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EXHIBIT 4(u)
THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO THE PROVISIONS
OF A NOTE PURCHASE AGREEMENT DATED AS OF FEBRUARY 29, 1996 BETWEEN THE
CORPORATION AND PMI MEZZANINE FUND, L.P. AND A REGISTRATION RIGHTS
AGREEMENT DATED AS OF FEBRUARY 29, 1996 BETWEEN THE CORPORATION AND
PMI MEZZANINE FUND, L.P., COPIES OF WHICH ARE ON FILE AT THE OFFICES
OF THE CORPORATION.
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 OR QUALIFIED UNDER ANY APPLICABLE STATE
SECURITIES OR BLUE SKY LAWS. THEY MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 AND
QUALIFICATION UNDER APPLICABLE STATE SECURITIES OR BLUE SKY LAWS, OR
PURSUANT TO AN EXEMPTION FROM SUCH REGISTRATION AND QUALIFICATION
REQUIREMENTS.
CORRECTIONS CORPORATION OF AMERICA
7.5% CONVERTIBLE, SUBORDINATED NOTE
DUE FEBRUARY 28, 2002
No. 013
February 29, 1996
SECTION 1. PAYMENT OBLIGATION. CORRECTIONS CORPORATION OF
AMERICA, a corporation duly organized and existing under the laws of the State
of Delaware (herein called the "Corporation"), for value received, hereby
promises to pay to XXXXXX & CO., as nominee for PMI Mezzanine Fund, L.P., a
limited partnership duly organized and existing under the laws of the State of
Delaware (herein called "PMI"), or registered assigns (hereinafter referred to
as the "Holder"), the principal sum of Five Million Dollars ($5,000,000) on the
Maturity Date, and to pay interest thereon from the date hereof quarterly on
March 31, June 30, September 30, and December 31 of each year, commencing March
31, 1996, at (i) the Coupon Rate, or (ii) upon the occurrence of a Triggering
Event and until the date on which such Triggering Event is cured or waived or
until the date that is ninety (90) days from initial occurrence of the
Triggering Event, whichever is later, at the Triggering Event Rate, until the
principal hereof is paid to the person in whose name this Note is registered at
the close of business on the Business Day immediately preceding the date such
payment is due. Any payments due hereunder that fall due on a day that is not
a Business Day shall be payable on the first succeeding
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Business Day and such extension of time shall be included in the computation of
interest due hereunder. Payment of the principal of and interest on this Note
will be made by cashiers check or by wire transfer of immediately available
funds, in currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts, at such address or to
such account, as applicable, as shall be designated to the Corporation by the
Holder.
SECTION 2. DEFINITIONS. As used herein, the following terms
will be deemed to have the meanings set forth below:
"BOARD" means the board of directors of the Corporation.
"BUSINESS DAY" means each Monday, Tuesday, Wednesday, Thursday, or
Friday that is not a day on which banking institutions in Los Angeles,
California are authorized or obligated by law or executive order to
close.
"CHANGE EVENT" shall mean:
(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) of beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) of 50% 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 were the beneficial owners of voting securities
of the Corporation immediately prior to such acquisition in
substantially the same proportion as their ownership,
immediately prior to such acquisition, of the combined voting
power of the then outstanding voting securities of the
Corporation entitled to vote generally in the election of
directors; or
(b) the Incumbent Board shall cease for any reason to
constitute at fifty percent (50%) of the members of the Board;
or
(c) approval by the stockholders of the Corporation of a
reorganization, merger, or consolidation, in each case, with
respect to which all or substantially all the individuals and
entities who were the respective beneficial owners of the
voting securities of the Corporation immediately prior to such
reorganization, merger, or consolidation do not, following
such
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reorganization, merger, or consolidation beneficially own,
directly or indirectly, more than 50% of the combined voting
power of the then outstanding voting securities entitled to
vote generally in the election of directors of the corporation
resulting from such reorganization, merger, or consolidation;
or
(d) the sale or other disposition of all or substantially all
the assets or property of the Corporation in one transaction
or a series of related transactions.
"CLOSING DATE" shall have the meaning ascribed thereto in Section 2.2
of the Note Purchase Agreement.
"COMMON STOCK" means the common stock of the Corporation, par value
$l.00 per share.
"CONVERSION PRICE" means $53.30 per share of Common Stock, subject to
adjustment from time to time as herein set forth.
"CONVERSION RATIO" means the number of Conversion Shares to be
delivered upon conversion of One Hundred Dollars ($100) of principal
amount of this Note. Subject to the provisions for adjustment set
forth herein, the Conversion Ratio shall be determined as the quotient
of (i) the principal amount of this Note to be converted, divided by
(ii) the Conversion Price. Subject to the provisions for adjustment
set forth herein, the Conversion Ratio initially shall be 1.8762.
"CONVERSION SHARES" means fully paid and nonassessable shares of
Common Stock issuable upon conversion of the indebtedness evidenced by
this Note.
"CONVERTIBLE NOTES" means the Corporation's (a) $7,000,000 aggregate
principal amount 8.5% Convertible Subordinated Notes due November 7,
1999, (b) $7,500,000 aggregate principal amount 8.5% Convertible,
Extendable, Subordinated Notes due on September 30, 1998 or, if
extended, on various dates, the latest of which is September 30, 2000,
(c) option to purchase the Floating Rate Notes, and (d) the Floating
Rate Notes when issued.
"CONVERTIBLE SECURITIES" means rights, warrants, options or other
securities convertible into or exchangeable for shares of Common
Stock.
"COUPON RATE" means seven and one-half percent (7.5%) per annum.
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"CURRENT MARKET PRICE" when used with reference to shares of Common
Stock, shall mean the closing price per share of Common Stock on such
date and, when used with reference to shares of Common Stock for any
period shall mean the average of the daily closing prices per share of
Common Stock for such period. If the Common Stock is listed or
admitted to trading on a national securities exchange, the closing
price for each day shall be the last sale price, regular way, or, in
case no such sale takes place on such day, the average of the closing
bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to
securities listed or admitted to trading on the New York Stock
Exchange or, if the Common Stock is not listed or admitted to trading
on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the
Common Stock is listed or admitted to trading. If the Common Stock is
not publicly held or so listed or publicly traded, "Current Market
Price" shall mean the fair market value per share of Common Stock as
determined in good faith by the Board based on an opinion of an
independent investment banking firm with an established national
reputation as a valuer of securities, which opinion may be based on
such assumptions as such firm shall deem to be necessary and
appropriate.
"EVENT OF DEFAULT" shall have the meaning set forth in Section 7.1 of
the Note Purchase Agreement.
"EXCHANGE ACT" shall have the meaning set forth in Section 3.1 of the
Note Purchase Agreement.
"FLOATING RATE NOTES" shall have the meaning set forth in the Sodexho
Agreement.
"INCUMBENT BOARD" means the individuals who, as of the Closing Date,
constitute the Board; provided, however, that any individual becoming
a director subsequent to the Closing Date, whose election, or
nomination for election by the Corporation's stockholders, was
approved by a vote of at least a majority of the directors then
comprising the Incumbent Board shall be deemed to be a member of the
Incumbent Board.
"MAJOR TRANSACTION" shall mean:
(a) approval by the stockholders of the Corporation of a
reorganization, merger, or consolidation, in each case, with
respect to which all or substantially all the individuals and
entities who were the respective beneficial owners of the
voting securities of the Corporation immediately prior to such
reorganization, merger, or consolidation do not, following
such reorganization, merger, or consolidation beneficially
own, directly or indirectly, more than 50% of the combined
voting power of the then
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outstanding voting securities entitled to vote generally in
the election of directors of the corporation resulting from
such reorganization, merger, or consolidation; or
(b) the sale or other disposition of all or substantially all
the assets or property of the Corporation in one transaction
or a series of related transactions.
"MANDATORY CONVERSION DATE" means the Business Day specified by the
Corporation, in compliance with the provisions hereof, as the date on
which all or a portion of the indebtedness evidenced by this Note will
be converted into shares of Common Stock pursuant to the Corporation's
right to compel such conversion.
"MANDATORY CONVERSION NOTICE" means a written notice substantially in
the form of the notice attached hereto as Exhibit A and incorporated
herein by this reference.
"MANDATORY PREPAYMENT DATE" means the Business Day specified by the
Holder, in compliance with the provisions hereof, as the date on which
all or a portion of the indebtedness evidenced by this Note must be
prepaid pursuant to the Holder's right to compel such prepayment.
"MANDATORY PREPAYMENT NOTICE" means a written notice substantially in
the form of the notice attached hereto as Exhibit B and incorporated
herein by this reference.
"MATURITY DATE" means February 28, 2002.
"NOTE" means this 7.5% convertible, subordinated note issued by the
Corporation.
"NOTE PURCHASE AGREEMENT" means that certain Note Purchase Agreement,
dated as of February 29, 1996, between the Corporation and PMI.
"OPTIONAL CONVERSION NOTICE" means a written notice substantially in
the form of the notice attached hereto as Exhibit C and incorporated
herein by this reference.
"SENIOR INDEBTEDNESS" means the principal of and premium, if any, and
unpaid interest on (a) indebtedness (other than indebtedness evidenced
by the Convertible Notes, indebtedness that is subordinated in right
of payment to one or more item or type of indebtedness of the
Corporation, or indebtedness incurred in violation of the terms and
conditions of the Note Purchase Agreement) of the Corporation,
irrespective of whether secured and whether heretofore or hereafter
(i) incurred for borrowed money, or (ii) evidenced by a note or
similar instrument given in connection with the acquisition by the
Corporation of any business, properties, or assets, including
securities (but not including any account payable or other obligation
created or assumed by the Corporation in the ordinary course of
business in
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connection with the obtaining of materials or services), (b) any
refundings, renewals, extensions, or deferrals of any of the
indebtedness included as Senior Indebtedness by virtue of clause (a)
hereof, and (c) obligations under capital leases; in each case for the
payment of which the Corporation is liable directly or indirectly by
guarantee, letter of credit, obligation to purchase or acquire, or
otherwise, unless the terms of the instrument evidencing such
indebtedness or capital lease or pursuant to which such indebtedness
or capital lease is outstanding specifically provide that such
indebtedness or capital lease is not superior in right of payment to
the indebtedness evidenced by this Note.
"SODEXHO AGREEMENT" means that certain Securities Purchase Agreement,
dated as of June 23, 1994, between Sodexho S.A., a French corporation,
or its designee and the Corporation, as amended by that certain
Amendment No. 1 to Securities Purchase Agreement, dated as of July 11,
1995.
"TRADING DAY" means, if the Common Stock is listed or admitted to
trading on any national securities exchange, a day on which such
exchange is open for the transaction of business, otherwise, a
Business Day.
"TRIGGERING EVENT" means the occurrence of any Unmatured Event of
Default of Event of Default described in clauses (i), (ii), and (iv)
through (x), inclusive, of Section 7.1 of the Note Purchase Agreement.
For purposes of determining the period during which the Triggering
Event Rate shall be in effect, a Triggering Event shall not be deemed
to have occurred until the date on which the Holder shall have given
notice of the occurrence thereof to the Corporation.
"TRIGGERING EVENT RATE" means nine and one-half percent (9.5%) per
annum.
"UNMATURED EVENT OF DEFAULT" shall mean any event or condition, the
occurrence of which would, with the lapse of time or the giving of
notice, or both, constitute an Event of Default.
SECTION 3. OPTIONAL CONVERSION. (a) Subject to and upon
compliance with the provisions of this Note, the Holder is entitled, at its
option, at any time on or before the close of business on the Business Day
prior to the Maturity Date, or in case this Note or a portion hereof is called
for conversion by the Corporation in accordance with the terms hereof, then
until and including, but not after, the close of business on the third Business
Day prior to the Mandatory Conversion Date, to convert all or a portion of the
principal amount of the indebtedness evidenced by this Note into Conversion
Shares.
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(b) The principal amount of the indebtedness evidenced by
this Note or any portion of the principal amount of the indebtedness evidenced
hereby that is One Thousand Dollars ($1,000), an integral multiple of One
Thousand Dollars ($1,000), or the remaining balance of the principal amount of
the indebtedness evidenced by this Note may be converted into Conversion
Shares. Subject to the provisions for adjustment set forth hereinafter, the
indebtedness evidenced by the Note shall be convertible into Conversion Shares
at a price per share equal to the Conversion Price and the number of Conversion
Shares to be deliverable to the Holder upon conversion of One Hundred Dollars
($100) of the principal amount of this Note shall be equal to the Conversion
Ratio.
(c) Conversion of all or a portion of the indebtedness
evidenced by this Note may be effected by the Holder upon the surrender to the
Corporation at the principal office of the Corporation in the State of
Tennessee or at the office of any agent or agents of the Corporation, as may be
designated by the Board, of this Note, duly endorsed or assigned to the
Corporation or in blank, accompanied by a Optional Conversion Notice to the
Corporation that the Holder elects to convert the principal amount of the
indebtedness evidenced by this Note or, if less than the entire principal
amount of the indebtedness evidenced by this Note is to be converted, the
portion thereof to be converted. Such Optional Conversion Notice shall specify
the name or names in which the Holder wishes the certificate or certificates
for shares of Common Stock to be issued. In case such notice shall specify a
name or names other than that of the Holder, such notice shall be accompanied
by payment of all transfer taxes payable upon the issuance of shares of Common
Stock in such name or names. Other than such taxes, the Corporation will pay
any and all issue and other taxes (other than taxes based on income) that may
be payable in respect of any issue or delivery of shares of Common Stock on
conversion of the indebtedness evidenced by this Note. No payment or
adjustment shall be made upon any conversion of this Note on account of any
dividends or other distributions payable on the Conversion Shares; provided,
however, that the Holder shall be entitled to receive the full amount of any
dividends or other distributions declared with respect to the Conversion Shares
with a record date on or after the effective date of such conversion.
As promptly as practicable, and in any event within five (5)
Business Days after the surrender of this Note 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 have been
paid), the Corporation shall deliver or cause to be delivered, either by
personal delivery or by certified or registered mail or by a recognized
overnight courier service, in any such case, properly insured, to the Holder in
accordance with the written instructions of the Holder (i) certificates
representing the number of Conversion Shares to which the Holder shall be
entitled, and (ii) if less than the entire principal amount of indebtedness
evidenced by this Note is being converted, a new promissory note, in the form
of this Note, for the balance of the indebtedness that is not being so
converted. Such conversion shall be deemed to have been made at the close of
business on the date of giving such notice and of such surrender of this Note
so that the rights of the Holder (as a noteholder) with respect to the
principal amount being converted
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shall cease, and the person or persons entitled to receive the Conversion
Shares issuable upon conversion shall be treated for all purposes as the record
holder or holders of such Common Stock as of such day. All accrued but unpaid
interest through the Business Day immediately preceding the date of such
conversion with respect to the principal amount of the indebtedness evidenced
by this Note being converted shall be payable upon conversion.
The Corporation shall not be required to convert, and no
surrender of this Note shall be effective for that purpose, while the transfer
books of the Corporation for the Common Stock are closed for any purpose (but
not for any period in excess of 15 days); but the surrender of this Note for
conversion during any period while such books are so closed shall become
effective for conversion immediately upon the reopening of such books, as if
the conversion had been made on the date this Note is surrendered, and at the
Conversion Ratio in effect at the date of such surrender.
(d) In case this Note is to be prepaid pursuant to the
mandatory prepayment provisions hereof, such right of conversion shall cease
and terminate as to the portion of this Note that is to be prepaid at the close
of business on the Business Day next preceding the date fixed for mandatory
prepayment unless the Corporation shall default in the payment of the mandatory
prepayment amount.
(e) In connection with the conversion of the indebtedness
evidenced by this Note, 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 Trading
Day on which such indebtedness evidenced by this Note is deemed to have been
converted. If more than one note shall be surrendered for conversion by the
Holder at the same time, the number of full shares of Common Stock issuable on
conversion thereof shall be computed on the basis of the total amount of
indebtedness to be converted.
(f) (i) The Corporation shall at all times reserve and
keep available for issuance upon the conversion of the indebtedness evidenced
by this Note, free from any preemptive rights, such number of its authorized
but unissued shares of Common Stock as will from time to time be sufficient to
permit the conversion of all of the indebtedness evidenced by this Note, and
shall take all action required to increase the authorized number of shares of
Common Stock if necessary to permit the conversion of all of the indebtedness
evidenced by this Note.
(ii) If the Corporation shall issue shares of
Common Stock upon conversion of indebtedness evidenced by this Note as
contemplated by this Section 3, the Corporation shall issue together with each
such share of Common Stock any rights issued to holders of Common Stock of the
Corporation, irrespective of whether such rights shall be exercisable at such
time, but only if such rights are issued and outstanding and held by other
holders of Common Stock of the Corporation at such time and have not expired.
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(g) The Conversion Ratio will 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 Closing Date (A) pay a dividend, or make a
distribution, on the outstanding shares of Common Stock in shares of
Common Stock, (B) subdivide the outstanding shares of Common Stock,
(C) combine the outstanding shares of Common Stock into a smaller
number of shares, or (D) issue by reclassification of the shares of
Common Stock any shares of capital stock of the Corporation, then, and
in each such case, the Conversion Ratio in effect immediately prior to
such event or the record date therefor, whichever is earlier, shall be
adjusted so that the Holder shall be entitled to receive the number of
shares of Common Stock (or other capital stock) of the Corporation
that the Holder would have owned or have been entitled to receive
after the happening of any of the events described above, had the
indebtedness evidenced by this Note been converted immediately prior
to the happening of such event or the record date therefor, whichever
is earlier. An adjustment made pursuant to this clause (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 such subdivision,
reclassification, or combination, at the close of business on the day
upon which such corporate action becomes effective. No adjustment
shall be made pursuant to this clause (i) in connection with any
transaction to which subsection (h) applies.
(ii) In case the Corporation shall issue shares of
Common Stock or Convertible Securities after the Closing Date at a
price per share (or having a conversion price per share) less than the
Current Market Price per share of Common Stock, as of the date of
issuance of such shares or of such Convertible Securities, then, and
in each such case, the Conversion Ratio shall be adjusted so that the
Holder shall be entitled to receive, upon the conversion hereof, the
number of shares of Common Stock determined by multiplying (A) the
applicable Conversion Ratio on the day immediately prior to such date
by (B) a fraction, the numerator of which shall be the sum of (1) the
number of shares of Common Stock outstanding on such date, plus (2)
the number of additional shares of Common Stock issued (or into which
the Convertible Securities may convert), and the denominator of which
shall be the sum of (a) the number of shares of Common Stock
outstanding on such date, plus (b) the number of shares of Common
Stock purchasable at the then Current Market Price per share with the
aggregate consideration received or receivable by the Corporation for
the total number of shares of Common Stock so issued (or into which
the Convertible Securities may convert). Notwithstanding the
foregoing, in the event that after the date hereof the Corporation (x)
issues the Floating Rate Notes, or (y) sells up to 1,000,000 shares
(dilution adjustments for future public stock issuances in excess of
1,000,000 shares after adjustment is made for the first 1,000,000
shares pursuant to this sentence, shall be made in accordance with the
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previous sentence) of its Common Stock to the public in a registered
offering or offerings (on Forms other than X-0, X-0, or any successor
Forms or similar Forms) (each such issuance an "Adjustment Event"),
then, and in each such case, the Conversion Ratio shall be adjusted so
that the holder shall be entitled to receive, upon the conversion
hereof, the number of shares of Common Stock determined by multiplying
the applicable Conversion Ratio on the day immediately prior to such
Adjustment Event by a fraction, (i) the numerator of which shall be
the number of shares of Common Stock outstanding, plus, in the case of
an Adjustment Event described in clause (x), the number of shares of
Common Stock into which the Floating Rate Notes may convert,
immediately after such Adjustment Event, and (ii) the denominator of
which shall be the number of shares of Common Stock outstanding,
immediately prior to such Adjustment Event.
An adjustment made pursuant to this clause (ii) shall
be made on the next Business Day following the date on which any such
issuance is made and shall be effective retroactively to the close of
business on the date of such issuance. For purposes of this clause
(ii), the aggregate consideration received or receivable by the
Corporation in connection with the issuance of shares of Common Stock
or of rights, warrants, or other securities convertible into shares of
Common Stock shall be deemed to be equal to the sum of the aggregate
offering price (before deduction of underwriting discounts or
commissions and expenses payable to third parties) of all such Common
Stock, rights, warrants, and convertible securities plus the minimum
aggregate amount, if any, payable upon exercise of conversion of any
such rights, warrants, and convertible securities into shares of
Common Stock. The issuance of any shares of Common Stock (whether
treasury shares or newly issued shares) pursuant to (a) a dividend or
distribution on, or subdivision, combination or reclassification of,
the outstanding shares of Common Stock requiring an adjustment in the
conversion ratio pursuant to clause (i) of this subsection (g), or (b)
other than as provided in clause (y) above, the terms of a firmly
committed underwritten public offering, shall not be deemed to
constitute an issuance of Common Stock or Convertible Securities by
the Corporation to which this clause (ii) applies.
Upon the expiration of any unexercised options,
warrants, or rights to convert any convertible securities for which an
adjustment has been made pursuant to this clause (ii), the adjustments
shall forthwith be reversed to effect such rate of conversion as would
have been in effect at the time of such expiration or termination had
such options, warrants, or rights or convertible securities, to the
extent outstanding immediately prior to such expiration or
termination, never been issued. If the purchase price provided for in
any option, warrant, or rights to convert any convertible securities
for which an adjustment has been made pursuant to this clause (ii),
the additional consideration, if any, payable upon the conversion or
exchange of any convertible securities for which an adjustment has
been made, or the rate at which any convertible securities referred to
above are convertible into or exchangeable for Common Stock shall, at
any time, increase or decrease (other than
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under or by reason of provisions designed to protect against
dilution), then, the Conversion Ratio in effect at the time of such
event shall forthwith be readjusted to the Conversion Ratio that would
have been in effect at such time had such options, warrants, or rights
or convertible securities still outstanding provided for such changed
purchase price, additional consideration, or conversion rate, as the
case may be, at the time initially granted, issued, or sold. No
adjustment shall be made pursuant to this clause (ii) in connection
with any transaction to which subsection (h) applies.
(iii) In case the Corporation shall at any time or
from time to time after the Closing Date 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 spinoff), on its Common Stock,
other than (A) dividends payable in cash in an aggregate amount not to
exceed 50% of net income from continuing operations before
extraordinary items of the Corporation, determined in accordance with
generally accepted accounting principles, during the period (treated
as one accounting period) commencing on December 31, 1995, and ending
on the date such dividend is paid; provided, that, to the extent
required by the terms thereof, such dividend shall have been
previously consented to by the holders of the notes issued pursuant to
the Note Purchase Agreement, or (B) dividends or distributions of
shares of Common Stock which are referred to in clause (i) of this
subsection (g), then, and in each such case, the Conversion Ratio
shall be adjusted so that the Holder shall be entitled to receive,
upon the conversion hereof, the number of shares of Common Stock
determined by multiplying (1) the applicable Conversion Ratio on the
day immediately prior to the record date fixed for the determination
of stockholders entitled to receive such dividend or distribution by
(2) a fraction, the numerator of which shall be the Current Market
Price per share of Common Stock for the period of 30 Trading Days
preceding such record date, and the denominator of which shall be such
Current Market Price per share of Common Stock less the fair market
value, as determined in good faith by the Board, a certified
resolution with respect to which shall be mailed to the Holder, per
share of Common Stock of such dividend or distribution. No adjustment
shall be made pursuant to this clause (iii) in connection with any
transaction to which subsection (h) applies.
(iv) For purposes of this subsection (g), the number
of shares of Common Stock at any time outstanding shall not include
any shares of Common Stock then owned or held by or for the account of
the Corporation.
(v) The term "dividend," as used in this
subsection (g), shall mean a dividend or other distribution upon stock
of the Corporation.
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(vi) Anything in this subsection (g) to the contrary
notwithstanding, the Corporation shall not be required to give effect
to any adjustment in the Conversion Ratio unless and until the net
effect of one or more adjustments (each of which shall be carried
forward), determined as above provided, shall have resulted in a
change of the Conversion Ratio by at least one one-hundredth (.01) of
one share of Common Stock, and when the cumulative net effect of more
than one adjustment so determined shall be to change the Conversion
Ratio by at least one one-hundredth (.01) of one share of Common
Stock, such change in Conversion Ratio shall thereupon be given
effect.
(vii) The certificate of any firm of independent
public accountants of recognized standing selected by the Board (which
may be the firm of independent public accountants regularly employed
by the Corporation) shall be presumptively correct for any computation
made under this subsection (g).
(viii) If the Corporation shall take a record of the
holders of its Common Stock for the purpose of entitling them to
receive a dividend or other distribution, and shall thereafter and
before the distribution to stockholders thereof legally abandon its
plan to pay or deliver such dividend or distribution, then thereafter
no adjustment in the number of shares of Common Stock issuable upon
exercise of the right of conversion granted by this subsection (g) or
in the Conversion Ratio then in effect shall be required by reason of
the taking of such record.
(h) In the case of any Major Transaction occurring at any
time, at the option of the Holder, the indebtedness evidenced by the Note shall
thereafter be convertible into, in whole and in part and in lieu of the Common
Stock issuable upon such conversion prior to consummation of such Major
Transaction, the kind and amount of shares of stock and other securities and
property receivable (including cash) upon the consummation of such Major
Transaction by a holder of that number of shares of Common Stock into which
such indebtedness, or portion thereof, was convertible immediately prior to
such Major 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 Major Transaction). In case securities or property
other than Common Stock shall be issuable or deliverable upon conversion as
aforesaid, then all references in this Section 3 shall be deemed to apply, so
far as appropriate and nearly as may be, to such other securities or property.
(i) In case at any time or from time to time the Corporation
shall pay any stock dividend or make any other non-cash 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, or there shall be any capital reorganization or reclassification
of the Common Stock of the Corporation or consolidation or merger of the
Corporation with or into another corporation or other entity, or any sale or
conveyance
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to another corporation or other entity of the assets or 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 20 days prior written notice (the time of mailing of such notice shall
be deemed to be the time of giving thereof) to the Holder at the address of the
Holder as shown on the books of the Corporation as of the date of 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) such reorganization,
reclassification, consolidation, merger, sale, conveyance, dissolution,
liquidation, or winding up shall take place, as the case may be, provided that
in the case of any Major Transaction to which subsection (h) applies the
Corporation shall give at least 30 days prior written notice as aforesaid.
Such notice also shall specify the date as of which the holders of the Common
Stock of record shall participate in said dividend, distribution, or
subscription rights or shall be entitled to exchange their Common 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. Failure to
give such notice shall not invalidate any action so taken.
(j) Anything herein to the contrary notwithstanding, the
issuance or sale of the following shares of Common Stock or options, warrants,
or other rights to purchase Common Stock shall be excluded from any calculation
of, and shall not be deemed issued or sold for purposes of calculating, any
reduction, adjustment, or readjustment of the Conversion Ratio hereunder: (i)
shares of Common Stock issued upon conversion of the indebtedness evidenced by
this Note or any portion thereof; (ii) shares of Common Stock or options,
warrants, or other rights to purchase Common Stock issuable, reserved for
issuance, or issued pursuant to a stock option plan, employee stock ownership
plan, or other compensatory benefit plan of the Corporation, duly adopted by
the Board; (iii) shares of Common Stock, issuable, reserved for issuance, or
issued pursuant to any currently outstanding warrants or options (other than as
provided in clause (x) of subparagraph (g)(ii) above), or any options,
warrants, or other rights issuable, reserved for issuance, or issued to
officers of the Corporation in the future for compensatory purposes, if duly
authorized by the Board; and (iv) shares of Common Stock issued upon conversion
of the indebtedness evidenced by the Convertible Notes (other than as provided
in clause (x) of subparagraph (g)(ii) above).
Section 4. REPORTS AS TO ADJUSTMENTS. Upon any adjustment of
the Conversion Ratio then in effect and any increase or decrease in the number
of shares of Common Stock issuable upon the operation of the conversion set
forth in Section 3, then, and in each such case, the Corporation shall promptly
deliver to the Holder, a certificate signed by the President or a Vice
President and by the Treasurer or an Assistant Treasurer or the Secretary or an
Assistant Secretary of the Corporation setting forth in reasonable detail the
event requiring the adjustment and the method by which such adjustment was
calculated and specifying the Conversion Ratio then in effect following such
adjustment and the increased or decreased number of shares issuable upon the
conversion granted by
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Section 3, and shall set forth in reasonable detail the method of calculation
of each and a brief statement of the facts requiring such adjustment. Where
appropriate, such notice to the Holder may be given in advance and included as
part of the notice required under the provisions of Section 3(i).
SECTION 5. MANDATORY CONVERSION. (a) At any time after the
fourth anniversary of the Closing Date, and so long as at such time the Common
Stock is listed or admitted to trading on a national securities exchange, the
Corporation may require the Holder to convert all or a portion of the principal
amount of the indebtedness evidenced by this Note into shares of Common Stock
if, at such time, the Current Market Price of the Common Stock has equalled or
exceeded one hundred fifty percent (150%) of the Conversion Price (as it may
from time to time be adjusted) for forty- five (45) consecutive Trading Days
following the forty-fifth monthly anniversary of the Closing Date. To exercise
such right, the Corporation must deliver a Mandatory Conversion Notice of the
exercise of such right to the Holder within thirty (30) days of the last day of
such forty-five (45) day period, such Mandatory Conversion Notice must be given
at least ten (10) Business Days, but not more than fifteen (15) Business Days
prior to the proposed Mandatory Conversion Date, and such Mandatory Conversion
Notice must specify the proposed Mandatory Conversion Date and the portion of
the principal amount of the indebtedness evidenced by this Note to be converted
into Common Stock.
(b) All conversions effected pursuant to the preceding
paragraph will be made effective as of the close of business on the Mandatory
Conversion Date at the Conversion Ratio in effect on the Mandatory Conversion
Date; provided, however, that, in order to be able to convert, the Current
Market Price on the Mandatory Conversion Date must equal or exceed one hundred
fifty percent (150%) of the Conversion Price in effect on the Mandatory
Conversion Date. If the Current Market Price on the Mandatory Conversion Date
does not equal or exceed one hundred fifty percent (150%) of the Conversion
Price in effect on the Mandatory Conversion Date, the Corporation's election to
require conversion will be deemed void and no conversion will be effected
pursuant to such notice. Such event will not be deemed, however, to alter or
restrict the Corporation's right to again require conversion at such time as
the Current Market Price equals or exceeds one hundred fifty percent (150%) of
the then current Conversion Price for forty-five (45) consecutive Trading Days
prior to such time. Upon conversion required by the Corporation pursuant to
this paragraph and the immediately preceding paragraph, all accrued but unpaid
interest with respect to the principal amount of the indebtedness evidenced by
this Note being converted shall be payable in accordance with the provisions of
the following paragraph.
(c) Conversions of the indebtedness evidenced by this Note
effected by the exercise of the Corporation's right to require conversion will
be deemed effective as of the close of business on the Mandatory Conversion
Date without any action by the Holder and the Holder will, as of such time, be
a stockholder of the Corporation with respect to the number of shares of Common
Stock into which the principal balance evidenced by this
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Note (or such portion of the principal balance evidenced by this Note as the
Corporation shall have specified) shall have been converted. The Holder agrees
promptly to surrender this Note for cancellation following mandatory
conversion. Certificates representing the shares of Common Stock issuable by
the Corporation as a result of the mandatory conversion of all or a portion of
the principal balance of the indebtedness evidenced by this Note and all
dividends and other distributions payable with respect to such shares and all
accrued but unpaid interest payable pursuant to the immediately preceding
paragraph will be retained by the Corporation pending surrender of this Note
for cancellation. As promptly as practicable, and in any event within five (5)
Business Days after the surrender of this Note, the Corporation shall deliver
or cause to be delivered, either by personal delivery or by certified or
registered mail or by a recognized overnight courier service, in any such case,
properly insured, to the Holder in accordance with the written instructions of
the Holder (i) certificates representing the number of Conversion Shares to
which the Holder shall be entitled, and (ii) if less than the entire principal
amount of indebtedness evidenced by this Note is being converted, a new
promissory note, in the form of this Note, for the balance of the indebtedness
that is not being so converted.
(d) In connection with the conversion of the indebtedness
evidenced by this Note, 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 Trading
Day on which such indebtedness evidenced by this Note is deemed to have been
converted. If more than one note shall be surrendered for conversion by the
Holder at the same time, the number of full shares of Common Stock issuable on
conversion thereof shall be computed on the basis of the total amount of
indebtedness to be converted.
SECTION 6. MANDATORY PREPAYMENT. In the case of any Change
Event occurring at any time, at the option of the Holder, the Holder may
require the Corporation to prepay all or a portion of the then outstanding
principal amount of the indebtedness evidenced by this Note. To exercise such
right of prepayment, the Holder must provide the Corporation with a Mandatory
Prepayment Notice at least thirty (30) days prior to the proposed Mandatory
Prepayment Date which Mandatory Prepayment Notice shall specify the portion of
the principal amount of the indebtedness evidenced by this Note (which must be
in integral multiples of One Thousand Dollars ($1,000)) to be prepaid. On the
Mandatory Prepayment Date specified, the Corporation shall prepay the portion
of the principal amount of the indebtedness evidenced by this Note that the
Holder has specified must be prepaid on such date, plus accrued interest on
such principal amount to the date of the prepayment. Any prepayment shall be
made by cashiers check or by wire transfer of immediately available funds, in
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts, at such address or to such
account, as applicable, as shall be designated to the Corporation by the
Holder.
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16
SECTION 7. SUBORDINATION. (a) The Corporation covenants and
agrees, and the Holder likewise covenants and agrees, that no payment shall be
made by the Corporation on account of principal of or interest on this Note, or
otherwise, if there shall have occurred and be continuing, and the Corporation
and the Holder shall have received notice from the holder or holders of, a
default with respect to any Senior Indebtedness (i) permitting the acceleration
thereof and such default is the subject of a judicial proceeding, or (ii) in an
aggregate principal amount of not less than One Million Dollars ($1,000,000)
entitling such holder or holders to compel the acceleration thereof (provided,
however, that in the case of Senior Indebtedness issued pursuant to an
indenture, such notice may be validly given only by the trustee under such
indenture), unless and until such default or Event of Default shall have been
cured or waived or shall have ceased to exist or such notice is withdrawn or
found by a court of competent jurisdiction to be invalid.
(b) Upon any payment by the Corporation or distribution of
assets of the Corporation of any kind or character, whether in cash, property,
or securities, to creditors of the Corporation upon any dissolution or winding
up or liquidation or reorganization of the Corporation, whether voluntary or
involuntary, or in bankruptcy, insolvency, receivership, or other similar
proceedings, all amounts due or to become due upon all Senior Indebtedness
shall first be paid in full in money or money's worth, or payment thereof
provided for, before any payment is made on account of the principal of or
interest on this Note and upon such dissolution or winding up or liquidation or
reorganization, any payment by the Corporation, or distribution of assets of
the Corporation of any kind or character, whether in cash, property, or
securities, to which the Holder would be entitled except for the provisions
hereof, shall be paid by the Corporation or by any receiver, trustee in
bankruptcy, liquidating trustee, agent, or other person making such payment or
distribution directly to the holders of Senior Indebtedness or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing any Senior Indebtedness
may have been issued, as their respective interests may appear, to the extent
necessary to pay all Senior Indebtedness in full in money or money's worth,
after giving effect to any concurrent payment or distribution to or for the
holders of Senior Indebtedness, before any payment or distribution is made to
the Holder.
(c) The foregoing notwithstanding, in the event that any
payment of or distribution of assets of the Corporation of any kind or
character, whether in cash, property or securities, prohibited by the
foregoing, shall be received by the Holder before all Senior Indebtedness is
paid in full in money or money's worth, or provision is made for such payment,
then and in such event such payment or distribution shall be paid over or
delivered to the holders of Senior Indebtedness or their representative or
representatives, or to the trustee or trustees under any indenture pursuant to
which any instruments evidencing any Senior Indebtedness may have been issued,
as their respective interests may appear, for application to the payment of all
Senior Indebtedness remaining unpaid to the extent necessary to pay all Senior
Indebtedness in full in money or money's worth, after giving effect to any
concurrent payment or distribution to or for the holders of such Senior
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Indebtedness (but subject to the power of a court of competent jurisdiction to
make other equitable provision, which shall have been determined by such court
to give effect to the rights conferred herein upon the Senior Indebtedness and
the holders thereof with respect to this Note or the Holder hereof by a lawful
plan or reorganization or readjustment under applicable bankruptcy law).
(d) The holders of Senior Indebtedness may, at any time and
from time to time, without the consent of or notice to the Holder, without
incurring responsibility to the Holder and without impairing or releasing the
obligations of the Holder to the holders of Senior Indebtedness: (i) change
the manner, place, or terms of payment or change or extend the time of payment
of, or renew or alter Senior Indebtedness, or otherwise amend, in any manner,
Senior Indebtedness or any instrument evidencing the same or any agreement
under which such Senior Indebtedness is outstanding; provided, however, that
the average weighted maturity of such Senior Indebtedness shall not be
decreased without the consent of the Holder; (ii) sell, exchange, release, or
otherwise deal with any property pledged, mortgaged, or otherwise securing
Senior Indebtedness; (iii) release any person liable in any manner for the
collection of Senior Indebtedness; and (iv) exercise or refrain from exercising
any rights against the Corporation and any other person.
(e) Subject to the payment in full of all amounts then due
(whether by acceleration of the maturity thereof or otherwise) on account of
the principal of, premium, if any, and interest on all Senior Indebtedness at
the time outstanding, the Holder shall be subrogated to the rights of the
holders of Senior Indebtedness to receive payments or distributions of cash,
property, or securities of the Corporation applicable to the Senior
Indebtedness until the principal of and interest on this Note shall be paid in
full; and, for the purposes of such subrogation, no payments or distributions
by the Corporation to the holders of Senior Indebtedness of any cash, property,
or securities to which the Holder would be entitled except for the provisions
hereof, and no payments over pursuant to the provisions hereof to the holders
of Senior Indebtedness by the Holder, shall, as between the Corporation, its
creditors other than holders of Senior Indebtedness, and the Holder, be deemed
to be a payment by the Corporation to or on account of the Senior Indebtedness.
(f) It is understood that the foregoing provisions of this
Note are and are intended solely for the purpose of defining the relative
rights of the Holder on the one hand and the holders of Senior Indebtedness on
the other hand. Nothing contained in this Note is intended to or shall impair,
as among the Corporation, its creditors other than the holders of Senior
Indebtedness, and the Holder, the obligation of the Corporation, which is
absolute and unconditional, to pay to the Holder the principal of and interest
on this Note as and when the same shall become due and payable in accordance
with its terms, or is intended to or shall affect the relative rights of the
Holder and creditors of the Corporation other than the holders of Senior
Indebtedness, nor shall anything herein prevent the Holder from exercising all
remedies otherwise permitted by applicable law upon default under this Note or
the Note Purchase Agreement.
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(g) Upon any payment or distribution of assets of the
Corporation referred to herein, the Holder shall be entitled to rely upon any
order or decree made by any court of competent jurisdiction in which such
dissolution, winding up, liquidation, or reorganization proceedings are
pending, or certificate of the receiver, trustee in bankruptcy, liquidating
trustee, agent, or other person making such payment or distribution, delivered
to the Holder, for the purpose of ascertaining the persons entitled to
participate in such distribution, the holders of Senior Indebtedness and other
indebtedness of the Corporation, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon, and all other facts pertinent
thereto.
(h) The Corporation shall give prompt written notice to the
Holder of any fact known to the Corporation that would prohibit the making of
any payment of moneys to or by the Corporation in respect of this Note.
SECTION 8. ACCELERATION. This Note and the indebtedness
evidenced hereby is subject to acceleration under the terms and conditions set
forth in the Note Purchase Agreement.
SECTION 9. NO OPTIONAL PREPAYMENT. This Note and the
indebtedness evidenced hereby shall not be prepaid at the option of the
Corporation.
SECTION 10. MISCELLANEOUS. (a) Any notice required by the
provisions of this Note to be given to the Holder or the Corporation shall be
given and deemed received or delivered in accordance with the provisions of
Section 10.4 of the Note Purchase Agreement.
(b) In the event of prepayment or conversion of this Note in
part only, a new note or notes for the unpaid or unconverted portion hereof
will be issued in the name or names requested by the Holder upon the
cancellation hereof.
(c) The transfer of this Note is registrable on the books of
the Corporation upon surrender of this Note for registration of transfer at the
offices of the Corporation in Nashville, Tennessee, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Corporation duly executed by, the Holder or its attorney duly authorized in
writing, and thereupon one or more new notes of authorized denominations and
for the same aggregate principal amount, will be issued to the designated
transferee or transferees. New notes are issuable only in registered form
without coupons in denominations of One Thousand Dollars ($1,000) and any
integral multiple thereof. This Note is exchangeable for a like aggregate
principal amount of notes of a different authorized denomination, as requested
by the Holder. No service charge shall be made for any such registration of
transfer or exchange, but the Corporation may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
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(d) Prior to the due presentment of this Note for
registration of transfer, the Corporation and any agent of the Corporation may
treat the person in whose name this Note is registered as the owner hereof for
all purposes, irrespective of whether this Note be overdue, and neither the
Corporation nor any such agent shall be affected by notice to the contrary.
(e) This Note shall be deemed to be a contract made under the
laws of the State of New York and for all purposes shall be governed by,
construed under, and enforced in accordance with the laws of the State of New
York.
(f) The Corporation agrees, to the extent permitted by law,
to pay to the Holder all costs and expenses (including attorneys' fees)
incurred by it in the collection hereof or the enforcement of any right or
remedy provided for herein (including such costs and expenses incurred in
connection with a workout or an insolvency or bankruptcy proceeding).
(g) The provisions of the Note Purchase Agreement are hereby
incorporated into this Note by this reference.
[Remainder of page intentionally left blank.]
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IN WITNESS WHEREOF, the undersigned has executed this Note
effective as of the date first above written.
CORRECTIONS CORPORATION OF AMERICA,
a Delaware corporation
By:
--------------------------------
Title:
--------------------------------
ATTEST:
------------------------------
Secretary
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Exhibit A
[FORM OF MANDATORY CONVERSION NOTICE]
-------------------------
-------------------------
-------------------------
Notice hereby is given that, in accordance with the terms and
conditions of the Note hereinafter described and that certain Note Purchase
Agreement, dated February 29, 1996, between Corrections Corporation of America
and PMI Mezzanine Fund, L.P., Corrections Corporation of America hereby elects
to require conversion of the 7.5% Convertible, Subordinated Note, due February
28, 2002, issued by it (the "Note"). The Note to be converted and the
principal amount thereof to be converted are as follows:
Principal Number of
Outstanding Amount to be Shares to
Note Number Principal Amount Converted Be Delivered
---------------------------------------------------------------------------------------------------------
The Mandatory Conversion Date will be .
---------------------
CORRECTIONS CORPORATION OF AMERICA
By:
--------------------------
Name:
-----------------------------
Title:
----------------------------
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Exhibit B
[FORM OF MANDATORY PREPAYMENT NOTICE]
TO: CORRECTIONS CORPORATION OF AMERICA
----------------------------------
----------------------------------
The undersigned owner of the attached Note hereby gives notice that,
in accordance with the terms and conditions of such Note and that certain Note
Purchase Agreement, dated February 29, 1996, between Corrections Corporation of
America and PMI Mezzanine Fund, L.P., it hereby exercises its right to require
prepayment of such Note or portion thereof (which is $1,000 or an integral
multiple thereof), plus all accrued but unpaid interest with respect to such
principal amount.
The Mandatory Prepayment Date shall be ______________. The principal
amount to be prepaid shall be $___________ _________________.
[Name of Holder]
Dated: By:
--------------------- --------------------------------
Name:
------------------------------
Title:
------------------------------
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Exhibit C
[FORM OF OPTIONAL CONVERSION NOTICE]
TO: CORRECTIONS CORPORATION OF AMERICA
----------------------------------
----------------------------------
The undersigned owner of the attached Note hereby gives notice that,
in accordance with the terms and conditions of such Note and the Note Purchase
Agreement, dated February 29, 1996, between Corrections Corporation of America,
PMI Mezzanine Fund, L.P., it hereby exercises its right to convert such Note,
or portion hereof (which is $1,000 or an integral multiple thereof) below
designated, into shares of Common Stock of Corrections Corporation of America
and directs that the shares issuable and deliverable upon the conversion, and
any notes representing any unconverted principal amount thereof, be issued and
delivered to the registered holder of such Note unless a different name has
been indicated below. If shares or a new note representing unconverted
principal are to be issued in the name of a person other than the undersigned,
the undersigned will pay all transfer taxes payable with respect thereto.
[Name of Holder]
Dated: By:
---------------- ---------------------------------------------
Name:
-------------------------------------------
Title:
------------------------------------------
Principal Amount to be converted (in an integral
if less than all):
$
----------------
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Fill in for registration of shares
of Common Stock and note if to be
issued other than to the
registered Holder.
---------------------------------
Name
---------------------------------
Address
---------------------------------
Please print name and address
(including zip code number)
SOCIAL SECURITY OR OTHER TAXPAYER
IDENTIFYING NUMBER
---------------------------------
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