereof by an amount equal to the fair market value of
the Capital Addition;
(vii) if required by Landlord, (a) an owner's policy of title
insurance insuring fee simple title to any land conveyed to Landlord
pursuant to subparagraph (v), free and clear of all liens and
encumbrances except those approved by Landlord and (b) a lender's
policy of title insurance satisfactory in form and substance to
Landlord and any lending institution advancing a portion of the cost
of the Capital Addition;
(viii) if required by Landlord, upon completion of the Capital
Addition, an M.A.I. appraisal of the Leased Property indicating that
the value of the Leased Property upon completion of the Capital
Addition exceeds the fair market value of the Leased Property prior
thereto by an amount not less than ninety-five percent (95%) of the
cost of such Capital Addition; and
(ix) such other certificates (including, but not limited to,
endorsements, increasing the insurance coverage, if any, at the time
required), documents, opinions of counsel, appraisals, surveys,
certified copies of duly adopted resolutions of the board of directors
of Tenant authorizing the execution and delivery of any amendment to
an individual Lease or new lease agreement and any other instruments
as may be reasonably required by Landlord and any lending institution
advancing any portion of the cost of the Capital Addition.
(c) Upon making a request to finance a Capital Addition, whether or
not such financing is actually consummated, Tenant shall pay or agree to
pay, upon demand, all reasonable costs and expenses of Landlord and any
lending institution which has committed to finance such Capital Addition
which have been paid or incurred by them in connection with
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the financing of the Capital Addition, including, but not limited to, (i)
the fees and expenses of their respective counsel, (ii) all printing
expenses, (iii) the amount of any filing, registration and recording taxes
and fees, (iv) documentary stamp taxes, if any, (v) title insurance
charges, appraisal fees, if any, rating agency fees, if any, (vi)
commitment fees, if any, and (vii) costs of obtaining regulatory and
governmental approvals for the construction, operation, use or occupancy of
the Capital Addition.
(d) (i) If Landlord and Tenant are unable to agree on the terms of
the financing of a Capital Addition by Landlord, Tenant may undertake the
cost of any such Capital Addition and seek construction, permanent or other
financing from other sources.
(ii) In the event Tenant shall construct any Capital Addition and
shall have obtained construction, permanent or other financing in
connection therewith from sources other than Landlord, as set forth in the
foregoing Section 8.09(d)(i), Landlord shall have the option to acquire
such Capital Addition for a period of ten (10) years following the date
Tenant first receives inmates in such Capital Addition ("Service
Commencement Date"). The price at which Landlord may acquire such Capital
Addition shall be the fair market value of the Capital Addition, as
reasonably and mutually determined by Landlord and Tenant, provided,
Landlord and Tenant agree that for the first two (2) years following the
Service Commencement Date, the fair market value of such Capital Addition
shall be deemed to be equal to Tenant's actual costs and expenses to
acquire, develop, design, construct and equip such Capital Addition
("Tenant's Cost"), as reflected on the books of Tenant, plus five percent
(5%) of Tenant's Cost. Landlord's exercise of such option shall require
Landlord to acquire such Capital Addition on such terms and conditions as
Landlord and Tenant shall reasonably agree, which shall be generally
consistent with the terms and conditions of Landlord's initial acquisition
of the related Leased Property from Tenant. Upon such acquisition, Landlord
shall lease such Capital Addition to Tenant on the terms and conditions set
forth herein, and Landlord and Tenant shall execute a new Lease, or an
amendment to the existing Lease, with respect thereto. In such case, for
acquisitions of Capital Additions within five (5) years of the date hereof,
the annual Base Rent shall be the greater of (i) the fair market rental
value of the Capital Addition, as reasonably and mutually determined by
Landlord and Tenant and (ii) eleven percent (11%) of the purchase price of
such Capital Addition. For Capital Additions thereafter, the Base Rent
shall be the fair market rental value of the Capital Addition, as
reasonably and mutually determined by Landlord and Tenant. Regardless of
whether the foregoing option is exercised, all Capital Additions shall
become the property of Landlord upon the expiration or termination of this
Lease.
ARTICLE IX
DEFAULTS AND REMEDIES
9.01 Events of Default. The occurrence of any one or more of the following
shall be an event of default ("Event of Default") hereunder:
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(a) Tenant fails to pay in full any installment of Rent, or any other
monetary obligation payable by Tenant to Landlord under a Lease, within
sixty (60) days after notice of nonpayment from Landlord;
(b) Tenant fails to observe and perform any other covenant, condition
or agreement under this Agreement or a Lease to be performed by Tenant
(except those described in Section 9.01(a) of this Agreement) and such
failure continues for a period of ninety (90) days after written notice
thereof is given to Tenant by Landlord; or if, by reason of the nature of
such default, the same cannot with due diligence be remedied within said
ninety (90) days, such failure will not be deemed to continue if Tenant
proceeds promptly and with due diligence to remedy the failure and
diligently completes the remedy thereof; provided, however, said cure
period will not extend beyond sixty (60) days if the facts or circumstances
giving rise to the default are creating a further harm to Landlord or the
Leased Property and Landlord makes a good faith determination that Tenant
is not undertaking remedial steps that Landlord would cause to be taken if
such Lease were then to terminate;
(c) If Tenant (a) admits in writing its inability to pay its debts
generally as they become due, (b) files a petition in bankruptcy or a
petition to take advantage of any insolvency act, (c) makes an assignment
for the benefit of its creditors, (d) is unable to pay its debts as they
mature, (e) consents to the appointment of a receiver of itself or of the
whole or any substantial part of its property, or (f) files a petition or
answer seeking reorganization or arrangement under the federal bankruptcy
laws or any other applicable law or statute of the United States of America
or any state thereof;
(d) If Tenant, on a petition in bankruptcy filed against it, is
adjudicated as bankrupt or a court of competent jurisdiction enters an
order or decree appointing, without the consent of Tenant, a receiver of
Tenant of the whole or substantially all of its property, or approving a
petition filed against it seeking reorganization or arrangement of Tenant
under the federal bankruptcy laws or any other applicable law or statute of
the United States of America or any state thereof, and such judgment, order
or decree is not vacated or set aside or stayed within ninety (90) days
from the date of the entry thereof;
(e) If the estate or interest of Tenant in any Leased Property or any
part thereof is levied upon or attached in any proceeding and the same is
not vacated or discharged within the later of ninety (90) days after
commencement thereof or sixty (60) days after receipt by Tenant of notice
thereof from Landlord (unless Tenant is contesting such lien or attachment
in accordance with this Agreement);
(f) Any representation or warranty made by Tenant in the Agreement or
any Lease or in any certificate, demand or request made pursuant to any
Lease proves to be incorrect, in any material respect and any adverse
effect on Landlord of any such misrepresentation or breach of warranty has
not been corrected to Landlord's satisfaction within ninety (90) days after
Tenant becomes aware of, or is notified by the Landlord of the fact of,
such misrepresentation or breach of warranty;
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(g) A default by Tenant in any payment of principal or interest on
any obligations for borrowed money having a principal balance of Fifteen
Million Dollars ($15,000,000) or more in the aggregate (excluding
obligations which are limited in recourse to specific property of Tenant
provided that such property is not a substantial portion of the assets of
Tenant and excluding any debt which is denominated as "subordinated debt")
and such default is not discharged within ninety (90) days, or in the
performance of any other provision contained in any instrument under which
any such obligation is created or secured (including the breach of any
covenant thereunder), if an effect of such default is that the holder(s) of
such obligation cause such obligation to become due prior to its stated
maturity and such default is not discharged within ninety (90) days; or
(h) A final, non-appealable judgment or judgments for the payment of
money in excess of Five Million Dollars ($5,000,000) in the aggregate not
fully covered (excluding deductibles) by insurance is rendered against
Tenant and the same remains undischarged, unvacated, unbonded or unstayed
for a period of one hundred twenty (120) consecutive days.
(i) The failure of Landlord to qualify as a real estate investment
trust under the Internal Revenue Code of 1986, as amended.
(j) Tenant ceases operations at a Leased Property for a period in
excess of forty-five (45) days during the Term.
(k) If, at any time prior to January 1, 2004, Tenant: (i) completes a
public offering of its common stock or securities convertible into common
stock of Tenant; (ii) transfers or sells an amount of Tenant's common stock
resulting in 20% or more of Tenant's outstanding common stock being held by
persons other than shareholders (including holders of securities
convertible into or exercisable for common stock) of Tenant as of the date
hereof, provided, however, that all wardens of correctional and detention
facilities managed by Tenant holding common stock of Tenant shall
constitute a single person for purposes of this Section 9.01(k); or (iii)
transfers or sells all or substantially all of Tenant's total assets.
Notwithstanding the foregoing, an Event of Default under the foregoing
subsections (a), (c), (d), (g), (h), (i) and (k) shall constitute an Event of
Default under all of the Leases and an Event of Default under the foregoing
subsections (b), (e), (f) and (j) shall constitute an Event of Default only with
respect to the specific Lease and Leased Property to which such Event of Default
applies. Provided, with respect to the Events of Default under the foregoing
subsections (b), (e), (f) and (j), if such Events of Default shall at any time
be applicable to Leased Properties for which the monthly Base Rent constitutes,
in the aggregate, greater than twenty-five percent (25%) of the monthly Base
Rent for all of the Leased Properties, then such Events of Default shall
constitute Events of Default under all of the Leases.
9.02 Remedies. To the extent any Event of Default is applicable only to a
specific Lease or Leases, or a specific Leased Property or Leased Properties (in
accordance with Section 9.01 above), the remedies set forth herein shall be
exercisable solely with respect to such Lease or Leases, or Leased Property or
Leased Properties, and shall not be exercisable with respect to any other Leases
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or Leased Property. To the extent any Event of Default constitutes an Event of
Default under all of the Leases (in accordance with Section 9.01 above), the
remedies set forth herein shall be exercisable with respect to all of the Leases
and all of the Leased Properties. Subject to the foregoing provisions, Landlord
may exercise any one or more of the following remedies upon the occurrence of an
Event of Default:
(a) Landlord may terminate the applicable Lease, exclude Tenant from
possession of the subject Leased Property and use reasonable efforts to
lease such Leased Property to others. If any Lease is terminated pursuant
to the provisions of this subparagraph (a), Tenant will remain liable to
Landlord for damages in an amount equal to the Rent and other sums which
would have been owing by Tenant under such Lease for the balance of the
Term if the Lease had not been terminated, less the net proceeds, if any,
of any re-letting of the subject Leased Property by Landlord subsequent to
such termination, after deducting all Landlord's expenses in connection
with such re-letting, including without limitation, the expenses set forth
in Section 9.02(b)(2) below. Landlord will be entitled to collect such
damages from Tenant monthly on the days on which the Rent and other amounts
would have been payable under the subject Lease if such Lease had not been
terminated, and Landlord will be entitled to receive such damages from
Tenant on each such day. Alternatively, at the option of Landlord, if such
Lease is terminated, Landlord will be entitled to recover from Tenant (a)
all unpaid Rent then due and payable, and (b) the worth at the time of the
award (as hereafter defined) of the Rent which would have been due and
payable from the date of termination through the Expiration Date as if the
Lease had not been terminated. The "worth at the time of award" of the
amount referred to in clause (b) is computed at "present value" using New
York Prime Rate. For purposes of this Agreement, "New York Prime Rate"
shall mean that rate of interest identified as prime or national prime by
the Wall Street Journal, or if not published or found, then the rate of
interest charged by the American bank with the greatest number of assets on
ninety (90) day unsecured notes to its preferred customers. For the purpose
of determining unpaid Rent under clause (b), the Rent reserved in the Lease
will be deemed to be the sum of the following: (i) the Base Rent computed
pursuant to Section 2.01; (ii) the Additional Rent computed pursuant to
Section 2.02; and (iii) the Other Additional Rent computed pursuant to
Section 2.02.01. Such computation of Other Additional Rent shall be based
on the Other Additional Rent paid for the Lease Year preceding the date of
termination, increased by 4% per year thereafter. Following payments by
Tenant of the foregoing amounts, Landlord shall deliver and pay over to
Tenant all rent, income, and other proceeds of any nature realized from the
sale, lease or other disposition or utilization of the Leased Premises, if
any, actually received by Landlord, up to the amounts so paid by Tenant
less Landlord's reasonably incurred costs and expenses of maintaining and
re-leasing or selling the Leased Premises.
(b) (1) Without demand or notice, Landlord may re-enter and take
possession of the applicable Leased Property or any part of such Leased
Property; and repossess such Leased Property as of the Landlord's former
estate; and expel the Tenant and those claiming through or under Tenant
from such Leased Property; and, remove the effects of both or either,
without being deemed guilty of any manner of trespass and without prejudice
to any remedies for arrears of Rent or preceding breach of covenants or
conditions. If Landlord elects to
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re-enter, as provided in this paragraph (b) or if Landlord takes possession
of such Leased Property pursuant to legal proceedings or pursuant to any
notice provided by law, Landlord may, from time to time, without
terminating the subject Lease, re-let such Leased Property or any part of
such Leased Property, either alone or in conjunction with other portions of
the Improvements of which such Leased Property are a part, in Landlord's
name but for the account of Tenant, for such term or terms (which may be
greater or less than the period which would otherwise have constituted the
balance of the Term of this Lease) and on such terms and conditions (which
may include concessions of free rent, and the alteration and repair of such
Leased Property) as Landlord, in its uncontrolled discretion, may
determine. Landlord may collect and receive the Rents for such Leased
Property. Landlord will not be responsible or liable for any failure to
re-let such Leased Property, or any part of such Leased Property, or for
any failure to collect any Rent due upon such re-letting. No such re-entry
or taking possession of such Leased Property by Landlord will be construed
as an election on Landlord's part to terminate this Lease unless a written
notice of such intention is given to Tenant. No notice from Landlord under
this Lease or under a forcible entry and detainer statute or similar law
will constitute an election by Landlord to terminate this Lease unless such
notice specifically says so. Landlord reserves the right following any such
re-entry or re-letting, or both, to exercise its right to terminate this
Lease by giving Tenant such written notice, and, in that event such Lease
will terminate as specified in such notice.
(2) If Landlord elects to take possession of such Leased
Property according to this subparagraph (b) without terminating such Lease,
Tenant will pay Landlord (i) the Rent, Additional Rent and other sums which
would be payable under such Lease if such repossession had not occurred,
less (ii) the net proceeds, if any, of any re-letting of such Leased
Property after deducting all of Landlord's expenses incurred in connection
with such re-letting, including without limitation, all repossession costs,
brokerage commissions, legal expense, attorneys' fees, expense of
employees, alteration, remodeling, repair costs, and expense of preparation
for such re-letting. If, in connection with any re-letting, the new Lease
term extends beyond the existing Term or such Leased Property covered by
such re-letting includes areas which are not part of such Leased Property,
a fair apportionment of the Rent received from such re-letting and the
expenses incurred in connection with such re-letting will be made in
determining the net proceeds received from such re-letting. In addition, in
determining the net proceeds from such re-letting, any rent concessions
will be apportioned over the term of the new Lease. Tenant will pay such
amounts to Landlord monthly on the days on which the Rent and all other
amounts owing under this Agreement or such Lease would have been payable if
possession had not been retaken, and Landlord will be entitled to receive
the rent and other amounts from Tenant on each such day.
(c) Landlord may re-enter the applicable Leased Property and have,
repossess and enjoy such Leased Property as if such Lease had not been
made, and in such event, Tenant and its successors and assigns shall remain
liable for any contingent or unliquidated obligations or sums owing at the
time of such repossession.
(d) Landlord may take whatever action at law or in equity as may
appear necessary or desirable to collect the Rent and other amounts payable
under the applicable Lease then due
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and thereafter to become due, or to enforce performance and observance of
any obligations, agreements or covenants of Tenant under such Lease.
9.03 Right of Set-Off. Landlord may, and is hereby authorized by Tenant, at
any time and from time to time, after advance notice to Tenant, to set-off and
apply any and all sums held by Landlord, including all sums held in any escrow
for Impositions, any indebtedness of Landlord to Tenant, and any claims by
Tenant against Landlord, against any obligations of Tenant under this Agreement
or any Lease and against any claims by Landlord against Tenant, whether or not
Landlord has exercised any other remedies hereunder. The rights of Landlord
under this Section are in addition to any other rights and remedies Landlord may
have against Tenant.
9.04 Performance of Tenant's Covenants. Landlord may perform any obligation
of Tenant which Tenant has failed to perform within two (2) days after Landlord
has sent a written notice to Tenant informing it of its specific failure
(provided no such notice shall be required if Landlord has previously notified
Tenant of such failure under the provisions of Section 9.01). Tenant shall
reimburse Landlord on demand, as Other Additional Rent, for any expenditures
thus incurred by Landlord and shall pay interest thereon at the New York Prime
Rate (as herein defined).
9.05 Late Charge. Any payment not made by Tenant for more than ten (10)
days after the due date shall be subject to a late charge payable by Tenant as
Rent of three percent (3%) of the amount of such overdue payment.
9.06 Litigation; Attorneys' Fees. Within ten (10) days after Tenant has
knowledge of any litigation or other proceeding that may be instituted against
Tenant, against any Leased Property to secure or recover possession thereof, or
that may affect the title to or the interest of Landlord in such Leased
Property, Tenant shall give written notice thereof to Landlord. Within thirty
(30) days of Landlord's presentation of an invoice, Tenant shall pay all
reasonable costs and expenses incurred by Landlord in enforcing or preserving
Landlord's rights under this Agreement and each Lease, whether or not an Event
of Default has actually occurred or has been declared and thereafter cured,
including without limitation, (i) the fees, expenses, and costs of any
litigation, receivership, administrative, bankruptcy, insolvency or other
similar proceeding; (ii) reasonable attorney, paralegal, consulting and witness
fees and disbursements; and (iii) the expenses, including without limitation,
lodging, meals, and transportation, of Landlord and its employees, agents,
attorneys, and witnesses in preparing for litigation, administrative,
bankruptcy, insolvency or other similar proceedings and attendance at hearings,
depositions, and trials in connection therewith. All such costs, charges and
fees as incurred shall be deemed to be Other Additional Rent under this
Agreement.
9.07 Remedies Cumulative. The remedies of Landlord herein are cumulative to
and not in lieu of any other remedies available to Landlord at law or in equity.
The use of any one remedy shall not be taken to exclude or waive the right to
use any other remedy.
9.08 Escrows and Application of Payments. As security for the performance
of its obligations hereunder, Tenant hereby assigns to Landlord all its right,
title and interest in and to all monies escrowed with Landlord under this
Agreement or under any Lease and all deposits with utility companies, taxing
authorities, and insurance companies; provided, however, that Landlord shall not
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exercise its rights hereunder until an Event of Default has occurred. Any
payments received by Landlord under any provisions of this Agreement or under
any Lease during the existence, or continuance of an Event of Default shall be
applied to Tenant's obligations in the order which Landlord may determine.
9.09 Power of Attorney. Tenant hereby irrevocably and unconditionally
appoints Landlord, or Landlord's authorized officer, agent, employee or
designee, as Tenant's true and lawful attorney-in-fact, to act, after an Event
of Default, for Tenant in Tenant's name, place, and stead, and for Tenant's and
Landlord's use and benefit, to execute, deliver and file all applications and
any and all other necessary documents or things, to effect a transfer,
reinstatement, renewal and/or extension of any and all licenses and other
governmental authorizations issued to Tenant in connection with Tenant's
operation of any Leased Property, and to do any and all other acts incidental to
any of the foregoing. Tenant irrevocably and unconditionally grants to Landlord
as its attorney-in-fact full power and authority to do and perform, after an
Event of Default, every act necessary and proper to be done in the exercise of
any of the foregoing powers as fully as Tenant might or could do if personally
present or acting, with full power of substitution, hereby ratifying and
confirming all that said attorney shall lawfully do or cause to be done by
virtue hereof. This power of attorney is coupled with an interest and is
irrevocable prior to the full performance of the Tenant's obligations under this
Agreement and each Lease.
ARTICLE X
DAMAGE AND DESTRUCTION
10.01 General. Tenant shall notify Landlord if any of the Leased Property
is damaged or destroyed by reason of fire or any other cause. Tenant shall
promptly repair, rebuild, or restore the Leased Property, at Tenant's expense,
so as to make the Leased Property at least equal in value to the Leased Property
existing immediately prior to such occurrence and as nearly similar to it in
character as is practicable and reasonable. Before beginning such repairs or
rebuilding, or letting any contracts in connection with such repairs or
rebuilding, Tenant will submit for Landlord's approval, which approval Landlord
will not unreasonably withhold or delay, complete and detailed plans and
specifications for such repairs or rebuilding. Promptly after receiving
Landlord's approval of the plans and specifications, Tenant will begin such
repairs or rebuilding and will prosecute the repairs and rebuilding to
completion with diligence, subject, however, to strikes, lockouts, acts of God,
embargoes, governmental restrictions, and other causes beyond Tenant's
reasonable control. Landlord will make available to Tenant the net proceeds of
any fire or other casualty insurance paid to Landlord for such repair or
rebuilding as the same progresses, after deduction of any costs of collection,
including attorneys' fees. Payment will be made against properly certified
vouchers of a competent architect in charge of the work and approved by
Landlord. Prior to commencing the repairing or rebuilding, Tenant shall deliver
to Landlord for Landlord's approval a schedule setting forth the estimated
monthly draws for such work. Landlord will contribute to such payments out of
the insurance proceeds an amount equal to the proportion that the total net
amount received by Landlord from insurers bears to the total estimated cost of
the rebuilding or repairing, multiplied by the payment by Tenant on account of
such work. Landlord may, however, withhold ten percent (10%) from each payment
until (i) the work of repairing or rebuilding is completed and proof has been
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furnished to Landlord that no lien or liability has attached or will attach to
the Leased Property or to Landlord in connection with such repairing or
rebuilding, (ii) Tenant has obtained a certificate of use and occupancy (or its
functional equivalent) for the portion of the Leased Premises repaired or
rebuilt and (iii) if Tenant has an agreement with any governmental authority for
the detention of inmates at such Leased Property which requires such
governmental authority to approve such repairs or rebuilding, such approval
shall have been obtained. Upon the completion of rebuilding or repairing and the
furnishing of such proof, the balance of the net proceeds of such insurance
payable to Tenant on account of such repairing or rebuilding will be paid to
Tenant. Tenant will obtain and deliver to Landlord a temporary or final
certificate of occupancy before the Leased Property is reoccupied for any
purpose. Tenant shall complete such repairs or rebuilding free and clear of
mechanic's or other liens, and in accordance with the building codes and all
applicable laws, ordinances, regulations, or orders of any state, municipal, or
other public authority affecting the repairs or rebuilding, and also in
accordance with all requirements of the insurance rating organization, or
similar body. Any remaining proceeds of insurance after such restoration will be
Tenant's property.
10.02 Landlord's Inspection. During the progress of such repairs or
rebuilding, Landlord and its architects and engineers may, from time to time,
inspect the Leased Property and will be furnished, if required by them, with
copies of all plans, shop drawings, and specifications relating to such repairs
or rebuilding. Tenant will keep all plans, shop drawings, and specifications
available, and Landlord and its architects and engineers may examine them at all
reasonable times. If, during such repairs or rebuilding, Landlord and its
architects and engineers determine that the repairs or rebuilding are not being
done in accordance with the approved plans and specifications, Landlord will
give prompt notice in writing to Tenant, specifying in detail the particular
deficiency, omission, or other respect in which Landlord claims such repairs or
rebuilding do not accord with the approved plans and specifications. Upon the
receipt of any such notice, Tenant will cause corrections to be made to any
deficiencies, omissions, or such other respect. Tenant's obligations to supply
insurance, according to Article IV, will be applicable to any repairs or
rebuilding under this Section.
10.03 Landlord's Costs. Tenant shall, within thirty (30) days after receipt
of an invoice from Landlord, pay the reasonable costs, expenses, and fees of any
architect or engineer employed by Landlord to review any plans and
specifications and to supervise and approve any construction, or for any
services rendered by such architect or engineer to Landlord as contemplated by
any of the provisions of this Agreement, or for any services performed by
Landlord's attorneys in connection therewith; provided, however, that Landlord
will consult with Tenant and notify Tenant of the estimated amount of such
expenses.
10.04 Rent Abatement. In the event that the provisions of Section 10.01
above shall become applicable, the Rent, real estate taxes and other Impositions
shall be abated or reduced proportionately during any period in which, by reason
of such damage or destruction, there is substantial interference with the
operation of the business of Tenant in the Leased Property, having regard to the
extent to which Tenant may be required to discontinue its business in the Leased
Property, and such abatement or reduction shall continue for the period
commencing with such destruction or damage and ending with the substantial
completion (defined below) by Tenant of such work or repair and/or
reconstruction. In the event that only a portion of any Leased Property is
rendered untenantable or incapable of such use, the Base Rent and all real
estate taxes and other Impositions payable hereunder
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shall be reduced on a pro rata basis for the amount that the correctional or
detention facility at a particular Leased Property is rendered incapable of
occupancy because of such damage or destruction in proportion to the total size
of the Leased Property prior to such damage or destruction. For purposes of this
paragraph, substantial completion shall occur upon the earlier of (i) nine (9)
months from the date of the first disbursement of insurance proceeds, or (ii)
the issuance of a certificate of occupancy for the Leased Property.
Notwithstanding any other provision hereof, such rental abatement shall be
limited to the amount of any rental or business interruption insurance proceeds
actually received by Landlord.
10.05 Substantial Damage During Lease Term. Provided Tenant has fully
complied with Section 4.01 hereof (including actually maintaining in effect
rental value insurance or business interruption insurance provided for in clause
(c) thereof) and has satisfied the conditions of the last sentence of this
Section 10.05, if, at any time during the Term of the particular Lease, the
Leased Property is so damaged by fire or otherwise that more than fifty percent
(50%) of the correctional or detention facility at the Leased Property is
rendered unusable, Tenant may, within thirty (30) days after such damage, give
notice of its election to terminate the Lease subject to the particular Leased
Property and, subject to the further provisions of this Section, such Lease will
cease on the tenth (10th) day after the delivery of such notice. If the Lease is
so terminated, Tenant will have no obligation to repair, rebuild or replace the
Leased Property, and the entire insurance proceeds will belong to Landlord. If
the Lease is not so terminated, Tenant shall rebuild the Leased Property in
accordance with Section 10.01. If Tenant elects to terminate any Lease pursuant
to this Section 10.05, Tenant will pay (or cause to be paid) to Landlord, an
amount equal to the difference between the amount of all insurance proceeds
received by Landlord, and the net book value of such Leased Property as shown in
Landlord's financial statements as of the date of such termination.
10.06 Damage Near End of Term. Notwithstanding any provisions of Section
10.01 to the contrary, if damage to or destruction of the Leased Property occurs
during the last twenty-four (24) months of the Term, and if such damage or
destruction cannot be fully repaired and restored within six (6) months
immediately following the date of loss, either party shall have the right to
terminate this Lease by giving notice to the other within thirty (30) days after
the date of damage or destruction, in which event Landlord shall be entitled to
retain the insurance proceeds and Tenant shall pay to Landlord on demand the
amount of any deductible or uninsured loss arising in connection therewith;
provided, however, that any such notice given by Landlord shall be void and of
no force and effect if Tenant exercises an available option to extend the Term
pursuant to provisions of the Lease for such Leased Property within thirty (30)
days following receipt of such termination notice.
ARTICLE XI
CONDEMNATION
11.01 Total Taking. If at any time during the Term any Leased Property is
totally and permanently taken by right of eminent domain or by conveyance made
in response to the threat of the exercise of such right ("Condemnation"), the
applicable Lease shall terminate on the Date of Taking (which shall mean the
date the condemning authority has the right to possession of the property being
condemned), and Tenant shall promptly pay all outstanding rent and other charges
through the date
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of termination, provided, however the applicable Lease shall not so terminate if
the Condemnation occurred due to the failure of Tenant to maintain the Leased
Property as required by Article VII of this Agreement or other applicable
provision of this Agreement, whether or not such failure on the part of Tenant
constituted an Event of Default under an individual Lease at the time of the
Condemnation.
11.02 Partial Taking. If a portion of any Leased Property is taken by
Condemnation, the subject Lease shall remain in effect if such Leased Property
is not thereby rendered Unsuitable for its Primary Intended Use (which shall
mean that the Leased Property is in such a state or condition such that in the
good faith judgment of Tenant, reasonably exercised, the Leased Property cannot
be operated on a commercially practicable basis as a correctional or detention
facility), but if such Leased Property is thereby rendered Unsuitable for its
Primary Intended Use, such Lease shall terminate on the Date of Taking, provided
such Condemnation was not as a result of Tenant's failure to maintain the Leased
Property as provided for in Section 11.01.
11.03 Restoration. If there is a partial taking of any Leased Property and
the subject Lease remains in full force and effect pursuant to Section 11.02,
Landlord shall furnish to Tenant the amount of the Award payable to Landlord, as
provided herein, in order for Tenant to accomplish all necessary restoration. If
Tenant receives an Award under Section 11.05, Tenant shall repair or restore any
Tenant Improvements up to but not exceeding the amount of the Award payable to
Tenant therefor. Before beginning such restoration, or letting any contracts in
connection with such restoration, Tenant will submit for Landlord's approval,
which approval Landlord will not unreasonably withhold or delay, complete and
detailed plans and specifications for such restoration. Promptly after receiving
Landlord's approval of the plans and specifications, Tenant will begin such
restoration and will prosecute the repairs and rebuilding to completion with
diligence, subject, however, to strikes, lockouts, acts of God, embargoes,
governmental restrictions, and other causes beyond Tenant's reasonable control.
Landlord will make available to Tenant the net proceeds of any Award paid to
Landlord for such restoration, after deduction of any costs of collection,
including attorneys' fees. Payment will be made against properly certified
vouchers of a competent architect in charge of the work and approved by
Landlord. Prior to commencing the restoration, Tenant shall deliver to Landlord
for Landlord's approval a schedule setting forth the estimated monthly draws for
such work. Landlord may, however, withhold ten percent (10%) from each payment
until the work of restoration is completed and proof has been furnished to
Landlord that no lien or liability has attached or will attach to the Leased
Property or to Landlord in connection with such restoration. Upon the completion
of restoration and the furnishing of such proof, the balance of the Award will
be paid to Tenant. Tenant will obtain and deliver to Landlord a temporary or
final certificate of occupancy before the Leased Property is reoccupied for any
purpose. Tenant shall complete such restoration free and clear of mechanic's or
other liens, and in accordance with the building codes and all applicable laws,
ordinances, regulations, or orders of any state, municipal, or other public
authority affecting the restoration, and also in accordance with all
requirements of the insurance rating organization, or similar body. Any
remaining proceeds of the Award after such restoration will be Tenant's
property.
11.04 Landlord's Inspection. During the progress of such restoration,
Landlord and its architects and engineers may, from time to time, inspect the
Leased Property and will be furnished,
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if required by them, with copies of all plans, shop drawings, and specifications
relating to such restoration. Tenant will keep all plans, shop drawings, and
specifications available, and Landlord and its architects and engineers may
examine them at all reasonable times. If, during such restoration, Landlord and
its architects and engineers determine that the restoration is not being done in
accordance with the approved plans and specifications, Landlord will give prompt
notice in writing to Tenant, specifying in detail the particular deficiency,
omission, or other respect in which Landlord claims such restoration does not
accord with the approved plans and specifications. Upon the receipt of any such
notice, Tenant will cause corrections to be made to any deficiencies, omissions,
or such other respect. Tenant's obligations to supply insurance, according to
Article IV, will be applicable to any restoration under this Section.
11.05 Award Distribution. The entire compensation, sums or anything of
value awarded, paid or received on a total or partial Condemnation (the "Award")
shall belong to and be paid to Landlord, except that, subject to the rights of
any mortgagee of Tenant, Tenant shall be entitled to receive from the Award, if
and to the extent such Award specifically includes such items, a sum
attributable to the value, if any, of: (i) any Tenant Improvements, and (ii) the
leasehold interest of Tenant under the subject Lease; provided, however, that if
the amount received by Landlord and said mortgagee is less than the Condemnation
Threshold (which shall mean, as of any given date, an amount equal to the net
book value of such Leased Property as shown on the financial statements of
Landlord as of the date of the Condemnation), then the amount of the Award
otherwise payable to Tenant for the value of its leasehold interest under this
Lease (and not any other funds of Tenant) shall instead be paid over to Landlord
up to the amount of the shortfall.
11.06 Temporary Taking. The taking of any Leased Property, or any part
thereof, by military or other public authority shall constitute a taking by
Condemnation only when the use and occupancy by the taking authority has
continued for longer than six (6) months. During any such six (6) month period,
which shall be a temporary taking, all the provisions of the subject Lease shall
remain in full force and effect with no abatement of rent payable by Tenant
hereunder. In the event of any such temporary taking, the entire amount of any
such Award made for such temporary taking allocable to the Term of such Lease,
whether paid by way of damages, rent or otherwise, shall be paid to Tenant.
ARTICLE XII
ASSIGNMENT AND SUBLETTING; ATTORNMENT
12.01 Prohibition Against Subletting and Assignment. Subject to Section
12.03, Tenant shall not, without the prior written consent of Landlord (which
consent Landlord may grant or withhold in its sole and absolute discretion),
assign, sublease, mortgage, pledge, hypothecate, encumber or otherwise transfer
this Agreement or any Lease or any interest herein or therein, or all or any
part of the Leased Property, or suffer or permit any Lease or the leasehold
estate created thereby or any other rights arising under any Lease to be
assigned, transferred, mortgaged, pledged, hypothecated or encumbered, in whole
or in part, whether voluntarily, involuntarily or by operation of law. For
purposes of this Section 12.01, an assignment of any Lease shall be deemed to
include any Change of Control of Tenant, as if such Change of Control were an
assignment of the Lease. No assignment shall in any way impair the continuing
primary liability of Tenant hereunder.
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An "Affiliate" shall mean any Person directly or indirectly controlling,
controlled by, or under common control with that Person.
A "Person" 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.
12.02 Changes of Control. A Change of Control requiring the consent of
Landlord shall mean:
(a) the issuance and/or sale by Tenant or the sale by any
stockholder of Tenant of a Controlling (which shall mean, as applied
to any Person, the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such
Person, whether through the ownership of voting securities, by
contract or otherwise) interest in Tenant to a Person other than an
Affiliate of Tenant, other than in either case a distribution to the
public pursuant to an effective registration statement under the
Securities Act of 1933, as amended (a "Registered Offering");
(b) the sale, conveyance or other transfer of all or
substantially all of the assets of Tenant (whether by operation of law
or otherwise); or
(c) any transaction pursuant to which Tenant is merged with or
consolidated into another entity (other than an entity owned and
Controlled by an Affiliate of Tenant), and Tenant is not the surviving
entity.
12.03 Operating/Service Agreements.
12.03.01 Permitted Agreements. Tenant shall, without Landlord's prior
approval, be permitted to enter into certain operating/service agreements for
portions of any Leased Property to various licensees in connection with Tenant's
operation of correctional or detention facilities as is customarily associated
with or incidental to the operation of such Leased Property, which agreements
may be in the nature of a sublease agreement.
12.03.02 Terms of Agreements. Each operating/service agreement concerning
any of the Leased Property shall be subject and subordinate to the provisions of
the applicable Lease. No agreement made as permitted by Section 13.03.01 shall
affect or reduce any of the obligations of Tenant hereunder, and all such
obligations shall continue in full force and effect as if no agreement had been
made. No agreement shall impose any additional obligations on Landlord under the
applicable Lease.
12.03.03 Copies. Tenant shall, within ten (10) days after the execution and
delivery of any operating/service agreement permitted by Section 12.03.01,
deliver a duplicate original thereof to Landlord.
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12.03.04 Assignment of Rights in Agreements. As security for
performance of its obligations under each Lease, Tenant hereby grants, conveys
and assigns to Landlord all right, title and interest of Tenant in and to all
operating/service agreements now in existence or hereinafter entered into for
any or all of the applicable Leased Property, and all extensions, modifications
and renewals thereof and all rents, issues and profits therefrom, to the extent
the same are assignable by Tenant. Landlord hereby grants to Tenant a license to
collect and enjoy all rents and other sums of money payable under any such
agreement concerning any of such Leased Property; provided, however, that
Landlord shall have the absolute right at any time after the occurrence and
continuance of an Event of Default upon notice to Tenant and any vendors or
licensees to revoke said license and to collect such rents and sums of money and
to retain the same. Tenant shall not (i) after the occurrence and continuance of
an Event of Default, consent to, cause or allow any material modification or
alteration of any of the terms, conditions or covenants of any of the agreements
or the termination thereof, without the prior written approval of Landlord nor
(ii) accept any rents (other than customary security deposits) more than ninety
(90) days in advance of the accrual thereof nor permit anything to be done, the
doing of which, nor omit or refrain from doing anything, the omission of which,
will or could be a breach of or default in the terms of any of the agreements.
12.03.05 Licenses, Etc. For purposes of Section 12.03, the
operating/service agreements shall mean any licenses, concession arrangements,
or other arrangements relating to the possession or use of all or any part of
any Leased Property but specifically excluding any management agreement,
facility operating agreement or other agreement for the housing or detention of
inmates.
12.04 Assignment. No assignment shall in any way impair the continuing
primary liability of Tenant hereunder, and no consent to any assignment in a
particular instance shall be deemed to be a waiver of the prohibition set forth
in Article XII. Any assignment shall be solely of Tenant's entire interest in
the subject Lease. Any assignment or other transfer of all or any portion of
Tenant's interest in any Lease in contravention of Article XII shall be voidable
at Landlord's option.
12.05 REIT Limitations. Anything contained in this Agreement to the
contrary notwithstanding, Tenant shall not (i) sublet or assign any Leased
Property or any Lease on any basis such that the rental or other amounts to be
paid by the sublessee or assignee thereunder would be based, in whole or in
part, on the income or profits derived by the business activities of the
sublessee or assignee; (ii) sublet or assign any Leased Property or any Lease to
any person that Landlord owns, directly or indirectly (by applying constructive
ownership rules set forth in Section 856(d) (5) of the Code), a ten percent
(10%) or greater interest; or (iii) sublet or assign any Leased Property or any
Lease in any other manner or otherwise derive any income which could cause any
portion of the amounts received by Landlord pursuant to any Lease or any
sublease to fail to qualify as "rents from real property" within the meaning of
Section 856(d) of the Code, or which could cause any other income received by
Landlord to fail to qualify as income described in Section 856(c) (2) of the
Code. The requirements of this Section 12.05 shall likewise apply to any further
subleasing by any subtenant.
12.06 Attornment. Tenant shall insert in each sublease permitted under
Section 12.03.01 provisions to the effect that (a) such sublease is subject and
subordinate to all of the terms and provisions of the applicable Lease
(including this Agreement) and to the rights of Landlord hereunder,
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(b) in the event such Lease shall terminate before the expiration of such
sublease, the sublessee thereunder will, at Landlords' option, attorn to
Landlord and waive any right the sublessee may have to terminate the sublease or
to surrender possession thereunder, as a result of the termination of such
Lease, and (c) in the event the sublessee receives a written notice from
Landlord or Landlord's assignees, if any, stating that Tenant is in default
under such Lease, the sublessee shall thereafter be obligated to pay all rentals
accruing under said sublease directly to the party giving such notice, or as
such party may direct. All rentals received from the sublessee by Landlord or
Landlord's assignees, if any, as the case may be, shall be credit against the
amounts owing by Tenant under such Lease.
ARTICLE XIII
ARBITRATION
13.01 Controversies. Except with respect to the payment of Rent hereunder,
which shall be subject to the provisions of Section 9.02, in the case a
controversy arises between the parties as to any of the requirements of this
Agreement or of any individual Lease or the performance thereunder which the
parties are unable to resolve, the parties agree to waive the remedy of
litigation (except for extraordinary relief in an emergency situation) and agree
that such controversy or controversies shall be determined by arbitration as
hereafter provided in this Article.
13.02 Appointment of Arbitrators. The party or parties requesting
arbitration shall serve upon the other a demand therefor, in writing, specifying
in detail the controversy and matter(s) to be submitted to arbitration. The
selection of arbitrators shall be conducted pursuant to the rules for resolution
of commercial disputes promulgated by the American Arbitration Association. The
party or parties giving notice shall request a listing of available arbitrators
from the American Arbitration Association, and each party shall respond in the
selection process within fifteen (15) days after each receipt of such listings
until a panel of three (3) arbitrators has been designated. If either party
fails to respond within fifteen (15) days, it is agreed that the American
Arbitration Association may make such selections as are necessary to complete
the panel of three (3) arbitrators.
13.03 Arbitration Procedure. Within fifteen (15) days after the selection
of the arbitration panel, the arbitrators shall give written notice to each
party as to the time and the place of each meeting, which shall be held in
Nashville, Tennessee, at which the parties may appear and be heard, which shall
be no later than sixty (60) days after certification of the arbitration panel.
The parties specifically waive discovery, and further waive the applicability of
rules of evidence or rules of procedure in the proceedings. The applicable rules
shall be those in effect at the time for the resolution of commercial disputes
promulgated by the American Arbitration Association. Notwithstanding the
foregoing, the substantive law governing the arbitration shall be the laws of
the State of Tennessee. The arbitrators shall take such testimony and make such
examination and investigations as the arbitrators reasonably deem necessary. The
decision of the arbitrators shall be in writing signed by a majority of the
panel which decision shall be final and binding upon the parties to the
controversy. Provided, however, in rendering their decisions and making awards,
the arbitrators shall not add to, subtract from or otherwise modify the
provisions of this Agreement.
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13.04 Expenses. The expenses of the arbitration shall be assessed by the
arbitrators and specified in the written decision. In the absence of a
determination or assessment of expenses of the arbitration procedure in the
award, all of the expenses of such arbitration shall be divided equally between
Landlord and Tenant. Each party in interest shall be responsible for and pay the
fees, costs and expenses of its own counsel, unless the arbitration award
provides for an assessment of reasonable attorneys' fees and costs.
13.05 Enforcement of the Arbitration Award. There shall be no appeal from
the decision of the arbitrators, and upon the rendering of an award, any party
thereto may file the arbitrators' decision in the United States District Court
for the Middle District of Tennessee for enforcement as provided by applicable
law.
ARTICLE XIV
QUIET ENJOYMENT, SUBORDINATION,
ATTORNMENT, ESTOPPEL CERTIFICATES
14.01 Quiet Enjoyment. So long as Tenant performs all of its obligations
under this Agreement and each Lease, Tenant's possession of the Leased Property
will not be disturbed by or through Landlord.
14.02 Landlord Mortgages; Subordination. Subject to Section 14.03, without
the consent of Tenant, Landlord may, from time to time, directly or indirectly,
create or otherwise cause to exist any lien, encumbrances or title retention
agreement on the Leased Properties, or any portion thereof or any interest
therein, whether to secure any borrowing or other means of financing or
refinancing. This Agreement and each Lease and Tenant's rights under this
Agreement and each Lease are subordinate to any ground lease or underlying
lease, first mortgage, first deed of trust, or other first lien against any
Leased Property, together with any renewal, consolidation, extension,
modification or replacement thereof, which now or at any subsequent time affects
any Leased Property or any interest of Landlord in any Leased Property, except
to the extent that any such instrument expressly provides that this Agreement
and each Lease is superior. This provision will be self-operative, and no
further instrument or subordination will be required in order to effect it.
However, Tenant shall execute, acknowledge and deliver to Landlord, at any time
and from time to time upon demand by Landlord, such documents as may be
requested by Landlord or any mortgagee or any holder of any mortgage or other
instrument described in this Section, to confirm or effect any such
subordination. If Tenant fails or refuses to execute, acknowledge, and deliver
any such document within twenty (20) days after written demand, Landlord may
execute, acknowledge and deliver any such document on behalf of Tenant as
Tenant's attorney-in-fact. Tenant hereby constitutes and irrevocably appoints
Landlord, its successors and assigns, as Tenant's attorney-in-fact to execute,
acknowledge, and deliver on behalf of Tenant any documents described in this
Section. This power of attorney is coupled with an interest and is irrevocable.
14.03 Attornment; Non-Disturbance. If any holder of any mortgage,
indenture, deed of trust, or other similar instrument described in Section 14.02
succeeds to Landlord's interest in any Leased Property, Tenant will pay to such
holder all Rent subsequently payable under the subject Lease.
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Tenant shall, upon request of anyone succeeding to the interest of Landlord,
automatically become the tenant of, and attorn to, such successor in interest
without changing such Lease. The successor in interest will not be bound by (i)
any payment of Rent for more than one (1) month in advance; (ii) any amendment
or modification of such Lease made without its written consent; (iii) any claim
against Landlord arising prior to the date on which the successor succeeded to
Landlord's interest; or (iv) any claim or offset of Rent against the Landlord.
Upon request by Landlord or such successor in interest and without cost to
Landlord or such successor in interest, Tenant will execute, acknowledge and
deliver an instrument or instruments confirming the attornment. If Tenant fails
or refuses to execute, acknowledge and deliver any such instrument within twenty
(20) days after written demand, then Landlord or such successor in interest will
be entitled to execute, acknowledge, and deliver any document on behalf of
Tenant as Tenant's attorney-in-fact. Tenant hereby constitutes and irrevocably
appoints Landlord, its successors and assigns, as Tenant's attorney-in-fact to
execute, acknowledge, and deliver on behalf of Tenant any such document. This
power of attorney is coupled with an interest and is irrevocable.
Landlord shall use reasonable efforts to obtain a non-disturbance agreement
from any such party referred to above which provides that in the event such
party succeeds to Landlord's interest under the Lease and provided that no Event
of Default by Tenant exists, such party will not disturb Tenant's possession,
use or occupancy of the Leased Property.
14.04 Estoppel Certificates. At the request of Landlord or any mortgagee or
purchaser of any Leased Property, Tenant shall execute, acknowledge, and deliver
an estoppel certificate, in recordable form, in favor of Landlord or any
mortgagee or purchaser of such Leased Property certifying the following: (i)
that the subject Lease is unmodified and in full force and effect, or if there
have been modifications that the same is in full force and effect as modified
and stating the modifications; (ii) the date to which Rent and other charges
have been paid; (iii) that neither Tenant nor Landlord is in default nor is
there any fact or condition which, with notice or lapse of time, or both, would
constitute a default, if that be the case, or specifying any existing default;
(iv) that Tenant has accepted and occupies such Leased Property; (v) that Tenant
has no defenses, set-offs, deductions, credits, or counterclaims against
Landlord, if that be the case, or specifying such that exist; (vi) that the
Landlord has no outstanding construction or repair obligations; and (vii) such
other information as may reasonably be requested by Landlord or any mortgagee or
purchaser. Any purchaser or mortgagee may rely on this estoppel certificate. If
Tenant fails to deliver the estoppel certificates to Landlord within ten (10)
days after the request of the Landlord, then Tenant shall be deemed to have
certified that (a) such Lease is in full force and effect and has not been
modified, or that such Lease has been modified as set forth in the certificate
delivered to Tenant; (b) Tenant has not prepaid any Rent or other charges except
for the current month; (c) Tenant has accepted and occupies such Leased
Property; (d) neither Tenant nor Landlord is in default nor is there any fact or
condition which, with notice or lapse of time, or both, would constitute a
default; (e) Landlord has no outstanding construction or repair obligation; and
(f) Tenant has no defenses, set-offs, deductions, credits, or counterclaims
against Landlord. Tenant hereby irrevocably appoints Landlord as Tenant's
attorney-in-fact to execute, acknowledge and deliver on Tenant's behalf any
estoppel certificate which Tenant does not object to within twenty (20) days
after Landlord sends the certificate to Tenant. This power of attorney is
coupled with an interest and is irrevocable.
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ARTICLE XV
MISCELLANEOUS
15.01 Notices. Landlord and Tenant hereby agree that all notices, demands,
requests, and consents (hereinafter "Notices") required to be given pursuant to
the terms of this Lease shall be in writing and shall be addressed as follows:
If to Tenant: Correctional Management Services Corporation
00 Xxxxxx Xxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxxx, Chief Financial
Officer
If to Landlord: Prison Realty Corporation
00 Xxxxxx Xxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
With a copy to: Xxxxxx & Xxxxxxxxxxx, P.A.
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxxxxx 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. Landlord or
Tenant may change its notice address at any time by giving the other party
Notice of such change.
15.02 Advertisement of Leased Property. In the event the parties hereto
have not executed a renewal lease of any Leased Property within one (1) year
prior to the expiration of the Term, then Landlord or its agent shall have the
right to enter such Leased Property at all reasonable times for the purpose of
exhibiting such Leased Property to others and to place upon such Leased Property
for and during the period commencing two hundred ten (210) days prior to the
expiration of the Term "for sale" or "for rent" notices or signs.
15.03 Landlord's Access. Landlord shall have the right to enter upon the
Leased Property, upon reasonable prior notice to Tenant, for purposes of
inspecting the same and assuring Tenant's compliance with this Agreement
provided, any such entry by Landlord shall be subject to all rules, guidelines
and procedures prescribed by Tenant in connection therewith. Landlord shall not
be allowed entry to the Leased Premises unless accompanied by such of Tenant's
personnel as Tenant shall require.
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15.04 Entire Agreement. This Agreement and the individual Leases contain
the entire agreement between Landlord and Tenant with respect to the subject
matter hereof and thereof. No representations, warranties, and agreements have
been made by Landlord except as set forth in this Agreement and the Leases.
15.05 Severability. If any term or provision of this Agreement or any Lease
is held or deemed by Landlord to be invalid or unenforceable, such holding shall
not affect the remainder of this Agreement or any Lease and the same shall
remain in full force and effect, unless such holding substantially deprives
Tenant of the use of the Leased Property or Landlord of the Rents therefor, in
which event the Lease for such Leased Property shall forthwith terminate as if
by expiration of the Term.
15.06 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.
15.07 Governing Law. This Agreement and each of the Leases shall be
construed under the laws of the State of Tennessee.
15.08 Memorandum of Lease. Landlord and Tenant agree that a record of this
Agreement or any Lease may be recorded by either party in a memorandum of lease
approved by Landlord and Tenant with respect to each Leased Property.
15.09 Waiver. No waiver by Landlord of any condition or covenant herein
contained, or of any breach of any such condition or covenant, shall be held or
take to be a waiver of any subsequent breach of such covenant or condition, or
to permit or excuse its continuance or any future breach thereof or of any
condition or covenant, nor shall the acceptance of Rent by Landlord at any time
when Tenant is in default in the performance or observance of any condition or
covenant herein be construed as a waiver of such default, or of Landlord's right
to terminate this Agreement or any Lease or exercise any other remedy granted
herein on account of such existing default.
15.10 Binding Effect. This Agreement and each Lease will be binding upon
and inure to the benefit of the heirs, successors, personal representatives, and
permitted assigns of Landlord and Tenant.
15.11 Authority. The persons executing this Agreement or any Lease on
behalf of Tenant warrant that (i) Tenant has the power and authority to enter
into this Agreement or such Lease; (ii) Tenant is qualified to do business in
the state in which the Leased Property is located; and (iii) they are authorized
to execute this Agreement and each Lease on behalf of Tenant. Tenant shall, at
the request of Landlord, provide evidence satisfactory to Landlord confirming
these representation.
15.12 Transfer of Permits, Etc. Upon the expiration or earlier termination
of the Term of any Lease (whether pursuant to the provisions of this Agreement
or of such Lease), Tenant shall, at the option of Landlord, transfer to and
relinquish to Landlord or Landlord's nominee and to cooperate with Landlord or
Landlords' nominee in connection with the processing by Landlord or such nominee
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of all licenses, operating permits, and other governmental authorization and all
contracts, including without limitation, the correctional or detention facility
license, and any other contracts with governmental or quasi-governmental
entities which may be necessary or appropriate for the operation by Landlord or
such nominee of the subject Leased Property for the purposes of operating a
correctional or detention facility; provided that the costs and expenses of any
such transfer or the processing of any such application shall be paid by
Landlord or Landlord's nominee; and provided further that any management
agreement, facility operating agreement or other agreement for the housing or
detention of inmates shall be expressly excluded. Any such permits, licenses,
certificates and contracts which are held in Landlord's name now or at the
termination of such Lease shall remain the property of Landlord. To the extent
permitted by law, Tenant hereby irrevocably appoints Landlord, its successors
and assigns and any nominee or nominees specifically designated by Landlord or
any successor or assign as Tenant's attorney-in-fact to execute, acknowledge,
deliver and file all documents appropriate to such transfer or processing of any
such application on behalf of Tenant; this power of attorney is coupled with an
interest and is irrevocable.
15.13 Modification. This Agreement and any Lease may only be modified by a
writing signed by both Landlord and Tenant.
15.14 Incorporation by Reference. All schedules and exhibits referred to in
this Agreement are incorporated into this Agreement, and all schedules and
exhibits referred to in any Lease (as well as the provisions of this Agreement,
except to the extent specifically excluded from or inconsistent with the terms
of such Lease) are incorporated into such Lease.
15.15 No Merger. The surrender of this Agreement or of any Lease by Tenant
or the cancellation of this Agreement or of any Lease by agreement of Tenant and
Landlord or the termination of this Agreement or of any Lease on account of
Tenant's default will not work a merger, and will, at Landlord's option,
terminate any subleases or operate as an assignment to Landlord of any
subleases. Landlord's option under this paragraph will be exercised by notice to
Tenant and all known subtenants of any applicable Leased Property.
15.16 Laches. No delay or omission by either party hereto to exercise any
right or power accruing upon any noncompliance or default by the other party
with respect to any of the terms hereof shall impair any such right or power or
be construed to be a waiver thereof.
15.17 Waiver of Jury Trial. To the extent that there is any claim by one
party against the other that is not to be settled by arbitration as provided in
Article XIII hereof, Landlord and Tenant waive trial by jury in any action,
proceeding or counterclaim brought by either of them against the other on all
matters arising out of this Agreement or the use and occupancy of the Leased
Property (except claims for personal injury or property damage). If Landlord
commences any summary proceeding for nonpayment of Rent, Tenant will not
interpose, and waives the right to interpose, any counterclaim in any such
proceeding.
15.18 Permitted Contests. Tenant, on its own or on Landlord's behalf (or in
Landlord's name), but at Tenant's expense, may contest, by appropriate legal
proceedings conducted in good faith and with due diligence, the amount or
validity or application, in whole or in part, of any Imposition
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or any legal requirement or insurance requirement or any lien, attachment, levy,
encumbrance, charge or claim provided that (i) in the case of an unpaid
Imposition, lien, attachment, levy, encumbrance, charge or claim, the
commencement and continuation of such proceedings shall suspend the collection
thereof from Landlord and from the Leased Property; (ii) neither the Leased
Property nor any Rent therefrom nor any part thereof or interest therein would
be in any immediate danger of being sold, forfeited, attached or lost; (iii) in
the case of a legal requirement, Landlord would not be in any immediate danger
of civil or criminal liability for failure to comply therewith pending the
outcome of such proceedings; (iv) in the event that any such contest shall
involve a sum of money or potential loss in excess of Fifty Thousand Dollars
($50,000.00), Tenant shall deliver to Landlord and its counsel an opinion of
Tenant's counsel to the effect set forth in clauses (i), (ii) and (iii), to the
extent applicable; (v) in the case of a legal requirement and/or an Imposition,
lien, encumbrance, or charge, Tenant shall give such reasonable security as may
be demanded by Landlord to insure ultimate payment of the same and to prevent
any sale or forfeiture of the affected Leased Property or the Rent by reason of
such nonpayment or noncompliance; provided, however, the provisions of this
Section shall not be construed to permit Tenant to contest the payment of Rent
(except as to contests concerning the method of computation or the basis of levy
of any Imposition or the basis for the assertion of any other claim) or any
other sums payable by Tenant to Landlord hereunder; (vi) in the case of an
insurance requirement, the coverage required by Article IV shall be maintained;
and (vii) if such contest be finally resolved against Landlord or Tenant, Tenant
shall, as Other Additional Rent due hereunder, promptly pay the amount required
to be paid, together with all interest and penalties accrued thereon, or comply
with the applicable legal requirement or insurance requirement. Landlord, at
Tenant's expense, shall execute and deliver to Tenant such authorizations and
other documents as may be reasonably required in any such contest, and, if
reasonably requested by Tenant or if Landlord so desires, Landlord shall join as
a party therein. Tenant hereby agrees to indemnify and save Landlord harmless
from and against any liability, cost or expense of any kind that may be imposed
upon Landlord in connection with any such contest and any loss resulting
therefrom.
15.19 Construction of Lease. This Agreement and each of the Leases for
Leased Properties have been reviewed by Landlord and Tenant and their respective
professional advisors. Landlord, Tenant, and their advisors believe that this
Agreement and such Leases are the product of all their efforts, that they
express their agreement, and agree that they shall not be interpreted in favor
of either Landlord or Tenant or against either Landlord or Tenant merely because
of any party's efforts in preparing such documents.
15.20 Counterparts. This Agreement and each Lease may be executed in
duplicate counterparts, each of which shall be deemed an original hereof or
thereof.
15.21 Relationship of Landlord and Tenant. The relationship of Landlord and
Tenant is the relationship of lessor and lessee. Landlord and Tenant are not
partners, joint venturers, or associates.
15.22 Landlord's Status as a REIT. Tenant acknowledges that Landlord
intends to elect to be taxed as a real estate investment trust ("REIT") under
the Code. Tenant shall not do anything which would adversely affect Landlord's
status as a REIT. Tenant hereby agrees to modifications of this Agreement which
do not materially adversely affect Tenant's rights and liabilities if such
modifications are required to retain or clarify Landlord's status as a REIT.
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15.23 Sale of Real Estate Assets. Notwithstanding any other provision of
this Agreement or of any Lease, Landlord shall not be required to sell or
transfer Leased Property, or any portion thereof, which is a real estate asset
as defined in Section 856(c)(6) of the Code, to Tenant if Landlord's counsel
advises Landlord that such sale or transfer may not be a sale of property
described in Section 857(b)(6)(C) of the Code. If Landlord determines not to
sell such property pursuant to the above sentence, Tenant's right, if any, to
purchase the Leased Property shall continue and be exercisable at such time as
the transaction, upon the advice of Landlord's counsel, would be a sale of
property described in Section 857(b)(6)(C) of the Code.
ARTICLE XVI
NONDISCLOSURE AND RELATED MATTERS
16.01 Covenant Not to Disclose. Landlord agrees that, by virtue of the
relationship of trust and confidence between Landlord and Tenant, it possesses
and will possess certain data and knowledge of operations of the Tenant which
are proprietary in nature and confidential. Landlord covenants and agrees that
it will not knowingly, at any time, directly or indirectly, for whatever reason,
without Tenant's prior written consent, which may be given or withheld in
Tenant's sole discretion, reveal, divulge or make known to any person or entity,
any confidential or proprietary record, data, trade secret, pricing policy, bid
amount, pricing strategy, personnel policy, method or practice of obtaining or
doing business, or any other confidential or proprietary information whatever
(the "Confidential Information"), whether or not obtained with the knowledge and
permission of the Tenant and whether or not developed, devised or otherwise
created in whole or in part by the efforts of Landlord, nor shall Landlord use
such Confidential Information for its own account. Confidential Information
shall not include any information generally available to the public other than
as a result of a disclosure of such information by Landlord. Notwithstanding
anything to the contrary provided herein, a disclosure of Confidential
Information by Landlord will not be considered a violation of this Article XVI
in the event such disclosure is involuntarily compelled by a final,
non-appealable, order from a court of competent jurisdiction.
16.02 Non-Interference Covenant. Landlord covenants and agrees that it will
not, at any time, directly or indirectly, for whatever reason, whether for its
own account or for the account of any other person, firm, corporation or other
organization, without Tenant's prior written consent, which may be given or
withheld in Tenant's sole discretion: (i) solicit, employ, deal with or
otherwise interfere with any of the Tenant's contracts or relationships with any
employee, officer, director or any independent contractor, whether the person is
employed by or associated with the Tenant on the date of this Agreement or at
any time hereafter; or (ii) solicit, accept, deal with or otherwise interfere
with any of the Tenant's contracts or relationships with any independent
contractor, customer, client or supplier. Notwithstanding the foregoing, (i)
Landlord may offer employment to the current employees of the Tenant who are
terminated by the Tenant subsequent to the date hereof, (ii) Landlord shall in
no way be liable for any actions by any entity leasing or managing any facility
owned by Landlord, and (iii) nothing provided herein shall prevent Landlord from
soliciting relationships with an entity or entities to lease, license, manage or
otherwise use any facility leased to the Tenant subsequent to the termination of
such lease with the Tenant.
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16.03 Business Materials and Property Disclosure. All written materials,
records and documents made by Landlord or coming into its possession concerning
the business or affairs of the Tenant shall be the sole property of the Tenant
and, upon request by the Tenant, Landlord shall deliver the same to the Tenant
and shall retain no copies. The foregoing restrictions shall not be applicable
to any written materials, records and documents generally available to the
public other than as a result of a disclosure of such written materials, records
and documents by Landlord.
16.04 Breach by Landlord. It is expressly understood, acknowledged and
agreed by Landlord that: (i) the restrictions contained in this Article XVI
represent a reasonable and necessary protection of the legitimate interests of
the Tenant and that its failure to observe and comply with its covenants and
agreements in this Article XVI will cause irreparable harm to the Tenant; (ii)
it is and will continue to be difficult to ascertain the nature, scope and
extent of the harm; and (iii) a remedy at law for such failure by Landlord will
be inadequate. Accordingly, it is the intention of the parties that, in addition
to any other rights and remedies which the Tenant may have in the event of any
breach by Landlord of this Article XVI, the Tenant shall be entitled, and is
expressly and irrevocably authorized by Landlord, to demand and obtain specific
performance, including, without limitation, temporary and permanent injunctive
relief, and all other appropriate equitable relief against Landlord in order to
enforce against Landlord any of the covenants and agreements contained in this
Article XVI, and/or to prevent any breach or any threatened breach by Landlord
of the covenants and agreements of Landlord contained in this Article XVI.
Should the Tenant prevail in any action to enforce this Article XVI, the Tenant
shall be entitled to recover all of its costs and expenses relating thereto,
including reasonable attorney's fees and expenses.
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IN WITNESS WHEREOF, the parties hereto have executed this Lease or caused
the same to be executed by their respective duly authorized officers as of the
date first set forth above.
LANDLORD:
PRISON REALTY CORPORATION
By: /s/ Doctor X. Xxxxxx
--------------------------------
Title: Chairman
-----------------------------
USCC, INC.
By: /s/ D. Xxxxxx Xxxxxx, III
--------------------------------
Title: President
-----------------------------
TRANSCOR, INC.
By: /s/ D. Xxxxxx Xxxxxx, III
--------------------------------
Title: President
-----------------------------
TENANT:
CORRECTIONAL MANAGEMENT SERVICES
CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxxxxx
--------------------------------
Title: Secretary
-----------------------------
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SCHEDULE A
THE FACILITIES
FACILITY NAME LOCATION
------------- (CITY, STATE)
-------------
Bent County Correctional Facility Las Animas, Colorado
Bridgeport Pre-Parole Transfer Facility Bridgeport, Texas
Central Arizona Detention Center Florence, Arizona
Cibola County Corrections Facility Milan, New Mexico
Cimarron Correctional Facility Cushing, Oklahoma
Coffee Correctional Facility Nicholls, Xxxxxxx
Xxxxx Correctional Facility Holdenville, Oklahoma
Diamondback Correctional Facility Watonga, Oklahoma
Xxxx Detention Center Eloy, Arizona
Houston Processing Center Houston, Texas
Huerfano County Correctional Facility Walsenburg, Colorado
Kit Xxxxxx Correctional Center Burlington, Colorado
Laredo Processing Center Laredo, Texas
Leavenworth Detention Center Leavenworth, Kansas
Xxx Adjustment Center Beatyville, Kentucky
Xxxxxx Adjustment Center St. Xxxx, Kentucky
Mineral Xxxxx Pre-Parole Transfer Facility Mineral Wells, Texas
New Mexico Women's Correctional Facility Grants, New Mexico
North Fork Correctional Center Sayre, Oklahoma
00
Xxxxxxxxx Xxxx Xxxxxxxxxx Xxxxxx Xxxxxxxxxx, Xxxx
Otter Creek Correctional Center Wheelwright, Kentucky
Prairie Correctional Facility Appleton, Minnesota
River City Correctional Center Louisville, Kentucky
Shelby Training Center Memphis, Tennessee
T. Xxx Xxxxx Correctional Center Taylor, Texas
Torrance County Detention Facility Estancia, New Mexico
West Tennessee Detention Center Mason, Tennessee
Xxxxxxx Correctional Facility Alamo, Georgia
Whiteville Correctional Facility Whiteville, Tennessee
CCA Headquarters Building Nashville, Tennessee
