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EXHIBIT 10.1
SECURITIES PURCHASE AGREEMENT
By and Among
PRISON REALTY TRUST, INC.,
CORRECTIONS CORPORATION OF AMERICA,
PRISON MANAGEMENT SERVICES, INC.,
and
JUVENILE AND JAIL FACILITY MANAGEMENT SERVICES, INC.,
on the one hand,
and
PACIFIC LIFE INSURANCE COMPANY,
on the other hand
Dated as of April 5, 2000
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TABLE OF CONTENTS
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ARTICLE I.
AUTHORIZATION OF THE ISSUANCE AND
SALE OF PACIFIC LIFE SHARES AND ISSUANCE OF WARRANTS
Section 1.1. Authorization.................................................................. 3
Section 1.2. Issuance and Sale.............................................................. 4
ARTICLE II.
CLOSING
Section 2.1. Closing Date................................................................... 4
Section 2.2. Further Assurances............................................................. 5
ARTICLE III.A
REPRESENTATIONS AND WARRANTIES OF PRISON REALTY
Section 3.A.1. Incorporation of Representations and Warranties Contained in the Merger
Agreement................................................................... 5
Section 3.A.2. Authority...................................................................... 5
Section 3.A.3. Consents and Approvals; Non-Contravention...................................... 6
Section 3.A.4. Enforceability of Transaction Documents........................................ 7
Section 3.A.5. Registration and Qualification................................................. 7
Section 3.A.6. Provisions of Maryland Law..................................................... 7
Section 3.A.7. Tax-Free Reorganization........................................................ 7
Section 3.B.1. Incorporation of Representations and Warranties Contained in the Merger
Agreement................................................................... 8
Section 3.B.2. Authority...................................................................... 8
Section 3.B.3. Consents and Approvals; Non-Contravention...................................... 8
Section 3.B.4. Enforceability of Transaction Documents........................................ 9
Section 3.C.1. Incorporation of Representations and Warranties Contained in the Merger
Agreement................................................................... 9
Section 3.C.2. Authority...................................................................... 9
Section 3.C.3. Consents and Approvals; Non-Contravention...................................... 9
Section 3.C.4. Enforceability of Transaction Documents........................................ 10
Section 3.D.1. Incorporation of Representations and Warranties Contained in the Merger
Agreement................................................................... 10
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Section 3.D.2. Authority...................................................................... 11
Section 3.D.3. Consents and Approvals; Non-Contravention...................................... 11
Section 3.D.4. Enforceability of Transaction Documents........................................ 11
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF PACIFIC LIFE
Section 4.1. Investment..................................................................... 12
Section 4.2. Rule 144....................................................................... 12
Section 4.3. Organization of Pacific Life................................................... 13
Section 4.4. Current Ownership.............................................................. 13
Section 4.5. No Voting Agreements........................................................... 13
Section 4.6. Authority of Pacific Life...................................................... 13
Section 4.7. Non-Contravention.............................................................. 13
Section 4.8. Brokers and Finders............................................................ 14
ARTICLE V.
CONDITIONS PRECEDENT TO CLOSING
Section 5.1. Conditions to Each Party's Obligation.......................................... 14
Section 5.2. Conditions to Pacific Life's Obligation........................................ 16
Section 5.3. Conditions to the Obligations of Each of the Companies......................... 19
ARTICLE VI.
[RESERVED]
ARTICLE VII.
COVENANTS OF THE COMPANIES
Section 7.1. Conduct of Business Pending the Initial Closing................................ 20
Section 7.2. Disclosure Documents; Stockholder Approvals.................................... 23
Section 7.3. Payment of Expenses; Fees...................................................... 24
Section 7.4. Availability of Prison Realty Common Stock..................................... 25
Section 7.5. Reporting...................................................................... 25
Section 7.6. No Solicitation of Competing Transactions...................................... 25
Section 7.7. No General Solicitation........................................................ 26
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Section 7.8. Access to Information.......................................................... 26
Section 7.9. HSR Approval................................................................... 27
Section 7.10. Preemptive Rights.............................................................. 27
Section 7.11. Registration Rights Agreement.................................................. 28
Section 7.12. Corporate Governance........................................................... 28
Section 7.13. Review of Audit................................................................ 28
Section 7.14. Delivery of Documents.......................................................... 28
Section 7.15. Rights Offering................................................................ 28
Section 7.16. Notification of Certain Matters................................................ 29
Section 7.17. Name Change.................................................................... 29
Section 7.18. Merger Agreement............................................................... 29
Section 7.19. Securitization Transaction..................................................... 30
ARTICLE VIII.
COVENANTS OF PACIFIC LIFE
Section 8.1. Certain Restrictions........................................................... 30
Section 8.2. HSR Approval................................................................... 32
Section 8.3. Quorum......................................................................... 32
Section 8.4. Transfers...................................................................... 32
Section 8.5. No Voting Agreements........................................................... 32
Section 8.6. Compliance with Organizational and Governing Documents......................... 32
Section 8.7. Confidentiality................................................................ 32
Section 8.8. Available Funds................................................................ 33
Section 8.9. Sale and Leaseback............................................................. 33
Section 8.10. Rights Offering................................................................ 33
ARTICLE IX.
RESTRICTIONS ON TRANSFERABILITY OF SECURITIES
Section 9.1. Restrictive Legend............................................................. 33
Section 9.2. Notice of Proposed Transfers................................................... 34
ARTICLE X.
TERMINATION
Section 10.1. Termination.................................................................... 35
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ARTICLE XI.
INDEMNIFICATION
Section 11.1. Survival of Representations and Warranties..................................... 36
Section 11.2. Indemnification................................................................ 37
Section 11.3. Terms of Indemnification....................................................... 38
ARTICLE XII.
MISCELLANEOUS
Section 12.1. Governing Law.................................................................. 39
Section 12.2. Jurisdiction; Forum; Service of Process; Waiver of Jury Trial.................. 39
Section 12.3. Successors and Assigns......................................................... 39
Section 12.4. Entire Agreement; Amendment.................................................... 40
Section 12.5. Notices, Etc................................................................... 40
Section 12.6. Certain Definitions............................................................ 40
Section 12.7. Delays or Omissions............................................................ 41
Section 12.8. Counterparts................................................................... 41
Section 12.9. Severability................................................................... 41
Section 12.10. Titles and Subtitles........................................................... 42
Section 12.11. No Public Announcement......................................................... 42
Section 12.12. Further Actions; Reasonable Efforts............................................ 42
Section 12.13. Enforcement of Agreement....................................................... 43
Section 12.14. Fairness Opinions.............................................................. 43
EXHIBITS
Exhibit A -- Agreement and Plan of Merger
Exhibit B -- Form of Articles of Amendment and Restatement of
Prison Realty
Exhibit C -- Form of Amended and Restated Bylaws of Prison Re-
alty
Exhibit D -- Form of Articles Supplementary for Series C Preferred
Stock
Exhibit E -- Form of Articles Supplementary for Series B Conv-
ertible Preferred Stock
Exhibit F -- Form of Warrant
Exhibit G -- Form of Registration Rights Agreement
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SCHEDULES
Schedule A -- Prison Realty's Disclosure Schedule
Schedule B -- CCA's Disclosure Schedule
Schedule C -- Service Company A's Disclosure Schedule
Schedule D -- Service Company B's Disclosure Schedule
Schedule E -- Pacific Life's Disclosure Schedule
Schedule 1.1 -- Number of Shares to be Issued
Schedule 5.2(i) -- Capital Expenditure Budget
Schedule 7.1(m) -- Description of Liability Insurance
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SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (the "Agreement") is made
as of April 5, 2000 by and among Prison Realty Trust, Inc., a Maryland
corporation ("Prison Realty"), Corrections Corporation of America, a Tennessee
corporation ("CCA"), Prison Management Services, Inc., a Tennessee corporation
("PMSI" or "Service Company A"), and Juvenile and Jail Facility Management
Services, Inc., a Tennessee corporation ("JJFMSI" or "Service Company B",
together with Prison Realty, CCA, and PMSI, collectively, the "Companies"), on
the one hand, and Pacific Life Insurance Company, a stock company organized
under the laws of the State of California ("Pacific Life"), on the other hand.
References to this Agreement herein shall include each of the Exhibits and
Schedules attached hereto.
WHEREAS, as a condition to the completion of the Investment
(as hereinafter defined): (i) CCA will be merged with and into CCA Acquisition
Sub, Inc., a Tennessee corporation ("CCA Sub"); (ii) PMSI will be merged with
and into PMSI Acquisition Sub, Inc., a Tennessee corporation ("PMSI Sub"); and
(iii) JJFMSI will be merged with and into JJFMSI Acquisition Sub, Inc., a
Tennessee corporation ("JJFMSI Sub"), with each of CCA Sub, PMSI Sub and JJFMSI
Sub being a surviving entity and wholly owned subsidiary of Prison Realty (the
"Combination"), all pursuant to the terms and conditions of the Agreement and
Plan of Merger dated December 26, 1999 attached hereto as Exhibit A (the "Merger
Agreement");
WHEREAS, contemporaneously with the effectiveness of the
Combination, Prison Realty will amend and restate its existing charter and
bylaws as substantially set forth in the forms of the Articles of Amendment and
Restatement of Prison Realty and Amended and Restated Bylaws of Prison Realty
attached hereto as Exhibit B and Exhibit C, respectively (the "New Prison Realty
Charter" and the "New Prison Realty Bylaws");
WHEREAS, in connection with the Combination, and as a
condition to Pacific Life's obligations hereunder: (i) Prison Realty will elect
to be taxed as a real estate investment trust, or a REIT, for federal income tax
purposes under the Internal Revenue Code of 1986, as amended (the "Code") for
its taxable year ended December 31, 1999 and in satisfaction of any distribution
requirements required thereby, will make such distributions to the holders of
its common stock, $0.01 par value per share (the "Prison Realty Common Stock"),
in the form of shares of Prison Realty's Series C Cumulative Convertible
Preferred Stock, $0.01 par value per share, with such rights and preferences as
set forth in the Articles Supplementary attached hereto as Exhibit D (the
"Prison Realty Series C Preferred Stock") in such amounts as may be required by
the Code and approved by Pacific Life (the "1999 Distribution"); and (ii) the
existing indebtedness of the Companies will be refinanced or renewed as
described in Section 5.1(i) herein;
WHEREAS, subject to the terms and conditions hereof and as set
forth in Section 7.15 of this Agreement, concurrently with Prison Realty seeking
Prison Realty Stockholder Approval (as defined in Section 5.1(c) herein), Prison
Realty will extend a rights of-
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fering (the "Rights Offering") to the holders of shares Prison Realty Common
Stock on the Rights Offering Record Date (as hereinafter defined) pursuant to
which such stockholders will be given the opportunity to purchase up to $200.0
million of shares of Prison Realty Common Stock (the "Rights Offering Shares")
at a price per share equal to the lower of $4.00 per share and 65% of the
average closing price of Prison Realty Common Stock on the New York Stock
Exchange (the "NYSE") for the three trading days preceding the commencement of
the Rights Offering (the "Rights Offering Purchase Price");
WHEREAS, promptly following the expiration of the rights
issued in the Rights Offering, subject to the terms and conditions hereof, at
the Closing (as hereinafter defined) Prison Realty will issue and sell, and
Pacific Life will purchase, shares of Prison Realty's Series B Cumulative
Convertible Preferred Stock, $0.01 par value per share ("Prison Realty Series B
Preferred Stock"), having an aggregate liquidation preference equal to (a)
$200.0 million less (b) the gross proceeds received by Prison Realty in the
Rights Offering, if any (the "Pacific Life Shares," the purchase of the Pacific
Life Shares is known as the "Pacific Life Investment"). The Prison Realty Series
B Preferred Stock shall be convertible into shares of Prison Realty Common Stock
at a price per share equal to the Rights Offering Purchase Price, and shall have
the rights and preferences as set forth in the Articles Supplementary attached
hereto as Exhibit E (the "Prison Realty Series B Articles Supplementary");
WHEREAS, in consideration for Pacific Life's commitment to
purchase the Pacific Life Shares, promptly following the completion of the
Rights Offering, at the Closing Prison Realty will issue and sell to Pacific
Life warrants to purchase the greater of: (i) 20.0 million shares of Prison
Realty Common Stock and (ii) that number of shares of Prison Realty Common Stock
equal to ten percent (10%) of the fully-diluted shares of Prison Realty Common
Stock after giving effect to (a) any shares of Prison Realty Common Stock
issuable in connection with the 1999 Distribution, (b) shares of Prison Realty
Common Stock issued in the Combination, (c) any shares of Prison Realty Common
Stock subscribed for and sold in the Rights Offering, (d) the shares of Prison
Realty Common Stock to be issued upon the conversion of the Prison Realty Series
B Preferred Stock, and (e) shares of Prison Realty Common Stock issuable upon
conversion, exchange or exercise of securities issued and outstanding prior to
the Closing which are convertible into or exchangeable or exercisable for shares
of Prison Realty Common Stock, with an initial exercise price equal to 120% of
the average closing price of Prison Realty Common Stock on the NYSE for the five
trading days preceding the consummation of the Rights Offering and with such
rights and terms as set forth in the form of warrant attached hereto as Exhibit
F (individually, a "Warrant," and, collectively, the "Warrants");
WHEREAS, in connection with the sale and purchase of the
Pacific Life Shares and the Warrants, Pacific Life will have the benefit of the
registration rights provided for in the Registration Rights Agreement in the
form attached hereto as Exhibit G (the "Registration Rights Agreement");
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WHEREAS, the parties contemplate that, contemporaneously with
the Closing, Pacific Life and Prison Realty will enter into a sale and leaseback
transaction with respect to the headquarters building of Prison Realty located
at 00 Xxxxxx Xxxxx Xxxxxxxxx, Xxxxxxxxx, Xxxxxxxxx as described in Section 8.9
(the "Sale and Leaseback");
WHEREAS, the Independent and Special Committees of the Board
of Directors of Prison Realty have (i) approved this Agreement, the Merger
Agreement and resulting Combination, and the other transactions contemplated
thereby and (ii) recommended that the same be approved by the full Board of
Directors of Prison Realty;
WHEREAS, the Board of Directors of Prison Realty has (i)
approved this Agreement, the Merger Agreement and resulting Combination and the
other transactions contemplated thereby and (ii) resolved to recommend that the
stockholders of Prison Realty approve certain transactions related to the
Combination and the Pacific Life Investment; and
WHEREAS, the Boards of Directors of each of CCA, Service
Company A and Service Company B have approved the Merger Agreement and the
resulting Combination and the transactions contemplated thereby and have
resolved to recommend that the same be approved by the shareholders of each
respective company.
NOW, THEREFORE, in consideration of the mutual covenants,
agreements, representations and warranties contained herein, and for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as follows:
ARTICLE I.
AUTHORIZATION OF THE ISSUANCE AND
SALE OF PACIFIC LIFE SHARES AND ISSUANCE OF WARRANTS
Section 1.1. Authorization.
(a) Subject to obtaining Prison Realty Stockholder Approval,
as defined in Section 5.1(c) herein, Prison Realty has authorized the issuance
and sale to Pacific Life at the Closing, as defined in Section 2.1 herein, of
the Pacific Life Shares and the Warrants pursuant to the terms and conditions of
this Agreement.
(b) The number of Pacific Life Shares to be sold and issued to
Pacific Life in the aggregate at the Closing and the number of shares of Prison
Realty Common Stock to be issued upon the exercise of each Warrant (the "Warrant
Shares") shall be the amount set forth on Schedule 1.1 attached hereto.
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Section 1.2. Issuance and Sale. Upon the terms and subject to
the conditions set forth herein, on the Closing Date, as defined in Section 2.1
herein, in reliance on the representations and warranties of Pacific Life
contained herein, Prison Realty will issue and sell to Pacific Life and, in
reliance on the representations and warranties of the Companies contained
herein, Pacific Life will purchase from Prison Realty, the number of Pacific
Life Shares and Warrants at the Closing pursuant to Section 1.1 of this
Agreement, for an aggregate purchase price of $200.0 million, less the amount of
gross proceeds received by Prison Realty from the Rights Offering as
contemplated in Section 7.15 hereof (the "Purchase Price").
ARTICLE II.
CLOSING
Section 2.1. Closing Date. The closing of the purchase and
sale of the Pacific Life Shares and the delivery of the Warrants contemplated
hereby (the "Closing") shall take place on such date and at such time as agreed
to by the Companies and Pacific Life, but in no event later than fifteen (15)
business days following the later of (i) the date of the Prison Realty
Stockholder Approval, as defined in Section 5.1(c), and (ii) the satisfaction or
waiver of all of the conditions set forth in Article V (the date of the Closing
is referred to herein as the "Closing Date"). The parties hereto agree that it
is their mutual intent for the Closing Date to occur on or before June 30, 2000,
subject to the satisfaction or waiver of the conditions set forth in Article V.
The Closing shall be held at the offices of Xxxxxx & Xxxxxxxxxxx, P.A., 000
Xxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxxxx, Xxxxxxxxx on the Closing Date, or at such
other place as mutually agreed to by the Companies and Pacific Life.
Delivery of the Pacific Life Shares to be purchased by Pacific
Life pursuant to this Agreement shall be made at the Closing by Prison Realty
delivering to Pacific Life, against payment of the Purchase Price therefor, one
certificate representing the appropriate number of Pacific Life Shares
(registered in the name of Pacific Life), unless at least three (3) business
days prior to the Closing Date Pacific Life shall have requested that Prison
Realty deliver more than one certificate representing the appropriate number of
Pacific Life Shares, in which event Prison Realty will deliver to Pacific Life
the number of certificates so requested, registered in Pacific Life's name.
Payment of the Purchase Price for the Pacific Life Shares to be purchased by
Pacific Life hereunder shall be made or caused to be made by Pacific Life to
Prison Realty at the Closing by delivery by wire transfer of immediately
available funds equal to the Purchase Price therefor.
Delivery of the Warrants to be issued to Pacific Life pursuant
to this Agreement shall be made at the Closing by Prison Realty delivering to
Pacific Life a Warrant representing the right to purchase the appropriate number
of shares of Prison Realty Common Stock.
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Execution and delivery of the Registration Rights Agreement
shall be made at the Closing by Prison Realty and Pacific Life.
Section 2.2. Further Assurances. From time to time following
the Closing, upon the request of Pacific Life, Prison Realty shall execute and
deliver, or cause to be executed and delivered, to Pacific Life such other
instruments and take such other action as may be reasonably necessary to more
effectively vest in Pacific Life and put Pacific Life in possession of the
Pacific Life Shares and Warrants issued by Prison Realty to Pacific Life.
ARTICLE III.A
REPRESENTATIONS AND WARRANTIES OF PRISON REALTY
Except as set forth: (i) in the documents filed by Prison
Realty with the Securities and Exchange Commission (the "SEC"), including the
exhibits and schedules thereto and incorporated therein by reference, and
publicly available prior to the date hereof (the "SEC Reports"); and (ii) in the
schedule delivered by Prison Realty to Pacific Life and attached hereto as
Schedule A ("Prison Realty's Disclosure Schedule") (provided, however, that the
description of the items set forth in Prison Realty's Disclosure Schedule
reasonably identifies and relates to the matter being disclosed), Prison Realty
hereby represents and warrants to Pacific Life as follows:
Section 3.A.1. Incorporation of Representations and Warranties
Contained in the Merger Agreement. The representations and warranties of Prison
Realty contained in the Merger Agreement are incorporated herein, and made a
part of, this Agreement by this reference, as if fully set forth herein, and
Prison Realty hereby affirms those representations and warranties in Section
3.01 of the Merger Agreement for the purposes of this Agreement and for the
benefit of Pacific Life hereunder.
Section 3.A.2. Authority.
(a) Prison Realty has all necessary corporate power and
authority to enter into this Agreement and the other agreements, documents and
instruments to be executed by Prison Realty in furtherance of the transactions
contemplated hereby and the agreements, the forms of which are attached hereto
as exhibits (such attached agreements, collectively with this Agreement, the
"Transaction Documents"), and to consummate the transactions contemplated
hereby. The execution and delivery of the Transaction Documents and the
consummation by Prison Realty of the transactions contemplated thereby have been
duly authorized by all necessary corporate action on the part of Prison Realty.
(b) The Pacific Life Shares and the Warrant Shares have been
duly authorized by Prison Realty, and the Pacific Life Shares and Warrant
Shares, when issued, sold
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and/or delivered in accordance with this Agreement and the Warrants, will be
validly issued, fully paid and nonassessable. There are no preemptive rights or
other rights to subscribe for or purchase securities existing with respect to
the issuance and sale of the Pacific Life Shares by Prison Realty pursuant to
the Transaction Documents, other than the preemptive rights granted to Pacific
Life pursuant to Section 7.10 herein.
(c) The Rights Offering Shares have been duly authorized by
Prison Realty, and the Rights Offering Shares, when issued, sold and delivered
in accordance with this Agreement, will be validly issued, fully paid and
nonassessable. There are no preemptive rights or other rights to subscribe for
or purchase securities existing with respect to the issuance and sale of the
Rights Offering Shares by Prison Realty pursuant to the Transaction Documents.
Section 3.A.3. Consents and Approvals; Non-Contravention. The
execution and delivery by Prison Realty of the Transaction Documents to which it
is a party, the performance of its obligations thereunder and the consummation
by it of the transactions contemplated thereby do not and will not (a) require
the consent, approval, authorization, order, registration, filing,
qualification, license or permit of or with any court or any government agency
or body, domestic or foreign, applicable to Prison Realty or any of its
properties or assets, (b) require the consent or approval of any party other
than a regulatory agency or body, (c) result in a breach of any of the terms and
provisions of, or constitute a default (or an event which with notice or lapse
of time, or both, would constitute a default) under, give rise to an
acceleration, cancellation or requirement for Prison Realty to prepay, redeem or
otherwise repurchase any securities or obligations under, or result in the
creation or imposition of any pledges, liens, claims, encumbrances, security
interests, charges and options of any nature whatsoever ("Liens") upon any
property or assets of Prison Realty pursuant to any agreement, instrument,
franchise, license or permit to which Prison Realty is a party or by which
Prison Realty or its properties or assets may be bound, (d) trigger any "change
of control" repurchase obligations under any of Prison Realty's outstanding
indebtedness, or (e) violate any judgment, decree, order, statute, rule or
regulation of any court or any federal, state, local or foreign government,
court, administrative, regulatory or other governmental agency, commission or
authority or any non-governmental self-regulatory agency, commission or
authority (a "Governmental Entity") or body applicable to Prison Realty or any
of its respective properties or assets. The execution, delivery and performance
of the Transaction Documents by Prison Realty and the consummation of the
transactions contemplated thereby do not and will not violate or conflict with
any provision of the charter, bylaws or similar governing documents of Prison
Realty, as currently in effect. Except for the Transaction Documents, Prison
Realty is not restricted by the terms of any indebtedness or other outstanding
agreements from paying dividends on the Pacific Life Shares in cash.
Section 3.A.4. Enforceability of Transaction Documents. This
Agreement has been, and each of the other Transaction Documents to be executed
and delivered by Prison
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Realty pursuant to this Agreement has been or will be, duly and validly
authorized, executed and delivered by Prison Realty and this Agreement is, and
such other Transaction Documents when so executed and delivered will be, valid
and binding obligations of Prison Realty, enforceable against it in accordance
with their terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws from
time to time affecting the enforcement of creditors' rights generally.
Section 3.A.5. Registration and Qualification. Assuming the
accuracy of the representations and warranties made by Pacific Life set forth in
Article IV hereof, it is not necessary in connection with the offer, sale and
delivery of the Pacific Life Shares and Warrants to Pacific Life in the manner
contemplated by this Agreement to register the Pacific Life Shares, or the
shares of Prison Realty Common Stock issuable upon conversion of the Pacific
Life Shares and the exercise of the Warrants, under the Securities Act of 1933,
as amended, including the rules and regulations promulgated thereunder (the
"Securities Act"), or the securities laws of any state.
Section 3.A.6. Provisions of Maryland Law. The approval and
authorization of the Transaction Documents, and the purchase of the Pacific Life
Shares, the Warrants, the Warrant Shares and the shares of Prison Realty Common
Stock issuable upon conversion of the Pacific Life Shares hereunder, by the
Prison Realty Board of Directors constitutes approval of the transactions for
the purposes of Maryland law (or similar laws of any jurisdiction applicable to
the transactions contemplated hereby) with respect to the acquisition of control
shares of, and business combinations with, Prison Realty.
Section 3.A.7. Tax-Free Reorganization. Each of the three
mergers comprising the Combination will qualify as a "reorganization" within the
meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the
"Code"), and none of the Companies or CCA Acquisition Sub, Inc., PMSI
Acquisition Sub, Inc. or JJFMSI Acquisition Sub, Inc., each a Tennessee
corporation, has recognized, or will recognize, any taxable gain, for United
States federal income tax purposes, as a result of the Combination.
ARTICLE III.B
REPRESENTATIONS AND WARRANTIES OF CCA
Except as set forth: (i) in the SEC Reports; and (ii) in the
schedule delivered by CCA to Pacific Life and attached hereto as Schedule B
("CCA's Disclosure Schedule") (provided, however, that the description of the
items set forth in CCA's Disclosure Schedule reasonably identifies and relates
to the matter being disclosed), CCA hereby represents and warrants to Pacific
Life as follows:
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Section 3.B.1. Incorporation of Representations and Warranties
Contained in the Merger Agreement. The representations and warranties of CCA
contained in the Merger Agreement are incorporated herein, and made a part of,
this Agreement by this reference, as if fully set forth herein, and CCA hereby
affirms those representations and warranties in Section 3.03 of the Merger
Agreement for the purposes of this Agreement and for the benefit of Pacific Life
hereunder.
Section 3.B.2. Authority. CCA has all necessary corporate
power and authority to enter into this Agreement and the Transaction Documents,
and to consummate the transactions contemplated hereby. The execution and
delivery of the Transaction Documents and the consummation by CCA of the
transactions contemplated thereby have been duly authorized by all necessary
corporate action on the part of CCA.
Section 3.B.3. Consents and Approvals; Non-Contravention. The
execution and delivery by CCA of the Transaction Documents to which it is a
party, the performance of its obligations thereunder and the consummation by it
of the transactions contemplated thereby do not and will not (a) require the
consent, approval, authorization, order, registration, filing, qualification,
license or permit of or with any court or any government agency or body,
domestic or foreign, applicable to CCA or any of its properties or assets, (b)
require the consent or approval of any party other than a regulatory agency or
body, (c) result in a breach of any of the terms and provisions of, or
constitute a default (or an event which with notice or lapse of time, or both,
would constitute a default) under, or result in the creation or imposition of
any Liens upon any property or assets of CCA pursuant to any agreement,
instrument, franchise, license or permit to which CCA is a party or by which CCA
or its properties or assets may be bound or (d) violate any judgment, decree,
order, statute, rule or regulation of any court or Governmental Entity or body
applicable to CCA or any of its respective properties or assets. The execution,
delivery and performance of the Transaction Documents by CCA and the
consummation of the transactions contemplated thereby do not and will not
violate or conflict with any provision of the charter, bylaws or similar
governing documents of CCA, as currently in effect.
Section 3.B.4. Enforceability of Transaction Documents. This
Agreement has been, and each of the other Transaction Documents to be executed
and delivered by CCA pursuant to this Agreement has been or will be, duly and
validly authorized, executed and delivered by CCA, and this Agreement is, and
such other Transaction Documents when so executed and delivered will be, valid
and binding obligations of CCA, enforceable against it in accordance with their
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws from time to time
affecting the enforcement of creditors' rights generally.
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ARTICLE III.C
REPRESENTATIONS AND WARRANTIES OF SERVICE COMPANY A
Except as set forth: (i) in the SEC Reports; and (ii) in the
schedule delivered by Service Company A to Pacific Life and attached hereto as
Schedule C ("Service Company A's Disclosure Schedule") (provided, however, that
the description of the items set forth in Service Company A's Disclosure
Schedule reasonably identifies and relates to the matter being disclosed),
Service Company A hereby represents and warrants to Pacific Life as follows:
Section 3.C.1. Incorporation of Representations and Warranties
Contained in the Merger Agreement. The representations and warranties of Service
Company A contained in the Merger Agreement are incorporated herein, and made a
part of, this Agreement by this reference, as if fully set forth herein, and
Service Company A hereby affirms those representations and warranties in Section
3.04 of the Merger Agreement for the purposes of this Agreement and for the
benefit of Pacific Life hereunder.
Section 3.C.2. Authority. Service Company A has all necessary
corporate power and authority to enter into this Agreement and the Transaction
Documents, and to consummate the transactions contemplated hereby. The execution
and delivery of the Transaction Documents and the consummation by Service
Company A of the transactions contemplated thereby have been duly authorized by
all necessary corporate action on the part of Service Company A.
Section 3.C.3. Consents and Approvals; Non-Contravention. The
execution and delivery by Service Company A of the Transaction Documents to
which it is a party, the performance of its obligations thereunder and the
consummation by it of the transactions contemplated thereby do not and will not
(a) require the consent, approval, authorization, order, registration, filing,
qualification, license or permit of or with any court or any government agency
or body, domestic or foreign, applicable to Service Company A or any of its
properties or assets, (b) require the consent or approval of any party other
than a regulatory agency or body, (c) result in a breach of any of the terms and
provisions of, or constitute a default (or an event which with notice or lapse
of time, or both, would constitute a default) under, or result in the creation
or imposition of any Liens upon any property or assets of Service Company A
pursuant to any agreement, instrument, franchise, license or permit to which
Service Company A is a party or by which Service Company A or its properties or
assets may be bound or (d) violate any judgment, decree, order, statute, rule or
regulation of any court or Governmental Entity or body applicable to Service
Company A or any of its respective properties or assets. The execution, delivery
and performance of the Transaction Documents by Service Company A and the
consummation of the transactions contemplated thereby do not and will not
violate or conflict with any provision of the Articles of Incorporation, bylaws
or similar governing documents of Service Company A, as currently in effect.
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Section 3.C.4. Enforceability of Transaction Documents. This
Agreement has been, and each of the other Transaction Documents to be executed
and delivered by Service Company A pursuant to this Agreement has been or will
be, duly and validly authorized, executed and delivered by Service Company A and
this Agreement is, and such other Transaction Documents when so executed and
delivered will be, valid and binding obligations of Service Company A,
enforceable against it in accordance with their terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws from time to time affecting the
enforcement of creditors' rights generally.
ARTICLE III.D
REPRESENTATIONS AND WARRANTIES OF SERVICE COMPANY B
Except as set forth: (i) in the SEC Reports; and (ii) in the
schedule delivered by Service Company B to Pacific Life and attached hereto as
Schedule D ("Service Company B's Disclosure Schedule") (provided, however, that
the description of the items set forth in Service Company B's Disclosure
Schedule reasonably identifies and relates to the matter being disclosed),
Service Company B hereby represents and warrants to Pacific Life as follows:
Section 3.D.1. Incorporation of Representations and Warranties
Contained in the Merger Agreement. The representations and warranties of Service
Company B contained in the Merger Agreement are incorporated herein, and made a
part of, this Agreement by this reference, as if fully set forth herein, and
Service Company B hereby affirms those representations and warranties in Section
3.05 of the Merger Agreement for the purposes of this Agreement and for the
benefit of Pacific Life hereunder.
Section 3.D.2. Authority. Service Company B has all necessary
corporate power and authority to enter into this Agreement and the Transaction
Documents, and to consummate the transactions contemplated hereby. The execution
and delivery of the Transaction Documents and the consummation by Service
Company B of the transactions contemplated thereby have been duly authorized by
all necessary corporate action on the part of Service Company B.
Section 3.D.3. Consents and Approvals; Non-Contravention. The
execution and delivery by Service Company B of the Transaction Documents to
which it is a party, the performance of its obligations thereunder and the
consummation by it of the transactions contemplated thereby do not and will not
(a) require the consent, approval, authorization, order, registration, filing,
qualification, license or permit of or with any court or any government agency
or body, domestic or foreign, applicable to Service Company B or any of its
properties or assets, (b) require the consent or approval of any party other
than a regulatory agency or body, (c) result in a breach of any of the terms and
provisions of, or constitute a default (or an event which with notice or lapse
of time, or both, would constitute a default) under, or result
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in the creation or imposition of any Liens upon any property or assets of
Service Company B pursuant to any agreement, instrument, franchise, license or
permit to which Service Company B is a party or by which Service Company B or
its properties or assets may be bound or (d) violate any judgment, decree,
order, statute, rule or regulation of any court or Governmental Entity or body
applicable to Service Company B or any of its respective properties or assets.
The execution, delivery and performance of the Transaction Documents by Service
Company B and the consummation of the transactions contemplated thereby do not
and will not violate or conflict with any provision of the charter, bylaws or
similar governing documents of Service Company B, as currently in effect.
Section 3.D.4. Enforceability of Transaction Documents. This
Agreement has been, and each of the other Transaction Documents to be executed
and delivered by Service Company B pursuant to this Agreement has been or will
be, duly and validly authorized, executed and delivered by Service Company B and
this Agreement is, and such other Transaction Documents when so executed and
delivered will be, valid and binding obligations of Service Company B,
enforceable against it in accordance with their terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws from time to time affecting the
enforcement of creditors' rights generally.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF PACIFIC LIFE
Except as set forth in the schedule delivered by Pacific Life
to the Companies and attached hereto as Schedule E ("Pacific Life's Disclosure
Schedule") (provided, however, that description of the items set forth in
Pacific Life's Disclosure Schedule reasonably identifies and relates to the
matter being disclosed), Pacific Life hereby represents and warrants with
respect to itself to each of the Companies as follows:
Section 4.1. Investment.
(a) Pacific Life is acquiring the Pacific Life Shares, the
Warrants and the shares of Prison Realty Common Stock issuable upon conversion
of the Pacific Life Shares and the exercise of the Warrants, for investment for
its own account, and not with a view to any resale or distribution thereof in
violation of the securities laws. Subject to the terms of the Registration
Rights Agreement, Pacific Life understands that the Pacific Life Shares, the
Warrants and the Warrant Shares have not and will not be registered under the
Securities Act by reason of specific exemptions therefrom which depend upon,
among other things, the bona fide nature of the investment intent and the
accuracy of Pacific Life's representations as expressed herein.
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(b) Pacific Life's financial condition and investments are
such that it is in a position to hold the Pacific Life Shares, the Warrants and
the shares of Prison Realty Common Stock issuable upon conversion of the Pacific
Life Shares and the exercise of the Warrants for an indefinite period, bear the
economic risks of the investment and withstand the complete loss of the
investment. Pacific Life has extensive knowledge and experience in financial and
business matters and has the capability to evaluate the merits and risks of such
Pacific Life Shares, the shares of Prison Realty Common Stock issuable upon
conversion of the Pacific Life Shares, and the Warrant Shares. Pacific Life
qualifies as (i) an "accredited investor" as such term is defined in Section
2(15) of the Securities Act and Regulation D promulgated thereunder or (ii) a
"qualified institutional buyer" as defined in Rule 144A under the Securities
Act.
Section 4.2. Rule 144. Pacific Life acknowledges that the
Pacific Life Shares, the Warrant Shares and the shares of Prison Realty Common
Stock issuable upon conversion of the Pacific Life Shares must be held
indefinitely unless subsequently registered under the Securities Act or any
applicable state securities laws or unless exemptions from such registrations
are available. Pacific Life is aware of and familiar with the provisions of Rule
144 promulgated under the Securities Act which permit limited resale of
securities purchased in a private placement subject to the satisfaction of
certain conditions.
Section 4.3. Organization of Pacific Life. Pacific Life is
duly organized and validly existing under the laws of the jurisdiction of its
organization.
Section 4.4. Current Ownership. Except as set forth in Pacific
Life's Disclosure Schedule, as of the date hereof, Pacific Life represents that
it does not beneficially own any capital stock of the Companies.
Section 4.5. No Voting Agreements. Pacific Life has not
entered into any voting agreement relating to the Pacific Life Shares, the
Warrant Shares, or the shares of Prison Realty Common Stock to be issued upon
the Pacific Life Shares' conversion prior to the date hereof.
Section 4.6. Authority of Pacific Life.
(a) Pacific Life has the power and authority to execute and
deliver this Agreement, to consummate the transactions contemplated hereby and
to comply with the terms, conditions and provisions hereof applicable to Pacific
Life.
(b) The execution, delivery and performance of this Agreement
by Pacific Life has been duly authorized and approved by Pacific Life and does
not require any further authorization or consent of Pacific Life or its
beneficial owners. This Agreement is the legal, valid and binding agreement of
Pacific Life, enforceable against Pacific Life in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy,
insol-
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vency, reorganization, moratorium or other similar laws from time to time
affecting the enforcement of creditors' rights generally.
Section 4.7. Non-Contravention. The execution, delivery and
performance of this Agreement by Pacific Life and the consummation of any of the
transactions contemplated hereby by Pacific Life will not (a) conflict with or
result in a breach of any of the terms and provisions of, or constitute a
default (or an event which with notice or lapse of time, or both, would
constitute a default) under, or result in the creation or imposition of any
Lien, charge or encumbrance upon any property or assets of Pacific Life pursuant
to any agreement, instrument, franchise, license or permit to which Pacific Life
is a party or by which any of its properties or assets may be bound or (b)
violate or conflict with any judgment, decree, order, statute, rule or
regulation of any court or any public, governmental or regulatory agency or body
applicable to Pacific Life or any of its properties or assets, other than such
breaches, defaults or violations that are not reasonably expected to impair the
ability of Pacific Life to consummate the transactions contemplated by this
Agreement. The execution, delivery and performance of this Agreement by Pacific
Life and the consummation of the transactions contemplated hereby by Pacific
Life does not and will not violate or conflict with any provision of the
organizational documents of Pacific Life, as currently in effect. Except for
filings under the HSR Act (as defined in Section 5.1(a) herein), no consent,
approval, authorization, order, registration, filing, qualification, license or
permit of or with any court or any government agency or body applicable to
Pacific Life is required for the execution, delivery and performance of this
Agreement or the consummation of the transactions contemplated hereby.
Section 4.8. Brokers and Finders. No agent, broker, investment
banker, financial advisor or other firm or person engaged by or on behalf of
Pacific Life is or will be entitled to any broker's or finder's fee or any other
commission or similar fee, in each case payable by the Companies, in connection
with any of the transactions contemplated by the Transaction Documents.
ARTICLE V.
CONDITIONS PRECEDENT TO CLOSING
Section 5.1. Conditions to Each Party's Obligation. The
respective obligation of each party to consummate the transactions contemplated
hereby with respect to the Pacific Life Investment shall be subject to the
satisfaction at or prior to the Closing of each of the following conditions:
(a) HSR Approval. The applicable waiting period (and any
extension thereof) under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended (the "HSR Act"), relating to the transactions
contemplated by the Transaction Documents shall have been terminated or
shall have expired.
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(b) No Injunctions or Restraints. No temporary restraining
order, preliminary or permanent injunction or other order issued by any
court of competent jurisdiction (collectively, "Restraints") preventing
consummation of any of the transactions contemplated hereby shall be in
effect.
(c) Prison Realty Stockholder Approval. The approval of
holders of the requisite number of the shares of Prison Realty Common
Stock outstanding on the record date (the "Record Date") for Prison
Realty's Stockholders Meeting, as defined in Section 7.2(a)(ii), shall
have been received for: (i) the revocation of the election by Prison
Realty to qualify as a real estate investment trust (a "REIT") under
the Code, which revocation shall be effective commencing with its
taxable year ending December 31, 2000; (ii) the adoption of amendments
to Prison Realty's charter as set forth in the New Prison Realty
Charter; and (iii) the Transaction Documents (including without
limitation the issuance of the Pacific Life Shares and the Warrants and
the changes to the Board of Directors of Prison Realty), all in
accordance with the requirements of Prison Realty's charter and bylaws,
the provisions of Maryland law and the rules of the NYSE (the "Prison
Realty Stockholder Approval").
(d) CCA Stockholder Approval. The approval of holders of the
requisite number of the shares of CCA capital stock outstanding on the
Record Date for CCA's Stockholders' Meeting, as defined in Section
7.2(a)(ii) herein, including the individual approval of the Baron Asset
Fund ("Baron"), shall have been received for the Combination in
accordance with the requirements of CCA's charter and bylaws and the
provisions of Tennessee law and the contractual agreement by and
between CCA and Baron (the "CCA Stockholder Approval").
(e) Service Company A Stockholder Approval. The approval of
holders of the requisite number of the shares of Service Company A's
voting common stock outstanding on the Record Date for Service Company
A's Stockholders' Meeting, as defined in Section 7.2(a)(ii) herein,
shall have been received for the Combination in accordance with the
requirements of Service Company A's charter and bylaws and the
provisions of Tennessee law (the "Service Company A Stockholder
Approval").
(f) Service Company B Stockholder Approval. The approval of
holders of the requisite number of the shares of Service Company B's
voting common stock outstanding on the Record Date for Service Company
B's Stockholders' Meeting, as defined in Section 7.2(a)(ii) herein,
shall have been received for the Combination in accordance with the
requirements of Service Company B's charter and bylaws and the
provisions of Tennessee law (the "Service Company B Stockholder
Approval", together with the Prison Realty Stockholder Approval, the
CCA Stockholder Approval and the Service Company A Stockholder
Approval, the "Stockholder Approval").
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(g) Combination. Pursuant to the Merger Agreement, the
Combination shall have been completed in accordance with its terms,
including the fulfillment of the condition therein that immediately
prior to the completion of the Combination, Prison Realty shall
purchase the shares of common stock of CCA held by each of Sodexho
Alliance, S.A. and Baron and shares of the common stock of Service
Company A and Service Company B held by third-party investors.
(h) Election to be Taxed as a REIT. Prison Realty shall (a)
have taken all actions necessary to elect to be taxed as a REIT under
the Code for its taxable year ended December 31, 1999 and to complete
the 1999 Distribution and (b) qualify for REIT status for such taxable
year.
(i) Financing. Prison Realty, on behalf of itself and as the
successor or parent to CCA, Service Company A and Service Company B
after the completion of the Combination, shall have entered into
definitive agreements with respect to (a) a new senior financing in the
aggregate amount of $1.0 billion or (b) the renewal of $1.0 billion of
its existing senior credit facilities, in either case all in such forms
as are reasonably acceptable to the Companies and Pacific Life. The
initial fundings under such facilities or such renewal shall have
occurred and the proceeds of such fundings, together with the proceeds
from the Rights Offering and the issuance of the Pacific Life Shares,
shall be applied as agreed to by Prison Realty and Pacific Life.
Notwithstanding any provision of this agreement to the contrary, the
responsibility and obligation to obtain such senior financing shall be
solely that of Prison Realty, and Pacific Life shall have no
responsibility or obligation, express or implied, to provide any such
debt financing.
(j) Registration of Prison Realty Capital Stock. The shares of
Prison Realty capital stock to be issued in the Combination and the
Rights Offering , as well as the rights issued in the Rights Offering,
shall be subject to a registration statement which shall have been
declared effective by the SEC, and no stop order suspending the
effectiveness of the registration statement shall be in effect and no
proceedings for such purpose shall be pending before or threatened by
the SEC.
(k) NYSE Listing. The shares of Prison Realty Common Stock
issued in the Combination and the Rights Offering shall have been
approved for listing on the NYSE, subject to official notice of
issuance, if applicable.
Section 5.2. Conditions to Pacific Life's Obligation. The
obligation of Pacific Life to consummate the transactions contemplated hereby
with respect to the Pacific Life Investment shall be subject to the satisfaction
at or prior to the Closing of each of the following conditions:
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(a) Representations And Warranties. The representations and
warranties of each of the Companies set forth in this Agreement or
incorporated herein by reference shall be true and correct, except that
this condition shall be deemed satisfied so long as any failures of
such representations and warranties to be true and correct do not
individually or in the aggregate have a Material Adverse Effect on the
Companies and their Subsidiaries, taken as a whole, as of the date of
this Agreement and as of the Closing Date (it being understood that a
material misrepresentation with respect to Section 3.01(c) of the
Merger Agreement ("Capital Structure of Prison Realty") would for
purposes of this condition be deemed to constitute a Material Adverse
Effect), except as otherwise contemplated by this Agreement, and
Pacific Life shall have received a certificate to such effect signed on
the Closing Date on behalf of the Companies by their respective Chief
Executive Officer and Chief Financial Officer or Treasurer, in form and
substance reasonably satisfactory to Pacific Life.
(b) Performance of Obligations. Each of the Companies shall
have performed in all material respects all obligations required to be
performed by them under this Agreement at or prior to the Closing and
the Companies shall have delivered to Pacific Life at the Closing a
certificate signed by their respective Chief Executive Officer and
Chief Financial Officer or Treasurer, dated the Closing Date, in form
and substance reasonably satisfactory to Pacific Life, to the foregoing
effect.
(c) Receipt of Consents. Each of the Companies shall have
obtained the consents contemplated by Section 5.2(c) of their
respective Disclosure Schedules (or not included therein, but required
to be so included) and a copy of each such consent or evidence thereof
reasonably satisfactory to Pacific Life shall have been provided to
Pacific Life at or prior to the Closing.
(d) Material Adverse Change. Since the date of this Agreement,
there shall not have occurred any event that could reasonably be
expected to have a Material Adverse Effect (or development that is
reasonably likely to result in any Material Adverse Effect) on the
Companies and their subsidiaries, taken as a whole, and each of the
Companies shall deliver to Pacific Life at the Closing a certificate
signed by its respective Chief Executive Officer, dated as of the
Closing Date, to the foregoing effect.
(e) Audit. Each of the Companies shall have delivered
consolidated financial statements for the year ended December 31, 1999
(collectively, the "1999 Financial Statements") audited by Xxxxxx
Xxxxxxxx LLP, each of the respective Companies' independent auditors,
which shall comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the
SEC with respect thereto, which have been prepared in accordance with
generally accepted accounting principles ("GAAP") and which fairly
present the consolidated financial position of the Companies and the
consolidated results of operations and cash flows
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for the period then ended. Except as required by changes in GAAP or law
or regulations or as disclosed in the SEC Reports filed prior to the
date of this Agreement or as otherwise agreed to by Pacific Life (such
agreement not to be unreasonably withheld to the extent that such
changes in methods of accounting or underlying assumptions are required
by the Combination), the 1999 Financial Statements shall not reflect
any change in any of the methods of accounting or underlying
assumptions (including but not limited to any change in the method of
reporting income and deductions for federal income tax purposes) from
those employed in the preparation of the Companies' financial
statements for the year ended December 31, 1998.
(f) No Defaults. Except as disclosed in Section 5.2(f) of
their respective Disclosure Schedules, none of the Companies or the
Subsidiaries shall be in violation or default under any provision of
their charter, by-laws or other organizational documents, or shall be
in breach of or default with respect to any provision of any agreement,
judgment, decree, order, mortgage, deed of trust, lease, franchise,
license, indenture, permit or other instrument to which it is a party
or by which it or any of its properties or assets are bound; and there
shall not exist any state of facts which would constitute an event of
default on the part of any of the Companies or the Subsidiaries as
defined in such documents which, with notice or lapse of time or both,
would constitute a default.
(g) Opinions of Counsel. Pacific Life shall have received at
the Closing opinions, dated the Closing Date, of counsel to the
Companies, in form and substance reasonably satisfactory to Pacific
Life and which, without limitation, shall contain an opinion in such
counsel's customary form that Prison Realty will qualify for REIT
status for the taxable year 1999.
(h) New Prison Realty Charter and Bylaws. The New Prison
Realty Charter and the New Prison Realty Bylaws shall be in effect and
Prison Realty shall have obtained the resignations of the directors
listed on Schedule 7.12 hereof effective as of the Closing and shall
have appointed the initial Series B Preferred Stock Directors to the
Board of Directors subject to the occurrence of the Closing.
(i) Certain Financial Tests. The Consolidated Net Debt of the
Companies (as hereinafter defined) shall not exceed $992.0 million as
of the end of the fifth business day prior to the Closing.
"Consolidated Net Debt of the Companies" shall mean the sum of (i) the
principal amount of and all obligations for payment then due under any
outstanding indebtedness of the Companies for borrowed money excluding
the 12% Senior Notes due 2006, the 9.5% Convertible Subordinated Notes
due 2008, the 7.5% Convertible Subordinated Notes due 2005, and
indebtedness among the Companies plus (ii) the unexpended portion, if
any, of the capital expenditure budget described on Schedule 5.2(i) as
having been budgeted to be spent prior to the date of this
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calculation, minus the lesser of cash on hand and $10 million. Not less
than five business days prior to the Closing, the Companies shall have
delivered to Pacific Life schedules in form and substance satisfactory
to Pacific Life and its independent accountants showing the calculation
of the Consolidated Net Debt of the Companies, together with a
certificate signed by each of the Companies' respective Chief Financial
Officers to the effect that this condition has been satisfied.
(j) Settlement of Litigation. Either the litigation described
in Section 7(b)(iv) of the Prison Realty Series B Articles
Supplementary existing on the date hereof (including for such purposes
successor lawsuits or new lawsuits arising out of the same facts and
circumstances) shall have been finally settled on terms and conditions
satisfactory to Pacific Life, or the insurance described in Schedule
7.1(m) hereof shall have been obtained and remain in full force and
effect at the Closing. As used in this Section 5.2(j) "finally settled"
shall mean that all parties to the litigation shall have entered into a
settlement agreement, that all relevant courts shall have approved the
settlement, and that the terms of the settlement shall no longer be
subject to appeal, or that such litigation shall have been dismissed
with prejudice by a court of competent jurisdiction and such dismissal
shall not be subject to appeal.
Section 5.3. Conditions to the Obligations of Each of the
Companies. The respective obligation of each of the Companies to consummate the
transactions contemplated hereby with respect to the Pacific Life Investment
shall be subject to the satisfaction at or prior to the Closing of each of the
following conditions:
(a) Roll Over of $30.0 Million Convertible, Subordinated Debt.
The holder of $30.0 million aggregate principal amount of Prison
Realty's 7.5% convertible, subordinated debt due February 2005 shall
not have accelerated the maturity of such debt or shall have exchanged
such debt for such other securities as are acceptable to Prison Realty.
(b) Representations and Warranties. The representations and
warranties of Pacific Life set forth in this Agreement shall be true
and correct, except that this condition shall be deemed satisfied so
long as any failures of such representations and warranties to be true
and correct do not individually or in the aggregate have a Material
Adverse Effect on Pacific Life as of the date of this Agreement and as
of the Closing Date, except as otherwise contemplated by this
Agreement, and the Companies shall have each received a certificate to
such effect signed on the Closing Date on behalf of Pacific Life by its
Chief Executive Officer and Chief Financial Officer or Treasurer, in
form and substance reasonably satisfactory to the Companies.
(c) Performance of Obligations. Pacific Life shall have
performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing and
Pacific Life shall have delivered to the Companies at the
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Closing a certificate signed by its Chief Executive Officer and Chief
Financial Officer or Treasurer, dated the Closing Date, in form and
substance reasonably satisfactory to Prison Realty, to the foregoing
effect.
(d) Opinion of Counsel. The Companies shall have received at
the Closing opinions, dated the Closing Date, of counsel to Pacific
Life, in form and substance reasonably satisfactory to the Companies.
ARTICLE VI.
[RESERVED]
ARTICLE VII.
COVENANTS OF THE COMPANIES
Each of the Companies hereby, severally and not jointly,
covenant with Pacific Life as follows:
Section 7.1. Conduct of Business Pending the Closing. Except
as set forth in Section 7.1 of the Companies' respective Disclosure Schedules or
as otherwise expressly contemplated by this Agreement or as consented to by
Pacific Life in writing, during the period from the date of this Agreement
through and including the Closing Date, each of the Companies shall, and shall
cause their Subsidiaries to, carry on their respective businesses in the
ordinary course consistent with past practice and in compliance in all material
respects with all applicable laws and regulations and, to the extent consistent
therewith, shall use reasonable efforts to preserve intact their current
business organizations and use reasonable efforts to preserve their
relationships with those persons having business dealings with them. Without
limiting the generality of the foregoing, except (i) as set forth in Section 7.1
of the Companies' respective Disclosure Schedules, (ii) with respect to the
"securitization" (or other similar financing) of payments due Prison Realty or
its Subsidiaries from the HMP Secretary of State for the Home Department of the
United Kingdom with respect to Prison Realty's HMP Forest Bank facility located
in Salford, England, or (iii) as otherwise expressly contemplated by this
Agreement, including without limitation the Merger Agreement, or as consented to
by Pacific Life in writing, during the period from the date of this Agreement
through the Closing Date, none of the Companies shall, and each shall not permit
any of their Subsidiaries to:
(a) other than (w) dividends and distributions by a direct or
indirect wholly owned Subsidiary to the Companies or one of their
wholly owned Subsidiaries, (x) the 1999 Distribution, (y) dividends and
distributions paid by Service Company A and
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Service Company B to their respective shareholders in accordance with
their distribution and dividend policy and practice to date, and (z)
the purchase of securities from certain shareholders of CCA, Service
Company A and Service Company B as contemplated in the Merger
Agreement, (i) declare, set aside or pay any dividends (payable in
cash, stock, property or otherwise) on, make any other distributions in
respect of, or enter into any agreement with respect to the voting of,
any of its capital stock, (ii) split, combine or reclassify any of its
capital stock or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for shares of
its capital stock, or (iii) purchase, redeem or otherwise acquire any
capital stock in the Companies or any of the Subsidiaries or any other
securities thereof or any rights, warrants or options to acquire any
such shares or other securities;
(b) other than the 1999 Distribution and the issuance of
Prison Realty securities in the Rights Offering, issue, deliver, sell,
pledge or otherwise encumber or subject to any Lien any of its shares
of capital stock or any other voting securities or any securities
convertible into, exercisable for or exchangeable with, or any rights,
warrants or options to acquire, any such shares, voting securities or
convertible securities;
(c) amend its charter, bylaws or other comparable
organizational documents or amend or waive any provisions of the
Transaction Documents or undertake any act or fail to act where such
act or failure to act would or could frustrate the purpose of the
Transaction Documents;
(d) acquire any business (whether by merger, consolidation,
purchase of assets or otherwise) or acquire any equity interest in any
person not an affiliate (whether through a purchase of stock,
establishment of a joint venture or otherwise);
(e) other than the obligations for capital commitments set
forth in Section 7.1 of any of the Companies' respective Disclosure
Schedules, (A) sell, lease, exchange, license, mortgage or otherwise
encumber or subject to any Lien or otherwise dispose of any of its real
properties or other assets, (B) enter into any new joint ventures or
similar projects, (C) enter into any new development projects or (D)
enter into any new leases or other material agreements or
understandings;
(f) change its methods of accounting (or underlying estimates
or assumptions), except as required by changes (i) in GAAP, (ii) in law
or regulation, or (iii) due to events subsequent to September 30, 1999
related or consequential to entering into the Merger Agreement or the
Transaction Documents or the consummation of the transactions
contemplated thereby (including, but not limited to, the effects of any
changes required by the SEC as part of its review of the SEC Reports
and the disclosure related to the Combination and the transactions
contemplated hereunder); or change any of its methods of reporting
income and deductions for federal income tax purposes from those
employed in the preparation of the federal income tax returns of
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the Companies for the taxable years ended December 31, 1998, except as
required by changes in law or regulation;
(g) effect any settlement or compromise of any pending or
threatened proceeding in respect of which the Companies are or could
have been a party, unless such settlement (i) includes an unconditional
written release of the Companies, in form and substance reasonable
satisfactory to the Companies, from all liability on claims that are
the subject matter of such proceeding, (ii) does not include any
statement as to any admission of fault, culpability or failure to act
by or on behalf of the Companies and (iii) is less than $100,000;
(h) other than the obligations for capital commitments set
forth in Section 7.1 of any of the Companies' respective Disclosure
Schedules, create, renew, amend, terminate or cancel, or take any other
action (or fail to take any action) that could reasonably be expected
to result in the creation, renewal, amendment, termination or
cancellation of any agreement or instrument that is material to the
Companies and their respective subsidiaries, taken as a whole;
(i) other than the obligations for capital commitments set
forth in Section 7.1 of any of the Companies' respective Disclosure
Schedules, incur any indebtedness for borrowed money (including, but
not limited to, borrowings under the Companies' respective credit
facilities other than borrowings contemplated by the Companies'
respective business plans previously provided to Pacific Life);
(j) other than the obligations for capital commitments set
forth in Section 7.1 of any of the Companies' respective Disclosure
Schedules, enter into any new capital or take out commitments or
increase any existing capital or take out commitments;
(k) except pursuant to agreements or arrangements in effect on
the date hereof, (A) terminate the employment of any executive officer
of the Companies, (B) enter into any new employment agreement with any
director, executive officer or other employee without the consent of
Pacific Life, (C) grant to any current or former director, executive
officer or other key employee of the Companies or any Subsidiary any
increase in compensation, bonus or other benefits (other than increases
in base salary in the ordinary course of business consistent with past
practice or arising due to a promotion or other change in status and
consistent with generally applicable compensation practices), (D) grant
to any such current or former director, executive officer or other
employee any increase in severance or termination pay, (E) amend, adopt
or terminate any employment, deferred compensation, consulting,
severance, termination or indemnification agreement with any such
current or former director, executive officer or employee, or (F)
amend, adopt or terminate any Benefit Plan, except as may be required
to retain qualification of any such plan under Section 401(a) of the
Code;
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(l) except pursuant to agreements or arrangements in effect on
the date hereof or as otherwise contemplated by this Agreement which
have been disclosed in Section 7.1 of the Companies' Disclosure
Schedules, pay, loan or advance any amount to, or sell, transfer or
lease any properties or assets (real, personal or mixed, tangible or
intangible) to, or purchase any properties or assets, or enter into any
agreement or arrangement with, any of its officers or directors or any
affiliate or the immediate family members or associates of any of its
officers or directors, other than payment of compensation at current
salary, incentive compensation and bonuses and other than properly
authorized business expenses in the ordinary course of business, in
each case consistent with past practice;
(m) permit any material insurance policy naming the Companies
or any Subsidiary as a beneficiary or a loss payable payee to be
canceled, diminished or terminated, or fail to obtain or maintain the
insurance coverage specified on Schedule 7.1(m) attached hereto;
(n) enter into or amend in a manner adverse to Pacific Life
any new agreement which has a non-competition, geographical restriction
or similar covenant; or
(o) authorize, or commit or agree to take, any of the
foregoing actions.
Section 7.2. Disclosure Documents; Stockholder Approvals.
(a) Each of the Companies agrees that it will, in accordance
with applicable law and its charter and bylaws:
(i) promptly file with the SEC, preliminary copies of the
disclosure documents to be sent to security holders in connection with
the transactions contemplated by this Agreement (the "Disclosure
Documents") and use its reasonable efforts to obtain the clearance by
the SEC of those Disclosure Documents requiring clearance by the SEC as
promptly as practicable thereafter;
(ii) promptly and duly call, give notice of, convene and hold a
meeting of its stockholders for the purpose of obtaining the Prison
Realty Stockholder Approval, CCA Stockholder Approval, Service Company
A Stockholder Approval or Service Company B Stockholder Approval, as
applicable (each, a "Stockholders' Meeting");
(iii) except to the extent such Board of Directors determines in
good faith, after consultation with outside counsel and after taking
into account any modifications as contemplated by Section 7.2(c)
hereof, that contrary action is required by such Board of Directors'
fiduciary duties under applicable law, recommend the Prison Realty
Stockholder Approval in the case of Prison Realty, the CCA Stockholder
Approval in the case of CCA, the Service Company A Stockholder Approval
in the case
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of Service Company A, and the Service Company B Stockholder Approval in
the case of Service Company B and include in the Disclosure Documents
such recommendations and the written opinion of the financial advisors
that the terms of the Investment and the transactions consummated in
connection therewith are fair, from a financial point of view, to
Prison Realty and the stockholders of Prison Realty, cause the
Combination (including the New Prison Realty Charter and the New Prison
Realty Bylaws) to become effective and take all lawful action to
solicit such approvals and acceptances; and
(iv) as promptly as practicable following the clearance by the
SEC of the Disclosure Documents requiring such clearance cause the
definitive Disclosure Documents to be mailed to its stockholders.
(b) Each of the Companies agrees that it shall use its
reasonable best efforts to ensure that the Disclosure Documents (including
without limitation any SEC Reports incorporated by reference therein) shall
comply with all applicable federal or other securities laws, except that the
Companies shall have no obligation as to information provided by Pacific Life.
(c) The filing with the SEC, or the transmission to any of the
Companies' security holders, of any Disclosure Document, or any amendment
thereof, relating to the transactions contemplated by this Agreement shall be
subject to the prior approval of Pacific Life and their counsel, which approval
shall not be unreasonably withheld or delayed.
Section 7.3. Payment of Expenses; Fees. Whether or not the
transactions contemplated in this Agreement are consummated or this Agreement is
terminated, except in the instance where such is caused by the breach of this
Agreement by Pacific Life, each of the Companies hereby agrees, jointly and
severally, (i) to pay all costs and expenses incident to the performance of the
obligations of the Companies hereunder, including those in connection with (A)
the issuance, transfer and delivery of the Pacific Life Shares, the Warrants or
the shares of Prison Realty Common Stock issuable upon conversion or exercise
thereof to the Pacific Life, including any transfer or similar taxes payable
with respect thereto, (B) the qualification of the Pacific Life Shares, the
Warrants or the shares of Prison Realty Common Stock issuable upon conversion or
exercise thereof under state or foreign securities or Blue Sky laws, (C) the
cost of printing the certificates for the Pacific Life Shares, the Warrants or
the shares of Prison Realty Common Stock issuable upon conversion or exercise
thereof, (D) the costs and charges of any transfer agent, registrar, trustee or
fiscal paying agent, (E) the costs associated with the Combination, and (F) the
costs associated with the Rights Offering and (ii) to promptly pay, upon the
request of Pacific Life on a monthly basis, all out-of-pocket costs and
expenses, including fees and expenses of advisors, accountants, attorneys,
consultants and other parties whom Pacific Life has engaged to assist it in
connection with a possible investment in the Companies, incurred by Pacific Life
in connection with the making of Pacific
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Life's initial proposal and any revised proposal, the evaluation, negotiation
and consummation of this Agreement, the other Transaction Documents and the
transactions contemplated hereby and thereby. Except for the payment of expenses
hereunder and notwithstanding any agreement entered into between Pacific Life
and any of the Companies prior to the date hereof, the Companies shall not be
liable for any transaction, break-up, monitoring, financing, financing
arrangement or other fees of any kind to any party relating to the Investment or
any merger, consolidation, transfer of substantial assets, sale or exchange of
securities or similar transactions (or financing with respect thereto) intended
to be completed in lieu of the Pacific Life Investment and the consummation and
non-consummation thereof. Each of the following obligations is independent and
not limited in any way by the Companies' obligations in respect of any of the
other following obligations: (i) the payment obligations under this Section;
(ii) the Companies' indemnification obligations under Section 11.2 and (iii) and
adjustments to the conversion price of the Shares pursuant to the Prison Realty
Articles Supplementary.
Section 7.4. Availability of Prison Realty Common Stock.
Prison Realty shall at all times reserve and keep available out of its
authorized but unissued common stock, for the purpose of effecting the
conversion of the Pacific Life Shares and the exercise of the Warrants, the full
number of shares of Prison Realty Common Stock then issuable upon the conversion
of the Pacific Life Shares and the exercise of the Warrants. Prison Realty will,
from time to time, in accordance with the laws of the State of Maryland and the
provisions of its charter then in effect increase the authorized amount of
Prison Realty Common Stock if at any time the number of shares of Prison Realty
Common Stock remaining unissued and available for issuance shall be insufficient
to permit conversion of the Pacific Life Shares and the exercise of the
Warrants.
Section 7.5. Reporting. Prison Realty shall, so long as the
Pacific Life Shares, shares of Prison Realty Common Stock issuable upon
conversion thereof, or Warrant Shares, are outstanding and are "restricted
securities" within the meaning of Rule 144(a)(3) under the Securities Act, file
reports and other information with the SEC under Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended (including the rules and regulations
promulgated thereunder, the "Exchange Act").
Section 7.6. No Solicitation of Competing Transactions.
(a) Except as expressly permitted in writing by Pacific Life,
none of the Companies shall authorize or permit any of their Subsidiaries or any
of the Companies' or the Subsidiaries' directors, officers, employees,
representatives, agents and advisors (including any investment banker, financial
advisor, attorney, accountant or other representative retained by any of them),
directly or indirectly to, (i) solicit, initiate, encourage (including by way of
furnishing nonpublic information), respond to (other than by bare statement,
without any further detail or explanation, that they are not permitted to
respond), or take any other action designed to facilitate, any inquiries or the
making of any proposal with respect to any merger,
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consolidation, transfer of substantial assets, sale or exchange of shares or
similar transaction (collectively, a "Competing Transaction"), (ii) participate
in any substantive discussions or negotiations regarding any Competing
Transaction or (iii) enter into any letter of intent, agreement in principle,
acquisition agreement or other similar agreement related to any Competing
Transaction. Upon execution of this Agreement, each of the Companies and the
Subsidiaries shall immediately cease any existing activities, discussions or
negotiations with any parties heretofore conducted with respect to any of the
foregoing. Notwithstanding the foregoing, none of the Companies will be
precluded from providing information to, or discussing, negotiating and
executing agreements with, any person or entity that makes a written proposal
pursuant to which such other person or entity would (i) make a significant
equity investment in one or more of the Companies, (ii) acquire all or a
substantial portion of the assets of one or more the Companies or (iii) acquire
one or more of the Companies, if and to the extent that its Board of Directors
reasonably determines in good faith (after consultation with outside counsel)
that they are required to authorize such actions by their fiduciary duties.
(b) Each of the Companies shall promptly (but in any event
within 24 hours) advise Pacific Life in writing of any inquiries, discussions,
negotiations, proposals or requests for information received on or after the
date of this Agreement relating to any Competing Transaction, the material terms
and conditions thereof and the identity of the person making such request or
Competing Transaction. Each of the Companies shall promptly advise Pacific Life
of any development relating to any inquiries, discussions, negotiations,
proposals or requests for information relating to a Competing Transaction,
whether the original inquiries, discussions, negotiations, proposals or requests
for information occurred before, on or after the date of this Agreement.
Section 7.7. No General Solicitation. None of the Companies,
their affiliates (as defined in Rule 501(b) under the Securities Act) or any
person acting on their behalf will offer to sell, sell or solicit any offer to
buy the Pacific Life Shares by means of any form of general solicitation or
general advertising (as those terms are used in Regulation D under the
Securities Act) or in any manner involving a public offering within the meaning
of Section 4(2) of the Securities Act that would require the registration of the
Pacific Life Shares under the Securities Act unless the Pacific Life Shares are
so registered.
Section 7.8. Access to Information. Each of the Companies
shall, and shall cause their Subsidiaries to, afford to Pacific Life and to the
officers, employees, accountants, counsel, financial advisors and other
representatives of Pacific Life, reasonable access during normal business hours
from the date hereof until and after the Closing to all the properties, books,
contracts, commitments, personnel, reports and records of or relating to the
Companies or the Subsidiaries, and each of the Companies shall, and shall cause
their Subsidiaries to, furnish promptly to Pacific Life, any financing source
identified by Pacific Life in connection with the transactions contemplated
hereby and to any other person that Pacific Life may reasonably request (i) a
copy of each report, schedule, registration statement and other document
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filed by it during such period pursuant to the requirements of federal or state
securities laws, (ii) such operating reports, financial reporting packages and
other operational and/or financial information sent to management or the Board
of Directors of the Companies or to the banks with whom the Companies and the
Subsidiaries maintain credit facilities or lines of credit and (iii) all other
information concerning its business, properties and personnel as Pacific Life
may reasonably request.
Section 7.9. HSR Approval. Each of the Companies shall
cooperate with Pacific Life in obtaining as soon as practicable all necessary
governmental consents and approvals, including without limitation, termination
or expiration of the waiting period under the HSR Act.
Section 7.10. Preemptive Rights.
(a) Pacific Life shall, until the fifth (5th) anniversary of
the Closing Date, for so long as Pacific Life owns any Shares, Warrants or
Warrant Shares, have the right to purchase additional shares of Prison Realty's
Common Stock, or securities convertible into or exchangeable for such common
stock (including without limitation, warrants, options or convertible stock or
debt) in any issuance of securities by Prison Realty other than issuances of
securities described in Section 7.10(c) hereof in a pro rata amount and on the
same terms and conditions as are called for by each future issuance (or as
nearly as may be practicable in the event the Investors cannot comply with such
terms and conditions). For the purposes of this Section 7.10, the term "pro rata
amount" shall mean such amount as will allow each Investor to maintain its then
existing percentage ownership of Prison Realty's Common Stock on a fully
converted basis (including its fully diluted ownership resulting from ownership
of the Shares and the Warrants).
(b) In connection with this preemptive right, Prison Realty
shall provide written notice to Pacific Life within fifteen (15) business days
following the end of each fiscal quarter of Prison Realty of all issuances by
Prison Realty giving rise to preemptive rights during such fiscal quarter.
Pacific Life shall then provide written notice to Prison Realty of the extent to
which its is exercising its preemptive rights and close any transaction relating
to the exercise of preemptive rights hereunder on or before the twentieth (20th)
business day following receipt of such notice by Prison Realty. Any preemptive
right not exercised by the end of such period will expire, lapse and be of no
effect.
(c) This Section 7.10 shall not apply to (w) securities issued
to persons who are directors or employees of Prison Realty pursuant to any
benefit plan, (x) securities issued by Prison Realty upon the conversion of
convertible debt issued by Prison Realty as of the Closing Date, (y) securities
issued as consideration for a "business combination" by Prison Realty, so long
as such consideration has a fair market value of less than $50 million and such
shares are issued at fair market value, or (z) the issuance and sale of
securities in the Rights Offering or issued upon the conversion or exercise of
such securities. For the purposes of this
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Section 7.10, the term "business combination" shall mean any cash, tender or
exchange offer, merger, consolidation or other business combination, sale of
assets or any combination of the foregoing transactions.
Section 7.11. Registration Rights Agreement. At or prior to
the Closing, Prison Realty shall enter into a Registration Rights Agreement for
the benefit of Pacific Life in the form of Exhibit G attached hereto.
Section 7.12. Corporate Governance. Immediately prior to the
Closing and except as provided in the following sentence, Prison Realty shall
use its best efforts to obtain the resignations of its directors. Immediately
after the Closing, the Board of Directors of Prison Realty shall consist of not
more than ten (10) persons which shall include Xxxxxx X. Xxxxxxx, Xxxx Xxxxxx
Cuny, Xxxxxx X. Xxxxxxx and one additional director designated from Prison
Realty's existing Board of Directors, four (4) persons designated by Pacific
Life, who shall be Series B Preferred Stock Directors as defined in the Prison
Realty Series B Articles Supplementary and two (2) Independent Directors (as
such term is defined in the New Prison Realty Charter) designated by the mutual
agreement of Pacific Life and Prison Realty's existing Board of Directors. In
connection with the foregoing, immediately after the Closing, (i) two (2)
members of Prison Realty's then existing senior management shall have the right
to attend and be heard at all meetings of the Prison Realty Board of Directors
and to receive all information provided to the Prison Realty Board of Directors,
with such members being selected by the Chief Executive Officer of Prison Realty
and subject to the reasonable approval of Pacific Life, and (ii) up to two (2)
representatives of Pacific Life shall have the right to attend and be heard at
all meetings of the Prison Realty Board of Directors and to receive all
information provided to the Prison Realty Board of Directors, with such
representatives being selected by Pacific Life and agreed to by Prison Realty's
existing Board of Directors.
Section 7.13. Review of Audit. The Companies shall permit the
accounting representative of Pacific Life to review the audit (including
appropriate review of company and auditor work papers) of the Companies'
financial statements for the year ended December 31, 1999.
Section 7.14. Delivery of Documents. The Companies shall
promptly deliver to Pacific Life copies of all filings by the Companies with the
SEC or with any other State or Federal authorities.
Section 7.15. Rights Offering. Concurrently with Prison Realty
seeking Prison Realty Stockholder Approval, Prison Realty shall conduct the
Rights Offering in which the holders of Prison Realty Common Stock (the
"Eligible Holders") on the record date for the Rights Offering (the "Rights
Offering Record Date") will be eligible to participate; provided, however, that
the Rights Offering Record Date shall be established and announced in accordance
with the applicable provisions of Rule 10b-17 promulgated under the Exchange Act
and the applicable rules of the NYSE. The Rights Offering shall be consummated
on or about the
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Closing Date. In the Rights Offering, the Eligible Holders will be offered
transferable rights to purchase for cash up to $200.0 million in Rights Offering
Shares (the "Offered Amount") at the Rights Offering Purchase Price, with an
issuance date on the date of the consummation of the closing of the Rights
Offering. The rights to purchase Rights Offering Shares shall be allocated among
the Eligible Holders pro-rata based on the respective number of shares of Prison
Realty Common Stock held by such Eligible Holders on the Rights Offering Record
Date (rounded down in the case of fractional shares to the nearest whole number
of shares) and, in the event that not all Eligible Holders exercise their right
to purchase in full, Eligible Holders who exercise their right to purchase in
full shall be entitled to subscribe for up to an additional five times (5x) the
number of Rights Offering Shares that the Eligible Holder was initially entitled
to subscribe for, provided that all Rights Offering Shares not originally
subscribed for shall be pro-rated in accordance with all such additional
requests. Notwithstanding anything contained in the foregoing to the contrary,
the maximum number of Rights Offering Shares which may be subscribed for by
Eligible Holders other than Pacific Life shall not exceed 95.0% of the Offered
Amount without the written consent of Pacific Life. The Rights Offering will
provide that any exercise thereof is irrevocable.
Prison Realty will use its reasonable best efforts to ensure
that (i) the Rights Offering will be conducted in compliance with all applicable
securities laws, (ii) the rights issued in the Rights Offering and Rights
Offering Shares will be subject to a registration statement which shall have
been declared effective by the SEC, and no stop order suspending the
effectiveness of the registration shall be in effect and no proceedings for such
purpose shall be pending before or threatened by the SEC, and (iii) the Rights
Offering Shares shall be listed on the NYSE, the NASDAQ National Market System
or other national securities exchange, subject to satisfying the eligibility
requirements thereof.
Section 7.16. Notification of Certain Matters. The Companies
shall, from time to time prior to the Closing, promptly supplement or amend the
Schedules hereto both to correct any inaccuracy in such Schedules when delivered
and to reflect any development which, if existing at the date of this Agreement,
would have been required to be set forth in the Schedules or which has rendered
inaccurate the information contained in such Schedules (each notice furnishing
such information being called a "Company Disclosure Supplement"), and at least
five (5) business days prior to the Closing the Companies will deliver to
Pacific Life a final Company Disclosure Supplement consisting of a complete
update of the Schedules hereto (the "Closing Disclosure Supplement").
Section 7.17. Name Change. The Companies shall take all
necessary and appropriate steps in order to change the name of Prison Realty to
Corrections Corporation of America upon the completion of the Combination.
Section 7.18. Merger Agreement. The Companies shall use their
commercially reasonable efforts to promptly enter into an amendment to the
Merger Agreement which
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reflects the transactions contemplated by this Agreement and extends the
termination date contained in Section 7.01(b)(ii) thereof to November 15, 2000.
Section 7.19. Securitization Transaction. Prison Realty shall
use its commercially reasonable efforts to promptly consummate a transaction
yielding net proceeds in excess of $70.0 million pursuant to a "securitization"
(or other similar financing) of payments due Prison Realty or its Subsidiaries
from the HMP Secretary of State for the Home Department of the United Kingdom
with respect to Prison Realty's HMP Forest Bank facility located in Salford,
England.
ARTICLE VIII.
COVENANTS OF PACIFIC LIFE
Section 8.1. Certain Restrictions.
(a) Pacific Life covenants with the Companies that, for a
period commencing on the Closing Date and continuing through the third (3rd)
anniversary of the Closing, (A) in the event that, after giving effect to the
purchase of the Pacific Life Shares and Warrant Shares issued or to be issued
pursuant to the terms of this Agreement, the Prison Realty Series C Preferred
Stock or any Prison Realty Common Stock issuable upon conversion, exercise or
exchange of the foregoing, Pacific Life would own greater than forty-five
percent (45%) of Prison Realty's Common Stock on a fully-diluted basis
(including the Pacific Life Shares and Warrant Shares issued or to be issued
pursuant to the terms of this Agreement), Pacific Life will not, directly or
indirectly, through one or more intermediaries or otherwise, purchase, acquire,
own or hold shares of Prison Realty Common Stock or any securities which are
convertible into or exchangeable or exercisable for Prison Realty Common Stock,
and (B) in the event that, after giving effect to the purchase of the Pacific
Life Shares and Warrant Shares issued or to be issued pursuant to the terms of
this Agreement, the Prison Realty Series C Preferred Stock or any Prison Realty
Common Stock issuable upon conversion, exercise or exchange of the foregoing,
Pacific Life would own less than forty-five percent (45%) of Prison Realty's
Common Stock on a fully-diluted basis (including the Pacific Life Shares and
Warrant Shares issued or to be issued pursuant to the terms of this Agreement),
Pacific Life will not, directly or indirectly, through one or more
intermediaries or otherwise, purchase, acquire, own or hold shares of Prison
Realty Common Stock or any securities which are convertible into or exchangeable
or exercisable for Prison Realty Common Stock, that would cause Pacific Life in
the aggregate, to own or have the right to acquire more than forty-five percent
(45%) of Prison Realty's Common Stock on a fully-diluted basis (including the
Pacific Life Shares and Warrant Shares issued or to be issued pursuant to the
terms of this Agreement), in each case, unless such shares or securities were
purchased or acquired in a purchase or acquisition which (i) is made directly
from Prison Realty in a transaction which is approved in advance by vote of a
majority of its Board of Directors, (ii) is a dividend on the Pacific Life
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Shares, the Warrant Shares, the Prison Realty Series C Preferred Stock or the
shares of Prison Realty Common Stock obtained upon conversion of the Pacific
Life Shares or the Prison Realty Series C Preferred Stock, or (iii) is made by
one or more affiliates of Pacific Life over whom Pacific Life does not control
investment or voting decisions and Pacific Life does not hold over fifty percent
(50%) of the outstanding voting power of such affiliate; provided, however, that
notwithstanding anything to the contrary contained herein, the foregoing
restriction shall not be deemed to be violated or applicable if the numbers of
shares of Prison Realty Common Stock or securities which are convertible into or
exchangeable or exercisable for Prison Realty Common Stock beneficially owned
directly or indirectly through one or more intermediaries or otherwise, in the
aggregate, by Pacific Life is increased solely as a result of any stock
dividend, stock split, split-up, recapitalization, merger or other change in the
corporate or capital structure of Prison Realty, or any other action taken
solely by Prison Realty. Notwithstanding the foregoing, (x) Pacific Life, or its
affiliate, may, to the extent not prohibited by law, acquire shares of
publicly-traded Prison Realty Common Stock or other securities in the ordinary
course of their regular market-making activities, if any, or engage in business
as an investor advisor or broker-dealer, for the account of their customers, and
(y) any individual who is an employee, partner or stockholder of any of Pacific
Life may purchase shares of Prison Realty Common Stock for his or her individual
account (held for investment purposes), provided that at no time shall any such
individual acquire beneficial ownership in excess of 10,000 shares of Prison
Realty Common Stock, including shares of Prison Realty Common Stock issuable
upon conversion, exchange or exercise of securities which are convertible into
or exchangeable or exercisable for shares of Prison Realty Common Stock (subject
to equitable adjustment in the event of a stock split or reclassification of the
Prison Realty Common Stock), exclusive of shares which may otherwise be acquired
consistent with this Section 8.1.
(b) Pacific Life covenants with the Companies that it will not
make any public announcement (except as required by law in respect of actions
permitted hereby) or proposal or offer whatsoever (including, but not limited
to, any "solicitation" of "proxies" as such terms are defined or used in
Regulation 14A of the Exchange Act) with respect to, (x) any form of business
combination or similar or other extraordinary transaction involving the
Companies or any affiliate thereof, including, without limitation, a merger,
tender or exchange offer or liquidation of the Companies' assets, or (y) any
form of restructuring, recapitalization or similar transaction with respect to
the Companies or any affiliate thereof.
(c) Within five (5) business days following a written request
therefor by Prison Realty, Pacific Life shall notify Prison Realty in writing of
the number of shares of each class or series of capital stock of Prison Realty
beneficially owned by Pacific Life, as well as in each case the nature of such
beneficial ownership.
Section 8.2. HSR Approval. Pacific Life shall cooperate with
each of the Companies in obtaining as soon as practicable all necessary
governmental consents and ap-
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provals, including without limitation, termination or expiration of the waiting
period under the HSR Act.
Section 8.3. Quorum. Pacific Life covenants that, for so long
as it beneficially owns a sufficient number of shares of Prison Realty Series B
Preferred Stock, or shares of Prison Realty Common Stock upon their conversion,
to have the right to designate any directors to the Board of Directors of Prison
Realty, Pacific Life will be present in person or represented by proxy with
respect to all securities of Prison Realty beneficially owned by Pacific Life at
any duly called meeting of the stockholders of Prison Realty for the purpose of
constituting a quorum for the transaction of business.
Section 8.4. Transfers. Pacific Life covenants with Prison
Realty that for a period of eighteen (18) months following the Closing Date,
Pacific Life will not, individually or in the aggregate, transfer more than
forty-nine percent (49%) of the Pacific Life Shares or the right to receive more
than forty-nine percent (49%) of the Pacific Life Shares, or more than
forty-nine percent (49%) of the Pacific Life Shares to any third-party, provided
that any transfer is made pursuant to the provisions of Section 9.2 herein.
Section 8.5. No Voting Agreements. Pacific Life covenants with
the Companies that, for so long as Pacific Life beneficially owns a sufficient
number of shares of Prison Realty Series B Preferred Stock, or shares of Prison
Realty Common Stock upon their conversion, to have the right to designate any
directors to the Board of Directors of Prison Realty, Pacific Life will not
enter into any voting agreement relating to the Pacific Life Shares, except as
disclosed in Pacific Life's Disclosure Schedule.
Section 8.6. Compliance with Organizational and Governing
Documents. Pacific Life agrees to comply with the provisions of, and to perform
its obligations set forth in the New Prison Realty Charter and the Prison Realty
Series B Articles Supplementary, and any amendments thereto, setting forth the
terms of the Pacific Life Shares and the Warrant Shares.
Section 8.7. Confidentiality. During the period from the date
of this Agreement through and including the Closing Date, Pacific Life covenants
with the Companies that any of the information furnished or otherwise obtained,
directly or indirectly, by it, its directors, officers, partners, employees,
agents or representatives including, without limitation, attorneys, accountants,
partners, experts and consultants (collectively, the "Representatives") and all
reports, analysis, compilations, data, studies or other documents prepared by
Pacific Life or its Representatives containing or based, in whole or in part, on
any such furnished information (collectively, the "Information") will be kept
strictly confidential and will not, without the prior written consent of the
Companies, be disclosed to any other individual, corporation, partnership, joint
venture, trust or association in any manner whatsoever, in whole or in part, and
will only be used for or in connection with the Combination and the purchase and
sale of Pacific Life Shares and Warrants described herein; provided that if
Pacific Life deter-
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mines, based on the advice of counsel, that it is legally obligated to release
the Information, Pacific Life may release only such portion of the Information
as it is legally required to disclose after notice to and consultation with the
Companies.
Section 8.8. Available Funds. Pacific Life covenants and
agrees that (a) it owns on the date hereof, and shall continue to own from the
date hereof through and including the Closing Date, cash or negotiable
securities in amount or value of not less than $220.0 million, free and clear of
any Lien, or (b) it shall arrange for the issuance of a letter of credit in an
amount of $220.0 million for the benefit of Prison Realty, in each case to
support Pacific Life's obligations pursuant to Section 1.2(a) and Section 8.9.
Section 8.9. Sale and Leaseback. Pacific Life agrees to
purchase from, and lease back (on a triple net lease basis) to, Prison Realty
the headquarters building located at 00 Xxxxxx Xxxxx Xxxxxxxxx, Xxxxxxxxx,
Xxxxxxxxx; subject to negotiating mutually acceptable definitive agreements for
such purchase and leaseback with rent and a capitalization rate equal to rents
and capitalization rates for comparable buildings in the Nashville area and to
tenants of comparable credit worthiness and with representations, warranties,
covenants, conditions and other terms (including the term of the lease) that are
customary for transactions of this type; and subject also to the consummation of
the transactions contemplated by this Agreement.
Section 8.10. Rights Offering. Pacific Life covenants and
agrees that it shall not purchase or otherwise become the beneficial owner of
any rights to purchase Prison Realty Common Stock which were originally
distributed to any third-party in the Rights Offering that it does not
subsequently exercise.
ARTICLE IX.
RESTRICTIONS ON TRANSFERABILITY OF SECURITIES
Section 9.1. Restrictive Legend. Each certificate representing
(a) the Pacific Life Shares, (b) the shares of Prison Realty Common Stock
issuable upon conversion of any Pacific Life Shares, (c) the Warrant Shares, and
(d) any other securities issued in respect of the Pacific Life Shares, the
shares of Prison Realty Common Stock issued upon conversion of any Pacific Life
Shares or the Warrant Shares upon any stock split, stock dividend,
recapitalization, merger, consolidation or similar event (each of the foregoing
securities in clauses (a) through (d) being referred to herein as "Restricted
Securities"), shall (unless otherwise permitted by the provisions of Section
9.2) contain a legend substantially in the following form (in addition to any
legend required under any applicable state securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED
FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933 OR ANY
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APPLICABLE STATE SECURITIES LAWS. SUCH SHARES MAY NOT BE SOLD OR
OTHERWISE TRANSFERRED UNTIL THE SAME HAVE BEEN REGISTERED UNDER SAID
ACT OR LAWS OR UNTIL THE COMPANY HAS RECEIVED AN OPINION OF LEGAL
COUNSEL SATISFACTORY TO IT THAT SUCH SHARES MAY LEGALLY BE SOLD OR
OTHERWISE TRANSFERRED WITHOUT SUCH REGISTRATION. COPIES OF THE
AGREEMENTS COVERING THE PURCHASE, TRANSFER AND REGISTRATION OF THESE
SHARES MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER
OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE COMPANY.
Prison Realty will promptly, upon request, remove any such legend when no longer
required by the terms of this Agreement or by applicable law.
Section 9.2. Notice of Proposed Transfers. Subject to the
restrictions contained in Sections 8.4 and 9.1 herein, prior to any proposed
transfer of any Restricted Securities, unless there is in effect a registration
statement under the Securities Act covering the proposed transfer, Pacific Life
shall give written notice to Prison Realty of its intention to effect such
transfer. Each such notice shall describe the manner and circumstances of the
proposed transfer in sufficient detail, and shall be accompanied by either (a) a
written opinion of legal counsel (who shall be reasonably satisfactory to Prison
Realty) addressed to Prison Realty and reasonably satisfactory to Prison Realty
to the effect that the proposed transfer of the Restricted Securities may be
effected without registration under the Securities Act or (b) a "no action"
letter from the SEC to the effect that the transfer of such securities without
registration will not result in a recommendation by the staff of the SEC that
action be taken with respect thereto, whereupon, in each case, Pacific Life
shall be entitled to transfer such Restricted Securities in accordance with the
terms of the notice delivered by Pacific Life to Prison Realty. Unless there is
in effect a registration statement under the Securities Act covering the
proposed transfer, each certificate to be issued to evidence the Restricted
Securities transferred as herein provided shall bear the appropriate restrictive
legend set forth in Section 9.1 except that such certificate shall not bear such
restrictive legend if, (i) in the opinion of counsel for Pacific Life, such
legend is not required in order to establish compliance with any provisions of
the Securities Act, (ii) a period of at least one year has elapsed since the
later of the date the Restricted Securities were acquired from Prison Realty or
from an affiliate of Prison Realty, and Pacific Life represents to Prison Realty
that it is not an affiliate of Prison Realty and has not been an affiliate
during the preceding three months and shall not become an affiliate of Prison
Realty without resubmitting the Restricted Securities for reimposition of the
legend, or (iii) the Restricted Securities have been sold pursuant to Rule
144(k) under the Securities Act and the certificate is accompanied by a
representation by Pacific Life that it is not an affiliate of Prison Realty, has
not been an affiliate during the three-month period prior to the sale and has
held the Restricted Securities for more than two years.
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ARTICLE X.
TERMINATION
Section 10.1. Termination. This Agreement may be terminated
and the transactions contemplated hereby may be abandoned at any time prior to
the Closing Date notwithstanding the fact that: (i) shareholder votes may have
been received with respect to the Combination or the issuance of the Pacific
Life Shares hereunder; or (ii) any other requisite authorization and approval of
the transactions contemplated hereby shall have been received (provided that any
such termination shall not relieve any party from liability for a breach of any
provision hereof prior to such termination):
(a) by the mutual written consent of Pacific Life and the
Companies;
(b) by Pacific Life or any of the Companies if either: (i) the
Closing has not occurred on or before September 15, 2000 and this
Agreement has not previously been terminated; provided, that the right
to terminate the Agreement under this Section 10.1(b) shall not be
available to any party whose failure to fulfill any obligation under
this Agreement has been the cause of, or resulted in, the failure of
the Closing to occur on or before such date; or (ii) there shall be any
law that makes consummation of the purchase of the Pacific Life Shares
and Warrants hereunder illegal or otherwise prohibited or if any court
of competent jurisdiction or governmental authority shall have issued
an order, decree, ruling or taken any other action restraining,
enjoining or otherwise prohibiting the purchase of the Pacific Life
Shares and Warrants hereunder and such order, decree, ruling or other
action shall have become final and non-appealable;
(c) by Pacific Life or any of the Companies if, (i) at Prison
Realty's Stockholders' Meeting, Prison Realty Stockholder Approval is
not obtained, (ii) at CCA's Stockholders' Meeting, CCA Stockholder
Approval is not obtained, (iii) at Service Company A's Stockholders'
Meeting, Service Company A Stockholder Approval is not obtained, or
(iv) at Service Company B's Stockholders' Meeting, Service Company B
Stockholder Approval is not obtained;
(d) by the Companies or Pacific Life, if the Board of
Directors of the Companies withdraws, modifies or changes its
recommendation of this Agreement in a manner adverse to Pacific Life or
shall have formally resolved to do so;
(e) by the Companies, in the event of a material breach by
Pacific Life of any representation, warranty or agreement contained
herein which has not been cured or is not curable within thirty (30)
days of the Companies providing notice of such breach to Pacific Life;
or
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(f) by Pacific Life, in the event of a material breach by the
Companies or any Subsidiary of any representation, warranty or
agreement contained herein (other than a breach which does not cause a
Material Adverse Effect) which has not been cured or is not curable
within thirty (30) days of Pacific Life providing notice thereof.
In the event that this Agreement shall be terminated pursuant
to this Article X, all further obligations of the parties under this Agreement,
other than the obligations set forth in Section 7.3 herein, shall be terminated
without further liability of any party to any other party, provided that nothing
herein shall relieve any party from liability for its willful breach of this
Agreement.
ARTICLE XI.
INDEMNIFICATION
Section 11.1. Survival of Representations and Warranties. All
representations and warranties of the Companies and Pacific Life contained
herein, including the Companies Disclosure Schedule, or any certificate or
instrument delivered in connection herewith at or prior to the Closing shall
survive the Closing until, through and including the 90th day following the
filing by Prison Realty of a Form 10-K containing the audited consolidated
financial statements of Prison Realty, as itself and as the survivor or parent
of CCA, Service Company A and Service company B, for the fiscal year ending
December 31, 2000 (the "Cut-off Date"); provided, however, that (a) the
representations and warranties set forth in Sections 3.A.2, 3.B.2, 3.C.2 and
3.D.2 and Sections 3.01(a), 3.03(a), 3.04(a) and 3.05(a) of the Merger Agreement
shall survive indefinitely and (b) the representations and warranties set forth
in Sections 3.A.7 and in Sections 3.01(j), 3.03(h), 3.04(h) and 3.05(h) in the
Merger Agreement (as made applicable hereto by Section 3.A.1) shall survive
until 90 days following the expiration of the applicable statute of limitations
(giving effect to any extensions thereof). The parties' respective covenants and
agreements set forth herein shall survive indefinitely unless otherwise set
forth therein or herein (except for those set forth in Sections 7.1, 7.2, 7.3,
7.6, 7.8, 7.9, 7.11, 7.12, 7.14, 7.15 and 7.17, each of which will survive until
the Cut-off Date). The Closing shall not be deemed in any way to constitute a
waiver by any party of any powers, rights or remedies it may have with respect
to any obligations of the other parties hereunder, including without limitation
with respect to any misrepresentation or breach of warranty known to such party
at the time of the Closing. No claim shall be made with respect to any
representation, warranty, covenant or agreement after it ceases to survive
except that in the event that any member of the Pacific Life Indemnified Group
(as defined below) (i) receives notice of or identifies any matter which
provides a reasonable basis for a claim to indemnification hereunder within the
applicable period provided in this Section 11.1, and (ii) provides notice to the
Companies of the receipt of such notice or of the matter so identified, and such
claim shall not have been finally resolved before the expiration of the
applicable period re-
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ferred to in this Section 11.1, any representation, warranty, covenant or
agreement that is the basis for such claim shall continue to survive with
respect to such claim and shall remain a basis for indemnity as to such claim
until such claim is finally resolved.
Section 11.2. Indemnification.
(a) For purposes of this Agreement, "Losses" shall mean all
demands, claims, actions or causes of action, assessments, losses, damages,
liabilities, diminution in value, costs (including costs of settlement) and
expenses (net of insurance reimbursement actually received by the Companies
after taking into account any related deductibles and premium increases and net
of any tax benefit (such as additional deductions due to increased liability for
interest) from the payment or from the related underlying liability with respect
to which the payment is made); including without limitation interest, penalties
and attorneys' fees and expenses, asserted against, resulting to, or imposed
upon or incurred by the Companies or the Pacific Life Indemnified Group, or any
member thereof, directly or indirectly, by reason of, relative to, or resulting
from any inaccuracy or any representation or warranty or any breach or violation
of any covenant or agreement of the Companies or any Subsidiary contained in the
Transaction Documents or any certificate or other document delivered by the
Companies in connection with the Closing; including, without limitation, any
claims relating to the Companies, the Subsidiaries or any properties (former or
current) owned, leased or managed by any of the foregoing. Notwithstanding the
foregoing, Losses relating to one or more inaccuracies of any representation or
warranty (but not with respect to any breach of any covenant or agreement) which
would give rise individually to a Loss of less than $100,000 shall be deemed not
to be a Loss for which indemnification is required under this Section 11.2 (each
such Loss a "De Minimis Exclusion").
Without limiting the foregoing, Losses shall include, without
limitation, payments made in connection with the defense, settlement or
disposition of any suit, action, claim or proceeding commenced by a current or
former stockholder of any of the Companies arising out of or related to any
action or failure to act by the Companies or the Subsidiaries at or prior to the
Closing (including without limitation in connection with any registration
rights, redemption rights or similar agreement), whether asserted before or
after the Closing.
(b) Prior to the Closing, the Companies severally but not
jointly hereby agree, and subsequent to the Closing, Prison Realty hereby agrees
to indemnify, defend and hold harmless Pacific Life and its officers, employees
and affiliates (the "Pacific Life Indemnified Group") from and against any and
all Losses (other than Losses covered in Section 11.2(c)) arising from its
respective breach (but not a breach by the other); provided, however, that any
indemnification in respect of that any indemnification in respect of breaches of
representations and warranties shall be operative and effective only to the
extent the amount of all Losses, in the aggregate, relating thereto, exceed $1.0
million (the "Trigger Amount"); provided, further, that indemnification in
respect of Losses relating to breaches of covenants and
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agreements will not be subject to the Trigger Amount. Required indemnification
payments by the Companies to Pacific Life under this Section 11.2(b) shall not
exceed $220 million; provided, however, that this limitation on indemnification
shall not apply to Losses arising out of fraud by or on behalf of the Companies.
(c) To the extent that Prison Realty shall at any time or from
time to time incur Losses arising out of or related to the litigation described
in Section 8(b)(iv) of the Prison Realty Series B Articles Supplementary (the
"Litigation") in excess of an aggregated amount of $50.0 million (the
"Litigation Amount"), then the conversion price of the Pacific Life Shares and
the exercise price of the Warrants then in effect shall each be reduced by $0.01
for every $1.0 million increment in excess of the Litigation Amount.
(d) The Companies' obligations, prior to the Closing, and
Prison Realty's obligations subsequent to the Closing, to make payments pursuant
to this Section 11.2 shall be satisfied as an adjustment to the conversion price
of the Pacific Life Shares as provided in Section 8(b)(iii) of the Prison Realty
Series B Articles Supplementary and the exercise price of the Warrants as
provided in Section 7.1(g) of the Warrant.
(e) The rights and remedies of Pacific Life with respect to
the representations and warranties of the Companies, including without
limitation the matters referred to in this Section 11.2, are limited to their
rights under this Article XI, and Pacific Life shall have no independent or
other right or remedies with respect thereto, including without limitation, the
right of rescission.
Section 11.3. Terms of Indemnification. The obligations and
liabilities of the Companies with respect to Claims by third parties
will be subject to the following terms and conditions:
(a) Pacific Life will give the Companies prompt notice of any
Claims asserted against, resulting to, imposed upon or incurred by
Pacific Life, directly or indirectly, and Pacific Life will have the
right to employ one counsel of its choice in each applicable
jurisdiction (if more than one jurisdiction is involved) to represent
Pacific Life and the fees and expenses of such separate counsel, with
respect to such Claim, shall be paid by the Companies;
(b) with respect to any Claim to which the Companies and
Pacific Life are specifically named, the Companies on one hand and
Pacific Life on the other will not without the prior written consent of
the other (which shall not be unreasonably withheld) settle or
compromise any Claim or consent to entry of any judgment relating to
any such Claim; and
(c) the Companies will provide Pacific Life reasonable access
to all records and documents of the Companies relating to any Claim.
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ARTICLE XII.
MISCELLANEOUS
Section 12.1. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF MARYLAND WITHOUT GIVING
EFFECT TO CONFLICTS OF LAW PRINCIPLES THEREOF.
Section 12.2. Jurisdiction; Forum; Service of Process; Waiver of Jury
Trial. With respect to any suit, action or proceeding ("Proceeding") arising out
of or relating to this agreement each of the Companies and Pacific Life hereby
irrevocably:
(a) submits to the exclusive jurisdiction of the United States
District Court for the Southern District of New York, the United States
District Court for the District of Maryland, or any state court located
in the State of Maryland, County of Baltimore (the "Selected Courts")
and waives any objection to venue being laid in the Selected Courts
whether based on the grounds of forum non conveniens or otherwise;
(b) consents to service of process in any Proceeding by the
mailing of copies thereof by registered or certified mail, postage
prepaid, or by recognized international express carrier or delivery
service, to the Companies or Pacific Life at their respective addresses
referred to in Section 12.5 hereof; provided, however, that nothing
herein shall affect the right of any party hereto to serve process in
any other manner permitted by law; and
(c) waives, to the fullest extent permitted by law, any right
it may have to a trial by jury in any Proceeding.
Section 12.3. Successors and Assigns. Except as otherwise
provided herein, the provisions hereof shall inure to the benefit of, and be
binding upon, the successors by operation of law and permitted assigns of the
parties hereto. No assignment of this Agreement may be made by any party at any
time, whether or not by operation of law, without the other parties' prior
written consent; provided, that any (i) transfer of Pacific Life Shares and
Warrant Shares permitted hereunder shall not entitle the transferee to the
rights of Pacific Life under this Agreement other than the registration rights
pursuant to the Registration Rights Agreement.
Section 12.4. Entire Agreement; Amendment. This Agreement and
the other Transaction Documents constitute the full and entire understanding and
agreement between the parties with regard to the subjects hereof and supercedes
and terminates all prior agreements relating to the subject matter hereof. No
party hereto shall have any right or obligation of any kind whatsoever under all
other agreements relating to the subject matter hereof be-
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tween or among Pacific Life on the one hand, and any or all of the Companies on
the other. Except as expressly provided herein, neither this Agreement nor any
term hereof may be amended, waived, discharged or terminated other than by a
written instrument signed by the Companies and by Pacific Life.
Section 12.5. Notices, Etc. All notices and other
communications provided for or permitted hereunder shall be made in writing and
delivered by hand delivery, facsimile, or any courier guaranteeing overnight
delivery (i) if to Pacific Life, at the most current address given by Pacific
Life to the Companies by means of a notice given in accordance with the
provisions of this Section 12.5, which address initially is, with respect to
Pacific Life as of the date hereof, 000 Xxxxxxx Xxxxxx Xxxxx, Xxxxxxx Xxxxx,
Xxxxxxxxxx 00000, facsimile number (000) 000-0000, Attention: Xxxxx X. Card,
with copies to Xxxxxx Xxxxxxxxx, Esq., facsimile number (000) 000-0000 and W.
Xxxxxx Xxxxx, Esq., facsimile number (000) 000-0000, and (ii) if to the
Companies, at 00 Xxxxxx Xxxxx Xxxxxxxxx, Xxxxxxxxx, Xxxxxxxxx 00000, facsimile
number (000) 000-0000, Attention: Chairman of the Board of Directors, with a
copy to Xxxxxx X. Xxxxxxx, Chairman of the Independent Committee of Prison
Realty, facsimile number (000) 000-0000, and Xxxxxx & Xxxxxxxxxxx, P.A.,
facsimile number (000) 000-0000, Attention: Xxxxxxxxx X. Xxxxx, Esq. All such
notices and communications shall be deemed to have been duly given: at the time
delivered by hand, if personally delivered; five (5) business days after being
deposited in the mail, postage prepaid, if mailed; when receipt is confirmed, if
delivered by facsimile; and on the next business day, if timely delivered to a
courier guaranteeing overnight delivery.
Section 12.6. Certain Definitions. As used herein, the
following terms shall have the meanings set forth below:
(a) "affiliate" and "associate" shall have the meanings
ascribed to them in Rule 12b-2 promulgated under the Exchange
Act;
(b) "beneficial ownership" shall have the meaning as such term
is used in Rule 13d-3 promulgated under the Exchange Act;
(c) "knowledge" of a party hereto shall mean the knowledge of
any director or executive officer after due inquiry;
(d) "Material Adverse Effect" or "Material Adverse Change"
shall mean, when used in connection with any of the Companies, any
change, effect, event, occurrence or development that is, or is
reasonably likely to be, materially adverse to the business, results or
operations or financial condition of the Companies and their
subsidiaries, taken as a whole, other than any change, effect, event or
occurrence relating to or arising out of (a) the economy or securities
markets in general, or (b) this Agreement or the transactions
contemplated hereby or the announcement thereof , including,
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but not limited to, changes in methods of accounting with respect to
the financial statements of the Companies permitted by Section 5.2(e)
of this Agreement; and
(e) "Subsidiary" of any of the parties means those entities
listed on Section 13.7(e) of its respective Disclosure Schedule.
Section 12.7. Delays or Omissions. Except as expressly
provided herein, no delay or omission to exercise any right, power or remedy
accruing to the Companies or Pacific Life upon any breach or default of any
party under this Agreement, shall impair any such right, power or remedy of the
Companies or Pacific Life nor shall it be construed to be a waiver of any such
breach or default, or an acquiescence therein, or of or in any similar breach or
default thereafter occurring; nor shall any waiver of any single breach or
default be deemed a waiver of any other breach or default theretofore or
thereafter occurring. Any waiver, permit, consent or approval of any kind or
character on the part of the Companies or Pacific Life of any breach or default
under this Agreement, or any waiver on the part of any such party of any
provisions or conditions of this Agreement, must be in writing and shall be
effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement or by law or otherwise afforded to the
Companies or Pacific Life shall be cumulative and not alternative.
Section 12.8. Counterparts. This Agreement may be executed in
any number of counterparts, each of which may be executed by only one of the
parties hereto, each of which shall be enforceable against the party actually
executing such counterpart, and all of which together shall constitute one
instrument.
Section 12.9. Severability. In the event that any provision of
this Agreement becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable or void, this Agreement shall continue in full force and
effect without said provisions; provided that no such severability shall be
effective if it materially changes the economic benefit of this Agreement to any
party.
Section 12.10. Titles and Subtitles. The titles and subtitles
used in this Agreement are used for convenience only and are not to be
considered in construing or interpreting this Agreement.
Section 12.11. No Public Announcement. None of the Companies,
the Subsidiaries or Pacific Life shall make any press release, public
announcement or filing with any Governmental Entity concerning the transactions
contemplated by the Transaction Documents, except as and to the extent that any
such party shall be obligated to make any such disclosure by this Agreement, by
law or by the rules of the NYSE, and then only after consultation with the other
regarding the basis of such obligation and the content of such press release,
public announcement or filing or as the parties shall mutually agree. The
parties agree that the
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initial press release to be issued with respect to the transactions contemplated
by the Transaction Documents shall be in the form heretofore agreed to by the
parties.
Section 12.12. Further Actions; Reasonable Efforts.
(a) Upon the terms and subject to the conditions hereof, each
of the parties agrees to use its reasonable best efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, and to assist and cooperate
with the other parties in doing, all things necessary, proper or advisable to
consummate and make effective, in the most expeditious manner practicable, the
transactions contemplated by the Transaction Documents, including without
limitation (i) the obtaining of all necessary actions or nonactions, waivers,
consents and approvals from governmental or regulatory entities and the making
of all necessary registrations and filings and the taking of all steps as may be
necessary to obtain an approval or waiver from, or to avoid an action or
proceeding by, any Governmental Entity, (ii) the obtaining of all necessary
consents, approvals or waivers from third parties, (iii) the defending of any
lawsuits or other legal proceedings, whether judicial or administrative,
challenging any of the Transaction Documents or the consummation of the
transactions contemplated thereby, including seeking to have any stay or
temporary restraining order entered by any court or other Governmental Entity or
any Restraint vacated or reversed, and (iv) the execution and delivery of any
additional instruments necessary to consummate the transactions contemplated by,
and to fully carry out the purposes of, the Transaction Documents; provided
that, in connection with the foregoing, the Companies and the Subsidiaries shall
reimburse Pacific Life for any costs and expenses incurred by them in connection
with the foregoing, other than costs and expenses incurred by them with respect
to any filings required to be made by them under the HSR Act as the result of
their purchase of the Pacific Life Shares.
(b) In connection with and without limiting the foregoing, the
parties shall use reasonable efforts (i) to take all action necessary to ensure
that no state takeover statute or similar statute or regulation is or becomes
applicable to the Transaction Documents or any of the other transactions
contemplated hereby or thereby and (ii) if any state takeover statute or similar
statute or regulation becomes applicable to the Transaction Documents or any
other transaction contemplated thereby, to take all action necessary to ensure
that the transactions contemplated by the Transaction Documents may be
consummated as promptly as practicable on the terms contemplated thereby and
otherwise to minimize the effect of such statute or regulation on the
transactions contemplated by the Transaction Documents.
Section 12.13. Enforcement of Agreement. The parties hereto
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with its specific
terms or was otherwise breached. It is accordingly agreed that the parties shall
be entitled to an injunction or injunctions and other equitable remedies to
prevent breaches of this Agreement and to enforce specifically the terms and
provisions hereof in any of the Selected Courts, this being in addition to any
other remedy to
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which they are entitled at law or in equity. Any requirements for the securing
or posting of any bond with respect to such remedy are hereby waived by each of
the parties hereto.
Section 12.14. Fairness Opinions. Prior to this Agreement
becoming effective, (a) the Independent and Special Committees of the Board of
Directors of Prison Realty shall have (i) received written opinions from their
respective financial advisors that the terms of the Pacific Life Investment are
fair to Prison Realty and its shareholders from a financial point of view, (ii)
reaffirmed its respective decision to approve this Agreement, the Merger
Agreement and resulting Combination, and the other transactions contemplated
thereby, and (iii) reaffirmed its respective decision to recommend that the same
be approved by the full Board of Directors of Prison Realty; (b) the Board of
Directors of Prison Realty shall have (i) received written opinions from its
financial advisors that the terms of the Pacific Life Investment are fair to
Prison Realty and its shareholders from a financial point of view, (ii)
reaffirmed its decision to approve this Agreement, the Merger Agreement and
resulting Combination and the other transactions contemplated thereby, and (iii)
reaffirmed its decision to resolve to recommend that the stockholders of Prison
Realty approve certain transactions related to the Combination and the Pacific
Life Investment; and (c) Pacific Life shall have been provided copies of such
written opinions and resolutions reasonably satisfactory to it in form and
substance.
[SIGNATURE PAGE TO FOLLOW]
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IN WITNESS WHEREOF, each of the undersigned has caused the
foregoing Agreement to be executed as of the date first above written.
COMPANIES:
PRISON REALTY TRUST, INC.
By:
Name:
Title:
CORRECTIONS CORPORATION OF AMERICA
By:
Name:
Title:
PRISON MANAGEMENT SERVICES, INC.
By:
Name:
Title:
JUVENILE AND JAIL FACILITY
MANAGEMENT SERVICES, INC.
By:
Name:
Title:
PACIFIC LIFE INSURANCE COMPANY:
By: /s/ Xxxxx X. Card
Name: Xxxxx X. Card
Title: Executive Vice Presient
50
SCHEDULE A
[INTENTIONALLY OMITTED]
51
SCHEDULE B
[INTENTIONALLY OMITTED]
52
SCHEDULE C
[INTENTIONALLY OMITTED]
53
SCHEDULE D
[INTENTIONALLY OMITTED]
54
SCHEDULE E
[INTENTIONALLY OMITTED]
55
SCHEDULE 1.1
[INTENTIONALLY OMITTED]
56
SCHEDULE 5.2(i)
[INTENTIONALLY OMITTED]
57
SCHEDULE 7.1(m)
[INTENTIONALLY OMITTED]
58
Exhibit A
AGREEMENT AND PLAN OF MERGER
[incorporated by reference herein]
59
Exhibit B
PRISON REALTY TRUST, INC.
ARTICLES OF AMENDMENT AND RESTATEMENT
THIS IS TO CERTIFY THAT:
FIRST: Prison Realty Trust, Inc., a Maryland corporation (the
"Corporation"), desires to amend and restate its Charter as currently in effect
and as hereinafter amended.
SECOND: The following provisions are all the provisions of the Charter
of the Corporation currently in effect and as hereinafter amended:
ARTICLE I
NAME
The name of this corporation shall be Corrections Corporation of
America (the "Corporation").
ARTICLE II
PURPOSE
The purpose for which this Corporation is formed is to engage in any
lawful act or activity for which corporations may be organized under the
Maryland General Corporation Law as now or hereinafter in force. The Corporation
also shall have all the general powers granted by law to Maryland corporations
and all other powers not inconsistent with law that are appropriate to promote
and attain its purpose.
ARTICLE III
PRINCIPAL OFFICE AND RESIDENT AGENT
The address of the principal office of the Corporation is c/o The
Corporation Trust Incorporated, 000 Xxxx Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxx
00000. The name of the resident agent of the Corporation in the State of
Maryland is The Corporation Trust Incorporated, and the address of the resident
agent is 000 Xxxx Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxx 00000.
ARTICLE IV
DIRECTORS
A. General Powers. The business and affairs of the Corporation shall be
managed by its Board of Directors and, except as otherwise expressly provided by
law, the Bylaws of the Corporation or this Charter, all of the powers of the
Corporation shall be vested in the Board of Directors. This Charter shall be
construed with the presumption in favor of the grant of power and authority to
the directors.
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B. Number of Directors. The Board of Directors shall consist of such
number of directors as shall be determined from time to time by resolution of
the Board of Directors in accordance with the Bylaws of the Corporation, except
as otherwise required by the Charter; provided that the number of directors
shall never be less than the minimum number required by the Maryland General
Corporation Law. The Board of Directors shall initially consist of [_______]
directors, at least [_______] of which must be Independent Directors. An
Independent Director is defined to be an individual who qualifies as a director
under the Bylaws of the Corporation but who: (i) is not an officer or employee
of the Corporation; (ii) is not the beneficial owner of five percent (5%) or
more of any class of equity securities of the Corporation, or any officer,
employee or "affiliate" (as defined in Rule 12b-2 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) of any such
stockholder of the Corporation; or (iii) does not have any economic relationship
requiring disclosure under the Exchange Act with the Corporation. The names of
the directors of the Corporation are ____________________________. A director
need not be a stockholder of the Corporation.
C. Effect of Increase or Decrease in Directors. In the event of any
increase or decrease in the number of directors pursuant to the first sentence
of Paragraph B above, each director then serving shall nevertheless continue as
a director until the expiration of his term and until his successor is duly
elected and qualified or his prior death, retirement, resignation or removal.
D. Service of Directors. Notwithstanding the provisions of this Article
IV, each director shall serve until his successor is elected and qualified or
until his death, retirement, resignation or removal.
E. Removal of Directors. Subject to the rights, if any, of any class or
series of stock to elect directors and to remove any director whom the holders
of any such stock have the right to elect, any director (including persons
elected by directors to fill vacancies in the Board of Directors) may be removed
from office, with or without cause, only by the affirmative vote of the holders
of at least a majority of the votes represented by the shares then entitled to
vote in the election of such director. At least thirty (30) days prior to any
meeting of stockholders at which it is proposed that any director be removed
from office, written notice of such proposed removal shall be sent to the
director whose removal will be considered at the meeting.
F. Directors Elected by Holders of Preferred Stock. During any period
when the holders of any series of Preferred Stock (as defined in Article V
hereof) have the right to elect additional directors, as provided for or fixed
pursuant to the provisions of Article V hereof, then upon commencement and for
the duration of the period during which such right continues (i) the then
otherwise total and authorized number of directors of the Corporation shall
automatically be increased by the number of such additional directors, and such
holders of Preferred Stock shall be entitled to elect the additional directors
so provided for or fixed pursuant to said provisions, and (ii) each such
additional director shall serve until such director's successor shall have been
duly elected and qualified, or until such director's right to hold such office
terminates pursuant to said provisions, whichever occurs earlier, subject to his
earlier death, disqualification, resignation or removal.
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ARTICLE V
CAPITAL STOCK
The total number of shares of stock which the Corporation shall have
authority to issue is four hundred fifty million (450,000,000), of which four
hundred million (400,000,000) shares are of a class denominated common stock,
$0.01 par value per share (the "Common Stock") and fifty million (50,000,000)
shares are of a class denominated preferred stock, $0.01 par value per share
(the "Preferred Stock"). The aggregate par value of all shares of all classes is
$4,500,000. Four million three hundred thousand (4,300,000) shares of the
Preferred Stock shall be designated as "8.0% Series A Cumulative Preferred
Stock" (the "Series A Preferred Stock").
The Board of Directors may authorize the issuance by the Corporation
from time to time of shares of any class of stock of the Corporation or
securities convertible or exercisable into shares of stock of any class or
classes for such consideration as the Board of Directors determines, or, if
issued as a result of a stock dividend or stock split, without any
consideration, and all stock so issued will be fully paid and non-assessable by
the Corporation. The Board of Directors may create and issue rights entitling
the holders thereof to purchase from the Corporation shares of stock or other
securities or property. The Board of Directors may classify or reclassify any
unissued stock from time to time by setting or changing the preferences,
conversion or other rights, voting powers, restrictions, limitations as to
dividends, qualifications, or terms or conditions of redemption of such stock.
The Board of Directors, with the approval of a majority of the entire
Board of Directors, and without action by the stockholders (other than as may be
specified in the Articles Supplementary setting forth the terms of any Preferred
Stock), may amend the Charter of the Corporation to increase or decrease the
aggregate number of shares of stock of the Corporation (but any such decrease
may not decrease the aggregate number of shares of stock then currently
outstanding) or the number of shares of stock of any class that the Corporation
has authority to issue.
The Corporation reserves the right to make any amendment to the Charter
of the Corporation, now or hereafter authorized by law, including any amendment
which alters the contract rights, as expressly set forth in the Charter of the
Corporation, of any outstanding shares of stock.
Notwithstanding any provision of law permitting or requiring any action
to be taken or approved by the affirmative vote of the holders of shares
entitled to cast a greater number of votes, any such action shall be effective
and valid if taken or approved by the affirmative vote of holders of shares
entitled to cast a majority of all the votes entitled to be cast on the matter.
The following is a description of each of the classes of stock of the
Corporation and a statement of the powers, preferences and rights of such stock,
and the qualifications, limitations and restrictions thereof:
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A. Common Stock.
1. Voting Rights. Each holder of Common Stock shall be
entitled to one vote per share of Common Stock on all matters to be
voted on by the stockholders of the Corporation. Notwithstanding the
foregoing, (i) holders of Common Stock shall not be entitled to vote on
any proposal to amend provisions of the Charter of the Corporation
setting forth the preferences, conversion or other rights, voting
powers, restrictions, limitations as to dividends, qualification, or
terms or conditions of redemption of a class or series of Preferred
Stock if the proposed amendment would not alter the contract rights of
the Common Stock, and (ii) holders of Common Stock shall not be
entitled to notice of any meeting of stockholders at which the only
matters to be considered are those as to which such holders have no
vote by virtue of this Article V, Section A.1.
2. Dividends and Rights Upon Liquidation. After the provisions
with respect to preferential dividends of any series of Preferred
Stock, if any, shall have been satisfied, and subject to any other
conditions that may be fixed in accordance with the provisions of this
Article V, then, and not otherwise, all Common Stock will participate
equally in dividends payable to holders of shares of Common Stock when
and as declared by the Board of Directors at their discretion out of
funds legally available therefor. In the event of voluntary or
involuntary dissolution or liquidation of the Corporation, after
distribution in full of the preferential amounts, if any, to be
distributed to the holders of Preferred Stock, the holders of Common
Stock shall, subject to the additional rights, if any, of the holders
of Preferred Stock fixed in accordance with the provisions of this
Article V, be entitled to receive all of the remaining assets of the
Corporation, tangible and intangible, of whatever kind available for
distribution to stockholders ratably in proportion to the number of
shares of Common Stock held by them respectively.
B. Preferred Stock.
1. Authorization and Issuance. The Preferred Stock may be
issued from time to time upon authorization by the Board of Directors
of the Corporation, in such series and with such preferences,
conversion or other rights, voting powers, restrictions, limitations as
to dividends, qualifications or other provisions as may be fixed by the
Board of Directors, except as otherwise set forth in the Charter.
2. Voting Rights. The holders of Preferred Stock shall have no
voting rights and shall have no rights to receive notice of any
meetings, except as required by law, as expressly provided for in the
Charter, or as expressly provided in the resolution establishing any
series thereof.
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C. Series A Preferred Stock.
1. Designation and Amount; Fractional Stock; Par Value. There
shall be a class of Preferred Stock of the Corporation designated as
"8.0% Series A Cumulative Preferred Stock," and the number of shares of
stock constituting such series shall be 4,300,000. The Series A
Preferred Stock is issuable solely in whole stock and shall entitle the
holder thereof to exercise the voting rights, to participate in the
distributions and dividends and to have the same benefits as all other
holders of Series A Preferred Stock as set forth in this Charter. The
par value of each share of Series A Preferred Stock shall be $0.01.
2. Maturity. The Series A Preferred Stock has no stated
maturity and will not be subject to any sinking fund or mandatory
redemption.
3. Rank. The Series A Preferred Stock will, with respect to
dividend rights and rights upon liquidation, dissolution or winding-up
of the Corporation, rank: (i) senior to all classes or series of Common
Stock of the Corporation and to all equity securities ranking junior to
the Series A Preferred Stock; (ii) on a parity with all equity
securities issued by the Corporation, the terms of which specifically
provide that such equity securities rank on a parity with the Series A
Preferred Stock with respect to dividend rights or rights upon
liquidation, dissolution or winding-up of the Corporation; and (iii)
junior to all existing and future indebtedness of the Corporation. The
term "equity securities" does not include convertible debt and
securities which rank senior to the Series A Preferred Stock prior to
conversion.
4. Dividends. Holders of the Series A Preferred Stock shall be
entitled to receive, when and as authorized and declared by the Board
of Directors, out of funds legally available for the payment of
dividends, cumulative preferential cash dividends at the rate of eight
percent (8.0%) per annum of the Liquidation Preference, as hereinafter
defined (which is equivalent to a fixed annual rate of $2.00 per
share). Such dividends shall be cumulative from the date of original
issuance and shall be payable quarterly in arrears on the fifteenth day
of January, April, July and October of each year (each, a "Dividend
Payment Date"), or, if not a business day, the next succeeding business
day. Dividends will accrue from the date of original issuance to the
first Dividend Payment Date and thereafter from each Dividend Payment
Date to the subsequent Dividend Payment Date. A dividend payable on the
Series A Preferred Stock for any partial dividend period will be
computed on the basis of a 360-day year consisting of twelve 30-day
months. Dividends will be payable to holders of record as they appear
in the stock records of the Corporation at the close of business on the
applicable record date, which shall be the last business day of March,
June, September and December, respectively, or on such other date
designated by the Board of Directors of the Corporation for the payment
of dividends that is not more than 30 nor less than 10 days prior to
the applicable Dividend Payment Date (each, a "Dividend Record Date").
The Series A Preferred Stock will rank senior to the Corporation's
Common Stock with respect to the payment of dividends.
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No dividends on Series A Preferred Stock shall be declared by
the Board of Directors of the Corporation or paid or set apart for
payment by the Corporation at such time as the terms and provisions of
any agreement to which the Corporation is a party, including any
agreement relating to its indebtedness, prohibits such declaration,
payment or setting apart for payment or provides that such declaration,
payment or setting apart for payment would constitute a breach thereof
or a default thereunder, or if such declaration or payment shall be
restricted or prohibited by law.
Notwithstanding the foregoing, dividends on the Series A
Preferred Stock will accrue whether or not the Corporation has
earnings, whether or not there are funds legally available for payment
of such dividends and whether or not such dividends are declared. The
accrued but unpaid dividends on the Series A Preferred Stock will not
bear interest, and holders of shares of Series A Preferred Stock will
not be entitled to any distributions in excess of full cumulative
distributions described above.
Except as set forth in the next sentence, no dividends will be
declared or paid or set apart for payment on any capital stock of the
Corporation or any other series of Preferred Stock ranking, as to
dividends, on a parity with or junior to the Series A Preferred Stock
(other than a distribution in stock of the Corporation's Common Stock
or on stock of any other class of stock ranking junior to the Series A
Preferred Stock as to dividends and upon liquidation) for any period
unless full cumulative dividends have been or contemporaneously are
declared and paid or declared and a sum sufficient for the payment
thereof is set apart for such payment on the Series A Preferred Stock
for all past dividend periods and the then current dividend period.
When dividends are not paid in full (or a sum sufficient for such full
payment is not so set apart) upon the Series A Preferred Stock and the
shares of any other series of Preferred Stock ranking on a parity as to
dividends with the Series A Preferred Stock, all dividends declared
upon the Series A Preferred Stock and any other series of Preferred
Stock ranking on a parity as to dividends with the Series A Preferred
Stock shall be declared pro rata so that the amount of dividends
authorized per share of Series A Preferred Stock and such other series
of Preferred Stock shall in all cases bear to each other the same ratio
that accrued dividends per share on the Series A Preferred Stock and
such other series of Preferred Stock (which shall not include any
accrual in respect of unpaid dividends for prior dividend periods if
such series of Preferred Stock does not have a cumulative dividend)
bear to each other. No interest, or sum of money in lieu of interest,
shall be payable in respect of any dividend payment or payments on the
Series A Preferred Stock which may be in arrears.
Except as provided in the immediately preceding paragraph,
unless full cumulative dividends on the Series A Preferred Stock have
been or contemporaneously are declared and paid or declared and a sum
sufficient for the payment thereof is set apart for payment for all
past dividend periods and the then current dividend period, no
dividends (other than in Common Stock or other stock of the Corporation
ranking junior to the Series A Preferred Stock as to dividends and upon
liquidation) shall be declared or paid or set aside for payment
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nor shall any other distribution be declared or made upon the Common
Stock, or stock of the Corporation ranking junior to or on a parity
with the Series A Preferred Stock as to dividends or upon liquidation,
nor shall any Common Stock, or any other stock of the Corporation
ranking junior to or on a parity with the Series A Preferred Stock as
to dividends or upon liquidation, be redeemed, purchased or otherwise
acquired for any consideration (or any monies be paid to or made
available for a sinking fund for the redemption of any such stock) by
the Corporation (except by conversion into or exchange for other stock
of the Corporation ranking junior to the Series A Preferred Stock as to
dividends and upon liquidation). Holders of shares of Series A
Preferred Stock shall not be entitled to any dividend, whether payable
in cash, property or stock, in excess of full cumulative dividends on
the Series A Preferred Stock as provided above. Any dividend payment
made on shares of the Series A Preferred Stock shall first be credited
against the earliest accrued but unpaid dividend due with respect to
such stock which remains payable.
5. Liquidation Preference. Upon any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the
Corporation, the holders of Series A Preferred Stock are entitled to be
paid out of the assets of the Corporation legally available for
distribution to its stockholders, a liquidation preference of $25 per
share (the "Liquidation Preference"), plus an amount equal to any
accrued and unpaid dividends to the date of payment but without
interest, before any distribution of assets is made to holders of
Common Stock or any other class or series of stock of the Corporation
that ranks junior to the Series A Preferred Stock as to liquidation
rights. In the event that, upon any such voluntary or involuntary
liquidation, dissolution or winding up, the available assets of the
Corporation are insufficient to pay the amount of the liquidating
distributions on all outstanding shares of Series A Preferred Stock and
the corresponding amounts payable on all stock of other classes or
series of Preferred Stock of the Corporation ranking on a parity with
the Series A Preferred Stock in the distribution of assets, then the
holders of shares of the Series A Preferred Stock and all other such
classes or series of Preferred Stock shall share ratably in any such
distribution of assets in proportion to the full liquidating
distributions to which they would otherwise be respectively entitled.
Holders of shares of Series A Preferred Stock will be entitled
to written notice of any such liquidation. After payment of the full
amount of the liquidating distributions to which they are entitled, the
holders of shares of Series A Preferred Stock will have no right or
claim to any of the remaining assets of the Corporation. The
consolidation or merger of the Corporation with or into any other
trust, corporation or entity or of any other corporation with or into
the Corporation, or the sale, lease or conveyance of all or
substantially all of the property or business of the Corporation, shall
not be deemed to constitute a liquidation, dissolution or winding up of
the Corporation.
6. Redemption. Shares of the Series A Preferred Stock are not
redeemable prior to January 30, 2003. On and after January 30, 2003,
the Corporation, at its option upon not less than thirty (30) nor more
than sixty (60) days' written notice, may redeem the Series A
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Preferred Stock, in whole or in part, at any time or from time to time,
for cash at a redemption price of $25 per share, plus all accrued and
unpaid dividends thereon to the date fixed for redemption (except as
provided below), without interest. Holders of shares of Series A
Preferred Stock to be redeemed shall surrender any certificates
representing such shares of Series A Preferred Stock at the place
designated in such notice and shall be entitled to the redemption price
and any accrued and unpaid dividends payable upon such redemption
following such surrender. If notice of redemption of any shares of
Series A Preferred Stock has been given and if the funds necessary for
such redemption have been set aside by the Corporation in trust for the
benefit of the holders of any shares of Series A Preferred Stock so
called for redemption, then from and after the redemption date
dividends will cease to accrue on such shares of Series A Preferred
Stock, such shares of Series A Preferred Stock shall no longer be
deemed outstanding and all rights of the holders of such stock will
terminate, except the right to receive the redemption price. If less
than all of the outstanding shares of Series A Preferred Stock are to
be redeemed, the shares of Series A Preferred Stock to be redeemed
shall be selected pro rata (as nearly as may be practicable without
creating fractional stock) or by any other equitable method determined
by the Corporation.
Unless full cumulative dividends on all shares of Series A
Preferred Stock shall have been or contemporaneously are declared and
paid or declared and a sum sufficient for the payment thereof set apart
for payment for all past dividend periods and the then current dividend
period, no shares of Series A Preferred Stock shall be redeemed unless
all outstanding shares of Series A Preferred Stock are simultaneously
redeemed and the Corporation shall not purchase or otherwise acquire
directly or indirectly any shares of Series A Preferred Stock (except
by exchange for capital stock of the Corporation ranking junior to the
Series A Preferred Stock as to dividends and upon liquidation);
provided, however, that the foregoing shall not prevent the purchase or
acquisition of shares of Series A Preferred Stock pursuant to a
purchase or exchange offer made on the same terms to holders of all
outstanding shares of Series A Preferred Stock. So long as no dividends
are in arrears, the Corporation shall be entitled at any time and from
time to time to repurchase shares of Series A Preferred Stock in
open-market transactions duly authorized by the Board of Directors and
effected in compliance with applicable laws.
Notice of redemption will be given by publication in a
newspaper of general circulation in the City of New York, such
publication to be made once a week for two (2) successive weeks
commencing not less than thirty (30) nor more than sixty (60) days
prior to the redemption date. A similar notice will be mailed by the
Corporation, postage prepaid, not less than thirty (30) nor more than
sixty (60) days prior to the redemption date, addressed to the
respective holders of record of the Series A Preferred Stock to be
redeemed at their respective addresses as they appear on the stock
transfer records of the Corporation. No failure to give such notice or
any defect thereto or in the mailing thereof shall affect the validity
of the proceedings for the redemption of any shares of Series A
Preferred Stock except as to the holder to whom notice was defective or
not given. Each notice shall state: (i) the redemption date; (ii) the
redemption price; (iii) the number of shares of Series A
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Preferred Stock to be redeemed; (iv) the place or places where the
certificates representing the shares of Series A Preferred Stock are to
be surrendered for payment of the redemption price; and (v) that
dividends on the stock to be redeemed will cease to accrue on such
redemption date. If less than all of the shares of Series A Preferred
Stock held by any holder are to be redeemed, the notice mailed to such
holder shall also specify the number of shares of Series A Preferred
Stock held by such holder to be redeemed.
Immediately prior to any redemption of shares of Series A
Preferred Stock, the Corporation shall pay, in cash, any accumulated
and unpaid dividends through the redemption date. Except as provided
above, the Corporation will make no payment or allowance for unpaid
dividends, whether or not in arrears, on shares of Series A Preferred
Stock which are redeemed.
7. Voting Rights. Holders of the shares of Series A Preferred
Stock will not have any voting rights, except as set forth below.
Whenever dividends on any shares of Series A Preferred Stock
shall be in arrears for four or more quarterly periods (a "Preferred
Dividend Default"), the holders of such Series A Preferred Stock
(voting together as a class with all other series of Preferred Stock
ranking on a parity with the Series A Preferred Stock as to dividends
or upon liquidation ("Parity Preferred") upon which like voting rights
have been conferred and are exercisable) will be entitled to vote for
the election of a total of two additional directors of the Corporation
(the "Preferred Stock Directors") at a special meeting called by the
holders of record of at least twenty percent (20%) of the shares of
Series A Preferred Stock and the holders of record of at least twenty
percent (20%) of the shares of any series of Parity Preferred so in
arrears (unless such request is received less than ninety (90) days
before the date fixed for the next annual or special meeting of the
stockholders) or at the next annual meeting of stockholders, and at
such subsequent annual meeting until all dividends accumulated on such
shares of Series A Preferred Stock for the past dividend periods and
the dividend for the then current dividend period shall have been fully
paid or declared and a sum sufficient for the payment thereof set aside
for payment. A quorum for any such meeting shall exist if at least a
majority of the outstanding shares of Series A Preferred Stock and
shares of Parity Preferred upon which like voting rights have been
conferred and are exercisable are represented in person or by proxy at
such meeting. Such Preferred Stock Directors shall be elected upon
affirmative vote of a plurality of the shares of Series A Preferred
Stock and such Parity Preferred present and voting in person or by
proxy at a duly called and held meeting at which a quorum is present.
If and when all accumulated dividends and the dividend for the then
current dividend period on the shares of Series A Preferred Stock shall
have been paid in full or set aside for payment in full, the holders
thereof shall be divested of the foregoing voting rights (subject to
revesting in the event of each and every Preferred Dividend Default)
and, if all accumulated dividends and the dividend for the then current
dividend period have been paid in full or set aside for payment in full
on all series of Parity Preferred upon which like voting rights have
been conferred and are exercisable, the term of office of each
Preferred
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Stock Director so elected shall immediately terminate. Any Preferred
Stock Director may be removed at any time with or without cause by, and
shall not be removed otherwise than by the vote of, the holders of
record of a majority of the outstanding shares of Series A Preferred
Stock and all series of Parity Preferred upon which like voting rights
have been conferred and are exercisable (voting together as a class).
So long as a Preferred Dividend Default shall continue, any vacancy in
the office of a Preferred Stock Director may be filled by written
consent of the Preferred Stock Directors remaining in office, or if
none remains in office, by a vote of the holders of record of a
majority of the outstanding shares of Series A Preferred Stock when
they have the voting rights described above (voting together as a class
with all series of Parity Preferred upon which like voting rights have
been conferred and are exercisable). The Preferred Stock Directors
shall each be entitled to one vote per director on any matter.
So long as any shares of Series A Preferred Stock remain
outstanding, the Corporation will not, without the affirmative vote or
consent of the holders of at least two-thirds of the shares of Series A
Preferred Stock outstanding at the time, given in person or by proxy,
either in writing or at a meeting (voting separately as a class), (a)
authorize or create, or increase the authorized or issued amount of,
any class or series of shares of stock ranking prior to the Series A
Preferred Stock with respect to payment of dividends or the
distribution of assets upon liquidation, dissolution or winding up or
reclassify any authorized shares of stock of the Corporation into such
shares, or create, authorize or issue any obligation or security
convertible into or evidencing the right to purchase any such shares of
stock, or (b) amend, alter or repeal the provisions of the Charter,
whether by merger, consolidation or otherwise (an "Event"), so as to
materially and adversely affect any right, preference, privilege or
voting power of the shares of Series A Preferred Stock or the holders
thereof; provided, however, with respect to the occurrence of any Event
set forth in (b) above, so long as the shares of Series A Preferred
Stock remain outstanding with the terms thereof materially unchanged,
the occurrence of any such Event shall not be deemed to materially and
adversely affect such rights, preferences, privileges or voting power
of holders of the shares of Series A Preferred Stock and provided
further that (i) any increase in the amount of the authorized Preferred
Stock or the creation or issuance of any other series of Preferred
Stock, or (ii) any increase in the amount of authorized shares of such
series, in each case ranking on a parity with or junior to the Series A
Preferred Stock with respect to payment of dividends or the
distribution of assets upon liquidation, dissolution or winding up,
shall not be deemed to materially and adversely affect such rights,
preferences, privileges or voting powers.
The foregoing voting provisions will not apply if, at or prior
to the time when the act with respect to which such vote would
otherwise be required shall be effected, all outstanding shares of
Series A Preferred Stock shall have been redeemed or called for
redemption upon proper notice and sufficient funds shall have been
deposited in trust to effect such redemption.
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8. Conversion. Shares of the Series A Preferred Stock are not
convertible into or exchangeable for any other property or securities
of the Corporation.
9. Definitions. Terms defined in this Article V, Paragraph C
shall apply only in respect of the Series A Preferred Stock.
ARTICLE VI
LIMITATION ON PERSONAL LIABILITY AND INDEMNIFICATION
OF DIRECTORS AND OFFICERS.
To the maximum extent that Maryland law in effect from time to time
permits limitation of liability of directors or officers of corporations, no
person who at any time was or is a director or officer of the Corporation shall
be personally liable to the Corporation or its stockholders for money damages.
Neither the amendment nor repeal of this provision, nor the adoption or
amendment of any other provision of the Charter or the Bylaws of the Corporation
inconsistent with this provision, shall limit or eliminate in any respect the
applicability of the preceding sentence with respect to any act or failure to
act which occurred prior to such amendment, repeal or adoption.
ARTICLE VII
OTHER CONSTITUENCIES
In considering the effect of a potential acquisition of control of the
Corporation, the Board of Directors of the Corporation may, but shall not be
required to, consider the effect of the potential acquisition of control on: (i)
stockholders, employees, suppliers, customers and creditors of the Corporation;
and (ii) communities in which offices or other establishments of the Corporation
are located.
THIRD: The amendment to and restatement of the Charter of the
Corporation as hereinabove set forth has been duly advised by the Board of
Directors of the Corporation and approved by the stockholders of the Corporation
as required by law.
FOURTH: The current address of the principal office of the Corporation
is as set forth in Article III of the foregoing amendment and restatement of the
Charter.
FIFTH: The name and address of the Corporation's current resident agent
is as set forth in Article III of the foregoing amendment and restatement of the
Charter.
SIXTH: The number of directors of the Corporation and the names of
those currently in office are as set forth in Article IV, Section B of the
foregoing amendment and restatement of the charter.
SEVENTH: The total number of shares of stock which the Corporation has
authority to issue is four hundred fifty million (450,000,000) shares,
consisting of four hundred million (400,000,000)
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shares of Common Stock, $0.01 par value per share, and fifty million
(50,000,000) shares of Preferred Stock, $0.01 par value per share. The aggregate
par value of all shares is $4,500,000.
EIGHTH: The undersigned President acknowledges these Articles of
Amendment and Restatement to be the corporate act of the Corporation, and, as to
all matters or facts required to be verified under oath, the undersigned
President acknowledges that to the best of his knowledge, information and
belief, these matters and facts are true in all material respects and that this
statement is made under the penalties for perjury.
IN WITNESS WHEREOF, the Corporation has caused these Articles of
Amendment and Restatement to be signed in its name and on its behalf by its
President and attested to by its Secretary on this ___ day of ________, 2000.
ATTEST: PRISON REALTY TRUST, INC.
By:_________________________ By: _________________________ (seal)
Title: Secretary Title: President
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Exhibit C
CORRECTIONS CORPORATION OF AMERICA
AMENDED AND RESTATED BYLAWS
ARTICLE I
OFFICES AND FISCAL AND TAXABLE YEARS
Section 1. PRINCIPAL OFFICE. The principal office of Corrections
Corporation of America (the "Corporation") shall be located at such place or
places as the Board of Directors may designate.
Section 2. ADDITIONAL OFFICES. The Corporation may have additional
offices at such places as the Board of Directors may from time to time determine
or the business of the Corporation may require.
Section 3. FISCAL AND TAXABLE YEARS. The fiscal and taxable years of
the Corporation shall begin on January 1 and end on December 31.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. PLACE. All meetings of stockholders shall be held at the
principal office of the Corporation or at such other place as shall be stated in
the notice of the meeting.
Section 2. ANNUAL MEETING. An annual meeting of the stockholders for
the election of Directors and the transaction of any business within the powers
of the Corporation shall be held during the month of May of each year at a
convenient location and on proper notice, on a date and at the time set by the
Board of Directors. Failure to hold an annual meeting does not invalidate the
Corporation's existence or affect any otherwise valid acts of the Corporation.
Section 3. SPECIAL MEETINGS. The President, Chairman of the Board, a
majority of the Board of Directors or a committee of the Board of Directors
which has been duly designated by the Board of Directors and whose powers and
authority, as provided in a resolution of the Board of Directors or these
Bylaws, include the power to call such meetings may call special meetings of the
stockholders. The Secretary of the Corporation shall call a special meeting of
the stockholders on the written request of stockholders entitled to cast at
least a majority of all the votes entitled to be cast at the meeting.
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Section 4. NOTICE. Not less than ten (10) nor more than ninety (90)
days before each meeting of stockholders, the Secretary shall give to each
stockholder entitled to vote at such meeting and to each stockholder not
entitled to vote who is entitled to notice of the meeting written or printed
notice stating the time and place of the meeting and, in the case of a special
meeting or as otherwise may be required by any statute, the purpose for which
the meeting is called, either by mail or by presenting it to such stockholder
personally or by leaving it at his residence or usual place of business. If
mailed, such notice shall be deemed to be given when deposited in the United
States mail addressed to the stockholder at his post office address as it
appears on the records of the Corporation, with postage thereon prepaid.
Section 5. SCOPE OF NOTICE. Any business of the Corporation may be
transacted at an annual meeting of stockholders without being specifically
designated in the notice, except such business as is required by any statute to
be stated in such notice. No business shall be transacted at a special meeting
of stockholders except as specifically designated in the notice.
Section 6. ORGANIZATION. At every meeting of the stockholders, the
Chairman of the Board, if there be one, shall conduct the meeting or, in the
case of vacancy in office or absence of the Chairman of the Board, one of the
following officers present shall conduct the meeting in the order stated: the
President, the Vice Presidents in their order of rank and seniority and the
Secretary, or, in the Secretary's absence, an assistant secretary, or in the
absence of both the Secretary and assistant secretaries, a person appointed by
the Chairman shall act as Secretary.
Section 7. QUORUM. At any meeting of stockholders, the presence in
person or by proxy of stockholders entitled to cast a majority of all the votes
entitled to be cast at such meeting shall constitute a quorum; but this Section
shall not affect any requirement under any statute or the Charter for the vote
necessary for the adoption of any measure. If, however, such quorum shall not be
present at any meeting of the stockholders, the stockholders entitled to vote at
such meeting, present in person or by proxy, shall have the power to adjourn the
meeting from time to time to a date not more than 120 days after the original
record date without notice other than announcement at the meeting. At such
adjourned meeting at which a quorum shall be present, any business may be
transacted which might have been transacted at the meeting as originally
notified.
Section 8. VOTING. A plurality of all the votes cast at a meeting of
stockholders duly called and at which a quorum is present shall be sufficient to
elect a Director. Each share of stock may be voted for as many individuals as
there are Directors to be elected and for whose election the share of stock is
entitled to be voted. A majority of the votes cast at a meeting of stockholders
duly called and at which a quorum is present shall be sufficient to approve any
other matter which may properly come before the meeting, unless more than a
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majority of the votes cast is required herein or by statute or by the Charter.
Unless otherwise provided in the Charter, each outstanding share of stock,
regardless of class, shall be entitled to one vote on each matter submitted to a
vote at a meeting of stockholders.
Section 9. PROXIES. A stockholder may vote the shares of stock owned of
record by him, either in person or by proxy. Such proxy shall be filed with the
Secretary of the Corporation before or at the time of the meeting. No proxy
shall be valid after eleven months from the date of its execution, unless
otherwise provided in the proxy.
Section 10. VOTING OF SHARES OF STOCK BY CERTAIN HOLDERS. Shares of
stock of the Corporation registered in the name of a corporation, partnership,
trust or other entity, if entitled to be voted, may be voted by the president or
a vice president, a general partner or director thereof, as the case may be, or
a proxy appointed by any of the foregoing individuals, unless some other person
who has been appointed to vote such shares of stock pursuant to a bylaw or a
resolution of the governing board of such corporation or other entity or
agreement of the partners of the partnership presents a certified copy of such
bylaw, resolution or agreement, in which case such person may vote such shares
of stock. Any fiduciary may vote shares of stock registered in his name as such
fiduciary, either in person or by proxy.
The Board of Directors may adopt by resolution a procedure by which a
stockholder may certify in writing to the Corporation that any shares of stock
registered in the name of the stockholder are held for the account of a
specified person other than the stockholder. The resolution shall set forth the
class of stockholders who may make the certification, the purpose for which the
certification may be made, the form of certification and the information to be
contained in it; if the certification is with respect to a record date or
closing of the stock transfer books, the time after the record date or closing
of the stock transfer books within which the certification must be received by
the Corporation; and any other provisions with respect to the procedure which
the Board of Directors considers necessary or desirable. On receipt of such
certification, the person specified in the certification shall be regarded as,
for the purposes set forth in the certification, the stockholder of record of
the specified shares of stock in place of the stockholder who makes the
certification.
Title 3, Subtitle 7 of the Maryland General Corporation Law (the
"MGCL"), or any successor statute, shall not apply to any acquisition by any
person of shares of stock of the Corporation.
Section 11. INSPECTORS. At any meeting of stockholders, the chairman of
the meeting may, or upon the request of any stockholder shall, appoint one or
more persons as inspectors for such meeting. Such inspectors shall ascertain and
report the number of shares of stock represented at the meeting based upon their
determination of the validity and effect of
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proxies, count all votes, report the results and perform such other acts as are
proper to conduct the election and voting with impartiality and fairness to all
the stockholders.
Each report of an inspector shall be in writing and signed by him or by
a majority of them if there is more than one inspector acting at such meeting.
If there is more than one inspector, the report of a majority shall be the
report of the inspectors. The report of the inspector or inspectors on the
number of shares of stock represented at the meeting and the results of the
voting shall be prima facie evidence thereof.
Section 12. NOMINATIONS AND STOCKHOLDER BUSINESS.
(a) Annual Meetings of Stockholders.
(1) Nominations of persons for election to the Board
of Directors and the proposal of business to be considered by
the stockholders may be made at an annual meeting of
stockholders (i) pursuant to the Corporation's notice of
meeting, (ii) by or at the direction of the Board of Directors
or (iii) by any stockholder of the Corporation who was a
stockholder of record at the time of giving of notice provided
for in this Section 12(a), who is entitled to vote at the
meeting and who complied with the notice procedures set forth
in this Section 12(a).
(2) For nominations or other business to be properly
brought before an annual meeting by a stockholder pursuant to
clause (iii) of paragraph (a)(1) of this Section 12, the
stockholder must have given timely notice thereof in writing
to the Secretary of the Corporation. To be timely, a
stockholder's notice shall be delivered to the Secretary at
the principal executive offices of the Corporation not less
than 60 days nor more than 90 days prior to the first
anniversary of the preceding year's annual meeting; provided,
however, that in the event that the date of the annual meeting
is advanced by more than 30 days or delayed by more than 60
days from such anniversary date, notice by the stockholder to
be timely must be so delivered not earlier than the 90th day
prior to such annual meeting and not later than the close of
business on the later of the 60th day prior to such annual
meeting or the tenth day following the day on which public
announcement of the date of such meeting is first made. Such
stockholder's notice shall set forth: (i) as to each person
whom the stockholder proposes to nominate for election or
reelection as a Director all information relating to such
person that is required to be disclosed in solicitations of
proxies for election of Directors, or is otherwise required,
in each case pursuant to Regulation 14A under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")
(including such person's written
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consent to being named in the proxy statement as a nominee and
to serving as a Director if elected); (ii) as to any other
business that the stockholder proposes to bring before the
meeting, a brief description of the business desired to be
brought before the meeting, the reasons for conducting such
business at the meeting and any material interest in such
business of such stockholder and of the beneficial owner, if
any, on whose behalf the proposal is made; and (iii) as to the
stockholder giving the notice and the beneficial owner, if
any, on whose behalf the nomination or proposal is made, (y)
the name and address of such stockholder, as they appear on
the Corporation's books, and of such beneficial owner and (z)
the number of each class of shares of stock of the Corporation
which are owned beneficially and of record by such stockholder
and such beneficial owner.
(3) Notwithstanding anything in the second sentence
of paragraph (a)(2) of this Section 12 to the contrary, in the
event that the number of Directors to be elected to the Board
of Directors is increased and there is no public announcement
naming all of the nominees for Director or specifying the size
of the increased Board of Directors made by the Corporation at
least 70 days prior to the first anniversary of the preceding
year's annual meeting, a stockholder's notice required by this
Section 12 (a) shall also be considered timely, but only with
respect to nominees for any new positions created by such
increase, if it shall be delivered to the Secretary at the
principal executive offices of the Corporation not later than
the close of business on the tenth day following the day on
which such public announcement is first made by the
Corporation.
(b) Special Meetings of Stockholders. Only such business shall
be conducted at a special meeting of stockholders as shall have been
brought before the meeting pursuant to the Corporation's notice of
meeting. Nominations of persons for election to the Board of Directors
may be made at a special meeting of stockholders at which Directors are
to be elected (i) pursuant to the Corporation's notice of meeting, (ii)
by or at the direction of the Board of Directors or (iii) provided that
the Board of Directors has determined that Directors shall be elected
at such special meeting, by any stockholder of the Corporation who was
a stockholder of record at the time of giving of notice provided for in
this Section 12(b), who is entitled to vote at the meeting and who
complied with the notice procedures set forth in this Section 12(b). In
the event the Corporation calls a special meeting of stockholders for
the purpose of electing one or more Directors to the Board of
Directors, any such stockholder may nominate a person or persons (as
the case may be) for election to such position as specified in the
Corporation's notice of meeting, if the stockholder's notice containing
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the information required by paragraph (a)(2) of this Section 12 shall
be delivered to the Secretary at the principal executive offices of the
Corporation not earlier than the 90th day prior to such special meeting
and not later than the close of business on the later of the 60th day
prior to such special meeting or the tenth day following the day on
which public announcement is first made of the date of the special
meeting and of the nominees proposed by the Board of Directors to be
elected at such meeting.
(c) General.
(1) Only such persons who are nominated in accordance
with the procedures set forth in this Section 12 shall be
eligible to serve as Directors, and only such business shall
be conducted at a meeting of stockholders as shall have been
brought before the meeting in accordance with the procedures
set forth in this Section 12. The presiding officer of the
meeting shall have the power and duty to determine whether a
nomination or any business proposed to be brought before the
meeting was made in accordance with the procedures set forth
in this Section 12 and, if any proposed nomination or business
is not in compliance with this Section 12, to declare that
such defective nomination or proposal be disregarded.
(2) For purposes of this Section 12, "public
announcement" shall mean disclosure in a press release
reported by the Dow Xxxxx News Service, Associated Press or
comparable news service or in a document publicly filed by the
Corporation with the Securities and Exchange Commission
pursuant to Sections 12, 14 or 15(d) of the Exchange Act.
(3) Notwithstanding the foregoing provisions of this
Section 12, a stockholder shall also comply with all
applicable requirements of state law and of the Exchange Act
and the rules and regulations thereunder with respect to the
matters set forth in this Section 12. Nothing in this Section
12 shall be deemed to affect any rights of stockholders to
request inclusion of proposals in the Corporation's proxy
statement pursuant to Rule 14a-8 under the Exchange Act.
Section 13. VOTING BY BALLOT. Voting on any question or in any election
may be viva voce unless the presiding officer shall order or any stockholder
shall demand that voting be by ballot.
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ARTICLE III
BOARD OF DIRECTORS
Section 1. GENERAL POWERS; QUALIFICATIONS; DIRECTORS HOLDING OVER. The
business and affairs of the Corporation shall be managed under the direction of
its Board of Directors. A Director shall be an individual at least 21 years of
age who is not under legal disability. Unless otherwise agreed between the
Corporation and the Director, each individual Director, including each
Independent Director (as defined in the Corporation's Charter), may engage in
other business activities of the type conducted by the Corporation and is not
required to present to the Corporation investment opportunities presented to
such Director (other than those presented to such Director in his or her
capacity as a Director of the Corporation) even though the investment
opportunities may be within the scope of the Corporation's investment policies.
In case of failure to elect Directors at an annual meeting of the stockholders,
the Directors holding over shall continue to direct the management of the
business and affairs of the Corporation until their successors are elected and
qualify.
Section 2. ANNUAL AND REGULAR MEETINGS. An annual meeting of the
Directors shall be held immediately after and at the same place as the annual
meeting of stockholders, no notice other than this Bylaw being necessary. The
Directors may provide, by resolution, the time and place, either within or
without the State of Maryland, for the holding of regular meetings of the
Directors without other notice than such resolution.
Section 3. SPECIAL MEETINGS. Special meetings of the Directors may be
called by or at the request of the Chairman of the Board, the Chief Executive
Officer or the President or by a majority of the Directors then in office. The
person or persons authorized to call special meetings of the Directors may fix
any place, either within or without the State of Maryland, as the place for
holding any special meeting of the Directors called by them.
Section 4. NOTICE. Notice of any special meeting shall be given by
written notice delivered personally, telegraphed or mailed to each Director at
his business or residence address. Personally delivered or telegraphed notices
shall be given at least two days prior to the meeting. Notice by mail shall be
given at least five days prior to the meeting. Telephone notice shall be given
at least 24 hours prior to the meeting. If mailed, such notice shall be deemed
to be given when deposited in the United States mail properly addressed, with
postage thereon prepaid. If given by telegram, such notice shall be deemed to be
given when the telegram is delivered to the telegraph company. Telephone notice
shall be deemed given when the Director is personally given such notice in a
telephone call to which he is a party. Neither the business to be transacted at,
nor the purpose of, any annual, regular or special meeting of the Directors need
be stated in the notice, unless specifically required by statute or these
Bylaws.
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Section 5. QUORUM. Except as provided in subsection (b) of Section 6, a
majority of the entire Board of Directors shall constitute a quorum for
transaction of business at any meeting of the Board of Directors, provided that,
if less than a majority of such Directors are present at said meeting, a
majority of the Directors present may adjourn the meeting from time to time
without further notice, and provided further that if, pursuant to the Charter or
these Bylaws, the vote of a majority of a particular group of Directors is
required for action, a quorum must also include a majority of such group.
The Directors present at a meeting which has been duly called and
convened may continue to transact business until adjournment, notwithstanding
the withdrawal of enough Directors to leave less than a quorum.
Section 6. VOTING. Except as provided in subsection (d) of Section 2 of
Article IV of these Bylaws, the action of the majority of the Board of Directors
present at a meeting at which a quorum is present shall be the action of the
Directors, unless the concurrence of a greater proportion is required for such
action by the Charter, these Bylaws or applicable statute.
Section 7. TELEPHONE MEETINGS. Directors may participate in a meeting
by means of a conference telephone or similar communications equipment if all
persons participating in the meeting can hear each other at the same time.
Participation in a meeting by these means shall constitute presence in person at
the meeting.
Section 8. INFORMAL ACTION BY DIRECTORS. Any action required or
permitted to be taken at any meeting of the Board of Directors may be taken
without a meeting, if a consent in writing to such action is signed by each
Director and such written consent is filed with the minutes of proceedings of
the Board of Directors.
Section 9. VACANCIES. If for any reason any or all of the Directors
cease to be Directors, such event shall not terminate the Corporation or affect
these Bylaws or the powers of the remaining Directors hereunder (even if fewer
than two Directors remain). Except as otherwise provided in the Charter of the
Corporation: (i) any vacancy on the Board of Directors for any cause other than
a vacancy created by an increase in the number of Directors shall be filled by a
majority of the remaining Directors, even if such majority is less than a
quorum; and (ii) any vacancy in the number of Directors created by an increase
in the number of Directors may be filled by a majority vote of the entire Board
of Directors. Any individual so elected as a Director shall hold office until
the next annual meeting of stockholders and until his successor is elected and
qualifies.
Section 10. COMPENSATION. Directors shall not receive any stated salary
for their services as Directors but, by resolution of the Board of Directors,
may receive cash
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compensation or a fixed sum of Common Stock of the Corporation for any service
or activity they performed or engaged in as Directors. By resolution of the
Board of Directors, Directors may receive a fee for and may be reimbursed for
expenses in connection with attendance, if any, at each annual, regular or
special meeting of the Board of Directors or of any committee thereof; and for
their expenses, if any, in connection with each property visit and any other
service or activity performed or engaged in as Directors; but nothing herein
contained shall be construed to preclude any Directors from serving the
Corporation in any other capacity and receiving compensation therefor.
Section 11. REMOVAL OF DIRECTORS. The stockholders may, at any time,
remove any Director in the manner provided in the Charter.
Section 12. LOSS OF DEPOSITS. No Director shall be liable for any loss
which may occur by reason of the failure of the bank, trust company, savings and
loan association, or other institution with whom moneys or shares of stock have
been deposited.
Section 13. SURETY BONDS. Unless required by law, no Director shall be
obligated to give any bond or surety or other security for the performance of
any of his duties.
Section 14. NUMBER, TENURE AND QUALIFICATIONS. The number of Directors
of the Corporation shall not be less than three (3) nor more than sixteen (16),
as determined from time to time by resolution adopted by a majority of the Board
of Directors or as required by the Charter of the Corporation. Directors need
not be stockholders of the Corporation.
ARTICLE IV
COMMITTEES OF BOARD OF DIRECTORS
Section 1. GENERAL. The Board of Directors may, by resolution passed by
a majority of the whole board, designate one or more committees, each such
committee to consist of one or more of the Directors of the Corporation. The
Board of Directors may designate one or more Directors as alternate members of
any committee, who may replace any absent or disqualified member at any meeting
of the committee. Any such committee, to the extent provided in the resolution
of the Board of Directors shall have and may exercise all the powers and
authority of the Board of Directors in the management of the business and
affairs of the Corporation, and may authorize the seal of the Corporation to be
affixed to all papers which may require it; but no such committee shall have the
power or authority in reference: (i) to authorize dividends on stock; (ii) to
authorize the issuance of stock (except that, if the Board of Directors has
given general authorization for the issuance of stock providing for or
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establishing a method or procedure for determining the maximum number of shares
to be issued, a committee may, in accordance with the general authorization or
any stock option or other plan or program adopted by the Board, authorize or fix
the terms of stock subject to classification or reclassification and the terms
on which any stock may be issued); (iii) to recommend to the stockholders any
action which requires stockholder approval; (iv) to amend the Bylaws; or (v) to
approve any merger or share exchange which does not require stockholder
approval.
Section 2. COMMITTEES. The Board of Directors shall have the following
committees, the specific authority and members of which shall be as designated
herein or by resolution of the Board of Directors.
(a) An Independent Committee, which shall consist solely of
Independent Directors and which shall have the authority to approve the
actions of the Board of Directors requiring approval by Independent
Directors under applicable law.
(b) An Audit Committee, which will consist solely of
Independent Directors and which shall make recommendations concerning
the engagement of independent public accountants, review with the
independent public accountants the plans and results of the audit
engagement, approve professional services provided by the independent
public accountants, review the independence of the independent public
accountants, consider the range of audit and non-audit fees and review
the adequacy of the Corporation's initial accounting controls.
(c) A Compensation Committee, which shall determine
compensation for the Corporation's executive officers and administer
any stock incentive plans adopted by the Corporation.
(d) Until the Termination Date (as defined below), there shall
be an Investment Committee, a simple majority of which shall be
comprised of all the Series B Preferred Stock Directors (as defined in
the Series B Preferred Stock Articles Supplementary). The Investment
Committee is hereby expressly delegated the exclusive power of the
Board of Directors to: (i) authorize and approve any incurrence,
amendment, modification or waiver of indebtedness for borrowed money
(including, but not limited to, the refinancing, repurchase or
repayment of existing indebtedness); (ii) approve capital expenditures
(iii) approve acquisitions and business expansions (not subject to
stockholder approval) including, but not limited to, approving new
management agreements or leases for facilities, and (iv)
notwithstanding any other provision of these Bylaws to the contrary,
designate the Chief Executive Officer and Chief Financial Officer. In
addition, without the affirmative vote of the Investment Committee, the
Board of Directors shall not: (i) authorize the declaration of common
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dividends or the issuance or sale of securities (including rights or
options related thereto other than employee options or similar rights
approved by the Compensation Committee); (ii) recommend to stockholders
any action which requires stockholder approval; (iii) amend the
Corporation's Charter or these Bylaws or expand the size of the Board
of Directors (except as specifically provided in the Corporation's
Charter or in the Series B Preferred Stock Articles Supplementary or
the Series C Preferred Stock Articles Supplementary); (iv) approve the
appointment or termination of any executive officer of the Corporation;
or (v) approve any merger, consolidation, share exchange or sale of
substantial assets which does not require stockholder approval. The
"Termination Date" shall be the date immediately following the last day
of the sixth consecutive fiscal quarter in which the corporation
achieves combined consolidated earnings before interest, taxes,
depreciation and amortization determined in accordance with GAAP
consistently applied (but without giving effect to extraordinary income
or expense) of not less than $60.0 million.
Notwithstanding the foregoing provisions of this Article IV, Section
2(d), the approval of the Investment Committee shall not be required for: (i)
issuances of debt or equity securities to Pacific Life (as defined in the Series
B Preferred Stock Articles Supplementary) pursuant to the Purchase Agreement (as
defined in the Series B Preferred Stock Articles Supplementary) or pursuant to
any other agreements or understandings with Pacific Life; or (ii) the issuance
of rights or warrants pursuant to the Rights Offering (as defined in the Series
B Preferred Stock Articles Supplementary) or the purchase of equity securities
of the Corporation pursuant to the Rights Offering.
Section 3. RECORDS OF COMMITTEE MEETINGS. Each committee shall keep
regular minutes of its meetings and report the same to the Board of Directors
when required. The presence of a majority of the total membership of any
committee shall constitute a quorum for the transaction of business at any
meeting of such committee and the act of a majority of those present shall be
necessary and sufficient for the taking of any action at such meeting.
ARTICLE V
OFFICERS
Section 1. GENERAL PROVISIONS. The officers of the Corporation may
consist of a Chairman of the Board, one (1) or more Vice Chairmen of the
Company, a Chief Executive Officer, a President, one or more Vice Presidents, a
Treasurer, one or more assistant treasurers, a Secretary, and one or more
assistant secretaries. In addition, the Board of Directors may from time to time
appoint such other officers with such powers and duties as
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they shall deem necessary or desirable. The officers of the Corporation shall be
elected annually by the Board of Directors at the first meeting of the Board of
Directors held after each annual meeting of stockholders. If the election of
officers shall not be held at such meeting, such election shall be held as soon
thereafter as may be convenient. Each officer shall hold office until his
successor is elected and qualifies or until his death, resignation or removal in
the manner hereinafter provided. Any two or more offices except President and
Vice President may be held by the same person. In their discretion, the Board of
Directors may leave unfilled any office except that of President, Secretary and
Treasurer. Election of an officer or agent shall not of itself create contract
rights between the Corporation and such officer or agent.
Section 2. REMOVAL AND RESIGNATION. Any officer or agent of the
Corporation may be removed by the Board of Directors if in their judgment the
best interests of the Corporation would be served thereby, but such removal
shall be without prejudice to the contract rights, if any, of the person so
removed. Any officer of the Corporation may resign at any time by giving written
notice of his resignation to the Board of Directors, the Chairman of the Board,
the President or the Secretary. Any resignation shall take effect at any time
subsequent to the time specified therein or, if the time when it shall become
effective is not specified therein, immediately upon its receipt. The acceptance
of a resignation shall not be necessary to make it effective unless otherwise
stated in the resignation. Such resignation shall be without prejudice to the
contract rights, if any, of the Corporation.
Section 3. VACANCIES. A vacancy in any office may be filled by the
Board of Directors for the balance of the term.
Section 4. CHAIRMAN OF THE BOARD. The Chairman of the Board shall
preside over the meetings of the Board of Directors and of the stockholders at
which he shall be present and shall in general oversee all of the business and
affairs of the Corporation. The Chairman of the Board may execute any deed,
mortgage, bond, contract or other instrument, except in cases where the
execution thereof shall be expressly delegated by the Board of Directors or by
these Bylaws to some other officer or agent of the Corporation or shall be
required by law to be otherwise executed. The Chairman of the Board shall
perform such other duties as may be assigned to him by the Board of Directors.
Section 5. VICE CHAIRMEN OF THE CORPORATION. The Board of Directors may
designate one (1) or more Vice Chairmen of the Corporation who shall have such
duties and responsibilities as may be assigned to him or them by the Board of
Directors.
Section 6. CHIEF EXECUTIVE OFFICER. The Board of Directors may
designate a Chief Executive Officer from among the elected officers. The Chief
Executive Officer shall have responsibility for implementation of the policies
of the Corporation, as
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determined by the Board of Directors, and for the administration of the business
affairs of the Corporation. In the absence of the Chairman of the Board, the
Chief Executive Officer shall preside over the meetings of the Board of
Directors and of the stockholders at which he shall be present.
Section 7. CHIEF OPERATING OFFICER. The Board of Directors may
designate a Chief Operating Officer from among the elected officers. Said
officer will have the responsibilities and duties as set forth by the Board of
Directors or the Chief Executive Officer.
Section 8. CHIEF DEVELOPMENT OFFICER. The Board of Directors may
designate a Chief Development Officer from among the elected officers. Said
officer will have the responsibilities and duties as set forth by the Board of
Directors or the Chief Executive Officer.
Section 9. CHIEF FINANCIAL OFFICER. The Board of Directors may
designate a Chief Financial Officer from among the elected officers. Said
officer will have the responsibilities and duties as set forth by the Board of
Directors or the Chief Executive Officer.
Section 10. PRESIDENT. In the absence of the Chairman of the Board and
the Chief Executive Officer, the President shall preside over the meetings of
the Board of Directors and of the stockholders at which he shall be present. In
the absence of a designation of a Chief Executive Officer by the Board of
Directors, the President shall be the Chief Executive Officer and shall be ex
officio a member of all committees that may, from time to time, be constituted
by the Board of Directors. The President may execute any deed, mortgage, bond,
contract or other instrument, except in cases where the execution thereof shall
be expressly delegated by the Board of Directors or by these Bylaws to some
other officer or agent of the Corporation or shall be required by law to be
otherwise executed; and in general shall perform all duties incident to the
office of President and such other duties as may be prescribed by the Board of
Directors from time to time.
Section 11. VICE PRESIDENTS. In the absence of the President or in the
event of a vacancy in such office, the Vice President (or in the event there be
more than one Vice President, the Vice Presidents in the order designated at the
time of their election or, in the absence of any designation, then in the order
of their election) shall perform the duties of the President and when so acting
shall have all the powers of and be subject to all the restrictions upon the
President; and shall perform such other duties as from time to time may be
assigned to him by the President or by the Board of Directors. The Board of
Directors may designate one or more Vice Presidents as Executive Vice President
or as Vice President for particular areas of responsibility.
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Section 12. SECRETARY. The Secretary shall: (a) keep the minutes of the
proceedings of the stockholders, the Board of Directors and committees of the
Board of Directors in one or more books provided for that purpose; (b) see that
all notices are duly given in accordance with the provisions of these Bylaws or
as required by law; (c) be custodian of the corporate records and of the seal of
the Corporation; (d) keep a register of the post office address of each
stockholder which shall be furnished to the Secretary by such stockholder; (e)
have general charge of the stock transfer books of the Corporation; and (f) in
general perform such other duties as from time to time may be assigned to him by
the Chief Executive Officer, the President or by the Board of Directors.
Section 13. TREASURER. The Treasurer shall have the custody of the
funds and securities of the Corporation and shall keep full and accurate
accounts of receipts and disbursements in books belonging to the Corporation and
shall deposit all moneys and other valuable effects in the name and to the
credit of the Corporation in such depositories as may be designated by the Board
of Directors.
The Treasurer shall disburse the funds of the Corporation as may be
ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the President and Directors, at the regular
meetings of the Board of Directors or whenever they may require it, an account
of all his transactions as Treasurer and of the financial condition of the
Corporation.
If required by the Board of Directors, the Treasurer shall give the
Corporation a bond in such sum and with such surety or sureties as shall be
satisfactory to the Board of Directors for the faithful performance of the
duties of his office and for the restoration to the Corporation, in case of his
death, resignation, retirement or removal from office, of all books, papers,
vouchers, moneys and other property of whatever kind in his possession or under
his control belonging to the Corporation.
Section 14. ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. The
assistant secretaries and assistant treasurers, in general, shall perform such
duties as shall be assigned to them by the Secretary or Treasurer, respectively,
or by the President or the Board of Directors. The assistant treasurers shall,
if required by the Board of Directors, give bonds for the faithful performance
of their duties in such sums and with such surety or sureties as shall be
satisfactory to the Board of Directors.
Section 15. SALARIES. The salaries of the officers shall be fixed from
time to time by the Board of Directors, and no officer shall be prevented from
receiving such salary by reason of the fact that he is also a Director.
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ARTICLE VI
CONTRACTS, LOANS, CHECKS AND DEPOSITS
Section 1. CONTRACTS. The Board of Directors may authorize any officer
or agent to enter into any contract or to execute and deliver any instrument in
the name of and on behalf of the Corporation and such authority may be general
or confined to specific instances. Any agreement, deed, mortgage, lease or other
document executed by one or more of the Board of Directors or by an authorized
person shall be valid and binding upon the Board of Directors and upon the
Corporation when authorized or ratified by action of the Directors.
Section 2. CHECKS AND DRAFTS. All checks, drafts or other orders for
the payment of money, notes or other evidences of indebtedness issued in the
name of the Corporation shall be signed by such officer or officers, agent or
agents of the Corporation in such manner as shall from time to time be
determined by the Board of Directors.
Section 3. DEPOSITS. All funds of the Corporation not otherwise
employed shall be deposited from time to time to the credit of the Corporation
in such banks, trust companies or other depositories as the Board of Directors
may designate.
ARTICLE VII
STOCK
Section 1. CERTIFICATES. Each stockholder shall be entitled to a
certificate or certificates which shall represent and certify the number of
shares of each class of stock held by him in the Corporation. Each certificate
shall be signed by the President, a Vice President or the Chairman of the Board
and countersigned by the Secretary or an assistant secretary or the Treasurer or
an assistant treasurer and may be sealed with the seal, if any, of the
Corporation. The signatures may be either manual or facsimile. Certificates
shall be consecutively numbered; and if the Corporation shall, from time to
time, issue several classes of shares of stock, each class may have its own
number series. A certificate is valid and may be issued whether or not an
officer who signed it is still an officer when it is issued. Each certificate
shall contain on its face or back a full statement or summary of such
information with respect to the stock of the Corporation as is required by the
MGCL. In lieu of such statement or summary, the Corporation may set forth upon
the face or back of the certificate a statement that the Corporation will
furnish to any stockholder, upon request and without charge, a full statement of
such information.
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Section 2. TRANSFERS. Certificates shall be treated as negotiable, and
title thereto and to the shares of stock they represent shall be transferred by
delivery thereof. No transfers of shares of stock of the Corporation shall be
made if (i) void pursuant to any provision of the Charter or (ii) the Board of
Directors, pursuant to any provision of the Charter, shall have refused to
permit the transfer of such shares of stock. Permitted transfers of shares of
stock of the Corporation shall be made on the stock records of the Corporation
only upon the instruction of the registered holder thereof, or by his attorney
thereunto authorized by power of attorney duly executed and filed with the
Secretary or with a transfer agent or transfer clerk, and upon surrender of the
certificate or certificates, if issued, for such shares of stock properly
endorsed or accompanied by a duly executed stock transfer power and the payment
of all taxes thereon. Upon surrender to the Corporation or the transfer agent of
the Corporation of a certificate for shares of stock duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, as to any transfers not prohibited by any provision of the Charter or
by action of the Board of Directors thereunder, it shall be the duty of the
Corporation to issue a new certificate to the person entitled thereto, cancel
the old certificate and record the transaction upon its books.
Section 3. REPLACEMENT CERTIFICATE. Any officer designated by the Board
of Directors may direct a new certificate to be issued in place of any
certificate previously issued by the Corporation alleged to have been lost,
stolen or destroyed upon the making of an affidavit of that fact by the person
claiming the certificate to be lost, stolen or destroyed. When authorizing the
issuance of a new certificate, the officer designated by the Board of Directors
may, in his discretion and as a condition precedent to the issuance thereof,
require the owner of such lost, stolen or destroyed certificate or the owner's
legal representative to advertise the same in such manner as he shall require
and/or to give bond, with sufficient surety, to the Corporation to indemnify it
against any loss or claim which may arise as a result of the issuance of a new
certificate.
Section 4. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE. The
Board of Directors may set, in advance, a record date for the purpose of
determining stockholders entitled to notice of or to vote at any meeting of
stockholders or determining stockholders entitled to receive payment of any
dividend or the allotment of any other rights, or in order to make a
determination of stockholders for any other purpose. Such date, in any case,
shall not be prior to the close of business on the day the record date is fixed
and shall be not more than 90 days, and in the case of a meeting of stockholders
not less than ten days, before the date on which the meeting or particular
action requiring such determination of stockholders of record is to be held or
taken.
In lieu of fixing a record date, the Board of Directors may provide
that the stock transfer books shall be closed for a stated period but not longer
than 20 days. If the stock transfer books are closed for the purpose of
determining stockholders entitled to notice of or
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to vote at a meeting of stockholders, such books shall be closed for at least
ten days before the date of such meeting.
If no record date is fixed and the stock transfer books are not closed
for the determination of stockholders, (a) the record date for the determination
of stockholders entitled to notice of or to vote at a meeting of stockholders
shall be at the close of business on the day on which the notice of meeting is
mailed or the 30th day before the meeting, whichever is the closer date to the
meeting, and (b) the record date for the determination of stockholders entitled
to receive payment of a dividend or an allotment of any other rights shall be
the close of business on the day on which the resolution of the Board of
Directors declaring the dividend or allotment of rights is adopted.
When a determination of stockholders entitled to vote at any meeting of
stockholders has been made as provided in this section, such determination shall
apply to any adjournment thereof, except when (i) the determination has been
made through the closing of the transfer books and the stated period of closing
has expired or (ii) the meeting is adjourned to a date more than 120 days after
the record date fixed for the original meeting, in either of which case a new
record date shall be determined as set forth herein.
Section 5. STOCK LEDGER. The Corporation shall maintain at its
principal office or at the office of its counsel, accountants or transfer agent,
an original or duplicate stock ledger containing the name and address of each
stockholder and the number of shares of each class of stock held by such
stockholder.
Section 6. FRACTIONAL SHARES OF STOCK; ISSUANCE OF UNITS. The Board of
Directors may issue fractional shares of stock or provide for the issuance of
scrip, all on such terms and under such conditions as they may determine.
Notwithstanding any other provision of the Charter or these Bylaws, the Board of
Directors may issue units consisting of different securities of the Corporation.
Any security issued in a unit shall have the same characteristics as any
identical securities issued by the Corporation, except that the Board of
Directors may provide that for a specified period securities of the Corporation
issued in such unit may be transferred on the books of the Corporation only in
such unit.
ARTICLE VIII
DIVIDENDS AND DISTRIBUTIONS
Section 1. AUTHORIZATION. Dividends and other distributions upon the
shares of stock of the Corporation may be authorized and declared by the Board
of Directors, subject
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to the provisions of law and the Charter. Dividends may be paid in cash,
property or shares of stock of the Corporation, subject to the provisions of law
and the Charter.
Section 2. CONTINGENCIES. Before payment of any dividends, there may be
set aside out of any funds of the Corporation available for dividends such sum
or sums as the Board of Directors may from time to time, in their absolute
discretion, think proper as a reserve fund for contingencies, for equalizing
dividends, for repairing or maintaining any property of the Corporation or for
such other purpose as the Board of Directors shall determine to be in the best
interest of the Corporation; and the Board of Directors may modify or abolish
any such reserve in the manner in which it was created.
ARTICLE IX
SEAL
Section 1. SEAL. The Board of Directors may authorize the adoption of a
seal by the Corporation. The seal shall have inscribed thereon the name of the
Corporation and the year of its formation. The Board of Directors may authorize
one or more duplicate seals and provide for the custody thereof.
Section 2. AFFIXING SEAL. Whenever the Corporation is required to place
its seal to a document, it shall be sufficient to meet the requirements of any
law, rule or regulation relating to a seal to place the word "(SEAL)" adjacent
to the signature of the person authorized to execute the document on behalf of
the Corporation.
ARTICLE X
INDEMNIFICATION AND ADVANCES FOR EXPENSES
To the maximum extent permitted by Maryland law in effect from time to
time, the Corporation, without requiring a preliminary determination of the
ultimate entitlement to indemnification, shall indemnify (a) any Director or
officer or any former Director or officer (including among the foregoing, for
all purposes of this Article X and without limitation, any individual who, while
a Director or officer and at the express request of the Corporation, serves or
has served another corporation, partnership, joint venture, trust, employee
benefit plan or any other enterprise as a director, officer or partner of such
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise) who has been successful, on the merits or otherwise, in the defense
of a proceeding to which he was made a party by reason of service in such
capacity, against reasonable expenses incurred by him in connection with the
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proceeding and (b) any Director or officer or any former Director or officer
against any claim or liability to which he may become subject by reason of such
status unless it is established that (i) his act or omission was material to the
matter giving rise to the proceeding and was committed in bad faith or was the
result of active and deliberate dishonesty, (ii) he actually received an
improper personal benefit in money, property or services or (iii) in the case of
a criminal proceeding, he had reasonable cause to believe that his act or
omission was unlawful. In addition, the Corporation shall pay or reimburse, in
advance of final disposition of a proceeding, reasonable expenses incurred by a
Director or officer or former Director or officer made a party to a proceeding
by reason of such status, provided that, in the case of a Director or officer,
the Corporation shall have received (i) a written affirmation by the Director or
officer of his good faith belief that he has met the applicable standard of
conduct necessary for indemnification by the Corporation as authorized by these
Bylaws and (ii) a written undertaking by or on the Director's or officer's
behalf to repay the amount paid or reimbursed by the Corporation if it shall
ultimately be determined that the applicable standard of conduct was not met.
The Corporation may, with the approval of its Directors, provide such
indemnification or payment or reimbursement of expenses to any Director or
officer or any former Director or officer who served a predecessor of the
Corporation and to any employee or agent of the Corporation or a predecessor of
the Corporation. Neither the amendment nor repeal of this Article, nor the
adoption or amendment of any other provision of the Charter or these Bylaws
inconsistent with this Article, shall apply to or affect in any respect the
applicability of this Article with respect to any act or failure to act which
occurred prior to such amendment, repeal or adoption.
Any indemnification or payment or reimbursement of the expenses
permitted by these Bylaws shall be furnished in accordance with the procedures
provided for indemnification or payment or reimbursement of expenses, as the
case may be, under Section 2-418 of the MGCL for directors of Maryland
corporations. The Corporation may provide to Directors or officers such other
and further indemnification or payment or reimbursement of expenses, as the case
may be, to the fullest extent permitted by the MGCL, as in effect from time to
time, for directors of Maryland corporations.
ARTICLE XI
WAIVER OF NOTICE
Whenever any notice is required to be given pursuant to the Charter or
Bylaws or pursuant to applicable law, a waiver thereof in writing, signed by the
person or persons entitled to such notice, whether before or after the time
stated therein, shall be deemed equivalent to the giving of such notice. Neither
the business to be transacted at, nor the purpose of, any meeting need be set
forth in the waiver of notice, unless specifically required
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by statute. The attendance of any person at any meeting shall constitute a
waiver of notice of such meeting, except where such person attends a meeting for
the express purpose of objecting to the transaction of any business on the
ground that the meeting is not lawfully called or convened.
ARTICLE XII
AMENDMENT OF BYLAWS
Subject to Section 2(d) of Article IV hereof and the Series B Preferred
Stock Articles Supplementary, the Board of Directors shall have the exclusive
power to adopt, alter or repeal any provision of these Bylaws and to make new
Bylaws in accordance with Article III hereof.
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Exhibit D
ARTICLES
SUPPLEMENTARY
CORRECTIONS CORPORATION OF AMERICA
SERIES C CUMULATIVE CONVERTIBLE PREFERRED STOCK
(PAR VALUE $0.01 PER SHARE)
Corrections Corporation of America, a Maryland corporation (the
"Corporation"), hereby certifies to the State Department of Assessments and
Taxation of the State of Maryland that:
FIRST: Pursuant to authority granted to the Board of Directors of the
Corporation (the "Board of Directors") by Article V of the charter of the
Corporation (the "Charter"), the Board of Directors has classified 8,000,000
shares (the "Shares") of Preferred Stock, as defined in the Charter, as a
separate series of shares of Preferred Stock, designated as Series C Cumulative
Convertible Preferred Stock, $0.01 par value per share (the "Series C Preferred
Stock").
SECOND: The terms of the Series C Preferred Stock, including the
preferences, voting powers, restrictions, limitations as to dividends and other
distributions, qualifications, and terms and conditions of redemption, as fixed
by the Board of Directors are as follows:
Section 1. Designation and Amount; Rank.
(a) The shares of such series shall be designated as the "Series C
Cumulative Convertible Preferred Stock" (the "Series C Preferred Stock"), and
the number of shares constituting such series shall be 8,000,000 shares. Section
11 sets forth the definitions of certain terms used in these Articles
Supplementary.
(b) The Series C Preferred Stock shall, with respect to dividend
distributions and distributions upon liquidation, winding-up and dissolution of
the Corporation, rank: (i) senior (to the extent set forth herein) to all Junior
Stock; (ii) on a parity with all Parity Stock; and (iii) junior to all Senior
Stock, provided, however, that any such Senior Stock that is not approved by the
holders of the Series C Preferred Stock in accordance with Section 3(a) hereof
shall be deemed to be Junior Stock and not Senior Stock.
Section 2. Dividends and Distributions.
(a) Subject to the preferential rights of all Senior Stock, the holders of
shares of Series C Preferred Stock shall be entitled to receive, when and as
authorized and declared by the Board of Directors, out of funds legally
available for the payment of dividends, (i) commencing on the first Dividend
Payment Date and continuing through the third anniversary of the Issuance Date,
cumulative preferential dividends payable in additional shares of Series
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C Preferred Stock at the rate of twelve percent (12%) per annum of the Stated
Amount of each share of the then outstanding Series C Preferred Stock, and (ii)
commencing with the first Dividend Period occurring after the third anniversary
of the Issuance Date, cumulative preferential dividends payable entirely in cash
at the rate of twelve percent (12%) per annum of the Stated Amount of each share
of the then outstanding Series C Preferred Stock. Dividends on shares of Series
C Preferred Stock shall accrue and be cumulative from the Issuance Date.
Dividends shall be payable quarterly in arrears when and as declared by the
Board of Directors on each Dividend Payment Date (or, if such Dividend Payment
Date is not a Business Day, the first (1st) Business Day following the Dividend
Payment Date) in respect of the Dividend Period ending on such Dividend Payment
Date (but without including such Dividend Payment Date) commencing on the first
Dividend Payment Date and continuing for so long as the Series C Preferred Stock
is outstanding. Any reference herein to "cumulative dividends" or "Accrued
Dividends" or similar phrases means that such dividends are fully cumulative and
accumulate and accrue on a daily basis (computed on the basis of a 360-day year
of twelve 30-day months), whether or not they have been declared and whether or
not there are profits, surplus or other funds of the Corporation legally
available for the payment of dividends. The Accrued Dividends will not bear
interest, and holders of shares of the Series C Preferred Stock will not be
entitled to any distributions other than as expressly set forth herein. All
dividends payable in additional shares of Series C Preferred Stock shall be paid
through the issuance of additional shares of Series C Preferred Stock (including
fractional shares) at the Stated Amount.
Notwithstanding anything contained herein to the contrary, no dividends on
shares of Series C Preferred Stock shall be declared by the Board of Directors
or paid or Set Apart for Payment by the Corporation at such time as, and to the
extent that, the terms and provisions of any agreement to which the Corporation
is a party, including any agreement relating to its indebtedness or any
provisions of the Corporation's Charter relating to any Senior Stock, prohibit
such declaration, payment or setting apart for payment or provide that such
declaration, payment or setting apart for payment would constitute a breach
thereof or a default thereunder, or if such declaration or payment shall be
restricted or prohibited by law.
(b) For so long as any shares of Series C Preferred Stock are outstanding,
no full dividends shall be declared by the Board of Directors or paid or Set
Apart for Payment by the Corporation on any Parity Stock for any period unless
the Accrued Dividends have been or contemporaneously are declared and paid in
full, or declared and, if payable in cash, a sum in cash is Set Apart for
Payment. If the Accrued Dividends and any accrued dividends with respect to
Parity Stock are not so paid (or a sum sufficient for such payment is not so Set
Apart for Payment), all dividends declared and paid upon shares of the Series C
Preferred Stock and any other Parity Stock shall be declared pro rata so that
the amount of dividends declared and paid per share on the Series C Preferred
Stock and such Parity Stock shall in all cases bear to each other the same ratio
that the Accrued Dividends per share on the Series C Preferred Stock and the
accrued dividends per share on such Parity Stock bear to each other.
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(c) For so long as any shares of Series C Preferred Stock are outstanding,
the Corporation shall not declare, pay or Set Apart for Payment any dividend on
any of the Junior Stock (other than dividends in Junior Stock to the holders of
Junior Stock), or make any payment on account of, or Set Apart for Payment money
for a sinking or other similar fund for, the purchase, redemption or other
retirement of, any of the Junior Stock or any warrants, rights, calls or options
exercisable for or convertible into any of the Junior Stock whether in cash,
obligations or shares of the Corporation or other property (other than in
exchange for Junior Stock), and shall not permit any corporation or other entity
directly or indirectly controlled by the Corporation to purchase or redeem any
of the Junior Stock or any such warrants, rights, calls or options (other than
in exchange for Junior Stock) unless the Accrued Dividends on the Series C
Preferred Stock for all Dividend Periods ended on or prior to the date of such
payment in respect of Junior Stock have been or contemporaneously are paid in
full or declared and, if payable in cash, a sum in cash has been Set Apart for
Payment.
(d) For so long as any shares of Series C Preferred Stock are outstanding,
the Corporation shall not (except with respect to dividends as permitted by
Section 2(b)) make any payment on account of, or Set Apart for Payment money for
a sinking or other similar fund for, the purchase, redemption or other
retirement of, any shares of the Parity Stock or any warrants, rights, calls or
options exercisable for or convertible into any shares of the Parity Stock, and
shall not permit any corporation or other entity directly or indirectly
controlled by the Corporation to purchase or redeem any shares of the Parity
Stock or any such warrants, rights, calls or options unless the Accrued
Dividends on the Series C Preferred Stock for all Dividend Periods ended on or
prior to the date of such payment in respect of Parity Stock have been or
contemporaneously are paid in full.
(e) Notwithstanding anything contained herein to the contrary, dividends on
the Series C Preferred Stock, if not paid on a Series C Dividend Payment Date,
will accrue whether or not dividends are declared for such Series C Dividend
Payment Date, whether or not the Corporation has earnings and whether or not
there are profits, surplus or other funds legally available for the payment of
such dividends. Any dividend payment made on shares of Series C Preferred Stock
shall first be credited against the current dividend and then against the
earliest Accrued Dividend.
Section 3. Voting Rights.
In addition to any voting rights provided elsewhere herein, and any voting
rights provided by law, and subject to the provisions of the Charter of the
Corporation, the holders of shares of Series C Preferred Stock shall have the
following voting rights:
(a) Notwithstanding any provision of Maryland law requiring that any action
of the holders of shares of the Series C Preferred Stock be taken or authorized
by the affirmative vote of the holders of a designated proportion greater than a
majority of such shares or votes entitled to be cast by such holders, the action
shall be effective and valid if taken or authorized by the affirmative vote of
the holders of a majority of the total number of shares of Series C
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Preferred Stock outstanding and entitled to vote thereon (the "Requisite
Holders"). For so long as any shares of Series C Preferred Stock are
outstanding, without first obtaining the approval of the Requisite Holders,
voting as a single class, given in person or by proxy at a meeting at which the
holders of such shares shall be entitled to vote separately as a class, the
Corporation shall not: (i) authorize or create, or increase the authorized or
issued amount of, any class or series of shares of Capital Stock of the
Corporation ranking senior to the Series C Preferred Stock with respect to
dividend distributions and distributions upon liquidation, winding-up and
dissolution of the Corporation or reclassify any authorized obligation or
security convertible into or evidencing the right to purchase any such shares of
Capital Stock of the Corporation, or (ii) amend, alter or repeal the provisions
of these Articles Supplementary, whether by merger, consolidation or otherwise
(each an "Event"), so as to materially and adversely affect any right,
preference, privilege or voting power of the shares of Series C Preferred Stock
or the holders thereof; provided, however, with respect to the occurrence of any
Event set forth in (ii) above, so long as the shares of Series C Preferred Stock
remain outstanding with the terms thereof materially unchanged, the occurrence
of any such Event shall not be deemed to materially and adversely affect such
rights, preferences, privileges or voting power of holders of the shares of
Series C Preferred Stock and provided further that (x) any increase in the
amount of the authorized Preferred Stock or the creation or issuance of any
other series of Preferred Stock, or (y) any increase in the amount of authorized
shares of such series, in each case ranking on a parity with or junior to the
Series C Preferred Stock with respect to dividend distributions or the
distribution of assets upon liquidation, dissolution or winding-up of the
Corporation, shall not be deemed to materially and adversely affect such rights,
preferences, privileges or voting powers.
(b) The foregoing voting provisions will not apply if, at or prior to the
time when the act with respect to which such vote would otherwise be required
shall be effected, all outstanding shares of Series C Preferred Stock shall have
been redeemed or called for redemption upon proper notice and sufficient funds
shall have been Set Apart for Payment to effect such redemption.
Section 4. Liquidation, Dissolution or Winding-Up.
If the Corporation shall commence a voluntary case under the Federal
bankruptcy laws or any other applicable Federal or state bankruptcy, insolvency
or similar law, or consent to the entry of any order for relief in an
involuntary case under such law or to the appointment of a receiver, liquidator,
assignee, custodian, trustee, sequestrator (or other similar official) of the
Corporation, or of any substantial part of its property, or make an assignment
for the benefit of its creditors, or admit in writing its inability to pay its
debts generally as they become due, or if a decree or order for relief in
respect of the Corporation shall be entered by a court having jurisdiction in
the premises in an involuntary case under the Federal bankruptcy laws or any
other applicable Federal or state bankruptcy, insolvency or similar law, or
appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator
(or other similar official) of the Corporation or of any substantial part of its
property, or ordering the winding-up or liquidation or its affairs, and on
account of any such event the Corporation shall liquidate,
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dissolve or wind up, or if the Corporation shall otherwise liquidate, dissolve
or wind up, subject to the prior rights of holders of any Senior Stock, but
before any distribution or payment shall be made to holders of Junior Stock, the
holders of shares of Series C Preferred Stock shall be entitled to receive, on a
parity with holders of Parity Stock, out of the assets of the Corporation
legally available for distribution to stockholders, an amount per share of
Series C Preferred Stock equal to the Stated Amount plus all Accrued Dividends
thereon until the date of such voluntary or involuntary liquidation, dissolution
or winding-up of the Corporation. If upon any liquidation, dissolution or
winding-up of the Corporation, the available assets of the Corporation are
insufficient to pay the amount of the liquidating distributions on all
outstanding shares of Series C Preferred Stock and the corresponding amounts
payable on all Parity Stock in the distribution of assets, then the holders of
shares of the Series C Preferred Stock and the Parity Stock shall share equally
and ratably in any distribution of assets of the Corporation first in proportion
to the full liquidating distributions per share to which they would otherwise be
respectively entitled and then in proportion to their respective amounts of
accrued but unpaid dividends. After payment of the full amount set forth above
to which they are entitled, the holders of shares of Series C Preferred Stock
will not be entitled to any further participation in any distribution of assets
of the Corporation and shall not be entitled to any other distribution. For the
purposes of this Section 4, neither the consolidation, merger or other business
combination of the Corporation with or into any other entity or entities nor the
sale of all or substantially all the assets of the Corporation shall be deemed
to be a liquidation, dissolution or winding-up of the Corporation.
Section 5. Call Right.
(a) Except as provided in this Section 5 or Section 7 herein, the
Corporation shall have no right to repurchase any shares of Series C Preferred
Stock prior to the Mandatory Redemption Date. At any time or from time to time
commencing six (6) months following the date which is the later of the third
anniversary of the Issuance Date or the date which is the 91st day following the
repayment in full of the Corporation's 12% Senior Notes due 2006 (the "Call
Trigger Date"), the Corporation shall have the right, at its sole option and
election, to repurchase, out of funds legally available therefor, all, or part,
of the outstanding shares of Series C Preferred Stock by providing written
notice (the "Call Notice") of its intention to repurchase all, or part, of the
outstanding shares of Series C Preferred Stock on the 30th Business Day
following the date of such notice (the "Call Date") at a cash price per share of
Series C Preferred Stock (the "Call Price") equal to the Stated Amount plus all
Accrued Dividends thereon to the date of redemption. If less than all shares of
Series C Preferred Stock outstanding at the time are to be repurchased by the
Corporation pursuant to this Section 5(a), the shares of Series C Preferred
Stock to be repurchased shall be selected pro rata; provided, however, that in
the event that less than ten percent (10%) of the number of shares of Series C
Preferred Stock originally issued are then outstanding, the Corporation shall be
required to repurchase all of such outstanding shares if it elects to repurchase
any shares pursuant to this Section 5(a).
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(b) The Call Notice shall state: (i) the Call Date; (ii) the Call Price;
(iii) the number of such holder's outstanding shares of Series C Preferred Stock
to be repurchased by the Corporation; (iv) the place or places where
certificates for such shares are to be surrendered for payment of the Call
Price, including any procedures applicable to redemptions to be accomplished
through book-entry transfers; and (v) that dividends on the shares of Series C
Preferred Stock to be repurchased shall cease to accumulate as of the Call Date,
or, if such shares are not actually repurchased on such date, the date on which
the shares of Series C Preferred Stock are actually repurchased by the
Corporation.
(c) Upon the Call Date (unless the Corporation shall default in making
payment of the appropriate Call Price), whether or not certificates for shares
which are the subject of the Call Notice have been surrendered for cancellation,
the shares of Series C Preferred Stock to be repurchased shall be deemed to be
no longer outstanding, dividends on such shares of Series C Preferred Stock
shall cease to accumulate and the holders thereof shall cease to be stockholders
with respect to such shares and shall have no rights with respect thereto,
except for the rights to receive the Call Price, without interest.
Section 6. Mandatory Redemption.
(a) Upon the Mandatory Redemption Date, the Corporation shall redeem all of
the outstanding shares of Series C Preferred Stock by paying therefor in cash an
amount per share of Series C Preferred Stock (the "Mandatory Redemption Price")
equal to the sum of the Stated Amount, plus all Accrued Dividends thereon to the
date of redemption.
(b) Notice of redemption of shares of Series C Preferred Stock pursuant to
Section 6(a) shall be sent at least thirty (30) Business Days prior to the
Mandatory Redemption Date, by first class mail, postage prepaid, to each holder
of record of shares of Series C Preferred Stock, at such holder's address as it
appears on the transfer books of the Corporation, provided that the failure to
give such notice or any defect therein or in the mailing thereof shall not
affect the validity of the proceedings except as to the holder to whom the
Corporation has failed to give notice or except as to the holder to whom notice
was defective. Such notice shall state: (i) the Mandatory Redemption Date; (ii)
the Mandatory Redemption Price; (iii) that all outstanding shares of Series C
Preferred Stock are to be redeemed; (iv) the place or places where certificates
for such shares are to be surrendered for payment of the Mandatory Redemption
Price, including any procedures applicable to redemptions to be accomplished
through book-entry transfers; and (v) that dividends on the shares to be
redeemed shall cease to accumulate as of the Mandatory Redemption Date, or, if
such shares are not actually redeemed on such date, the date on which the shares
of Series C Preferred Stock are actually redeemed by the Corporation. The
Corporation shall also publish the fact that it is redeeming shares of Series C
Preferred Stock through a nationally prominent newswire service on or before the
date of mailing any notice of redemption.
(c) Upon the Mandatory Redemption Date (unless the Corporation shall
default in making payment of the appropriate Mandatory Redemption Price),
whether or not certificates
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for shares which are the subject of the Mandatory Redemption Notice have been
surrendered for cancellation, the shares of Series C Preferred Stock to be
repurchased shall be deemed to be no longer outstanding, dividends on such
shares of Series C Preferred Stock shall cease to accumulate and the holders
thereof shall cease to be stockholders with respect to such shares and shall
have no rights with respect thereto, except for the rights to receive the
Mandatory Redemption Price, without interest.
Section 7. Certain Transactions Prohibited.
The Corporation shall not during any Pricing Period or any Conversion
Period, declare a dividend or make a distribution, on the outstanding shares of
Common Stock, in either case, in shares of Common Stock, or effect a
subdivision, combination, consolidation or reclassification of the outstanding
shares of Common Stock into a greater or lesser number of shares of Common
Stock.
Section 8. Conversion Into Common Stock.
(a) Each share of Series C Preferred Stock may, at the option of the holder
thereof, be converted into shares of Common Stock at any time during any
Conversion Period, on the terms and conditions set forth in this Section 8.
Subject to the provisions for adjustment hereinafter set forth, each share of
Series C Preferred Stock shall be convertible in the manner hereinafter set
forth into a number of fully paid and nonassessable shares of Common Stock equal
to the product obtained by multiplying the Applicable Conversion Rate (as
defined below) by the number of shares of Series C Preferred Stock being
converted. The "Applicable Conversion Rate" means the quotient obtained by
dividing the Conversion Value on the date of conversion by the Conversion Price
on the date of conversion.
(b) In case of any capital reorganization or reclassification of
outstanding shares of Common Stock (other than a reclassification covered by
Section 7), or in case of any consolidation, share exchange or merger of the
Corporation with or into another Person, or in case of any sale or conveyance to
another Person of the property of the Corporation as an entirety or
substantially as an entirety (each of the foregoing being referred to as a
"Transaction"), each share of Series C Preferred Stock then outstanding shall
thereafter be convertible into, in lieu of the Common Stock issuable upon such
conversion prior to the consummation of such Transaction, the kind and amount of
shares of stock and other securities and property (including cash) receivable
upon the consummation of such Transaction by a holder of that number of shares
of Common Stock into which one share of Series C Preferred Stock was convertible
immediately prior to such Transaction (including, on a pro rata basis, the cash,
securities or property received by holders of Common Stock in any tender or
exchange offer that is a step in such Transaction). In any such case, if
necessary, appropriate adjustment (as determined in good faith by the Board of
Directors) shall be made in the application of the provisions set forth in this
Section 8 with respect to rights and interests thereafter of the holders of
shares of Series C Preferred Stock to the end that the provisions set forth
herein for the protection of the conversion rights of the Series C Preferred
Stock shall thereafter be applicable, as nearly as reasonably may be, to any
such other shares
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of stock and other securities and property deliverable upon conversion of the
shares of Series C Preferred Stock remaining outstanding (with such adjustments
in the conversion price and number of shares issuable upon conversion and such
other adjustments in the provisions hereof as the Board of Directors shall
determine in good faith to be appropriate). In case securities or property other
than Common Stock shall be issuable or deliverable upon conversion as aforesaid,
then all references in this Section 8 shall be deemed to apply, so far as
appropriate and as nearly as may be, to such other securities or property.
Notwithstanding anything contained herein to the contrary, the Corporation
will not effect any Transaction unless, prior to the consummation thereof, (i)
the Surviving Person (as defined in Section 11 hereof), if other than the
Corporation, shall assume, by written instrument mailed to each record holder of
shares of Series C Preferred Stock, at such holder's address as it appears on
the transfer books of the Corporation, the obligation to deliver to such holder
such cash, property and securities to which, in accordance with the foregoing
provisions, such holder is entitled. Nothing contained in this Section 8(b)
shall limit the rights of holders of the Series C Preferred Stock to convert the
Series C Preferred Stock in connection with the Transaction or to exercise their
rights to require the redemption of the Series C Preferred Stock under Section
6.
(c) The holder of any shares of Series C Preferred Stock may exercise its
right to convert such shares into shares of Common Stock by surrendering for
such purpose to the Corporation, at its principal office or at such other office
or agency maintained by the Corporation for that purpose, a certificate or
certificates representing the shares of Series C Preferred Stock to be converted
duly endorsed to the Corporation in blank accompanied by a written notice
stating that such holder elects to convert all or a specified whole number of
such shares in accordance with the provisions of this Section 8. The Corporation
will pay any and all documentary, stamp or similar issue or transfer tax and any
other taxes that may be payable in respect of any issue or delivery of shares of
Common Stock on conversion of Series C Preferred Stock pursuant hereto. As
promptly as practicable, and in any event within three (3) Business Days after
the surrender of such certificate or certificates and the receipt of such notice
relating thereto and, if applicable, payment of all transfer taxes (or the
demonstration to the satisfaction of the Corporation that such taxes are
inapplicable), the Corporation shall deliver or cause to be delivered (i)
certificates registered in the name of such holder representing the number of
validly issued, fully paid and nonassessable full shares of Common Stock to
which the holder of shares of Series C Preferred Stock so converted shall be
entitled and (ii) if less than the full number of shares of Series C Preferred
Stock evidenced by the surrendered certificate or certificates are being
converted, a new certificate or certificates, of like tenor, for the number of
shares evidenced by such surrendered certificate or certificates less the number
of shares converted. Such conversion shall be deemed to have been made at the
close of business on the date of receipt of such notice and of such surrender of
the certificate or certificates representing the shares of Series C Preferred
Stock to be converted so that the rights of the holder thereof as to the shares
being converted shall cease except for the right to receive shares of Common
Stock, and the person entitled to receive the
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shares of Common Stock shall be treated for all purposes as having become the
record holder of such shares of Common Stock at such time.
(d) In connection with the conversion of any shares of Series C Preferred
Stock, no fractions of shares of Common Stock shall be issued, but in lieu
thereof the Corporation shall pay a cash adjustment in respect of such
fractional interest in an amount equal to such fractional interest multiplied by
the Current Market Price per share of Common Stock on the day on which such
shares of Series C Preferred Stock are deemed to have been converted.
Section 9. Reports as to Adjustments.
Whenever the number of shares of Common Stock into which each share of
Series C Preferred Stock is convertible (or the number of votes to which each
share of Series C Preferred Stock is entitled) is adjusted as provided in
Section 8, the Corporation shall promptly issue a press release stating that the
number of shares of Common Stock into which the shares of Series C Preferred
Stock are convertible has been adjusted and setting forth the new number of
shares of Common Stock (or describing the new stock, securities, cash or other
property) into which each share of Series C Preferred Stock is convertible, as a
result of such adjustment, a brief statement of the facts requiring such
adjustment and the computation thereof, and when such adjustment became
effective.
Section 10. Reacquired Shares.
Any shares of Series C Preferred Stock redeemed, repurchased or otherwise
acquired by the Corporation in any manner whatsoever shall be retired and
canceled promptly after the acquisition thereof. All such shares shall upon
their cancellation become authorized but unissued shares of Preferred Stock of
the Corporation and may be reissued as part of another series of Preferred Stock
of the Corporation subject to the conditions or restrictions on authorizing,
creating or issuing any class or series, or any shares of any class or series,
set forth in Section 3(a).
Section 11. Definitions.
For the purposes of these Articles Supplementary, the following terms shall
have the meanings indicated below:
"Accrued Dividends" to a particular date (the "Applicable Date") means all
dividends accrued but not paid on the Series C Preferred Stock pursuant to
Section 2(a), whether or not earned or declared, accrued to the Applicable Date.
"affiliate" shall have the meaning set forth in Rule 12b-2 promulgated by
the Securities and Exchange Commission under the Exchange Act.
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"Business Day" means any day other than a Saturday, Sunday, or a day on
which commercial banks in the City of New York are authorized or obligated by
law or executive order to close.
"Bylaws" means the bylaws of the Corporation, as in effect from time to
time, including any and all amendments thereto and restatements thereof.
"Call Date" shall have the meaning set forth in Section 5(a) hereof.
"Call Notice" shall have the meaning set forth in Section 5(a) hereof.
"Call Price" shall have the meaning set forth in Section 5(a) hereof.
"Call Trigger Date" shall have the meaning set forth in Section 5(a)
hereof.
"Capital Stock" means (i) in the case of a corporation, corporate stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (iii) in the case of a partnership or limited liability
company, partnership or membership interests (whether general or limited) and
(iv) any other interest or participation that confers on a person the right to
receive a share of the profits and losses of, or distributions of assets of, the
issuing person.
"Charter" means the Amended and Restated Charter of the Corporation as
amended by the Articles of Amendment and Restatement set forth as Exhibit B to
the Purchase Agreement.
"Closing Price" per share of Common Stock (or any other security) on any
date shall be the last sale price, at 4:30 p.m., Eastern Time, or, in case no
such sale takes place on such day, the average of the closing bid and asked
prices, in either case as reported on the NYSE or in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the Nasdaq National Market or American Stock Exchange, as the case
may be, or, if the Common Stock (or such other security) is not listed or
admitted to trading on any national securities exchange, the last quoted sale
price or, if not so quoted, the average of the high bid and low asked prices in
the over-the-counter market, as reported by the National Association of
Securities Dealers, Inc. Automated Quotations System ("NASDAQ") or such other
system then in use, or, if on any such date the Common Stock (or such other
security) is not quoted by any such organization, the average of the closing bid
and asked prices as furnished by a professional market maker making a market in
the Common Stock (or such other security) selected by the Board of Directors and
reasonably acceptable to the Requisite Holders.
"Common Stock" means the common stock, par value $0.01 per share, of the
Corporation.
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"Conversion Period" means (x) the period of ten (10) Business Days
commencing on the sixth Business Day after the Issuance Date and (y) the period
of ten (10) Business Days ending ninety (90) calendar days after the Issuance
Date or the first Business Day thereafter.
"Conversion Price" shall be the Current Market Price for the Pricing
Period, subject to adjustment as provided in Section 8.
"Conversion Value" per share of Series C Preferred Stock shall be an amount
equal to the Stated Amount plus all Accrued Dividends, if any, thereon to the
date of conversion or redemption, as the case may be.
"Current Market Price" per share of Common Stock (or any other security) on
any date shall be the average of the Closing Prices of a share of Common Stock
(or such other security) for the ten consecutive Trading Days before the date in
question. If on any such Trading Day the Common Stock (or such other security)
is not quoted by any organization referred to in the definition of Closing
Price, the Current Market Price of the Common Stock (or such other security) on
such day shall be determined by an investment banking firm of national
reputation familiar with the valuation of companies substantially similar to the
Corporation (the "Investment Banking Firm") appointed by the Board of Directors.
"Dividend Payment Date" means the following dates: (i) the date that is
three months after the Issuance Date; (ii) the date that is six months after the
Issuance Date; (iii) the date that is nine months after the Issuance Date; (iv)
the date that is the first anniversary of the Issuance Date; and the
anniversaries of the foregoing dates, provided that no Dividend Payment Date
shall occur with respect to shares of Series C Preferred Stock which have
actually been redeemed or repurchased by the Corporation.
"Dividend Period" means the period from the Issuance Date to the first
Dividend Payment Date (but without including such Dividend Payment Date) and,
thereafter, each Dividend Payment Date to the following Dividend Payment Date
(but without including such later Dividend Payment Date).
"Event" shall have the meaning set forth in Section 3(a) hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Issuance Date" means the original date of issuance of Series C Preferred
Stock to the initial holders thereof.
"Junior Stock" means all classes of Common Stock of the Corporation and
each other class of Capital Stock of the Corporation or series of Preferred
Stock of the Corporation currently existing or hereafter created the terms of
which do not expressly provide that it ranks senior to, or on a parity with, the
Series C Preferred Stock as to dividend distributions and distributions upon
liquidation, winding-up and dissolution of the Corporation.
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"Mandatory Redemption Date" shall mean the date which is the tenth
anniversary of the Issuance Date.
"NYSE" means the New York Stock Exchange, Inc.
"Parity Stock" means any class of Capital Stock of the Corporation or
series of Preferred Stock of the Corporation hereafter created that has been
approved by holders of Series C Preferred Stock in accordance with Section 3(a)
hereof, the terms of which expressly provide that such class or series will rank
on a parity with the Series C Preferred Stock as to dividend distributions and
distributions upon liquidation, winding-up and dissolution.
"Person" means an individual, partnership, corporation, limited liability
company or partnership, unincorporated organization, trust or joint venture, or
a governmental agency or political subdivision thereof, or other entity of any
kind.
"Preferred Stock" means the preferred stock, $0.01 par value per share, of
the Corporation.
"Pricing Period" means the ten (10) Trading Days ending one day prior to
the date a holder of Series C Preferred Stock converts his or her shares during
a Conversion Period.
"Purchase Agreement" means the Securities Purchase Agreement, dated as of
April 5, 2000, by and among the Corporation, Corrections Corporation of America,
a Tennessee corporation, Prison Management Services, Inc., a Tennessee
corporation, and Juvenile and Jail Facility Management Services, Inc., a
Tennessee corporation, on the one hand, and Pacific Life Insurance Company, a
stock company organized under the laws of California, on the other hand.
"Requisite Holders" shall have the meaning set forth in Section 3(a)
hereof.
"Rights Offering" shall have the meaning set forth in the preamble to the
Purchase Agreement.
"Senior Stock" means each other class of Capital Stock of the Corporation
or series of Preferred Stock of the Corporation hereafter created that has been
approved by the holders of Series C Preferred Stock in accordance with Section
3(a) hereof and the terms of which expressly provide that such class or series
will rank senior to the Series C Preferred Stock as to dividend distributions
and distributions upon liquidation, winding-up and dissolution of the
Corporation. The existing Series A Preferred Stock of the Corporation shall
constitute Senior Stock of the Corporation ranking senior to the Series C
Preferred Stock as to dividend distributions and distributions upon liquidation,
winding-up and dissolution, and the Series B Preferred Stock of the Corporation
shall also constitute Senior Stock of the Corporation ranking senior to the
Series C Preferred Stock as to dividend distributions and distributions upon
liquidation, winding-up and dissolution.
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"Series A Preferred Stock" means the 8% Series A Cumulative Preferred
Stock, $0.01 par value per share, of the Corporation, the terms of which are set
forth in the Charter of the Corporation.
"Series B Preferred Stock" means the Series B Cumulative Convertible
Preferred Stock of the Corporation, $0.01 par value per share, the terms of
which are set forth in Articles Supplementary to the Charter of the Corporation.
"Series C Preferred Stock" means the Series C Cumulative Convertible
Preferred Stock of the Corporation, $0.01 par value per share, the terms of
which are set forth in these Articles Supplementary.
"Set Apart for Payment" means the Corporation shall have irrevocably
deposited with a bank or trust company doing business in the Borough of
Manhattan, the City of New York, and having a capital and surplus of at least
$1,000,000,000, in trust for the exclusive benefit of the holders of shares of
Series C Preferred Stock, funds sufficient to satisfy the Corporation's payment
obligation.
"Stated Amount" means $25.00 per share of Series C Preferred Stock.
"Surviving Person" means the continuing or surviving Person in a merger,
consolidation, other corporate combination or the transfer of all or a
substantial part of the properties and assets of the Corporation, in connection
with which the Series C Preferred Stock or Common Stock of the Corporation is
exchanged, converted or reinstated into the securities of any other Person or
cash or any other property; provided, however, if such Surviving Person is a
direct or indirect Subsidiary of a Person, the parent entity also shall be
deemed to be a Surviving Person.
"Trading Day" means a day on which the principal national securities
exchange on which the Common Stock (or any other security) is quoted, listed or
admitted to trading is open for the transaction of business or, if the Common
Stock (or such other security) is not quoted, listed or admitted to trading on
any national securities exchange (including the NYSE), any day other than a
Saturday, Sunday, or a day on which banking institutions in the State of New
York are authorized or obligated by law or executive order to close.
Section 12. REIT Status.
Nothing contained in these Articles Supplementary to the Charter shall
limit the authority of the Board of Directors to take such other action as it
deems necessary or advisable to protect the Corporation and the interests of the
stockholders by the preservation of the Corporation's qualification as a real
estate investment trust for Federal income tax purposes for the taxable year
ended December 31, 1999, including without limitation the payment of dividends
in the form of Parity Stock or Junior Stock.
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Section 13. References.
References to numbered sections herein refer to sections of these Articles
Supplementary, unless otherwise stated.
THIRD: The Series C Preferred Stock has been classified by the Board of
Directors of the Corporation under the authority contained in the Charter of the
Corporation and the Articles Supplementary have been duly approved by the Board
of Directors of the Corporation.
FOURTH: The undersigned President of the Corporation acknowledges these
Articles Supplementary to be the act of the Corporation and further, as to all
matters or facts required to be verified under oath, the undersigned President
acknowledges, that to the best of his knowledge, information and belief, the
matters and facts set forth herein are true in all material respects and that
this statement is made under the penalties for perjury.
IN WITNESS WHEREOF, the Corporation has caused these Articles to be
executed under seal in its name and on its behalf by its President and attested
to by its Secretary on this ______ day of _____________, 2000.
ATTEST: CORRECTIONS CORPORATION OF
AMERICA
By: By: (SEAL)
----------------------- ------------------------
Secretary President
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Exhibit E
ARTICLES
SUPPLEMENTARY
CORRECTIONS CORPORATION OF AMERICA
SERIES B CUMULATIVE CONVERTIBLE PREFERRED STOCK
(PAR VALUE $0.01 PER SHARE)
Corrections Corporation of America, a Maryland corporation (the
"Corporation"), hereby certifies to the State Department of Assessments and
Taxation of the State of Maryland that:
FIRST: Pursuant to authority granted to the Board of Directors of the
Corporation (the "Board of Directors") by Article V of the charter of the
Corporation (the "Charter"), the Board of Directors has classified 8,000,000
shares (the "Shares") of Preferred Stock, as defined in the Charter, as a
separate series of shares of Preferred Stock, designated as Series B Cumulative
Convertible Preferred Stock, $0.01 par value per share (the "Series B Preferred
Stock").
SECOND: The terms of the Series B Preferred Stock, including the
preferences, conversions and other rights, voting powers, restrictions,
limitations as to dividends and other distributions, qualifications, and terms
and conditions of redemption, as fixed by the Board of Directors, are as
follows:
Section 1. Designation and Amount; Rank.
(a) The shares of such series shall be designated as the "Series B
Cumulative Convertible Preferred Stock" (the "Series B Preferred Stock"), and
the number of shares constituting such series shall be 8,000,000 shares. Section
14 sets forth the definitions of certain terms used in these Articles
Supplementary.
(b) The Series B Preferred Stock shall, with respect to dividend
distributions and distributions upon liquidation, winding-up and dissolution of
the Corporation, rank: (i) senior (to the extent set forth herein) to all Junior
Stock; (ii) on a parity with all Parity Stock; provided that any such Parity
Stock (other than the Series A Preferred Stock and the Series C Preferred Stock)
that is not approved by the holders of the Series B Preferred Stock in
accordance with Section 3(b) hereof shall be deemed to be Junior Stock and not
Parity Stock; and (iii) junior to all Senior Stock, provided, however, that any
such Senior Stock that is not approved by the holders of the Series B Preferred
Stock in accordance with Section 3(b) hereof shall be deemed to be Junior Stock
and not Senior Stock.
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Section 2. Dividends and Distributions.
(a) Subject to the preferential rights of all Senior Stock, the holders of
shares of Series B Preferred Stock shall be entitled to receive, when and as
authorized and declared by the Board of Directors, out of funds legally
available for the payment of dividends: (i) commencing on the first Dividend
Payment Date following the Issuance Date and continuing through the third
anniversary of the Issuance Date, (A) cumulative preferential dividends payable
in cash on each such Dividend Payment Date at a rate of six percent (6%) per
annum of the Stated Amount of each share of the then outstanding Series B
Preferred Stock, and (B) cumulative preferential dividends payable in additional
shares of Series B Preferred Stock on each such Dividend Payment Date at a rate
of four percent (4%) per annum of the Stated Amount of each share of the then
outstanding Series B Preferred Stock; and (ii) commencing with the First
Dividend Period occurring after the third anniversary of the Issuance Date,
cumulative preferential dividends payable entirely in cash on each such Dividend
Payment Date at a rate of ten percent (10%) per annum of the Stated Amount of
each share of the then outstanding Series B Preferred Stock. Dividends on shares
of Series B Preferred Stock shall accrue and be cumulative from the Issuance
Date. Dividends shall be payable quarterly in arrears when and as declared by
the Board of Directors on each Dividend Payment Date (or, if such Dividend
Payment Date is not a Business Day, the first (1st) Business Day following the
Dividend Payment Date) in respect of the Dividend Period ending on such Dividend
Payment Date (but without including such Dividend Payment Date) commencing on
the first Dividend Payment Date and continuing for so long as the Series B
Preferred Stock is outstanding. If cash dividends on the Series B Preferred
Stock are in arrears and unpaid for a period of 60 days or more (a "Dividend
Default"), then dividends shall accrue at the rate of sixteen percent (16%) per
annum of the Stated Amount of each share of the then outstanding Series B
Preferred Stock, compounded quarterly (the "Default Rate") from the last
Dividend Payment Date on which cash dividends were to be paid in full until such
time as all cash dividends in arrears are once again paid in full with respect
to the current quarterly dividend. Any reference herein to "cumulative
dividends" or "Accrued Dividends" or similar phrases means that such dividends
are fully cumulative and accumulate and accrue on a daily basis (computed on the
basis of a 360-day year of twelve 30-day months), whether or not they have been
declared and whether or not there are profits, surplus or other funds of the
Corporation legally available for the payment of dividends. All dividends
payable in additional shares of Series B Preferred Stock shall be paid through
the issuance of additional shares of Series B Preferred Stock (including
fractional shares) at the Stated Amount.
Notwithstanding anything contained herein to the contrary, no dividends on
shares of Series B Preferred Stock shall be declared by the Board of Directors
or paid or Set Apart for Payment by the Corporation at such time as, and to the
extent that, the terms and provisions of any agreement to which the Corporation
is a party, including any agreement relating to its
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indebtedness or any provisions of the Corporation's Charter relating to any
Senior Stock, prohibit such declaration, payment or setting apart for payment or
provide that such declaration, payment or setting apart for payment would
constitute a breach thereof or a default thereunder, or if such declaration or
payment shall be restricted or prohibited by law.
(b) In case the Corporation shall at any time or from time to time declare,
order, pay or make a dividend or other distribution (including, without
limitation, any distribution of stock or other securities or property or rights
or warrants to subscribe for securities of the Corporation or any of its
Subsidiaries by way of dividend or spin-off) on the Common Stock (other than:
(i) any dividend or distribution of shares of Common Stock covered by Section
8(b)(i); (ii) the Rights Offering or any issuance of rights pursuant to the
Rights Offering or any stockholder rights agreement of the Corporation; (iii)
any dividend or distribution on the Common Stock for which the record date fixed
by the Corporation is a date which is prior to the Issuance Date; or (iv) the
distribution of shares of the Series C Preferred Stock), then, and in each such
case (a "Triggering Distribution"), the holders of shares of Series B Preferred
Stock shall be entitled to receive from the Corporation, with respect to each
share of Series B Preferred Stock held, in addition to the dividends payable
under Section 2(a), the same dividend or distribution received by a holder of
the number of shares of Common Stock into which such share of Series B Preferred
Stock is convertible on the record date for such dividend or distribution, after
giving effect to the contemporaneous issuance of any additional shares of Series
B Preferred Stock as described in Section 2(a) above with respect to Accrued
Dividends. Any such dividend or distribution shall be declared, ordered, paid or
made on the Series B Preferred Stock at the same time such dividend or
distribution is declared, ordered, paid or made on the Common Stock and shall be
in addition to any dividends payable to the holders of Series B Preferred Stock
under Section 2(a) hereof.
(c) For so long as any shares of Series B Preferred Stock are outstanding,
no full dividends shall be declared by the Board of Directors or paid or Set
Apart for Payment by the Corporation on any Parity Stock for any period unless
the Accrued Dividends have been or contemporaneously are declared and paid in
full, or declared and, if payable in cash, a sum in cash is Set Apart for
Payment. If the Accrued Dividends and any accrued dividends with respect to
Parity Stock are not so paid (or a sum sufficient for such payment is not so Set
Apart for Payment), all dividends declared and paid upon shares of the Series B
Preferred Stock and any other Parity Stock shall be declared pro rata so that
the amount of dividends declared and paid per share on the Series B Preferred
Stock and such Parity Stock shall in all cases bear to each other the same ratio
that the Accrued Dividends per share on the Series B Preferred Stock and the
accrued dividends per share on such Parity Stock bear to each other.
(d) For so long as any shares of Series B Preferred Stock are outstanding,
the Corporation shall not declare, pay or Set Apart for Payment any dividend on
any of the Junior Stock (other than dividends in Junior Stock to the holders of
Junior Stock), or make any
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payment on account of, or Set Apart for Payment money for a sinking or other
similar fund for, the purchase, redemption or other retirement of, any of the
Junior Stock or any warrants, rights, calls or options exercisable for or
convertible into any of the Junior Stock whether in cash, obligations or shares
of the Corporation or other property (other than in exchange for Junior Stock),
and shall not permit any corporation or other entity directly or indirectly
controlled by the Corporation to purchase or redeem any of the Junior Stock or
any such warrants, rights, calls or options (other than in exchange for Junior
Stock) unless the Accrued Dividends on the Series B Preferred Stock for all
Dividend Periods ended on or prior to the date of such payment in respect of
Junior Stock have been or contemporaneously are paid in full or declared and, if
payable in cash, a sum in cash has been Set Apart for Payment.
(e) For so long as any shares of Series B Preferred Stock are outstanding,
the Corporation shall not (except with respect to dividends as permitted by
Section 2(c)) make any payment on account of, or Set Apart for Payment money for
a sinking or other similar fund for, the purchase, redemption or other
retirement of, any shares of the Parity Stock or any warrants, rights, calls or
options exercisable for or convertible into any shares of the Parity Stock, and
shall not permit any corporation or other entity directly or indirectly
controlled by the Corporation to purchase or redeem any shares of the Parity
Stock or any such warrants, rights, calls or options unless the Accrued
Dividends on the Series B Preferred Stock for all Dividend Periods ended on or
prior to the date of such payment in respect of Parity Stock have been or
contemporaneously are paid in full.
(f) Notwithstanding anything contained herein to the contrary, dividends on
the Series B Preferred Stock, if not paid on a Series B Dividend Payment Date,
will accrue whether or not dividends are declared for such Series B Dividend
Payment Date, whether or not the Corporation has earnings and whether or not
there are profits, surplus or other funds legally available for the payment of
such dividends. Any dividend payment made on shares of Series B Preferred Stock
shall first be credited against the current dividend and then against the
earliest Accrued Dividend.
Section 3. Voting Rights.
In addition to any voting rights provided elsewhere herein, and any voting
rights provided by law, and subject to the provisions of the Charter of the
Corporation, the holders of shares of Series B Preferred Stock shall have the
following voting rights:
(a) For so long as any shares of Series B Preferred Stock are outstanding,
each share of Series B Preferred Stock shall entitle the holder thereof to vote
on all matters voted on by holders of the Capital Stock of the Corporation of
the class into which such share of Series B Preferred Stock is convertible,
voting together as a single class with the other shares entitled to vote, at all
meetings of the stockholders of the Corporation. With respect to any
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such vote, each share of Series B Preferred Stock shall entitle the holder
thereof to cast the number of votes equal to the number of votes which could be
cast in such vote by a holder of the shares of Capital Stock of the Corporation
of the class into which such share of Series B Preferred Stock is convertible on
the record date for such vote.
(b) Notwithstanding any provision of Maryland law requiring that any action
of the holders of shares of the Series B Preferred Stock be taken or authorized
by the affirmative vote of the holders of a designated proportion greater than a
majority of such shares or votes entitled to be cast by such holders, the action
shall be effective and valid if taken or authorized by the affirmative vote of
the holders of a majority of the total number of shares of Series B Preferred
Stock outstanding and entitled to vote thereon (the "Requisite Holders"). For so
long as any shares of Series B Preferred Stock are outstanding, without first
obtaining the approval of the Requisite Holders, voting as a single class, given
in person or by proxy at a meeting at which the holders of such shares shall be
entitled to vote separately as a class, the Corporation shall not: (i) alter or
change the rights, preferences or privileges of the Series B Preferred Stock as
set forth in these Articles Supplementary or the Series C Preferred Stock as set
forth in the Articles Supplementary designating the rights, preferences or
privileges of the Series C Preferred Stock so as to affect such shares of Series
B Preferred Stock adversely; or (ii) amend, modify or waive any provision of the
Charter or the Amended and Restated Bylaws of the Corporation so as to affect
such shares of Series B Preferred Stock adversely.
(c) Until the Termination Date, without first obtaining the approval of the
Requisite Holders, voting as a single class, given in person or by proxy at a
meeting at which the holders of such shares shall be entitled to vote separately
as a class, or, if approval of holders of shares of the Series B Preferred Stock
is not required by the MGCL, by written consent of the Requisite Holders, the
Corporation shall not: (i) increase or decrease the authorized or issued number
of shares of Series B Preferred Stock or Series C Preferred Stock of the
Corporation (other than shares issued to holders of Series B Preferred Stock or
Series C Preferred Stock, shares issued pursuant to the terms of the Series B
Preferred Stock or Series C Preferred Stock, or pursuant to the Rights
Offering); (ii) create or authorize, or reclassify any authorized Capital Stock
of the Corporation into any new class or series, or any shares of any class or
series, of Capital Stock of the Corporation; or (iii) enter into or authorize
any transaction constituting a Change of Control.
Section 4. Liquidation, Dissolution or Winding-Up.
(a) If the Corporation shall commence a voluntary case under the Federal
bankruptcy laws or any other applicable Federal or state bankruptcy, insolvency
or similar law, or consent to the entry of any order for relief in an
involuntary case under such law or to the appointment of a receiver, liquidator,
assignee, custodian, trustee, sequestrator (or other similar official) of the
Corporation, or of any substantial part of its property, or make an
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assignment for the benefit of its creditors, or admit in writing its inability
to pay its debts generally as they become due, or if a decree or order for
relief in respect of the Corporation shall be entered by a court having
jurisdiction in the premises in an involuntary case under the Federal bankruptcy
laws or any other applicable Federal or state bankruptcy, insolvency or similar
law, or appointing a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or other similar official) of the Corporation or of any
substantial part of its property, or ordering the winding-up or liquidation or
its affairs, and on account of any such event the Corporation shall liquidate,
dissolve or wind up, or if the Corporation shall otherwise liquidate, dissolve
or wind up, subject to the prior rights of holders of any Senior Stock, but
before any distribution or payment shall be made to holders of Junior Stock, the
holders of shares of Series B Preferred Stock shall be entitled to receive, on a
parity with holders of Parity Stock, out of the assets of the Corporation
legally available for distribution to stockholders, the greater of: (i) the
Series B Liquidation Preference of the shares of Series B Preferred Stock held
by the holder; or (ii) the Fair Market Value of the cash, securities and other
property that such holder of the Series B Preferred Stock would have received
had they converted their Series B Preferred Stock (including for such purposes
any shares of Series B Preferred Stock issuable in respect of Accrued Dividends)
into shares of Common Stock immediately prior to such liquidation, dissolution
or winding-up, plus Accrued Dividends payable in cash to the extent not
otherwise reflected pursuant to the preceding parenthetical phrase of this
clause (ii) (including for such purposes any shares of Series B Preferred Stock
issuable in respect of Accrued Dividends, through the date of such liquidation,
dissolution or winding-up). If upon any liquidation, dissolution or winding-up
of the Corporation, the available assets of the Corporation are insufficient to
pay the amount of the liquidating distributions on all outstanding shares of
Series B Preferred Stock and the corresponding amounts payable on all Parity
Stock in the distribution of assets, then the holders of shares of the Series B
Preferred Stock and the Parity Stock shall share equally and ratably in any
distribution of assets of the Corporation first in proportion to the full
liquidating distributions per share to which they would otherwise be
respectively entitled and then in proportion to their respective amounts of
accrued but unpaid dividends. After payment of the full amount of the greater of
the amounts set forth in clause (i) or (ii) above to which they are entitled,
the holders of shares of Series B Preferred Stock will not be entitled to any
further participation in any distribution of assets of the Corporation and shall
not be entitled to any other distribution. For the purposes of this Section 4,
neither the consolidation, merger or other business combination of the
Corporation with or into any other entity or entities nor the sale of all or
substantially all the assets of the Corporation shall be deemed to be a
liquidation, dissolution or winding-up of the Corporation.
Section 5. Put Right.
(a) At any time following the date which is the later of the ninth
anniversary of the Issuance Date or the date which is the 91st day following the
repayment in full of the
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Corporation's 12% Senior Notes due 2006 (the "Put Trigger Date"), a holder may
give written notice (the "Put Notice") to the Corporation of its intention to
sell all, but not less than all, of its Series B Preferred Stock to the
Corporation on the 30th Business Day following the date of such notice (the "Put
Date") at a cash price per share of Series B Preferred Stock (the "Put Price")
equal to the Series B Preferred Liquidation Preference. The holders of shares of
Series B Preferred Stock shall be permitted to convert their Series B Preferred
Stock into Common Stock at any time prior to the close of business on the last
Business Day immediately preceding the later of the Put Date or, if not actually
repurchased by the Corporation on the Put Date, the date on which the Series B
Preferred Stock is actually repurchased by the Corporation.
(b) The Put Notice shall state (i) the Put Date and (ii) the number of
outstanding shares of Series B Preferred Stock to be redeemed. Promptly
following receipt of the Put Notice, the Corporation shall provide written
notice to the holder setting forth (i) the Put Price, (ii) the place or places
where certificates for such shares of Series B Preferred Stock are to be
surrendered for payment of the Put Price, including any procedures applicable to
repurchases to be accomplished through book entry transfers and (iii) that
dividends on the shares of Series B Preferred Stock to be repurchased shall
cease to accumulate as of the Put Date.
(c) Upon the Put Date (unless the Corporation shall default in making
payment of the appropriate Put Price), whether or not certificates for shares
which are the subject of the Put Notice have been surrendered for cancellation,
the shares of Series B Preferred Stock to be redeemed shall be deemed to be no
longer outstanding, dividends on the shares of Series B Preferred Stock shall
cease to accumulate and the holders thereof shall cease to be stockholders with
respect to such shares and shall have no rights with respect thereto, except for
the rights to receive the Put Price but without interest, and, up to the later
of (i) the close of business on the first (1st) Business Day preceding the Put
Date or (ii) the date on which the shares of Series B Preferred Stock are
actually repurchased, the right to convert such shares pursuant to Section 8
hereof.
Section 6. Mandatory Redemption.
(a) Upon the Mandatory Redemption Date, the Corporation shall redeem all of
the outstanding shares of Series B Preferred Stock (including for such purposes
any shares of Series B Preferred Stock issued as dividends or issuable in
respect of Accrued Dividends) by paying therefor in cash an amount per share of
Series B Preferred Stock (the "Mandatory Redemption Price") equal to the sum of
the Stated Amount, plus all Accrued Dividends thereon to the date of redemption.
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(b) Notice of redemption of shares of Series B Preferred Stock pursuant to
Section 6(a) shall be sent at least thirty (30) Business Days prior to the
Mandatory Redemption Date, by first class mail, postage prepaid, to each holder
of record of shares of Series B Preferred Stock, at such holder's address as it
appears on the transfer books of the Corporation, provided that the failure to
give such notice or any defect therein or in the mailing thereof shall not
affect the validity of the proceedings except as to the holder to whom the
Corporation has failed to give notice or except as to the holder to whom notice
was defective. Such notice shall state: (i) the Mandatory Redemption Date; (ii)
the Mandatory Redemption Price; (iii) that all outstanding shares of Series B
Preferred Stock are to be redeemed (including for such purposes any shares of
Series B Preferred Stock issuable in respect of Accrued Dividends); (iv) the
place or places where certificates for such shares are to be surrendered for
payment of the Mandatory Redemption Price, including any procedures applicable
to redemptions to be accomplished through book-entry transfers; and (v) that
dividends on the shares to be redeemed shall cease to accumulate as of the
Mandatory Redemption Date, or, if such shares are not actually redeemed on such
date, the date on which the shares of Series B Preferred Stock are actually
redeemed by the Corporation. The Corporation shall also publish the fact that it
is redeeming shares of Series B Preferred Stock through a nationally prominent
newswire service on or before the date of mailing any notice of redemption.
(c) Upon the Mandatory Redemption Date (unless the Corporation shall
default in making payment of the appropriate Mandatory Redemption Price),
whether or not certificates for shares which are the subject of the Mandatory
Redemption Notice have been surrendered for cancellation, the shares of Series B
Preferred Stock to be repurchased shall be deemed to be no longer outstanding,
dividends on such shares of Series B Preferred Stock shall cease to accumulate
and the holders thereof shall cease to be stockholders with respect to such
shares and shall have no rights with respect thereto, except for the rights to
receive the Mandatory Redemption Price, without interest.
Section 7. Offer to Purchase Upon a Change of Control.
(a) In the event there occurs a Change of Control, the Corporation shall,
subject to legal availability of funds therefor, offer to redeem all of the
outstanding shares of the Series B Preferred Stock held by a holder for an
amount in cash equal to the greater of: (i) the Series B Liquidation Preference
of the shares of Series B Preferred Stock held by the holder; and (ii) in all
other cases, the Fair Market Value of the cash, securities and other property
that such holder of the Series B Preferred Stock would have received had they
converted their Series B Preferred Stock (including for such purposes any shares
of Series B Preferred Stock issuable in respect of Accrued Dividends) into
shares of Common Stock immediately prior to such Change of Control, plus Accrued
Dividends payable in cash to the extent not otherwise reflected pursuant to the
parenthetical phrase of this clause (ii) (the greatest of (i) and (ii)
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above being referred to as the "Change of Control Redemption Price"). In the
event of a Change of Control, each holder of Series B Preferred Stock shall have
the right (but not the obligation) to require the Corporation to redeem any or
all of the Series B Preferred Stock held by such holder for an amount equal to
the Change of Control Redemption Price. Any payments to holders of Series B
Preferred Stock exercising the right to redeem shares of Series B Preferred
Stock pursuant to this Section 7(a) shall be in preference to holders of Junior
Stock.
(b) Each holder of Series B Preferred Stock shall also be permitted, until
the fifth (5th) Business Day following a Change of Control, to convert the
shares of Series B Preferred Stock held by such holder into shares of Common
Stock in accordance with Section 8 below; provided that any shares of Common
Stock issuable upon conversion of any Series B Preferred Stock converted
pursuant to this sentence after a Change of Control has occurred shall be
entitled to receive the same amount of cash, securities and other property in
connection with such Change of Control as the Common Stock outstanding prior to
the Change of Control. In the event that any holder does not elect to convert or
redeem such holder's shares of Series B Preferred Stock pursuant to the
foregoing sentence, such holder shall retain any rights it has to convert or
redeem its shares of Series B Preferred Stock in connection with any subsequent
Change of Control.
(c) Within five (5) Business Days following a Change of Control event
requiring the Corporation to offer to redeem shares of Series B Preferred Stock
pursuant to Section 7(a) herein, the Corporation shall send notice of such offer
of redemption by first class mail, postage prepaid, to each holder of record of
shares of Series B Preferred Stock, at such holder's address as it appears on
the transfer books of the Corporation; provided, however, the failure to give
such notice or any defect therein or in the mailing thereof shall not affect the
validity of the offer except as to the holder to whom the Corporation has failed
to give notice or except as to the holder to whom notice was defective. Such
notice shall state: (i) the Change of Control Redemption Price; (ii) the place
or places where certificates for such shares are to be surrendered for payment
of the Change of Control Redemption Price, including any procedures applicable
to redemptions to be accomplished through book-entry transfers; and (iii) that
dividends on the shares to be redeemed shall cease to accumulate upon the date
fixed for redemption by the Corporation (the "Change of Control Redemption
Date") unless such shares are not actually redeemed on such date. The
Corporation shall publish the fact that it is offering to redeem shares of
Series B Preferred Stock through a nationally prominent newswire service on or
before the date of mailing any notice of right of redemption. In the event a
record holder of shares of Series B Preferred Stock shall elect to require the
Corporation to redeem shares of Series B Preferred Stock pursuant to this
Section 7, such holder shall deliver within twenty (20) Business Days of the
mailing to it of the Corporation's notice described in this Section 7(c), a
written notice to the Corporation so stating, specifying
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the number of shares to be redeemed pursuant to this Section 7. The Corporation
shall, in accordance with the terms hereof, redeem the number of shares so
specified on the Change of Control Redemption Date. Failure of the Corporation
to give any notice required by this Section 7(c), or the formal insufficiency of
any such notice, shall not prejudice the rights of any holders of shares of
Series B Preferred Stock to cause the Corporation to redeem shares held by them.
Notwithstanding the foregoing, the Board of Directors of the Corporation may
modify any offer pursuant to this Section 7(c) to the extent necessary to comply
with the Exchange Act and the rules and regulations thereunder.
Section 8. Conversion Into Common Stock.
(a) Each share of Series B Preferred Stock may, at the option of the holder
thereof, be converted into shares of Common Stock at any time, whether or not
the Corporation has given a notice of an offer to redeem under Section 7, on the
terms and conditions set forth in this Section 8. Subject to the provisions for
adjustment hereinafter set forth, each share of Series B Preferred Stock shall
be convertible in the manner hereinafter set forth into a number of fully paid
and nonassessable shares of Common Stock equal to the product obtained by
multiplying the Applicable Conversion Rate (as defined below) by the number of
shares of Series B Preferred Stock being converted. The "Applicable Conversion
Rate" means the quotient obtained by dividing the Conversion Value on the date
of conversion by the Conversion Price, as adjusted pursuant to Section 8(b), on
the date of conversion.
(b) The Conversion Price shall be subject to adjustment from time to time
as follows:
(i) In case the Corporation shall at any time or from time to time
after the Issuance Date declare a dividend, or make a distribution, on the
outstanding shares of Common Stock, in either case, in shares of Common Stock,
or effect a subdivision, combination, consolidation or reclassification of the
outstanding shares of Common Stock into a greater or lesser number of shares of
Common Stock, then, and in each such case, the Conversion Price in effect
immediately prior to such event or the record date therefor, whichever is
earlier, shall be adjusted by multiplying such Conversion Price by a fraction,
the numerator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event and the denominator of which is the
number of shares of Common Stock outstanding immediately after such event
(provided, however, that the distribution of shares of the Series C Preferred
Stock or the distribution of rights pursuant to Rights Offering or any
stockholder rights agreement of the Corporation shall not give rise to such an
event of adjustment). An adjustment made pursuant to this Section 8(b)(i) shall
become effective: (x) in the case of any such dividend or distribution,
immediately after the close of business on the record date for the determination
of holders of shares of Common Stock entitled to receive such dividend or
distribution; or (y) in the case of any such
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subdivision, reclassification, consolidation or combination, at the close of
business on the day upon which such corporate action becomes effective.
(ii) In case the Corporation shall issue (other than upon the exercise
of options, rights or convertible securities) shares of Common Stock (or
options, rights, warrants or other securities convertible into or exchangeable
for shares of Common Stock) at a price per share (or having an exercise or
conversion price per share) less than the Current Market Price as of the
Business Day immediately preceding the Measurement Date, other than (A) the
initial issuance of the Series C Preferred Stock, (B) issuances in a private
placement of securities, other than to an affiliate of the Corporation, at a
cash price for the securities sold in such private placement (and the underlying
Common Stock, as applicable) of not less than 95% of the Current Market Price
thereof, (C) in a transaction to which Section 2(a), 2(b) or 8(b)(i) applies,
(D) pursuant to options, deferred shares or other securities under any Existing
Benefit Plan or any employee or director benefit plan or program of the
Corporation approved by the Board of Directors of the Corporation or shares of
Common Stock issued upon the exercise thereof, (E) pursuant to the conversion of
the Series B Preferred Stock or the Series C Preferred or as dividends on the
Series A Preferred Stock, the Series B Preferred Stock or the Series C Preferred
Stock, (F) pursuant to the conversion of all convertible securities previously
issued by the Corporation and outstanding on the Issuance Date, or (G) pursuant
to the issuance of Common Stock in connection with the Rights Offering (the
issuances under clauses (A), (B), (C), (D), (E), (F) and (G) being referred to
as "Excluded Issuances"), then, and in each such case, the Conversion Price in
effect immediately prior to the Measurement Date shall be reduced so as to be
equal to an amount determined by multiplying such Conversion Price by a fraction
of which the numerator shall be the number of shares of Common Stock outstanding
at the close of business on the Measurement Date plus the number of shares of
Common Stock (or the number of shares of Common Stock issuable upon the
conversion, exchange or exercise of such options, rights, warrants or other
securities convertible into or exchangeable for shares of Common Stock) which
the aggregate consideration receivable by the Corporation in connection with
such issuance would purchase at such Current Market Price and the denominator
shall be the number of shares of Common Stock outstanding at the close of
business on the Measurement Date plus the number of shares of Common Stock (or
the number of shares of Common Stock issuable upon the conversion, exchange or
exercise of such options, rights, warrants or other securities convertible into
or exchangeable for shares of Common Stock) so issued. For purposes of this
Section 8(b)(ii), the aggregate consideration receivable by the Corporation in
connection with the issuance of shares of Common Stock or of options, rights,
warrants or other convertible securities shall be deemed to be equal to the sum
of the gross offering price (before deduction of customary underwriting
discounts or commissions and expenses payable to third parties) of all such
securities plus the minimum aggregate amount, if any, payable upon conversion or
exercise of any such options, rights, warrants or other convertible securities
into shares of Common
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Stock, less any original issue discount, premiums and other similar incentives
which have the effect of reducing the effective price per share. For purposes of
this Section 8(b)(ii), such adjustment shall become effective immediately prior
to the opening of business on the Business Day immediately following the
Measurement Date.
(iii) To the extent that the Companies' (as such term is defined in the
Purchase Agreement) indemnification obligations pursuant to Section 11.2(c) of
the Purchase Agreement are to be satisfied in the form of a Conversion Price
adjustment and not in cash, then the Conversion Price (after giving effect to
all previous adjustments) shall be reduced by the amount of any such Loss (as
such term is defined in the Purchase Agreement), other than a Loss covered by
Section 8(b)(iv) hereof, divided by the number of shares of Common Stock then
issuable upon conversion of the Series B Preferred Stock.
(iv) To the extent that the Corporation shall, after the Issuance Date,
become obligated to make any Stockholder Litigation Payment (as defined in this
Section 8(b)(iv)) with the effect that the aggregate of all Stockholder
Litigation Payments shall be in excess of $50.0 million, the Conversion Price
then in effect shall be reduced by $0.01 (without regard to any limitation in
Section 8(b)(vi) hereof) for every $1.0 million increment by which the
Stockholder Litigation Payment shall exceed $50.0 million in the aggregate. For
purposes of this Section 8(b)(iv), a "Stockholder Litigation Payment" means (i)
any payment or series of payments (whether paid in cash, in capital stock, in
other rights or property or any combination thereof) resulting from an adverse
judgment relating to, or a settlement or other disposition of, the following
litigation (including for such purposes, successor lawsuits or new lawsuits
arising out of the same facts and circumstances): (A) In re Prison Realty
Securities Litigation, Civ. Xx. 0-00-0000 (Xxxxxx Xxxxxx District Court for the
Middle District of Tennessee); (B) In re Old CCA Securities Litigation, Civ. Xx.
0-00-0000 (Xxxxxx Xxxxxx District Court for the Middle District of Tennessee);
and (C) Xxxxxxx, X.X. x. Corrections Corporation of America, et al., No.
98-2391-III (Chancery Court for Davidson County, Tennessee), or (ii) any payment
or series of payments (whether paid in cash, in capital stock, in other rights
or property or any combination thereof) resulting from an adverse judgment
relating to, or a settlement or either disposition of, any suit, action, claim
or proceeding commenced by a current or former stockholder or creditor of the
Corporation arising out of or relating to the transactions contemplated by the
Purchase Agreement, including but not limited to the purchase of the shares of
Series B Preferred Stock by Pacific Life, the Combination and the Rights
Offering.
(v) In addition to the adjustments in Sections 8(b)(i)-(iv) above, the
Corporation will be permitted to make such reductions in the Conversion Price as
it considers to be advisable in order that any event treated for Federal income
tax purposes as a dividend of stock or stock rights will not be taxable to the
holders of the shares of Common Stock.
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(vi) No adjustment in the Conversion Price shall be required unless
such adjustment would require an increase or decrease of at least $0.01;
provided, that any adjustments which by reason of this Section 8(b)(vi) are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Section 8 shall be made to
the nearest cent or to the nearest one-hundredth of a share, as the case may be.
(c) In case of any capital reorganization or reclassification of
outstanding shares of Common Stock (other than a reclassification covered by
Section 8(b)(i)), or in case of any consolidation, share exchange or merger of
the Corporation with or into another Person, or in case of any sale or
conveyance to another Person of the property of the Corporation as an entirety
or substantially as an entirety (each of the foregoing being referred to as a
"Transaction"), each share of Series B Preferred Stock then outstanding shall
thereafter be convertible into, in lieu of the Common Stock issuable upon such
conversion prior to the consummation of such Transaction, the kind and amount of
shares of stock and other securities and property (including cash) receivable
upon the consummation of such Transaction by a holder of that number of shares
of Common Stock into which one share of Series B Preferred Stock was convertible
immediately prior to such Transaction (including, on a pro rata basis, the cash,
securities or property received by holders of Common Stock in any tender or
exchange offer that is a step in such Transaction). In any such case, if
necessary, appropriate adjustment (as determined in good faith by the Board of
Directors) shall be made in the application of the provisions set forth in this
Section 8 with respect to rights and interests thereafter of the holders of
shares of Series B Preferred Stock to the end that the provisions set forth
herein for the protection of the conversion rights of the Series B Preferred
Stock shall thereafter be applicable, as nearly as reasonably may be, to any
such other shares of stock and other securities and property deliverable upon
conversion of the shares of Series B Preferred Stock remaining outstanding (with
such adjustments in the conversion price and number of shares issuable upon
conversion and such other adjustments in the provisions hereof as the Board of
Directors shall determine in good faith to be appropriate). In case securities
or property other than Common Stock shall be issuable or deliverable upon
conversion as aforesaid, then all references in this Section 8 shall be deemed
to apply, so far as appropriate and as nearly as may be, to such other
securities or property.
Notwithstanding anything contained herein to the contrary, the Corporation
will not effect any Transaction unless, prior to the consummation thereof, (i)
the Surviving Person (as defined in Section 14 hereof), if other than the
Corporation, shall assume, by written instrument mailed to each record holder of
shares of Series B Preferred Stock, at such holder's address as it appears on
the transfer books of the Corporation, the obligation to deliver to such holder
such cash, property and securities to which, in accordance with the foregoing
provisions, such holder is entitled. Nothing contained in this Section 8(c)
shall limit the rights
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of holders of the Series B Preferred Stock to convert the Series B Preferred
Stock in connection with the Transaction or to exercise their put right under
Section 5 or their rights to require the redemption of the Series B Preferred
Stock under Section 6 and Section 7.
(d) The holder of any shares of Series B Preferred Stock may exercise its
right to convert such shares into shares of Common Stock by surrendering for
such purpose to the Corporation, at its principal office or at such other office
or agency maintained by the Corporation for that purpose, a certificate or
certificates representing the shares of Series B Preferred Stock to be converted
duly endorsed to the Corporation in blank accompanied by a written notice
stating that such holder elects to convert all or a specified whole number of
such shares in accordance with the provisions of this Section 8. The Corporation
will pay any and all documentary, stamp or similar issue or transfer tax and any
other taxes that may be payable in respect of any issue or delivery of shares of
Common Stock on conversion of Series B Preferred Stock pursuant hereto. As
promptly as practicable, and in any event within three (3) Business Days after
the surrender of such certificate or certificates and the receipt of such notice
relating thereto and, if applicable, payment of all transfer taxes (or the
demonstration to the satisfaction of the Corporation that such taxes are
inapplicable), the Corporation shall deliver or cause to be delivered (i)
certificates registered in the name of such holder representing the number of
validly issued, fully paid and nonassessable full shares of Common Stock to
which the holder of shares of Series B Preferred Stock so converted shall be
entitled and (ii) if less than the full number of shares of Series B Preferred
Stock evidenced by the surrendered certificate or certificates are being
converted, a new certificate or certificates, of like tenor, for the number of
shares evidenced by such surrendered certificate or certificates less the number
of shares converted. Such conversion shall be deemed to have been made at the
close of business on the date of receipt of such notice and of such surrender of
the certificate or certificates representing the shares of Series B Preferred
Stock to be converted so that the rights of the holder thereof as to the shares
being converted shall cease except for the right to receive shares of Common
Stock, and the person entitled to receive the shares of Common Stock shall be
treated for all purposes as having become the record holder of such shares of
Common Stock at such time.
(e) Shares of Series B Preferred Stock may be converted at any time;
provided, however, that (i) if the shares of Series B Preferred Stock are the
subject of a Put Notice pursuant to Section 5 hereof, such shares may be
converted up to the close of business on the later of (A) the last Business Day
immediately preceding the Put Date or (B) if not actually repurchased on the Put
Date, the date on which the Series B Preferred Stock is actually repurchased;
and (ii) if the shares of Series B Preferred Stock are subject to an offer to
redeem upon a Change of Control pursuant to Section 7 hereof, may be converted
up to the fifth (5th) Business Day following a Change of Control pursuant to the
provisions of Section 7(b) hereof.
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(f) In connection with the conversion of any shares of Series B Preferred
Stock, no fractions of shares of Common Stock shall be issued, but in lieu
thereof the Corporation shall pay a cash adjustment in respect of such
fractional interest in an amount equal to such fractional interest multiplied by
the Current Market Price per share of Common Stock on the day on which such
shares of Series B Preferred Stock are deemed to have been converted.
(g) In case at any time or from time to time the Corporation shall pay any
dividend or make any other distribution to the holders of its Common Stock or
shall offer for subscription pro rata to the holders of its Common Stock any
additional shares of stock of any class or any other right (other than the
Rights Offering or any issuance of rights pursuant to any stockholder rights
agreement of the Corporation) or there shall be any capital reorganization or
reclassification of the Common Stock of the Corporation or consolidation, share
exchange or merger of the Corporation with or into another corporation, or any
sale or conveyance to another corporation of the property of the Corporation as
an entirety or substantially as an entirety, or there shall be a voluntary or
involuntary dissolution, liquidation or winding up of the Corporation, then, in
any one or more of said cases the Corporation shall give at least twenty (20)
days prior written notice (the time of mailing of such notice shall be deemed to
be the time of giving thereof) to the registered holders of the Series B
Preferred Stock at the addresses of each as shown on the books of the
Corporation as of the date on which (i) the books of the corporation shall close
or a record shall be taken for such stock dividend, distribution or subscription
rights or (ii) notice of such reorganization, reclassification, consolidation,
share exchange, merger, sale or conveyance, dissolution, liquidation or winding
up is given, provided that in the case of any Transaction to which Section 8(c)
applies, the Corporation shall give at least thirty (30) days prior written
notice as aforesaid. Such notice shall also specify the date, if known, as of
which the holders of the Common Stock and of the Series B Preferred Stock of
record shall participate in said dividend, distribution or subscription rights
or shall be entitled to exchange their Common Stock or Series B Preferred Stock
for securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale or conveyance, or participate in
such dissolution, liquidation or winding up, as the case may be.
Section 9. Reports as to Adjustments.
Whenever the number of shares of Common Stock into which each share of
Series B Preferred Stock is convertible (or the number of votes to which each
share of Series B Preferred Stock is entitled) is adjusted as provided in
Section 8, the Corporation shall promptly mail to the holders of record of the
outstanding shares of Series B Preferred Stock at their respective addresses as
the same shall appear in the Corporation's stock records a notice stating that
the number of shares of Common Stock into which the shares of Series B Preferred
Stock are convertible has been adjusted and setting forth the new number of
shares of Common Stock (or describing the new stock, securities, cash or other
property) into which
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each share of Series B Preferred Stock is convertible, as a result of such
adjustment, a brief statement of the facts requiring such adjustment and the
computation thereof, and when such adjustment became effective.
Section 10. Reacquired Shares.
Any shares of Series B Preferred Stock converted, redeemed, repurchased or
otherwise acquired by the Corporation in any manner whatsoever shall be retired
and canceled promptly after the acquisition thereof. All such shares shall upon
their cancellation become authorized but unissued shares of Preferred Stock of
the Corporation and may be reissued as part of another series of Preferred Stock
of the Corporation, subject to the conditions or restrictions on authorizing,
creating or issuing any class or series, or any shares of any class or series,
set forth in Section 3(b).
Section 11. Board of Directors.
(a) Increase in Size of Board of Directors. Upon the Issuance Date and
until the Termination Date, the number of directors of the Corporation shall
automatically be increased, as contemplated by Article IV, Paragraph F of the
Charter of the Corporation, by the number of directors required by Section
11(b). Upon the Termination Date, the provisions of this Section 11 shall
terminate and shall be of no further effect, and Article IV of the Charter of
the Corporation, Articles II and III of the Bylaws of the Corporation and the
applicable provisions of the MGCL shall govern the composition and election of
the Board of Directors of the Corporation.
(b) Additional Directors. Upon the Issuance Date, the number of directors
of the Corporation shall automatically be increased by an additional six (6)
directors (the "Additional Directors"). Four (4) of the Additional Directors
shall be designated as "Series B Preferred Stock Directors." The initial Series
B Preferred Stock Directors shall be elected by a majority of the entire Board
of Directors of the Corporation in office on the Issuance Date, and thereafter,
the Series B Preferred Stock Directors shall be elected in accordance with
Section 11(c) hereof. Two (2) of the Additional Directors shall be designated as
"Outside Directors." The initial Outside Directors shall be elected by a
majority of the entire Board of Directors of the Corporation in office on the
Issuance Date, and thereafter, the Outside Directors shall be elected in
accordance with Section 11(d) hereof. At least two (2) Outside Directors must
satisfy the qualifications for an Independent Director, as such term is defined
in Article IV, Paragraph B of the Charter of the Corporation.
(c) Election of Series B Preferred Stock Directors. Until the Termination
Date, the applicable number of Series B Preferred Stock Directors (as determined
by Section 10(f) hereof) shall be elected as provided for in this Section 11(c).
Pursuant to clause (a)(1)(ii) of
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Article II, Section 12 of the Bylaws of the Corporation, the Corporation shall
cause to exist a nominating committee composed solely of the Series B Preferred
Stock Directors then in office for the purpose of nominating the Board of
Directors' nominees as Series B Preferred Stock Directors (the "Series B
Preferred Stock Director Nominating Committee"). Prior to each annual meeting of
stockholders, the Board of Directors' nominees for Series B Preferred Stock
Directors shall be nominated by the Series B Preferred Stock Director Nominating
Committee. The Series B Preferred Stock Directors shall be elected by a
plurality of the votes cast by holders of shares of Series B Preferred Stock,
voting as a separate class, present in person or represented by proxy at such
meeting or by consent, and entitled to vote on the election of Series B
Preferred Stock Directors. Each Series B Preferred Stock Director so elected
shall hold office for a term expiring at the next annual meeting following the
annual meeting of stockholders at which such director was elected and until his
successor is duly elected and qualified, subject to his earlier death,
disqualification, resignation or removal. Each Series B Preferred Stock Director
may be removed from office, with or without cause, by majority vote of the
outstanding shares of Series B Preferred Stock voting at a meeting or acting by
written consent.
(d) Election of Outside Directors. Until the Termination Date, the Outside
Directors shall be elected as provided for in this Section 11(d). Pursuant to
clause (a)(1)(ii) of Article II, Section 12 of the Bylaws of the Corporation,
the Corporation shall cause to exist a nominating committee composed of each of
the Series B Preferred Stock Directors then in office and the same number (but
not less than one (1)) of the Remaining Directors (as defined in Section 11(e)
below) then in office (who shall be elected by a majority vote of the Remaining
Directors) for the purpose of nominating the Board of Directors' nominees as
Outside Directors (the "Outside Director Nominating Committee"). Prior to each
annual meeting of stockholders, the Board of Directors' nominees for Outside
Directors shall be nominated by the Outside Director Nominating Committee. The
Outside Directors shall be elected by a plurality of the votes cast by holders
of shares of Series B Preferred Stock and Common Stock and any other class
entitled to vote thereon, voting as a single class, present in person or
represented by proxy at such meeting, and entitled to vote on such election of
Outside Directors. Each Outside Director so elected shall hold office for a term
expiring at the next annual meeting following the annual meeting of stockholders
at which such director was elected and until his successor is duly elected and
qualified, subject to his earlier death, disqualification, resignation or
removal.
(e) Election of Remaining Directors. Until the Termination Date, the
directors of the Corporation other than the Additional Directors (the "Remaining
Directors") shall be elected as provided for in this Section 11(e). Pursuant to
clause (a)(1)(ii) of Article II, Section 12 of the Bylaws of the Corporation,
the Corporation shall cause to exist a nominating committee composed of the
Remaining Directors then in office for the purpose of nominating
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the Board of Directors' nominees as Remaining Directors (the "Remaining Director
Nominating Committee"). Prior to each annual meeting of stockholders, the Board
of Directors' nominees for Remaining Directors shall be nominated by the
Remaining Director Nominating Committee. The Remaining Directors shall be
elected by a plurality of the votes cast by holders of shares of Series B
Preferred Stock, Common Stock, and any other class of Capital Stock entitled to
vote thereon voting as a single class, present in person or represented by proxy
at such meeting, and entitled to vote on such election of Remaining Directors.
Each Remaining Director so elected shall hold office for a term expiring at the
next annual meeting following the annual meeting of stockholders at which such
director was elected and until his successor is duly elected and qualified,
subject to his earlier death, disqualification, resignation or removal.
(f) Reduction in Number of Series B Preferred Stock Directors.
(i) Reduction Upon Decrease in Ownership Percentage. Until the
Termination Date, and if and for so long as the number of shares of Series B
Preferred Stock outstanding constitutes at least fifty percent (50%) of the
number of shares of Series B Preferred Stock initially issued pursuant to
Section 1.2 of the Securities Purchase Agreement, the number of Series B
Preferred Stock Directors will be four (4). At the next annual meeting following
such time as the number of shares of Series B Preferred Stock outstanding
constitutes less than twenty-five percent (25%) but equal to or more than ten
percent (10%) of the shares of Series B Preferred Stock initially issued
pursuant to Section 1.2 of the Securities Purchase Agreement, the number of
Series B Preferred Stock Directors will be reduced to two (2). At such time as
the number of shares of Series B Preferred Stock outstanding constitutes less
than ten percent (10%) of the shares of Series B Preferred Stock initially
issued pursuant to Section 1.2 of the Securities Purchase Agreement, the number
of Series B Preferred Stock Directors will be reduced to zero (0). Any reduction
in the number of Series B Preferred Stock Directors shall increase the number of
Outside Directors by the same amount. Series B Preferred Stock Directors whose
terms are expiring as a result of this provision may be nominated for election
as Outside Directors.
(ii) Notice of Transfer. In determining the number of Series B
Preferred Stock Directors, the Corporation shall at all times be entitled to
rely conclusively on the stockholders register. Upon any such reduction, the
Series B Preferred Stock Directors then in office shall be entitled to give
prompt notice to the Board of Directors identifying which Series B Preferred
Stock Director(s) shall have his or her term concluded. Absent such notice, a
majority of the other Directors shall designate the Series B Preferred Stock
Director(s) whose term shall be concluded at the next annual meeting.
(g) Vacancies. Until the Termination Date, subject to the rights, if any,
of the holders of any class or series of stock to elect directors and to fill
vacancies in the Board of
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Directors relating thereto and except as set forth in Section 11(b), any and all
vacancies in the Board of Directors, however occurring, including, without
limitation, by reason of an increase in the size of the Board of Directors, or
the death, resignation, disqualification or removal of a director, shall be
filled: (i) in the case of the Series B Preferred Stock Directors, either (A) by
the nomination of the Series B Preferred Stock Director Nominating Committee and
election by the same stockholder vote as is required for the election of Series
B Preferred Stock Directors at any regular meeting or at any special meeting
called for that purpose or (B) by the vote of a majority of all of the remaining
Series B Preferred Stock Directors then in office at any regular meeting or at
any special meeting called for that purpose; (ii) in the case of the Outside
Directors, either (A) by the nomination of the Outside Director Nominating
Committee and election by the same stockholder vote as is required for the
election of the Outside Directors at any regular meeting or at any special
meeting called for that purpose or (B) by the vote of a majority of all of the
Directors then in office at any regular meeting or at any special meeting called
for that purpose; or (iii) in the case of the Remaining Directors, either (A) by
the nomination of the Remaining Director Nominating Committee and election by
the same stockholder vote as is required for the election of Remaining Directors
at any regular meeting or at any special meeting called for that purpose or (B)
by the majority vote of all the continuing Remaining Directors then in office at
any regular meeting or at any special meeting called for that purpose. Any
director elected in accordance with the preceding sentence shall hold office
until the next annual meeting of stockholders and until such director's
successor shall have been duly elected and qualified or until such director's
earlier resignation or removal.
Section 12. Appointment of Directors Upon Payment Default.
If and as long as (i) dividends on the Series B Preferred Stock shall be in
arrears and unpaid for four (4) Dividend Periods or (ii) the Corporation fails
to honor the put provisions of Section 5, the mandatory redemption provisions of
Section 6 or the Change of Control redemption provisions of Section 7 hereof
(collectively, a "Payment Default"), the holders of such Series B Preferred
Stock (voting together as a class with all other series of Parity Stock upon
which like voting rights have been conferred and are exercisable) will be
entitled to vote for the election of a total of three (3) additional directors
of the Corporation (the "Default Directors") at a special meeting called at the
request of the holders of record of at least twenty percent (20%) of the shares
of Series B Preferred Stock and the holders of record of at least twenty percent
(20%) of the shares of any series of Parity Stock so in arrears (unless such
request is received less than ninety (90) days before the date fixed for the
next annual or special meeting of the stockholders) or at the next annual
meeting of stockholders, and at such subsequent annual meeting until all
dividends accumulated on such shares of Series B Preferred Stock for the past
dividend periods and the dividend for the then current dividend period shall
have been fully paid or declared and a sum sufficient for the payment thereof
Set
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Apart for Payment. A quorum for any such meeting shall exist if at least a
majority of the outstanding shares of Series B Preferred Stock and shares of
Parity Stock upon which like voting rights have been conferred and are
exercisable are represented in person or by proxy at such meeting. Such Default
Directors shall be elected upon affirmative vote of a plurality of the shares of
Series B Preferred Stock and such Parity Stock present and voting in person or
by proxy at a duly called and held meeting at which a quorum is present. If and
when (i) all accumulated dividends and the dividend for the then current
dividend period on the shares of Series B Preferred Stock shall have been paid
in full or Set Apart for Payment in full, the holders thereof shall be divested
of the foregoing voting rights (subject to revesting in the event of each and
every Payment Default) and, if all accumulated dividends and the dividend for
the then current dividend period have been paid in full or Set Apart for Payment
in full on all series of Parity Stock upon which like voting rights have been
conferred and are exercisable, or (ii) the Corporation shall have fully complied
with the provisions of Section 5, Section 6 or Section 7, as the case may be,
the failure of which to comply with gave rise to the right to elect Default
Directors, the term of office of each Default Director so elected shall
immediately terminate. Any Default Director may be removed at any time with or
without cause by, and shall not be removed otherwise than by the vote of, the
holders of record of a majority of the outstanding shares of Series B Preferred
Stock and all series of Parity Stock upon which like voting rights have been
conferred and are exercisable (voting together as a class). So long as a Payment
Default shall continue, any vacancy in the office of a Default Director may be
filled by written consent of the Default Directors remaining in office, or if
none remains in office, by a vote of the holders of record of a majority of the
outstanding shares of Series B Preferred Stock when they have the voting rights
described above (voting together as a class with all series of Parity Stock upon
which like voting rights have been conferred and are exercisable) or by written
consent of holders of a majority of such shares. The Default Directors shall
each be entitled to one vote per director on any matter.
Section 13. Compliance With Regulatory Requirements.
To the extent that any holder of shares of the Series B Preferred Stock or
any assignee or transferee of such holder (each, a "Holder") is required under
applicable law or regulation (including, but not limited to, the Bank Holding
Company Act of 1956, as amended, and as it may be further amended (the "BHCA"))
to modify the terms of the shares of the Series B Preferred Stock (including
these Articles Supplementary), or to defer until such Holder qualifies as a
"financial holding company" under the BHCA receipt of certain rights and
privileges associated with the shares of the Series B Preferred Stock, including
the right to influence the management or policies of the Corporation in order to
conform to the requirements of such law or regulation, the Corporation will
cooperate with such Holder to take such steps as may be reasonably necessary to
conform the investment represented by the shares of the Series B Preferred Stock
(including these Articles Supplementary) held by that
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Holder to the requirements of such law or regulation; provided, however, that
the Corporation shall not be required to make any material changes to the
economic terms of the shares of the Series B Preferred Stock and/or to enable
such Holder, after such Holder qualifies as a "financial holding company" under
the BHCA, to exercise to the maximum extent then permissible under the BHCA, the
rights and privileges associated with the shares of Series B Preferred Stock.
Section 14. Definitions.
For the purposes of these Articles Supplementary, the following terms shall
have the meanings indicated below:
"Accrued Dividends" to a particular date (the "Applicable Date") means all
dividends accrued but not paid on the Series B Preferred Stock pursuant to
Section 2(a), whether or not earned or declared, accrued to the Applicable Date.
"Additional Director" shall have the meaning set forth in Section 11(b)
hereof.
"affiliate" shall have the meaning set forth in Rule 12b-2 promulgated by
the Securities and Exchange Commission under the Exchange Act.
"BHCA" shall have the meaning set forth in Section 13 hereof.
"Business Day" means any day other than a Saturday, Sunday, or a day on
which commercial banks in the City of New York are authorized or obligated by
law or executive order to close.
"Bylaws" means the bylaws of the Corporation, as in effect from time to
time, including any and all amendments thereto and restatements thereof.
"Capital Stock" means (i) in the case of a corporation, corporate stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (iii) in the case of a partnership or limited liability
company, partnership or membership interests (whether general or limited) and
(iv) any other interest or participation that confers on a person the right to
receive a share of the profits and losses of, or distributions of assets of, the
issuing person.
"Change of Control" means any of the following:
(a) the acquisition by any individual, entity or group (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (the "Acquiring Person"),
of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 50%
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or more of the combined voting power of the then-outstanding voting securities
of the Corporation entitled to vote generally in the election of directors, but
excluding, for this purpose, any such acquisition by (i) the Corporation or any
of its subsidiaries, (ii) any employee benefit plan (or related trust) of the
Corporation or its subsidiaries or (iii) any corporation with respect to which,
following such acquisition, more than 50% of the combined voting power of the
then-outstanding voting securities of such corporation entitled to vote
generally in the election of directors is then beneficially owned, directly or
indirectly, by individuals and entities who, immediately prior to such
acquisition, were the beneficial owners of then outstanding voting securities of
the Corporation entitled to vote generally in the election of directors; or
(b) the approval by the stockholders of the Corporation of a
reorganization, merger, share exchange or consolidation, in each case, with
respect to which of the individuals and entities who were the record owners of
the voting securities of the Corporation immediately prior to such
reorganization, merger, share exchange or consolidation do not, following such
reorganization, merger, share exchange or consolidation, own, directly or
indirectly, more than 50% of the voting power of the then outstanding voting
securities entitled to vote generally in the election of directors (or persons
fulfilling a comparable role) of the entity resulting from such reorganization,
merger or consolidation; or
(c) the sale or other disposition of assets representing 50% or more of the
assets of the Corporation in one transaction or series of related transactions.
"Change of Control Redemption Price" shall have the meaning set forth in
Section 7(a) hereof.
"Charter" means the Amended and Restated Charter of the Corporation, as
amended by the Articles of Amendment and Restatement set forth as Exhibit B to
the Purchase Agreement.
"Closing Price" per share of Common Stock (or any other security) on any
date shall be the last sale price, at 4:30 p.m., Eastern Time, or, in case no
such sale takes place on such day, the average of the closing bid and asked
prices, in either case as reported on the NYSE or in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the Nasdaq National Market or American Stock Exchange, as the case
may be, or, if the Common Stock (or such other security) is not listed or
admitted to trading on any national securities exchange, the last quoted sale
price or, if not so quoted, the average of the high bid and low asked prices in
the over-the-counter market, as reported by the National Association of
Securities Dealers, Inc. Automated Quotations System ("NASDAQ") or such other
system then in use, or, if on any such date the Common Stock (or such other
security) is not quoted by any such organization, the average of the closing bid
and asked
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prices as furnished by a professional market maker making a market in the Common
Stock (or such other security) selected by the Board of Directors and reasonably
acceptable to the Requisite Holders.
"Common Stock" means the common stock, par value $0.01 per share, of the
Corporation.
"Conversion Price" shall initially be equal to the Rights Offering Purchase
Price, subject to adjustment as provided in Section 8(b).
"Conversion Value" per share of Series B Preferred Stock shall be an amount
equal to the Stated Amount plus all Accrued Dividends thereon to the date of
conversion or redemption, as the case may be.
"Current Market Price" per share of Common Stock (or any other security) on
any date shall be the average of the Closing Prices of a share of Common Stock
(or such other security) for the five consecutive Trading Days selected by the
Corporation commencing not less than ten (10) Trading Days nor more than twenty
(20) Trading Days before the date in question. If on any such Trading Day the
Common Stock (or such other security) is not quoted by any organization referred
to in the definition of Closing Price, the Current Market Price of the Common
Stock (or such other security) on such day shall be determined by agreement
between the Corporation and the Requisite Holders, provided that if such
agreement is not reached within ten (10) Business Days, such dispute shall be
submitted for final determination to a mutually acceptable investment banking
firm of national reputation familiar with the valuation of companies
substantially similar to the Corporation (the "Investment Banking Firm"). In the
event that the Corporation and the Requisite Holders cannot agree on a mutually
acceptable Investment Banking Firm within ten (10) Business Days, the
Corporation, on the one hand, and the Requisite Holders, on the other hand,
shall each select one Investment Banking Firm, and shall cause such firms to
promptly select a third firm within five (5) Business Days. The three Investment
Banking Firms so selected shall, by majority vote, render their final
determination as promptly as practicable and in any event within twenty (20)
Business Days, which determination shall be final and binding on the Corporation
and the holder of Series B Preferred Stock.
"Default Director" shall have the meaning set forth in Section 12 hereof.
"Dividend Payment Date" means the following dates: (i) the date that is
three months after the Issuance Date; (ii) the date that is six months after the
Issuance Date; (iii) the date that is nine months after the Issuance Date; (iv)
the date that is the first anniversary of the Issuance Date; and the
anniversaries of the foregoing dates, provided that no Dividend
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Payment Date shall occur with respect to shares of Series B Preferred Stock
which have actually been redeemed or repurchased by the Corporation.
"Dividend Period" means the period from the Issuance Date to the first
Dividend Payment Date (but without including such Dividend Payment Date) and,
thereafter, each Dividend Payment Date to the following Dividend Payment Date
(but without including such later Dividend Payment Date).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Existing Benefit Plans" means the employee or director benefit plans
adopted and administered by the Corporation as of the Issuance Date, including,
but not limited to, the employee and director benefit plans assumed by the
Corporation in the merger of each of the old Corrections Corporation of America,
a Tennessee corporation, and CCA Prison Realty Trust, a Maryland real estate
investment trust, with and into the Corporation.
"Fair Market Value" shall mean, with respect to any securities, the Current
Market Price thereof as of the close of business on the date of measurement and
shall mean, with respect to any asset other than cash and securities, a value as
determined by the Board of Directors of the Corporation.
"Holder" shall have the meaning set forth in Section 13 hereof.
"Issuance Date" means the original date of issuance of the Series B
Preferred Stock to the initial holders thereof.
"Junior Stock" means all classes of Common Stock of the Corporation and
each other class of Capital Stock of the Corporation or series of Preferred
Stock of the Corporation currently existing or hereafter created the terms of
which do not expressly provide that it ranks senior to, or on a parity with, the
Series B Preferred.
"Mandatory Redemption Date" shall mean the date which is the fifteenth
anniversary of the Issuance Date.
"Measurement Date" means, for purposes of Section 8(b)(ii), (i) in the case
of an offering of rights, warrants or options to all or substantially all of the
holders of the Common Stock or any other issuance contemplated by such Section
where a record date is fixed for the determination of stockholders entitled to
participate in such issuance, such record date and (ii) in all other cases, the
Business Day immediately preceding the date of issuance of shares of Common
Stock (or options, rights, warrants or other securities convertible into or
exchangeable for shares of Common Stock) contemplated by such Section.
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"MGCL" means the Maryland General Corporation Law, as now or hereinafter in
force.
"NYSE" means the New York Stock Exchange, Inc.
"Outside Director" shall have the meaning set forth in Section 11(b)
hereof.
"Outside Director Nominating Committee" shall have the meaning set forth in
Section 11(d) hereof.
"Parity Stock" means any class of Capital Stock of the Corporation or
series of Preferred Stock of the Corporation hereafter created that has been
approved by holders of Series B Preferred Stock in accordance with Section 3(b)
hereof, the terms of which expressly provide that such class or series will rank
on a parity with the Series B Preferred Stock as to dividend distributions and
distributions upon liquidation, winding-up and dissolution. The existing Series
A Preferred Stock of the Corporation shall constitute Parity Stock of the
Corporation ranking on a parity with the Series B Preferred Stock as to dividend
distributions and distributions upon liquidation, winding-up and dissolution.
"Payment Default" shall have the meaning set forth in Section 12 hereof.
"Person" means an individual, partnership, corporation, limited liability
company or partnership, unincorporated organization, trust or joint venture, or
a governmental agency or political subdivision thereof, or other entity of any
kind.
"Preferred Stock" means the preferred stock, $0.01 par value per share, of
the Corporation.
"Purchase Agreement" means the Securities Purchase Agreement, dated as of
April 5, 2000, by and among the Corporation, Corrections Corporation of America,
a Tennessee corporation, Prison Management Services, Inc., a Tennessee
corporation, and Juvenile and Jail Facility Management Services, Inc., a
Tennessee corporation, on the one hand, and Pacific Life Insurance Company, a
stock company organized under the laws of California, on the other hand.
"Put Date" shall have the meaning set forth in Section 5(a) hereof.
"Put Notice" shall have the meaning set forth in Section 5(a) hereof.
"Put Price" shall have the meaning set forth in Section 5(a) hereof.
"Put Trigger Date" shall have the meaning set forth in Section 5(a) hereof.
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"Remaining Director" shall have the meaning set forth in Section 11(e)
hereof.
"Remaining Director Nominating Committee" shall have the meaning set forth
in Section 11(e) hereof.
"Requisite Holders" shall have the meaning set forth in Section 3(b)
hereof.
"Rights Offering" shall have the meaning set forth in the preamble to the
Purchase Agreement.
"Rights Offering Purchase Price" shall have the meaning set forth in the
preamble to the Purchase Agreement.
"Senior Stock" means each other class of Capital Stock of the Corporation
or series of Preferred Stock of the Corporation hereafter created that has been
approved by the holders of Series B Preferred Stock in accordance with Section
3(b) hereof and the terms of which expressly provide that such class or series
will rank senior to the Series B Preferred Stock as to dividend distributions
and distributions upon liquidation, winding-up and dissolution of the
Corporation.
"Series A Preferred Stock" means the 8% Series A Cumulative Preferred
Stock, $0.01 par value per share, of the Corporation, the terms of which are set
forth in the Charter of the Corporation.
"Series B Liquidation Preference" means, in the event of a voluntary or
involuntary liquidation, dissolution or winding-up of the Corporation or in the
event of a Change of Control, an amount per share of Series B Preferred Stock
equal to the Stated Amount of their Series B Preferred Stock, plus any Accrued
Dividends.
"Series B Preferred Stock" means the Series B Cumulative Convertible
Preferred Stock of the Corporation, $0.01 par value per share, the terms of
which are set forth in these Articles Supplementary.
"Series B Preferred Stock Director" shall have the meaning set forth in
Section 11(b) hereof.
"Series B Preferred Stock Director Nominating Committee" shall have the
meaning set forth in Section 11(c) hereof.
"Series C Preferred Stock" means the Series C Cumulative Convertible
Preferred Stock of the Corporation, $0.01 par value per share, the terms of
which will be set forth in Articles Supplementary to the Charter of the
Corporation.
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"Set Apart for Payment" means the Corporation shall have irrevocably
deposited with a bank or trust company doing business in the Borough of
Manhattan, the City of New York, and having a capital and surplus of at least
$1,000,000,000, in trust for the exclusive benefit of the holders of shares of
Series B Preferred Stock, funds sufficient to satisfy the Corporation's payment
obligation.
"Stated Amount" means $25.00 per share of Series B Preferred Stock.
"Subsidiary" of any Person means any corporation or other entity of which a
majority of the voting power of the voting equity securities or equity interest
is owned, directly or indirectly, by such Person.
"Surviving Person" means the continuing or surviving Person in a merger,
consolidation, other corporate combination or the transfer of all or a
substantial part of the properties and assets of the Corporation, in connection
with which the Series B Preferred Stock or Common Stock of the Corporation is
exchanged, converted or reinstated into the securities of any other Person or
cash or any other property; provided, however, if such Surviving Person is a
direct or indirect Subsidiary of a Person, the parent entity also shall be
deemed to be a Surviving Person.
"Termination Date" shall mean the date that less than ten percent (10%) of
the number of shares of Series B Preferred Stock initially issued pursuant to
Section 1.2 of the Purchase Agreement remain outstanding.
"Trading Day" means a day on which the principal national securities
exchange on which the Common Stock (or any other security) is quoted, listed or
admitted to trading is open for the transaction of business or, if the Common
Stock (or such other security) is not quoted, listed or admitted to trading on
any national securities exchange (including the NYSE), any day other than a
Saturday, Sunday, or a day on which banking institutions in the State of New
York are authorized or obligated by law or executive order to close.
"Trading Price" per share of Common Stock (or any other security) on any
date shall be the last sales price, at 4:30 p.m., Eastern Time, for the Common
Stock (or such other security) reported on the NYSE (or if the Common Stock (or
such other security) is not then quoted thereon, then for the principal national
securities exchange on which the Common Stock (or such other security) is listed
or admitted to trading) or, if the Common Stock (or such other security) is not
quoted on the NYSE and is not listed or admitted to trading on any national
securities exchange, in the over-the-counter market, as reported by NASDAQ or
such other system then in use, or, if on any such date the Common Stock (or such
other security) is not quoted by any such organization, as furnished by a
professional market maker making a
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market in the Common Stock (or such other security) selected by the Board of
Directors of the Corporation and reasonably acceptable to the Requisite Holders.
"Triggering Distribution" shall have the meaning set forth in Section 2(b)
hereof.
Section 15. References.
References to numbered sections herein refer to sections of these Articles
Supplementary, unless otherwise stated.
THIRD: The Series B Preferred Stock has been classified by the Board of
Directors of the Corporation under the authority contained in the Charter of the
Corporation and those Articles Supplementary have been duly approved by the
Board of Directors of the Corporation.
FOURTH: The undersigned President of the Corporation acknowledges these
Articles Supplementary to be the act of the Corporation and further, as to all
matters or facts required to be verified under oath, the undersigned President
acknowledges, that to the best of his knowledge, information and belief, the
matters and facts set forth herein are true in all material respects and that
this statement is made under the penalties for perjury.
IN WITNESS WHEREOF, the Corporation has caused these Articles to be
executed under seal in its name and on its behalf by its President and attested
to by its Secretary on this ______ day of _____________, 2000.
ATTEST: CORRECTIONS CORPORATION OF
AMERICA
By: By: (SEAL)
---------------------- ------------------------
Secretary President
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Exhibit F
THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO THE PROVISIONS OF A
SECURITIES PURCHASE AGREEMENT DATED AS OF APRIL 5, 2000 BY AND AMONG PRISON
REALTY TRUST, INC., CORRECTIONS CORPORATION OF AMERICA, PRISON MANAGEMENT
SERVICES, INC., AND JUVENILE AND JAIL FACILITY MANAGEMENT SERVICES, INC., ON THE
ONE HAND, AND PACIFIC LIFE INSURANCE COMPANY, ON THE OTHER HAND (THE "SECURITIES
PURCHASE AGREEMENT"), AND A REGISTRATION RIGHTS AGREEMENT DATED AS OF _________,
2000 BETWEEN PRISON REALTY TRUST, INC., AND PACIFIC LIFE INSURANCE COMPANY (THE
"REGISTRATION RIGHTS AGREEMENT"), COPIES OF WHICH ARE ON FILE AT THE OFFICES OF
THE CORPORATION.
THIS WARRANT AND ANY SECURITIES ACQUIRED UPON THE EXERCISE OF THIS WARRANT HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY STATE SECURITIES LAWS AND NEITHER THIS WARRANT NOR
SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, TRANSFERRED,
PLEDGED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT OR SUCH LAWS OR AN EXEMPTION FROM REGISTRATION UNDER
SUCH ACT AND SUCH LAWS.
CORRECTIONS CORPORATION OF AMERICA
FORM OF COMMON STOCK PURCHASE WARRANT
This Warrant Certificate certifies that, _________, or
registered assigns (collectively, the "Warrantholder"), is the registered holder
of this Common Stock Purchase Warrant expiring on or before the Expiration Date
(the "Warrants") to purchase shares of Common Stock, par value $0.01 per share
(the "Common Stock"), of Corrections Corporation of America, formerly Prison
Realty Trust, Inc., a Maryland corporation (the "Company"). Each Warrant
entitles the Warrantholder, upon exercise at any time and from time to time
during the period from the date of this Warrant through _________, 2008 (the
"Expiration Date"), to purchase _________shares of Common Stock (each such
share, a "Warrant Share," and collectively, the "Warrant Shares") at the initial
exercise price (the "Exercise Price") of $______ payable in lawful money of the
United States of America upon surrender of this
134
Warrant Certificate and payment of the Exercise Price, all subject to the terms,
conditions and adjustments herein set forth.
Certain capitalized terms used herein and not otherwise
defined shall have the meanings ascribed to them in Section 11 hereto or
otherwise those meanings ascribed to them in the Securities Purchase Agreement.
1. Duration and Exercise of Warrant; Limitations on Exercise;
Payment of Taxes.
1.1 Duration and Exercise of Warrant. Subject to the terms and
conditions set forth herein, the Warrant may be exercised, either in whole or
from time to time in part, at the election of the Warrantholder by
(a) the surrender of this Warrant to the Company, with a duly
executed Exercise Form (in the form annexed hereto as Exhibit A)
specifying the number of Warrant Shares to be purchased, during normal
business hours on any Business Day prior to the Expiration Date (as
used in this Agreement, "Business Day" shall mean a day other than a
Saturday, Sunday or a day on which banking institutions in the State of
Maryland are required or authorized to close by applicable law,
regulation or executive order; and
(b) the delivery of payment to the Company, for the account of
the Company, by cash, by certified or bank cashier's check or by wire
transfer of immediately available funds in accordance with wire
instructions that shall be provided by the Company upon request, of the
Exercise Price for the number of Warrant Shares specified in the
Exercise Form in lawful money of the United States of America.
Upon such surrender of the Warrants and payment of the
Exercise Price, the Company shall issue and cause to be delivered with all
reasonable dispatch to or upon the written order of the Warrantholder, a
certificate or certificates for the number of full Warrant Shares issuable upon
the exercise of such Warrants. The Company agrees that such Warrant Shares shall
be deemed to be issued to the Warrantholder as the record holder of such Warrant
Shares as of the close of business on the date on which this Warrant shall have
been surrendered and payment made for the Warrant Shares as aforesaid. All
Warrant Certificates surrendered upon exercise of Warrants shall be canceled and
disposed of by the Company.
1.2 Limitations on Exercise. Notwithstanding anything to the
contrary herein, this Warrant may be exercised only upon (i) the delivery to the
Company of any certificates, legal opinions, and other documents reasonably
requested by the Company to satisfy the Company that the proposed exercise of
this Warrant may be effected without registration under the Securities Act, and
(ii) receipt by the Company of approval of any applicable Gov-
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135
ernmental Authority of the proposed exercise. The Warrantholder shall not be
entitled to exercise this Warrant, or any part thereof, unless and until such
approvals, certificates, legal opinions or other documents are reasonably
acceptable to the Company. The cost of such approvals, certificates, legal
opinions and other documents, if required, shall be borne by the Warrantholder.
1.3 Warrant Shares Certificate. A stock certificate or
certificates for the Warrant Shares specified in the Exercise Form shall be
delivered to the Warrantholder within five Business Days after receipt of the
Exercise Form and receipt of payment of the Exercise Price for the Warrant
Shares. If this Warrant shall have been exercised only in part, the Company
shall, at the time of delivery of the stock certificate or certificates, deliver
to the Warrantholder a new Warrant evidencing the rights to purchase the
remaining Warrant Shares, which new Warrant shall in all other respects be
identical with this Warrant.
1.4 Payment of Taxes. The issuance of certificates for Warrant
Shares upon the exercise of Warrants shall be made without charge to the
Warrantholder for any documentary stamp or similar stock transfer or other
issuance tax in respect thereto; provided, however, that the Warrantholder shall
be required to pay any and all taxes which may be payable in respect of any
transfer involved in the issuance and delivery of any certificate in a name
other than that of the registered Warrantholder as reflected upon the books of
the Company.
1.5 Divisibility of Warrant; Transfer of Warrant. (a) This
Warrant may only be transferred by the Warrantholder pursuant to the terms and
provisions of Section 8.4 of the Securities Purchase Agreement.
(b) Subject to the provisions of this Section, this Warrant
may be divided into warrants of ten thousand shares or multiples thereof, upon
surrender at the office of the Company located at 00 Xxxxxx Xxxxx Xxxxxxxxx,
Xxxxxxxxx, Xxxxxxxxx 00000, without charge to the Warrantholder. Subject to the
provisions of this Section, upon such division, the Warrants may be transferred
of record as the then Warrantholder may specify without charge to such
Warrantholder (other than any applicable transfer taxes).
(c) Subject to the provisions of this Section, upon surrender
of this Warrant to the Company with a duly executed Assignment Form (in the form
annexed hereto as Exhibit B) and funds sufficient to pay any transfer tax, the
Company shall, without charge, execute and deliver a new Warrant or Warrants
which shall in all material respects be identical with this Warrant, in the name
of the assignee named in such Assignment Form, and this Warrant shall promptly
be canceled. Prior to any proposed transfer (whether as the result of a division
or otherwise) of this Warrant, such Warrantholder shall give written notice to
the Company of such Warrantholder's intention to effect such transfer. Each such
notice shall describe the manner and circumstances of the proposed transfer in
sufficient detail. The term "Warrant"
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as used in this Agreement shall be deemed to include any Warrants issued in
substitution or exchange for this Warrant.
2. Restrictions on Transfer; Restrictive Legends. Except as
otherwise permitted by this Section 2, each stock certificate for Warrant Shares
issued upon the exercise of any Warrant and each stock certificate issued upon
the direct or indirect transfer of any such Warrant Shares shall be stamped or
otherwise imprinted with a legend in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS AND NEITHER THE SECURITIES NOR ANY INTEREST THEREIN MAY
BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR SUCH
LAWS OR AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND SUCH LAWS.
Notwithstanding the foregoing, the Warrantholder may require
the Company to issue a Warrant or a stock certificate for Warrant Shares, in
each case without a legend, if either (i) such Warrant or such Warrant Shares,
as the case may be, have been registered for resale under the Securities Act or
(ii) the Warrantholder has delivered to the Company an opinion of legal counsel,
which opinion shall be addressed to the Company and be reasonably satisfactory
in form and substance to the Company, to the effect that such registration is
not required with respect to such Warrant or such Warrant Shares, as the case
may be.
By acceptance of this Warrant, the Warrantholder expressly
agrees that it will at all times comply with the restrictions contained in Rule
144(e) under the Securities Act (as in effect on the date hereof) when selling,
transferring or otherwise disposing Warrant Shares, even if such restrictions
would not then be applicable to the Warrantholder.
3. Reservation and Registration of Shares, etc. The Company
covenants and agrees as follows:
(a) all Warrant Shares which are issued upon the exercise of
this Warrant will, upon issuance, be validly issued, fully paid, and
nonassessable, not subject to any preemptive rights, and free from all
taxes, liens, security interests, charges, and other encumbrances with
respect to the issue thereof, other than taxes with respect to any
transfer occurring contemporaneously with such issue;
(b) during the period within which this Warrant may be
exercised, the Company will at all times have authorized and reserved,
and keep available, free from
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137
preemptive rights, out of the aggregate of its authorized but unissued
Common Stock, for the purpose of enabling it to satisfy any obligation
to issue Warrant Shares upon exercise of Warrants, the maximum number
of shares of Common Stock which may then be deliverable upon the
exercise of all outstanding Warrants; and
(c) the Company will use its reasonable best efforts to obtain
all such authorizations, exemptions or consents from any public
regulatory body having jurisdiction thereof as may be necessary to
enable the Company to perform its obligations under this Warrant.
4. Obtaining Stock Exchange Listings. The Company will from
time to time take all action which may be necessary so that the Warrant Shares,
immediately upon their issuance upon the exercise of Warrants, will be listed on
the principal securities exchanges and markets within the United States of
America, if any, on which other shares of Common Stock are listed.
5. Loss or Destruction of Warrant. Subject to the terms and
conditions hereof, upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this Warrant
and, in the case of loss, theft or destruction, of such bond or indemnification
as the Company may reasonably require, and, in the case of such mutilation, upon
surrender and cancellation of this Warrant, the Company will execute and deliver
a new Warrant of like tenor.
6. Ownership of Warrant. The Company may deem and treat the
Warrantholder as the holder and owner hereof (notwithstanding any notations of
ownership or writing hereon made by anyone other than the Company) for all
purposes and shall not be affected by any notice to the contrary, until
presentation of this Warrant for registration of transfer.
7. Certain Adjustments.
7.1 The number of Warrant Shares purchasable upon the exercise
of this Warrant and the Exercise Price shall be subject to adjustment as
follows:
(a) Stock Dividends. If at any time after the date of the
issuance of this Warrant (i) the Company shall fix a record date for
the issuance of any stock dividend payable in shares of Common Stock,
or (ii) the number of shares of Common Stock shall have been increased
by a subdivision or split-up of shares of Common Stock, then, on the
record date fixed for the determination of holders of Common Stock
entitled to receive such dividend or immediately after the effective
date of such subdivision or split-up, as the case may be, the number of
shares to be delivered upon exercise of this Warrant will be increased
so that the Warrantholder will be entitled to receive
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138
the number of shares of Common Stock that such Warrantholder would have
owned immediately following such action had this Warrant been exercised
immediately prior thereto, and the Exercise Price will be adjusted as
provided below in paragraph (g).
(b) Combination of Stock. If the number of shares of Common
Stock outstanding at any time after the date of the issuance of this
Warrant shall have been decreased by a combination of the outstanding
shares of Common Stock, then, immediately after the effective date of
such combination, the number of shares of Common Stock to be delivered
upon exercise of this Warrant will be decreased so that the
Warrantholder thereafter will be entitled to receive the number of
shares of Common Stock that such Warrantholder would have owned
immediately following such action had this Warrant been exercised
immediately prior thereto, and the Exercise Price will be adjusted as
provided below in paragraph (g).
(c) Reorganization, etc. If any capital reorganization of the
Company, any reclassification of the Common Stock, any consolidation of
the Company with or merger of the Company with or into any other
Person, or any sale or lease or other transfer of all or substantially
all of the assets of the Company to any other Person, shall be effected
in such a way that the holders of Common Stock shall be entitled to
receive stock, other securities or assets (whether such stock, other
securities or assets are issued or distributed by the Company or
another Person) with respect to or in exchange for Common Stock, then,
upon exercise of this Warrant, the Warrantholder shall have the right
to receive the kind and amount of stock, other securities or assets
receivable upon such reorganization, reclassification, share exchange
or consolidation, merger or sale, lease or other transfer by a holder
of the number of shares of Common Stock that such Warrantholder would
have been entitled to receive upon exercise of this Warrant had this
Warrant been exercised immediately before such reorganization,
reclassification, share exchange or consolidation, merger or sale,
lease or other transfer, subject to adjustments that shall be as nearly
equivalent as may be practicable to the adjustments provided for in
this Section 7. The Company shall not effect any such share exchange or
consolidation, merger or sale, lease or other transfer, unless prior
to, or simultaneously with, the consummation thereof, the successor
Person (if other than the Company) resulting from such share exchange
or consolidation or merger, or such Person purchasing, leasing or
otherwise acquiring such assets, shall assume, by written instrument,
the obligation to deliver to the Warrantholder the shares of stock,
securities or assets to which, in accordance with the foregoing
provisions, the Warrantholder may be entitled and all other obligations
of the Company under this Warrant. The provisions of this paragraph (c)
shall apply to successive reorganizations, reclassifications,
consolidations, mergers, sales, leasing transactions and other
transfers.
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139
(d) Distributions to all Holders of Common Stock. If the
Company shall, at any time after the date of issuance of this Warrant,
fix a record date to distribute to all holders of its Common Stock any
shares of capital stock of the Company (other than Common Stock) or
evidences of its indebtedness or assets (not including regular
quarterly cash dividends and distributions paid from retained earnings
of the Company) or rights or warrants to subscribe for or purchase any
of its securities, then the Warrantholder shall be entitled to receive,
upon exercise of this Warrant, that portion of such distribution to
which it would have been entitled had the Warrantholder exercised its
Warrant immediately prior to the date of such distribution. At the time
it fixes the record date for such distribution, the Company shall
allocate sufficient reserves to ensure the timely and full performance
of the provisions of this subsection. The Company shall promptly (but
in any case no later than five Business Days prior to the record date
of such distribution) give notice to the Warrantholder that such
distribution will take place.
(e) Fractional Shares. No fractional shares of Common Stock
shall be issued to any Warrantholder in connection with the exercise of
this Warrant. Instead of any fractional shares of Common Stock that
would otherwise be issuable to such Warrantholder, the Company will pay
to such Warrantholder a cash adjustment in respect of such fractional
interest in an amount equal to that fractional interest of the then
current Fair Market Value per share of Common Stock.
(f) Carryover. Notwithstanding any other provision of this
Section 7, no adjustment shall be made to the number of shares of
Common Stock to be delivered to the Warrantholder if such adjustment
represents less than 0.01% of the number of shares to be so delivered,
but any lesser adjustment shall be carried forward and shall be made at
the time and together with the next subsequent adjustment which
together with any adjustments so carried forward shall amount to 0.01%
or more of the number of shares to be so delivered.
(g) Exercise Price Adjustments.
(i) Whenever the number of Warrant Shares purchasable
upon the exercise of this Warrant is adjusted, as herein
provided, the Exercise Price payable upon the exercise of this
Warrant shall be adjusted by multiplying such Exercise Price
immediately prior to such adjustment by a fraction, of which
the numerator shall be the number of Warrant Shares
purchasable upon the exercise of the Warrant immediately prior
to such adjustment, and of which the denominator shall be the
number of Warrant Shares purchasable immediately thereafter.
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(ii) To the extent that the Company shall, after the
date of issuance of this Warrant, become obligated to make any
Stockholder Litigation Payment (as defined in this Section
7.1(g)(ii)) with the effect that the aggregate of all
Stockholder Litigation Payments shall be in excess of $50.0
million, the Exercise Price then in effect shall be reduced by
$0.01 for every $1.0 million increment by which the
Stockholder Litigation Payment shall exceed $50.0 million in
the aggregate. For purposes of this Section 7.1(g)(ii), a
"Stockholder Litigation Payment" means (A) any payment or
series of payments (whether paid in cash, in capital stock, in
other rights or property or any combination thereof) resulting
from an adverse judgment relating to, or a settlement or other
disposition of, the following litigation (including for such
purposes, successor lawsuits or new lawsuits arising out of
the same facts and circumstances): (1) In re Prison Realty
Securities Litigation, Civ. Xx. 0-00-0000 (Xxxxxx Xxxxxx
District Court for the Middle District of Tennessee); (2) In
re Old CCA Securities Litigation, Civ. Xx. 0-00-0000 (Xxxxxx
Xxxxxx District Court for the Middle District of Tennessee),
and (3) Xxxxxxx, X.X. x. Corrections Corporation of America,
et al., No. 98-2391-III (Chancery Court for Davidson County,
Tennessee); or (B) any payment or series of payments (whether
paid in cash, in capital stock, in other rights or property or
any combination thereof) resulting from an adverse judgment
relating to, or a settlement or other disposition of, any
suit, action, claim or proceeding commenced by a current or
former stockholder or creditor of the Company arising out of
or relating to the transactions contemplated by the Securities
Purchase Agreement, including but not limited to the purchase
of the shares of Series B Preferred Stock by Pacific Life and
the Combination, both as defined therein.
(iii) The Exercise Price shall be subject to
adjustment from time to time as follows:
(A) In case the Company shall at any time or
from time to time after the date of the issuance of
this Warrant declare a dividend, or make a
distribution, on the outstanding shares of Common
Stock, in either case, in shares of Common Stock, or
effect a subdivision, combination, share exchange or
consolidation or reclassification of the outstanding
shares of Common Stock into a greater or lesser
number of shares of Common Stock, then, and in each
such case, the Exercise Price in effect immediately
prior to such event or the record date therefor,
whichever is earlier, shall be adjusted by
multiplying such Exercise Price by a fraction, the
numerator of which is the number of shares of Common
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Stock that were outstanding immediately prior to such
event and the denominator of which is the number of
shares of Common Stock outstanding immediately after
such event. An adjustment made pursuant to this
Section 7.1(g)(iii)(A) shall become effective: (x) in
the case of any such dividend or distribution,
immediately after the close of business on the record
date for the determination of holders of shares of
Common Stock entitled to receive such dividend or
distribution; or (y) in the case of any such
subdivision, reclassification, consolidation or
combination, at the close of business on the day upon
which such corporate action becomes effective.
(B) In case the Company shall issue (other
than upon the exercise of options, rights or
convertible securities) shares of Common Stock (or
options, rights, warrants or other securities
convertible into or exchangeable for shares of Common
Stock) at a price per share (or having an Exercise
Price per share) less than the Fair Market Value as
of the business day immediately preceding the
Measurement Date, as defined herein, other than (1)
issuances in a private placement of securities, other
than to an affiliate of the Company, at a price for
the securities sold in such private placement (and
the underlying Common Stock, as applicable) of not
less than 95% of the Fair Market Value thereof, (2)
in a transaction of the type described in any of
Sections 2(a), 2(b) or 7(b)(i) of the Prison Realty
Articles Supplementary relating to the Company's
Series B Preferred Stock and setting forth the rights
and preferences thereto, (3) pursuant to options,
deferred shares or other securities under any
employee or director benefit plan or program of the
Company approved by the Board of Directors of the
Company or shares of Common Stock issued upon the
exercise thereof, (4) pursuant to the conversion of
the Company's Series B Preferred Stock or the
Company's Series C Preferred Stock or as dividends on
the Company's Series A Preferred Stock, Series B
Preferred Stock, or Series C Preferred Stock, (5)
pursuant to the conversion of all convertible
securities previously issued by the Company and
outstanding on the date of the issuance of this
Warrant, or (6) pursuant to the issuance of the
Series C Preferred Stock in connection with the 1999
Distribution (as defined in the Securities Purchase
Agreement) (the issuances under clauses (1), (2),
(3), (4), (5) and (6) being referred to as "Excluded
Issuances"), then, and in each such case, the
Exercise Price in effect immediately prior to the
Measurement Date shall be reduced so as to be equal
to an amount determined by multiplying such Exercise
Price by a fraction of which the numerator shall be
the number of shares of Common Stock outstanding at
the close of business on the Measurement Date plus
the number of shares of Common Stock (or the number
of shares of Com-
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mon Stock issuable upon the conversion, exchange or
exercise of such options, rights, warrants or other
securities convertible into or exchangeable for
shares of Common Stock) which the aggregate
consideration receivable by the Company in connection
with such issuance would purchase at such Fair Market
Value and the denominator shall be the number of
shares of Common Stock outstanding at the close of
business on the Measurement Date plus the number of
shares of Common Stock (or the number of shares of
Common Stock issuable upon the conversion, exchange
or exercise of such options, rights, warrants or
other securities convertible into or exchangeable for
shares of Common Stock) so issued. For purposes of
this Section 7.1(g)(iii)(B), the aggregate
consideration receivable by the Company in connection
with the issuance of shares of Common Stock or of
options, rights, warrants or other convertible
securities shall be deemed to be equal to the sum of
the gross offering price (before deduction of
customary underwriting discounts or commissions and
expenses payable to third parties) of all such
securities plus the minimum aggregate amount, if any,
payable upon conversion or exercise of any such
options, rights, warrants or other convertible
securities into shares of Common Stock, less any
original issue discount, premiums and other similar
incentives which have the effect of reducing the
effective price per share. For purposes of this
Section 7.1(b)(iii)(B), such adjustment shall become
effective immediately prior to the opening of
business on the business day immediately following
the Measurement Date.
(C) To the extent that the Companies' (as
such term is defined in the Securities Purchase
Agreement) indemnification obligations pursuant to
Section 11.2(c) of the Securities Purchase Agreement
are to be satisfied in the form of an Exercise Price
adjustment and not in cash, then the Exercise Price
(after giving effect to all previous adjustments)
shall be reduced by the amount of any such Loss (as
such term is defined in the Securities Purchase
Agreement), other than a Loss covered by Section
7.1(g)(ii) hereof, divided by the number of shares of
Common Stock then issuable upon exercise of the
Warrant.
(D) In addition to the adjustments in
Sections 7.1(g)(iii)(A)-(C) above, the Company will
be permitted to make such reductions in the Exercise
Price as it considers to be advisable in order that
any event treated for Federal income tax purposes as
a dividend of stock or stock rights will not be
taxable to the holders of the shares of Common Stock.
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143
(E) No adjustment in the Exercise Price
shall be required unless such adjustment would
require an increase or decrease of at least $0.01 of
the Exercise Price; provided, that any adjustments
which by reason of this Section 7.1(g)(iii)(E) are
not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All
calculations under this Section 7.1 shall be made to
the nearest cent or to the nearest one-hundredth of a
share, as the case may be.
7.2 Notice of Adjustments. Whenever the number of Warrant
Shares or the Exercise Price of such Warrant Shares is adjusted, as herein
provided, the Company shall promptly give to the Warrantholder notice of such
adjustment or adjustments and a certificate of a firm of independent public
accountants of recognized national standing selected by the Board of Directors
of the Company (which shall be appointed at the Company's expense and may be the
independent public accountants regularly employed by the Company) setting forth
the number of Warrant Shares and the Exercise Price of such Warrant Shares after
such adjustment, a brief statement of the facts requiring such adjustment, and
the computation by which such adjustment was made.
7.3 Effect of Failure to Notify. Failure to file any
certificate or notice or to give any notice, or any defect in any certificate or
notice, pursuant to Section 7.2 shall not affect the legality or validity of the
adjustment to the Exercise Price, the number of shares purchasable upon exercise
of this Warrant, or any transaction giving rise thereto.
8. Reports Under Securities Exchange Act of 0000 (xxx
"Xxxxxxxx Xxx"). With a view to making available to the Warrantholder the
benefits of Rule 144 promulgated under the Securities Act or any other similar
rule or regulation of the Securities and Exchange Commission ("SEC") that may at
any time permit the Warrantholder to sell securities of the Company to the
public without registration ("Rule 144"), the Company agrees to
(a) make and keep public information available, as those terms
are understood and defined in Rule 144, at all times;
(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the
Exchange Act; and
(c) furnish to the Warrantholder, promptly upon request, (i) a
written statement by the Company that it has complied with the
reporting requirements of Rule 144 (at any time after 90 days after the
effective date of the first registration statement filed by the
Company), the Securities Act and the Exchange Act (at any time after it
has become subject to such reporting requirements), (ii) a copy of the
most recent annual or quarterly report of the Company and such other
reports and documents
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so filed by the Company, and (iii) such other information as may be
reasonably requested to permit the sale of such securities without
registration.
9. Amendments. Any provision of this Warrant may be amended
and the observance thereof may be waived (either generally or in a particular
instance and either retroactively or prospectively), only with the written
consent or approval of the Company and the Warrantholder. Any amendment or
waiver effected in accordance with this Section 9 shall be binding upon the
Warrantholder and the Company.
10. Expiration of the Warrant. The obligations of the Company
pursuant to this Warrant shall terminate on the Expiration Date.
11. Definitions. As used herein, unless the context otherwise
requires, the following terms have the following respective meanings:
"Fair Market Value" shall mean, with respect to a share of
Common Stock as of a particular date (the "Determination Date"), the
average, rounded to the nearest cent ($0.01), of the closing price per
share of the Common Stock on the New York Stock Exchange, for the 20
consecutive trading days ending on the trading day immediately
preceding the date in question. If at any time the Common Stock is not
listed on any exchange or quoted in the domestic over-the-counter
market, the "Fair Market Value" shall be deemed to be the fair value
thereof, as agreed by the Majority of Holders within 20 days of the
date on which the determination is to be made.
"Governmental Authority" shall mean the government of any
nation, state, city, locality or other political subdivision of any
thereof, and any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government
having or asserting jurisdiction over a Person, its business or its
properties.
"Person" shall mean any individual, firm, Company,
partnership, limited liability company, trust, incorporated or
unincorporated association, joint venture, joint stock company,
Governmental Authority or other entity of any kind.
"Measurement Date" shall mean, in the case of an offering of
rights, warrants or options to all or substantially all of the holders
of the Common Stock or any other issuance contemplated herein, where a
record date is fixed for the determination of stockholders entitled to
participate in such issuance, such record date and in all other cases,
the business day immediately preceding the date of issuance of shares
of Common Stock (or options, rights, warrants or other securities
convertible into or exchangeable for shares of Common Stock).
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12. No Impairment. The Company shall not by any action,
including, without limitation, amending the Articles of Incorporation of the
Company or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms of this
Warrant, but will at all times in good faith assist in the carrying out of all
such terms and in the taking of all such reasonable actions as may be necessary
or appropriate to protect the rights of the Warrantholder against impairment.
Without limiting the generality of the foregoing, the Company shall (a) take all
such actions as may be necessary or appropriate in order that the Company may
validly and legally issue fully paid and nonassessable shares of Common Stock
upon the exercise of this Warrant, and (b) provide reasonable assistance to the
Warrantholder in obtaining all authorizations, exemptions or consents from any
Governmental Authority which may be necessary in connection with the exercise of
this Warrant.
13. Miscellaneous.
13.1 Entire Agreement. This Warrant constitutes the entire
agreement between the Company and the Warrantholder with respect to the
Warrants.
13.2 Binding Effects; Benefits. This Warrant shall inure to
the benefit of and shall be binding upon the Company and the Warrantholder and
its respective heirs, legal representatives, successors and assigns. Nothing in
this Warrant, expressed or implied, is intended to or shall confer on any Person
other than the Company and the Warrantholder, or its respective heirs, legal
representatives, successors or assigns, any rights, remedies, obligations or
liabilities under or by reason of this Warrant.
13.3 Section and Other Headings. The section and other
headings contained in this Warrant are for reference purposes only and shall not
be deemed to be a part of this Warrant or to affect the meaning or
interpretation of this Warrant.
13.4 Pronouns. All pronouns and any variations thereof refer
to the masculine, feminine or neuter, singular or plural, as the context may
require.
13.5 Further Assurances. Each of the Company and the
Warrantholder shall do and perform all such further acts and things and execute
and deliver all such other certificates, instruments and documents as the
Company or the Warrantholder may, at any time and from time to time, reasonably
request in connection with the performance of any of the provisions of this
Warrant.
13.6 Notices. All notices and other communications required or
permitted to be given under this Warrant shall be in writing and shall be deemed
to have been duly given if (i) delivered personally or (ii) sent by facsimile or
recognized overnight courier or by United States first class certified mail,
postage prepaid, to the parties hereto at the following addresses
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or to such other address as any party hereto shall hereafter specify by notice
to the other party hereto:
if to the Company, addressed to:
Corrections Corporation of America
00 Xxxxxx Xxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Chief Financial Officer or Secretary
Fax Number: (000) 000-0000
with a copy to:
Xxxxxx & Xxxxxxxxxxx, P.A.
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxxxxx X. Xxxxx, Esq.
Fax Number: (000) 000-0000
if to the Warrantholder, addressed to:
-----------------------
-----------------------
-----------------------
Attention: Chief Financial Officer
Fax Number:
------------
with a copy to:
-----------------------
-----------------------
-----------------------
Attention:
-------------
Fax Number:
-------------
Except as otherwise provided herein, all such notices and
communications shall be deemed to have been received (a) on the date of delivery
thereof, if delivered personally or sent by facsimile, (b) on the second
Business Day following delivery into the custody of an overnight courier
service, if sent by overnight courier, provided that such delivery is made
before such courier's deadline for next-day delivery, or (c) on the third
Business Day after the mailing thereof.
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13.7 Separability. Any term or provision of this Warrant which
is invalid or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the terms and provisions of this Warrant or
affecting the validity or enforceability of any of the terms or provisions of
this Warrant in any other jurisdiction.
13.8 Governing Law. THIS WARRANT SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER THE LAWS OF THE STATE OF MARYLAND AND FOR ALL PURPOSES SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF SUCH STATE
APPLICABLE TO SUCH AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH
STATE.
13.9 No Rights or Liabilities as Stockholder. Nothing
contained in this Warrant shall be deemed to confer upon the Warrantholder any
rights as a stockholder of the Company or as imposing any liabilities on the
Warrantholder to purchase any securities whether such liabilities are asserted
by the Company or by creditors or stockholders of the Company or otherwise.
[SIGNATURE PAGE TO FOLLOW]
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IN WITNESS WHEREOF, the Company has caused this Warrant to be
signed by its duly authorized officer.
CORRECTIONS CORPORATION OF
AMERICA
By:________________________________
Dated: ____________________________
ATTEST:
By: _______________________________
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EXHIBIT A
EXERCISE FORM
(To be executed upon exercise of this Warrant)
The undersigned hereby irrevocably elects to exercise the
right, represented by this Warrant, to purchase _______ shares of Common Stock
and herewith tenders payment for such Common Stock to the order of Corrections
Corporation of America in the amount of $______, which amount includes payment
of the par value for _______ of the Common Stock, in accordance with the terms
of this Warrant. The undersigned requests that a certificate for such shares of
Common Stock be registered in the name of ______________________ and that such
certificates be delivered to ______________________ whose address is
___________________________________.
Dated:__________________________
Signature:__________________________________
__________________________________
(Print Name)
__________________________________
(Xxxxxx Xxxxxxx)
__________________________________
(City) (State) (Zip Code)
Signed in the Presence of:
_______________________________
Exh. A-1
150
EXHIBIT B
FORM OF ASSIGNMENT
(To be executed only upon transfer of this Warrant)
For value received, the undersigned registered holder of the
within Warrant hereby sells, assigns and transfers unto _____________ the right
represented by such Warrant to purchase ____________ shares of Common Stock of
Corrections Corporation of America to which such Warrant relates and all other
rights of the Warrantholder under the within Warrant, and appoints _____________
Attorney to make such transfer on the books of Corrections Corporation of
America maintained for such purpose, with full power of substitution in the
premises. This sale, assignment and transfer has been previously approved in
writing by Corrections Corporation of America.
Dated:_____________________________
Signature:_________________________________
_________________________________
(Print Name)
_________________________________
(Xxxxxx Xxxxxxx)
_________________________________
(City) (State) (Zip Code)
Signed in the Presence of:
___________________________________
Exh. B-1
151
Exhibit G
REGISTRATION RIGHTS AGREEMENT
By and Among
CORRECTIONS CORPORATION OF AMERICA
and
The Persons Listed on
the Signature Pages Hereof
Dated as of ___________, 2000
152
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement"), dated as of
_________, 2000, by and among Corrections Corporation of America, formerly
Prison Realty Trust, Inc., a Maryland corporation ("CCA" or the "Company"), and
the other Persons identified on the signature pages hereof (herein referred to
collectively, along with their respective affiliates and successors who from and
after the date hereof acquire or are otherwise the transferee of any Registrable
Securities (as hereinafter defined), as the "Initial Holders" and individually,
as an "Initial Holder") and any other Person that shall from and after the date
hereof acquire or otherwise be the transferee of any Registrable Securities and
who shall be a Permitted Transferee (as hereinafter defined) of any Initial
Holder (herein referred to collectively as the "Holders" and individually as a
"Holder").
WHEREAS CCA (as Prison Realty Trust, Inc.), Corrections Corporation of
America, a Tennessee corporation, Prison Management Services, Inc., a Tennessee
corporation, and Juvenile and Jail Facility Management Services, Inc., a
Tennessee corporation, have entered into a Securities Purchase Agreement, dated
as of April 5, 2000 (the "Securities Purchase Agreement") with the Initial
Holders which provides, upon the terms and subject to the conditions thereof,
for the purchase by the Initial Holders of up to an aggregate of 8,000,000
shares of CCA's Series B Cumulative Convertible Preferred Stock, $0.01 par value
per share (the "Series B Preferred Stock");
WHEREAS the Series B Preferred Stock shall be convertible into shares
of CCA Common Stock, $0.01 par value per share (the "Common Stock"), and shall
have the rights and preferences set forth in the Articles Supplementary relating
to the Series B Preferred Stock, as defined herein, and attached as Exhibit D to
the Securities Purchase Agreement;
WHEREAS, subject to the terms and conditions of the Securities Purchase
Agreement, CCA will issue to the Initial Holders warrants to purchase shares of
Common Stock (the "Warrants") collectively granting to the Initial Holders the
right to purchase that number of shares of Common Stock equal to up to ten
percent (10%) of the total shares of Common Stock outstanding at the time of
purchase, on a fully diluted basis (the issuance and sale of the Series B
Preferred Stock and the Warrants to the Initial Holders are referred to herein,
collectively, as the "Investment");
WHEREAS, CCA intends to elect to be taxed as a real estate investment
trust, or a REIT, for federal income tax purposes under the Internal Revenue
Code of 1986, as amended (the "Code"), for its taxable year ending December 31,
1999 and, in satisfaction of any distribution requirements required thereby,
will make such distributions to the holders of its Common Stock, in the form of
shares of CCA's Series C Cumulative Convertible Preferred Stock, $0.01 par value
per share (the "Series C Preferred Stock"); and
153
WHEREAS, in order to induce the Initial Holders to complete the
transactions contemplated by the Securities Purchase Agreement and set forth
above, CCA has agreed to provide registration rights on the terms and subject to
the conditions provided herein.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties and agreements contained herein, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound hereby, the parties hereto agree
as follows:
Section 1. Definitions.
(a) As used in this Agreement, the following terms shall have the
following meanings:
"Affiliate" shall have the meaning set forth in Rule 12b-2 promulgated
under the Exchange Act.
"Blackout Period" shall have the meaning set forth in Section 2(a)(i).
"Company" shall have the meaning set forth in the preamble and shall
also include CCA's successors.
"Common Stock" shall have the meaning set forth in the recitals hereto.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
"Holders" shall have the meaning set forth in the preamble.
"Incidental Registration" shall mean a registration required to be
effected by CCA pursuant to Section 2(b).
"Incidental Registration Statement" shall mean a registration statement
of CCA or as provided in Section 2(b), which covers any of the Registrable
Securities on an appropriate form in accordance with the Securities Act and all
amendments and supplements to such registration statement, including
post-effective amendments, in each case including the Prospectus contained
therein, all exhibits thereto and all material incorporated by reference
therein.
"Initial Holder(s)" shall have the meaning set forth in the preamble.
"Majority Holders" shall mean Holders of the Registrable Securities as
to which registration has been requested representing in the aggregate a
majority of such shares beneficially owned by Holders.
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154
"Market Value" shall mean, with respect to the Common Stock, the
average, rounded to the nearest cent ($0.01), of the closing price per share of
the Common Stock, respectively, on the New York Stock Exchange for twenty
consecutive trading days ending on the trading day immediately preceding the
date in question. If at any time the Common Stock is not listed on any exchange
or quoted in the domestic over-the-counter market, the "Market Value" shall be
deemed to be the fair value thereof, as agreed by the Majority of Holders within
20 days of the date on which the determination is to be made.
"NASD" shall mean the National Association of Securities Dealers, Inc.
"Permitted Transferee" shall mean any Person to which transfer of
Registrable Securities would not constitute a violation of the Securities
Purchase Agreement.
"Person" shall mean any individual, limited or general partnership,
corporation, trust, joint venture, association, joint stock company or
unincorporated organization.
"Prospectus" shall mean the prospectus included in a Registration
Statement, including any preliminary Prospectus, and any such Prospectus as
amended or supplemented by any prospectus supplement with respect to the terms
of the offering of any portion of the Registrable Securities and by all other
amendments and supplements to such Prospectus, including post-effective
amendments, and in each case including all material incorporated by reference
therein.
"Registrable Securities" shall mean certain shares of the Company which
may be acquired pursuant to the terms of the Securities Purchase Agreement,
including (i) any shares of Series B Preferred Stock, (ii) any shares of Common
Stock issued or issuable upon conversion of any shares of Series B Preferred
Stock, (iii) any shares of Common Stock issued upon exercise of the Warrants,
(iv) any shares of Series C Preferred Stock, (v) any shares of Common Stock
issued or issuable upon exercise of the Series C Preferred Stock, and (vi) any
securities issued or issuable with respect to any shares of Series B Preferred
Stock, Series C Preferred Stock or the Common Stock described in clauses (i),
(ii), (iii), (iv) and (v) above, by way of stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger,
consolidation, reorganization or otherwise.
"Registration Expenses" shall mean (i) all registration, listing,
qualification and filing fees (including NASD filing fees and all stock exchange
listing fees), (ii) fees and disbursements of counsel for the Company, (iii)
fees and disbursements of counsel for the Holders, (iv) accounting fees incident
to any such registration, (v) blue sky fees and expenses (including counsel fees
in connection with the preparation of a Blue Sky Memorandum and legal investment
survey), (vi) all expenses of any Persons in preparing or assisting in
preparing, printing, distributing, mailing and delivering any Registration
Statement, any Prospectus, any underwriting agreements, transmittal letters,
securities sales agreements, securities certificates
3
155
and other documents relating to the performance of and compliance with this
Agreement, (vii) the expenses incurred in connection with making road show
presentations and holding meetings with potential investors to facilitate the
distribution and sale of Registrable Securities which are customarily borne by
the issuer, and (v) all internal expenses of the Company (including all salaries
and expenses of officers and employees performing legal or accounting duties);
provided, however, that Registration Expenses shall not include any Selling
Expenses.
"Registration Statement" shall mean any registration statement of the
Company which covers any Registrable Securities and all amendments and
supplements to any such Registration Statement, including post-effective
amendments, in each case including the Prospectus contained therein, all
exhibits thereto and all material incorporated by reference therein.
"Required Registration Statement" shall mean a Registration Statement
pursuant to Section 2(a)(i).
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended from
time to time.
"Securities Purchase Agreement" shall have the meaning set forth in the
recitals hereto.
"Selling Expenses" shall mean underwriting discounts, selling
commissions and stock transfer taxes applicable to the shares registered by the
Holders, fees and disbursements of counsel for the Holders retained by them
(other than with respect to the fees and disbursements made in connection with
the preparation of a Blue Sky Memorandum and legal investment survey).
"Series B Preferred Stock" shall have the meaning set forth in the
recitals hereto.
"Underwriter" shall have the meaning set forth in Section 5(a).
"Underwritten Offering" shall mean a sale of securities of the Company
to an Underwriter or Underwriters for reoffering to the public.
"Warrants" shall have the meaning set forth in the recitals hereto.
(b) Capitalized terms used herein and not otherwise defined shall
have the meanings assigned such terms in the Securities Purchase Agreement.
Section 2. Registration Under the Securities Act.
(a) Required Registration.
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156
(i) Right to Require Registration. One or more Holders of
Registrable Securities shall have the right from time to time to request in
writing (a "Request") (which Request shall specify the Registrable Securities
intended to be disposed of by such Holders and the intended method of
distribution thereof) that the Company register the Registrable Securities held
by such Holder or Holders by filing with the SEC a Required Registration
Statement. Within ten (10) business days from the receipt of such a Request, the
Company will give written notice of such requested registration to all Initial
Holders of Registrable Securities. No later than the sixtieth (60th) calendar
day after the receipt of such Request, the Company will use all reasonable
efforts to cause to be filed with the SEC a Required Registration Statement
covering the Registrable Securities which the Company has been so requested to
register by Holders thereof other than the Initial Holder(s) initiating the
Request by written request given to the Company within ten (10) business days
after the giving of such written notice by the Company, providing for the
registration under the Securities Act of the Registrable Securities which the
Company has been so requested to register by all such Holders, to the extent
necessary to permit the disposition of such Registrable Securities so to be
registered in accordance with the intended methods of distribution thereof
specified in such Request or further requests, and shall use all reasonable
efforts to have such Required Registration Statement declared effective by the
SEC as soon as practicable thereafter and to keep such Required Registration
Statement continuously effective for a period of at least sixty (60) calendar
days (or, in the case of an Underwritten Offering, such period as the
Underwriters shall reasonably require) following the date on which such Required
Registration Statement is declared effective (or such shorter period which will
terminate when all of the Registrable Securities covered by such Required
Registration Statement have been sold pursuant thereto), including, if
necessary, by filing with the SEC a post-effective amendment or a supplement to
the Required Registration Statement or the related Prospectus or any document
incorporated therein by reference or by filing any other required document or
otherwise supplementing or amending the Required Registration Statement, if
required by the rules, regulations or instructions applicable to the
registration form used by the Company for such Required Registration Statement
or by the Securities Act, the Exchange Act, any state securities or blue sky
laws, or any rules and regulations thereunder.
Pursuant to this Section 2(a)(i), the Company shall not be
required to effect: (i) a Required Registration hereunder unless Holders
beneficially owning Registrable Securities with an aggregate Market Value of
$30.0 million have initiated or joined in the Request, and (ii) more than six
(6) registrations in the aggregate requested by the Holders.
A Request may be withdrawn prior to the filing of the Required
Registration Statement by the Holder(s) which made such Request (a "Withdrawn
Request") and a Required Registration Statement may be withdrawn prior to the
effectiveness thereof by Holders of a majority of the Registrable Securities
included therein (a "Withdrawn Required Registration"), and, in either such
event, such withdrawal shall be treated as a Required Registration
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157
which can be effected pursuant to clause (ii) of the immediately preceding
paragraph, except that the Holders may require the Company to disregard one
Withdrawn Request for purposes of such clause (ii).
The Holders shall not, without the Company's consent, be entitled
to deliver a Request for a Required Registration after the completion of the
Required Registration if less than ninety (90) calendar days have elapsed since
(A) the effective date of a prior Required Registration Statement, (B) in the
case of a Required Registration which is effected other than by means of an
Underwritten Offering, the date of sale by the Holders of their Registrable
Securities pursuant thereto or (C) the date of withdrawal of a Withdrawn
Required Registration.
Notwithstanding the foregoing, the Company shall not be required
to file a Required Registration Statement for a period of one year after the
Initial Closing Date (as defined in the Securities Purchase Agreement), and
after such time, may delay the filing of a Required Registration Statement if
the Board of Directors of the Company determines that such action is in the best
interests of the Company's stockholders, and only for an aggregate number of
days not to exceed sixty (60) days in any twelve (12) month period (a "Blackout
Period").
The registration rights granted pursuant to the provisions of this
Section 2(a)(i) shall be in addition to the registration rights granted pursuant
to the other provisions of this Section 2.
(ii) Priority in Required Registrations. If a Required
Registration pursuant to this Section 2(a) involves an Underwritten Offering,
and the sole Underwriter or the lead managing Underwriter, as the case may be,
of such Underwritten Offering shall advise the Company in writing (with a copy
to each Holder requesting registration) on or before the date five (5) days
prior to the date then scheduled for such offering that, in its opinion, the
amount of Registrable Securities requested to be included in such Required
Registration exceeds the amount which can be sold in such offering without
adversely affecting the distribution of the Registrable Securities being
offered, the Company will include in such Required Registration only the amount
of Registrable Securities that the Company is so advised can be sold in such
offering; provided, however, that the Company shall be required to include in
such Required Registration all Registrable Securities requested to be included
in the Required Registration by the Initial Holders, and, to the extent not all
such securities can be included in such Required Registration, the number of
securities to be included shall be allocated pro rata by the Initial Holders
thereof requesting inclusion in such Required Registration on the basis of the
number of securities requested to be included by all such Initial Holders.
(b) Incidental Registration.
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158
(i) Right to Include Registrable Securities. If at any time the
Company proposes to register any of its Series B Preferred Stock or Common Stock
under the Securities Act (other than (A) any registration of public sales or
distributions solely by and for the account of the Company of securities issued
(x) pursuant to any employee benefit or similar plan or any dividend
reinvestment plan or (y) in any acquisition by the Company, or (B) pursuant to
Section 2(a) hereof), either in connection with a primary offering for cash for
the account of the Company or a secondary offering, the Company will, each time
it intends to effect such a registration, give written notice to all Initial
Holders of Registrable Securities at least ten (10) business days prior to the
initial filing of a Registration Statement with the SEC pertaining thereto,
informing such Initial Holders of its intent to file such Registration Statement
and of the Holders' rights to request the registration of the Registrable
Securities held by the Holders under this Section 2(b) (the "Company Notice").
Upon the written request of any Initial Holder made within seven (7) business
days after any such Company Notice is given (which request shall specify the
Registrable Securities intended to be disposed of by such Initial Holder and
such Initial Holder's Permitted Transferees and, unless the applicable
registration is intended to effect a primary offering of Series B Preferred
Stock or Common Stock for cash for the account of the Company, the intended
method of distribution thereof), the Company will use all reasonable efforts to
effect the registration under the Securities Act of all Registrable Securities
which the Company has been so requested to register by such Initial Holders to
the extent required to permit the disposition (in accordance with the intended
methods of distribution thereof or, in the case of a registration which is
intended to effect a primary offering for cash for the account of the Company,
in accordance with the Company's intended method of distribution) of the
Registrable Securities so requested to be registered, including, if necessary,
by filing with the SEC a post-effective amendment or a supplement to the
Incidental Registration Statement or the related Prospectus or any document
incorporated therein by reference or by filing any other required document or
otherwise supplementing or amending the Incidental Registration Statement, if
required by the rules, regulations or instructions applicable to the
registration form used by the Company for such Incidental Registration Statement
or by the Securities Act, any state securities or blue sky laws, or any rules
and regulations thereunder; provided, however, that if, at any time after giving
written notice of its intention to register any securities and prior to the
effective date of the Incidental Registration Statement filed in connection with
such registration, the Company shall determine for any reason not to register or
to delay registration of such securities, the Company may, at its election, give
written notice of such determination to each Initial Holder of Registrable
Securities and, thereupon, (A) in the case of a determination not to register,
the Company shall be relieved of its obligation to register any Registrable
Securities in connection with such registration (but not from its obligation to
pay the Registration Expenses incurred in connection therewith), and (B) in the
case of a determination to delay such registration, the Company shall be
permitted to delay registration of any Registrable Securities requested to be
included in such Incidental Registration Statement for the same period as the
delay in registering such other securities.
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159
The registration rights granted pursuant to the provisions of
this Section 2(b) shall be in addition to the registration rights granted
pursuant to the other provisions of this Section.
(ii) Priority in Incidental Registrations. If a registration
pursuant to this Section 2(b) involves an Underwritten Offering of the
securities so being registered, whether or not for sale for the account of the
Company (on a firm commitment basis), by or through one or more underwriters of
recognized standing under underwriting terms appropriate for such a transaction,
and the sole Underwriter or the lead managing Underwriter, as the case may be,
of such Underwritten Offering shall advise the Company in writing (with a copy
to each Initial Holder of Registrable Securities requesting registration) on or
before the date five (5) days prior to the date then scheduled for such offering
that, in its opinion, the amount of securities (including Registrable
Securities) requested to be included in such registration exceeds the amount
which can be sold in (or during the time of) such offering without adversely
affecting the distribution of the securities being offered (such writing to
state the basis of such belief and the approximate number of Registrable
Securities which may be distributed without such effect), then the Company will
include in such registration: (i) all the securities entitled to be sold
pursuant to such Registration Statement without reference to the incidental
registration rights of any holder (including the Holders), and (ii) the amount
of other securities (including Registrable Securities) requested to be included
in such registration that the Company is so advised can be sold in (or during
the time of) such offering, allocated, if necessary, pro rata among the holders
(including the Holders) thereof requesting such registration on the basis of the
number of the securities (including Registrable Securities) beneficially owned
at the time by the holders (including the Holders) requesting inclusion of their
securities; provided, however, that in the event the Company will not, by virtue
of this paragraph, include in any such registration all of the Registrable
Securities of any Holder requested to be included in such registration, such
Holder may, upon written notice to the Company given within three (3) days of
the time such Holder first is notified of such matter, reduce the amount of
Registrable Securities it desires to have included in such registration,
whereupon only the Registrable Securities, if any, it desires to have included
will be so included and the Holders not so reducing shall be entitled to a
corresponding increase in the amount of Registrable Securities to be included in
such registration.
(c) Expenses. The Company agrees to pay all Registration Expenses
in connection with (i) each of the registrations requested pursuant to Section
2(a), whether or not such registration is consummated, and (ii) each
registration as to which Holders request inclusion of Registrable Securities
pursuant to Section 2(b), whether or not such registration is consummated. All
Selling Expenses relating to securities registered on behalf of the Holders
shall be borne by the Holders of shares included in such registration, other
selling stockholders and the Company pro rata on the basis of the number of
shares so registered.
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(d) Effective Registration Statement; Suspension. Subject to the
third paragraph of Section 2(a)(i), a Registration Statement pursuant to Section
2(a) will not be deemed to have become effective (and the related registration
will not be deemed to have been effected) unless it has been declared effective
by the SEC prior to a request by the Holders of a majority of the Registrable
Securities included in such registration that such Registration Statement be
withdrawn; provided, however, that if, after it has been declared effective, the
offering of any Registrable Securities pursuant to such Registration Statement
is interfered with by any stop order, injunction or other order or requirement
of the SEC or any other governmental agency or court that shall have been in
effect for at least thirty (30) days, such Registration Statement will be deemed
not to have become effective, and the related registration will not be deemed to
have been effected.
(e) Selection of Underwriters. At any time or from time to time,
the Holders of a majority of the Registrable Securities covered by a Required
Registration Statement may elect to have such Registrable Securities sold in an
Underwritten Offering and may select the investment banker or investment bankers
and manager or managers that will serve as lead and co-managing Underwriters
with respect to the offering of such Registrable Securities, subject to the
consent of the Company, which shall not be unreasonably withheld. No Holder may
participate in any Underwritten Offering hereunder unless such Holder (a) agrees
to sell such Holder's securities on the basis provided in any underwriting
arrangements approved by the Persons entitled hereunder to approve such
arrangements and (b) completes and executes all questionnaires, powers of
attorney, custody agreements, indemnities, underwriting agreements and other
documents required under the terms of such Underwritten Offering.
Section 3. Restrictions on Public Sale by the Company. If
requested by the sole Underwriter or lead managing Underwriter(s) in such
Underwritten Offering, the Company agrees not to effect any public sale or
distribution (other than public sales or distributions solely by and for the
account of the Company of securities issued pursuant to any employee benefit or
similar plan or any dividend reinvestment plan) of any securities during the
period commencing on the date the Company receives a Request from any Initial
Holder and continuing until ninety (90) days after such Registration Statement
is declared effective by the SEC (or for such shorter period as the sole or lead
managing Underwriter shall request) unless earlier terminated by the sole
Underwriter or lead managing Underwriter(s) in such Underwritten Offering.
Section 4. Registration Procedures. In connection with the
obligations of the Company pursuant to Section 2 hereof, the Company shall use
all reasonable efforts to effect or cause to be effected the registration of the
Registrable Securities under the Securities Act to permit the sale of such
Registrable Securities by the Holders in accordance with their intended method
or methods of distribution, and the Company shall:
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(a) (i) prepare and, within sixty (60) days after the end of the period
within which requests for the registration may be given to the Company or in any
event as soon thereafter as possible, file with the SEC a Registration Statement
which (x) shall be on Form S-3 (or any successor to such form), if available,
(y) shall be available for the sale or exchange of the Registrable Securities in
accordance with the intended method or methods of distribution by the selling
Holders thereof and (z) shall comply as to form in all material respects with
the requirements of the applicable form and include, or incorporate by
reference, all financial statements required by the SEC to be filed therewith or
incorporated by reference therein and all other information reasonably requested
by the lead managing Underwriter or sole Underwriter, if applicable, to be
included therein, (ii) use all reasonable best efforts to cause such
Registration Statement to become effective and remain effective in accordance
with Section 2, (iii) use all reasonable best efforts to not take any action
that would cause a Registration Statement to contain a material misstatement or
omission or to be not effective and usable for resale of Registrable Securities
during the period that such Registration Statement is required to be effective
and usable and (iv) cause each Registration Statement and the related Prospectus
and any amendment or supplement thereto, as of the effective date of such
Registration Statement, amendment or supplement (x) to comply in all material
respects with any requirements of the Securities Act and the rules and
regulations of the SEC and (y) not to contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading;
(b) subject to paragraph (j) of this Section 4, prepare and file with
the SEC such amendments and post-effective amendments to each Registration
Statement, as may be necessary to keep such Registration Statement effective for
the applicable period; cause the related Prospectus to be supplemented by any
Prospectus Supplement required by applicable law, and as so supplemented to be
filed pursuant to Rule 424 (or any similar provisions then in force) promulgated
under the Securities Act; and comply with the provisions of the Securities Act
and the Exchange Act with respect to the disposition of all securities covered
by such Registration Statement, as so amended, or in such Prospectus, as so
supplemented, during the applicable period in accordance with the intended
method or methods of distribution by the selling Holders thereof, as set forth
in such Registration Statement; provided, however, that the Company shall be
deemed not to have used its reasonable best efforts to keep a Registration
Statement effective during the applicable period relating thereto if the Company
voluntarily takes any action that would result in selling Holders of the
Registrable Securities covered thereby not being able to sell such Registrable
Securities during that period unless such action is required by applicable law;
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(c) furnish to each Holder of Registrable Securities and to each
Underwriter of an Underwritten Offering of Registrable Securities, if any, and
its counsel, without charge, as many copies of each Prospectus, including each
preliminary Prospectus, and any amendment or supplement thereto and such other
documents as such Holder or Underwriter may reasonably request in order to
facilitate the public sale or other disposition of any Registrable Securities;
the Company hereby consents to the use of the Prospectus, including each
preliminary Prospectus, by each Holder of Registrable Securities and each
Underwriter of an Underwritten Offering of Registrable Securities, if any, in
connection with the offering and sale of the Registrable Securities covered by
the Prospectus or the preliminary Prospectus (the Holders hereby agreeing not to
make a broad public dissemination of a form of preliminary Prospectus which is
designed to be a "quiet filing" without the Company's consent, such consent to
not be withheld unreasonably);
(d) (i) use all reasonable best efforts to register or qualify the
Registrable Securities, no later than the time the applicable Registration
Statement is declared effective by the SEC, under all applicable state
securities or "blue sky" laws of such jurisdictions as each Underwriter, if any,
or any Holder of Registrable Securities covered by a Registration Statement,
shall reasonably request; (ii) use all reasonable efforts to keep each such
registration or qualification effective during the period such Registration
Statement is required to be kept effective; and (iii) do any and all other acts
and things which may be reasonably necessary or advisable to enable each such
Underwriter, if any, and Holder to consummate the disposition in each such
jurisdiction of such Registrable Securities owned by such Holder; provided,
however, that the Company shall not be obligated to qualify as a foreign
corporation or as a dealer in securities in any jurisdiction in which it is not
so qualified or to consent to be subject to general service of process (other
than service of process in connection with such registration or qualification or
any sale of Registrable Securities in connection therewith) in any such
jurisdiction;
(e) notify each Holder of Registrable Securities promptly, and, if
requested by such Holder, confirm such advice in writing, (i) when the
Registration Statement has become effective and when any post-effective
amendments and supplements thereto become effective, (ii) of the issuance by the
SEC or any state securities authority of any stop order, injunction or other
order or requirement suspending the effectiveness of a Registration Statement or
the initiation of any proceedings for that purpose, (iii) if, between the
effective date of a Registration Statement and the closing of any sale of
securities covered thereby pursuant to any agreement to which the Company is a
party, the representations and warranties of the Company contained in such
agreement cease to be true and correct in all material respects or if the
Company receives any notification with respect to the suspension of the
qualification of the Regis-
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trable Securities for sale in any jurisdiction or the initiation of any
proceeding for such purpose, and (iv) of the happening of any event during the
period a Registration Statement is effective as a result of which such
Registration Statement or the related Prospectus contains any untrue statement
of a material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not misleading;
(f) furnish counsel for each such Underwriter, if any, and for the
Holders of Registrable Securities copies of any comment letters received from
the SEC or any other request by the SEC or any state securities authority for
amendments or supplements to a Registration Statement and Prospectus or for
additional information;
(g) use all reasonable efforts to obtain the withdrawal of any order
suspending the effectiveness of a Registration Statement at the earliest
possible time;
(h) upon request, furnish to the sole Underwriter or lead managing
Underwriter of an Underwritten Offering of Registrable Securities, if any,
without charge, at least one signed copy of each Registration Statement and any
post-effective amendment thereto, including financial statements and schedules,
all documents incorporated therein by reference and all exhibits; and furnish to
each Holder of Registrable Securities, without charge, at least one conformed
copy of each Registration Statement and any post-effective amendment thereto
(without documents incorporated therein by reference or exhibits thereto, unless
requested);
(i) cooperate with the selling Holders of Registrable Securities and
the sole Underwriter or lead managing Underwriter of an Underwritten Offering of
Registrable Securities, if any, to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be sold and not
bearing any restrictive legends; and enable such Registrable Securities to be in
such denominations (consistent with the provisions of the governing documents
thereof) and registered in such names as the selling Holders or the sole
Underwriter or lead managing Underwriter of an Underwritten Offering of
Registrable Securities, if any, may reasonably request at least three business
days prior to the closing of any sale of Registrable Securities;
(j) upon the occurrence of any event contemplated by paragraph (e)(iv)
of this Section, use all reasonable efforts to prepare a supplement or
post-effective amendment to a Registration Statement or the related Prospectus,
or any document incorporated therein by reference, or file any other required
document so that, as thereafter delivered to the purchasers of the Registrable
Securities, such Prospectus will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading;
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(k) enter into customary agreements (including, in the case of an
Underwritten Offering, underwriting agreements in customary form, and including
provisions with respect to indemnification and contribution in customary form
and consistent with the provisions relating to indemnification and contribution
contained herein) and take all other customary and appropriate actions in order
to expedite or facilitate the disposition of such Registrable Securities and in
connection therewith;
(l) make such representations and warranties to the Holders of such
Registrable Securities and the Underwriters, if any, in form, substance and
scope as are customarily made by issuers to underwriters in similar underwritten
offerings;
(m) obtain opinions of counsel to the Company and updates thereof
(which counsel and opinions (in form, scope and substance) shall be reasonably
satisfactory to the lead managing Underwriter, if any, and the Majority Holders
of the Registrable Securities being sold) addressed to each selling Holder and
the Underwriters, if any, covering the matters customarily covered in opinions
requested in sales of securities or underwritten offerings and such other
matters as may be reasonably requested by such Holders and Underwriters;
(i) obtain "cold comfort" letters and updates thereof from the
Company's independent certified public accountants addressed to the
selling Holders of Registrable Securities, if permissible, and the
Underwriters, if any, which letters shall be customary in form and
shall cover matters of the type customarily covered in "cold comfort"
letters to underwriters in connection with primary underwritten
offerings;
(ii) to the extent requested and customary for the relevant
transaction, enter into a securities sales agreement with the Holders
and such representative of the selling Holders as the Majority Holders
of the Registrable Securities covered by any Registration Statement
relating to the Registration and providing for, among other things, the
appointment of such representative as agent for the selling Holders for
the purpose of soliciting purchases of Registrable Securities, which
agreement shall be customary in form, substance and scope and shall
contain customary representations, warranties and covenants; and
(iii) deliver such customary documents and certificates as may
be reasonably requested by the Majority Holders of the Registrable
Securities being sold or by the managing Underwriters, if any.
The above shall be done (i) at the effectiveness of such Registration Statement
(and each post-effective amendment thereto) in connection with any registration,
and (ii) at
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each closing under any underwriting or similar agreement as and to the extent
required thereunder;
(n) make available for inspection by representatives of the Initial
Holders of the Registrable Securities and any Underwriters participating in any
disposition pursuant to a Registration Statement and any counsel or accountant
retained by such Holders or Underwriters, all relevant financial and other
records, pertinent corporate documents and properties of the Company and cause
the respective officers, directors and employees of the Company to supply all
information reasonably requested by any such representative, Underwriter,
counsel or accountant in connection with a Registration Statement;
(o) (i) within a reasonable time prior to the filing of any
Registration Statement, any Prospectus, any amendment to a Registration
Statement or amendment or supplement to a Prospectus, provide copies of such
document to the Initial Holders of Registrable Securities and to counsel to such
Initial Holders and to the Underwriter or Underwriters of an Underwritten
Offering of Registrable Securities, if any; fairly consider such reasonable
changes in any such document prior to or after the filing thereof as the counsel
to the Holders or the Underwriter or the Underwriters may request and not file
any such document in a form to which the Majority Holders of Registrable
Securities being registered or any Underwriter shall reasonably object; and make
such of the representatives of the Company as shall be reasonably requested by
the Holders of Registrable Securities being registered or any Underwriter
available for discussion of such document;
(ii) within a reasonable time prior to the filing of any document which
is to be incorporated by reference into a Registration Statement or a
Prospectus, provide copies of such document to counsel for the Holders; fairly
consider such reasonable changes in such document prior to or after the filing
thereof as counsel for such Holders or such Underwriter shall request; and make
such of the representatives of the Company as shall be reasonably requested by
such counsel available for discussion of such document;
(p) cause all Registrable Securities to be qualified for inclusion in
or listed on the New York Stock Exchange or any securities exchange on which
securities of the same class issued by the Company is then so qualified or
listed if so requested by the Majority Holders of Registrable Securities covered
by a Registration Statement, or if so requested by the Underwriter or
Underwriters of an Underwritten Offering of Registrable Securities, if any;
(q) otherwise use all reasonable efforts to comply with all applicable
rules and regulations of the SEC, including making available to its security
holders an earn-
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ings statement covering at least 12 months which shall satisfy the
provisions of Section 11(a) of the Securities Act and Rule 158
thereunder;
(r) cooperate and assist in any filings required to be made
with the NASD and in the performance of any due diligence investigation
by any Underwriter in an Underwritten Offering and its counsel; and
(s) use all reasonable efforts to facilitate the distribution
and sale of any Registrable Securities to be offered pursuant to this
Agreement, including without limitation by making road show
presentations, holding meetings with potential investors and taking
such other actions as shall be requested by the Majority Holders of
Registrable Securities covered by a Registration Statement or the lead
managing Underwriter of an Underwritten Offering, in each case subject
to the reasonable availability of the Company's executives given their
other duties.
Each selling Holder of Registrable Securities as to which any
registration is being effected pursuant to this Agreement agrees, as a condition
to the registration obligations with respect to such Holder provided herein, to
furnish to the Company such information regarding such Holder required to be
included in the Registration Statement, the ownership of Registrable Securities
by such Holder and the proposed distribution by such Holder of such Registrable
Securities as the Company may from time to time reasonably request in writing.
Each Holder agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in paragraph (e)(iv)
of this Section, such Holder will forthwith discontinue disposition of
Registrable Securities pursuant to the effected Registration Statement until
such Holder's receipt of the copies of the supplemented or amended Prospectus,
contemplated by paragraph (j) of this Section, and, if so directed by the
Company, such Holder will deliver to the Company (at the expense of the
Company), all copies in its possession, other than permanent file copies then in
such Holder's possession, of the Prospectus covering such Registrable Securities
which was current at the time of receipt of such notice.
Section 5. Indemnification: Contribution.
(a) Indemnification by the Company. The Company agrees, jointly
and severally, to indemnify and hold harmless each Person who participates as an
underwriter (any such Person being an "Underwriter") each Holder and their
respective partners, directors, officers and employees and each Person, if any,
who controls any Holder or Underwriter within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act as follows:
(i) against any and all losses, liabilities, claims, damages,
judgments and expenses whatsoever, as incurred, arising out of any
untrue statement or alleged untrue
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statement of a material fact contained in any Registration Statement
(or any amendment or supplement thereto) pursuant to which Registrable
Securities were registered under the Securities Act, including all
documents incorporated therein by reference, or the omission or alleged
omission therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading or arising out
of any untrue statement or alleged untrue statement of a material fact
contained in any Prospectus, including all documents incorporated
therein by reference, or the omission or alleged omission therefrom of
a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading;
(ii) against any and all losses, liabilities, claims, damages,
judgments and expenses whatsoever, as incurred, to the extent of the
aggregate amount paid in settlement of any litigation, investigation or
proceeding by any governmental agency or body, commenced or threatened,
or of any other claim whatsoever based upon any such untrue statement
or omission, or any such alleged untrue statement or omission, if such
settlement is effected with the written consent of the Company; and
(iii) against any and all expenses whatsoever, as incurred
(including fees and disbursements of counsel chosen by any indemnified
party), incurred in investigating, preparing or defending against any
litigation, investigation or proceeding by any governmental agency or
body, commenced or threatened, in each case whether or not such Person
is a party, or any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid under
subparagraph (i) or (ii) above; provided, however, that this indemnity
agreement does not apply to any Holder or Underwriter with respect to
any loss, liability, claim, damage, judgment or expense to the extent
arising out of any untrue statement or alleged untrue statement of a
material fact contained in any Prospectus (or any amendment or
supplement thereto), or the omission or alleged omission therefrom of a
material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading, in any
such case made in reliance upon and in conformity with written
information furnished to the Company by such Holder or Underwriter
expressly for use in a Registration Statement (or any amendment
thereto) or any Prospectus (or any amendment or supplement thereto).
(b) Indemnification by Holders. Each selling Holder severally, but
not jointly, agrees to indemnify and hold harmless the Company, each Underwriter
and the other selling Holders, and each of their respective partners, directors,
officers and employees, and each Person, if any, who controls the Company, any
Underwriter or any other selling Holder within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, against any and all losses,
liabilities, claims, damages, judgments and expenses described in the indemnity
contained in Section 5(a) hereof (provided that any settlement of the type
de-
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scribed therein is effected with the written consent of such selling Holder), as
incurred, but only with respect to untrue statements or alleged untrue
statements of a material fact contained in any Prospectus or the omissions, or
alleged omissions therefrom of a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, in any such case made in reliance upon and in conformity with
written information furnished to the Company by such selling Holder expressly
for use in such Registration Statement (or any amendment thereto) or such
Prospectus (or any amendment or supplement thereto); provided, however, that no
such Holder shall be liable for any claims hereunder in excess of the amount of
net proceeds received by such Holder from the sale of Registrable Securities
pursuant to such Registration Statement.
(c) Conduct of Indemnification Proceedings. Each indemnified party
or parties shall give reasonably prompt notice to each indemnifying party or
parties of any action or proceeding commenced against it in respect of which
indemnity may be sought hereunder, but failure to so notify an indemnifying
party or parties shall not relieve it or them from any liability which it or
they may have under this indemnity agreement, except to the extent that the
indemnifying party is materially prejudiced by such failure to give notice. If
the indemnifying party or parties so elects within a reasonable time after
receipt of such notice, the indemnifying party or parties may assume the defense
of such action or proceeding at such indemnifying party's or parties' expense
with counsel chosen by the indemnifying party or parties and approved by the
indemnified party defendant in such action or proceeding, which approval shall
not be unreasonably withheld; provided, however, that, if such indemnified party
or parties determine in good faith that a conflict of interest exists and that
therefore it is advisable for such indemnified party or parties to be
represented by separate counsel or that, upon advice of counsel, there may be
legal defenses available to it or them which are different from or in addition
to those available to the indemnifying party, then the indemnifying party or
parties shall not be entitled to assume such defense and the indemnified party
or parties shall be entitled to separate counsel (limited in each jurisdiction
to one counsel for all Underwriters and another counsel for all other
indemnified parties under this Agreement) at the indemnifying party's or
parties' expense. If an indemnifying party or parties is not so entitled to
assume the defense of such action or does not assume such defense, after having
received the notice referred to in the first sentence of this paragraph, the
indemnifying party or parties will pay the reasonable fees and expenses of
counsel for the indemnified party or parties (limited in each jurisdiction to
one counsel for all Underwriters and another counsel for all other indemnified
parties under this Agreement). No indemnifying party or parties will be liable
for any settlement effected without the written consent of such indemnifying
party or parties, which consent shall not be unreasonably withheld. If an
indemnifying party is entitled to assume, and assumes, the defense of such
action or proceeding in accordance with this paragraph, such indemnifying party
or parties shall not, except as otherwise provided in this Section 5(c), be
liable for any fees and expenses of counsel for the indemnified parties incurred
thereafter in connection with such action or proceeding.
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(d) Contribution.
(i) In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in this Section is
for any reason held to be unenforceable by the indemnified parties although
applicable in accordance with its terms in respect of any losses, liabilities,
claims, damages, judgments and expenses suffered by an indemnified party
referred to therein, each applicable indemnifying party, in lieu of indemnifying
such indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, liabilities, claims, damages,
judgments and expenses in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and of the liable
selling Holders (including, in each case, that of their respective officers,
directors, employees and agents) on the other in connection with the statements
or omissions which resulted in such losses, liabilities, claims, damages,
judgments or expenses, as well as any other relevant equitable considerations.
The relative fault of the Company on the one hand and of the liable selling
Holders (including, in each case, that of their respective officers, directors,
employees and agents) on the other shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company, on the one hand, or by or on behalf of the
selling Holders, on the other, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The amount paid or payable by a party as a result of the losses,
liabilities, claims, damages, judgments and expenses referred to above shall be
deemed to include, subject to the limitations set forth in paragraph (c) of this
Section, any legal or other fees or expenses reasonably incurred by such party
in connection with investigating or defending any action or claim.
(ii) The Company and each Holder of Registrable Securities agree
that it would not be just and equitable if contribution pursuant to this Section
5(d) were determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to in
subparagraph (i) above. Notwithstanding the provisions of this paragraph (d), in
the case of distributions to the public, an indemnifying Holder shall not be
required to contribute any amount in excess of the amount by which (A) the total
price at which the Registrable Securities sold by such indemnifying Holder and
its affiliated indemnifying Holders and distributed to the public were offered
to the public exceeds (B) the amount of any damages which such indemnifying
Holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.
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(iii) For purposes of this Section, each Person, if any, who
controls a Holder or an Underwriter within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act (and their respective partners,
directors, officers and employees) shall have the same rights to contribution as
such Holder or Underwriter, and each director of the Company, each officer of
the Company who signed the Registration Statement and each Person, if any, who
controls the Company within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, shall have the same rights to contribution as
the Company.
Section 6. Miscellaneous.
(a) Inconsistent Agreements. The Company is not a party to, and
will not on or after the date of this Agreement enter into, any agreement which
conflicts with the provisions of this Agreement nor has the Company entered into
any such agreement, and the Company will not on or after the date of this
Agreement modify in any manner adverse to the Holders any such agreement;
provided, however, that nothing in this sentence shall prohibit the Company from
granting registration rights, which become exercisable from and after the
Closings (as defined in the Securities Purchase Agreement), to any Person (a
"Third Party") who becomes an owner of shares of any of the Company's capital
stock after the date hereof (including granting incidental registration rights
with respect to any Registration Statement required to be filed or maintained
hereunder) if and only if (i) the Third-Party's registration rights (including,
without limitation, demand registration rights) provide to the Holders of
Registrable Securities who seek to participate in such registration (whether or
not such registration is initiated hereunder) rights no less favorable to such
Holders than those rights provided to the Holders hereunder as if such
registration were a Required Registration (including, without limitation, the
priority provisions contained in Section 2(a)(ii)), provided, further, however,
that if such registration is not initiated by the Initial Holders such
registration shall not be deemed one of the Required Registrations for purposes
of the limitations contained in the second paragraph of Section 2(a)(i), and
(ii) the Third Party is required to enter into the agreements provided for in
Section 3 hereof (as if it were the Company) on the terms and for the period
applicable to the Company (including preventing sales pursuant to Rule 144 under
the Securities Act) if requested by the sole Underwriter or lead managing
Underwriter in an Underwritten Offering initiated by Holders of Registrable
Securities pursuant to Section 2(a). The rights granted to the Holders hereunder
do not in any way conflict with and are not inconsistent with the rights granted
to the holders of the Company's other issued and outstanding securities under
any such agreements.
(b) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given unless the Company has obtained the written consent of at least
a majority of the Holders and, if any such amendment, modification, supplement,
waiver or consent would adversely affect the
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rights of any Holder hereunder, the written consent of each Holder which is
affected shall be obtained; provided, however, that nothing herein shall
prohibit any amendment, modification, supplement, waiver or consent the effect
of which is limited only to those Holders who have agreed to such amendment,
modification, supplement, waiver or consent.
(c) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand delivery, facsimile, or any
courier guaranteeing overnight delivery (i) if to a Holder, at the most current
address given by such Holder to the Company by means of a notice given in
accordance with the provisions of this paragraph (c), which address initially
is, with respect to each Holder as of the date hereof, the address set forth
next to such Holder's name on the signature pages hereof with a copy to
_____________________, facsimile number __________, and with respect to each
Holder who becomes such after the date hereof, the address of such Holder in the
stock records of the Company, (ii) if to the Company, at 00 Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxx, Xxxxxxxxx 00000, facsimile number (000) 000-0000,
Attention: Chief Financial Officer or Secretary, with a copy to Xxxxxx &
Xxxxxxxxxxx, P.A., 000 Xxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxxxx, Xxxxxxxxx 00000,
facsimile number (000) 000-0000, Attention: Xxxxxxxxx X. Xxxxx, Esq., and
thereafter at such other address, notice of which is given in accordance with
the provisions of this paragraph. Notwithstanding the foregoing, the Company
shall not be obligated to provide any notice to any Holder which is not an
Initial Holder except with respect to a Required or Incidental Registration
Statement which has been filed and pursuant to which such Holder is identified
as a selling stockholder.
All such notices and communications shall be deemed to have been
duly given: at the time delivered by hand, if personally delivered; when receipt
is confirmed, if sent by facsimile; and on the next business day if timely
delivered to a courier guaranteeing overnight delivery. Notwithstanding the
foregoing, nothing in this Section 6(c) is intended to enlarge the class of
Persons which are Holders, as defined in the preamble of this Agreement, and
thus entitled to the rights granted hereunder.
(d) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors, assigns and transferees of each
of the parties, including, without limitation and without the need for an
express assignment, subsequent Holders. If any successor, assignee or transferee
of any Holder shall acquire Registrable Securities in any manner, whether by
operation of law or otherwise, such Registrable Securities shall be held subject
to all of the terms of this Agreement, and by taking and holding such
Registrable Securities such Person shall be conclusively deemed to have agreed
to be bound by and to perform all of the terms and provisions of this Agreement
and to receive the benefits hereof. For purposes of this Agreement, "successor"
for any entity other than a natural person shall mean a successor to such entity
as a result of such entity's merger, consolidation, liquidation, dissolution,
sale of substantially all of its assets, or similar transaction.
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(e) Recapitalizations, Exchanges, etc. Affecting Registrable
Securities. The provisions of this Agreement shall apply, to the full extent set
forth herein with respect to the Registrable Securities, to any and all
securities or capital stock of the Company or any successor or assign of the
Company (whether by merger, consolidation, sale of assets or otherwise) which
may be issued in respect of, in exchange for, or in substitution of such
Registrable Securities, by reason of any dividend, split, issuance, reverse
split, combination, recapitalization, reclassification, merger, consolidation or
otherwise. Upon the occurrence of any of such events, Series B Preferred Stock
and Common Stock amounts hereunder shall be appropriately adjusted if necessary.
(f) Counterparts. This Agreement may be executed in two or more
counterparts, each of which, when so executed and delivered, shall be deemed to
be an original, but all of which counterparts, taken together, shall constitute
one and the same instrument.
(g) Descriptive Headings, etc. The headings in this Agreement are
for convenience of reference only and shall not limit or otherwise affect the
meaning of terms contained herein. Unless the context of this Agreement
otherwise requires: (1) words of any gender shall be deemed to include each
other gender; (2) words using the singular or plural number shall also include
the plural or singular number, respectively; (3) the words "hereof", "herein"
and "hereunder" and words of similar import when used in this Agreement shall
refer to this Agreement as a whole and not to any particular provision of this
Agreement, and Article, Section, paragraph and clause references are to the
Articles, Sections, paragraphs and clauses to this Agreement unless otherwise
specified; (4) the word "including" and words of similar import when used in
this Agreement shall mean "including, without limitation," unless otherwise
specified; (5) "or" is not exclusive; and (6) provisions apply to successive
events and transactions.
(h) Severability. In the event that any one or more of the
provisions, paragraphs, words, clauses, phrases or sentences contained herein,
or the application thereof in any circumstances, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision, paragraph, word, clause, phrase or
sentence in every other respect and of the other remaining provisions,
paragraphs, words, clauses, phrases or sentences hereof shall not be in any way
affected, impaired, or invalidated, and the parties hereto shall use their best
efforts to find and employ an alternative means to achieve the same or
substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.
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(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF MARYLAND (WITHOUT GIVING
EFFECT TO THE CONFLICTS OF LAW PRINCIPLES THEREOF).
(j) Specific Performance. The parties hereto acknowledge that
there would be no adequate remedy at law if any party fails to perform in any
material respect any of its obligations hereunder, and accordingly agree that
each party, in addition to any other remedy to which it may be entitled at law
or in equity, shall be entitled to compel specific performance of the
obligations of any other party under this Agreement in accordance with the terms
and conditions of this Agreement in any court of the United States or any State
thereof having jurisdiction.
(k) Entire Agreement. This Agreement is intended by the parties as
a final expression of their agreement and intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein. This Agreement supersedes all
prior agreements and understandings between the Company, on the one hand, and
the other parties to this Agreement, on the other, with respect to such subject
matter.
[SIGNATURE PAGE TO FOLLOW]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first written above.
COMPANY:
CORRECTIONS CORPORATION OF AMERICA
By:___________________________________
Its:__________________________________
INITIAL HOLDERS:
______________________________________
By:___________________________________
Its:__________________________________
By:___________________________________
Its:__________________________________
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