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EXHIBIT 4.17
8.5% CONVERTIBLE SUBORDINATED NOTE
MODIFICATION AGREEMENT
This 8.5% CONVERTIBLE SUBORDINATED NOTE MODIFICATION AGREEMENT, dated
December 30, 1998 (the "Modification Agreement"), is entered into by and between
Sodexho Alliance, S.A., a French societe anonyme and successor in interest to
Sodexho S.A., a French societe anonyme (the "Purchaser"), and Corrections
Corporation of America, a Tennessee corporation and successor in interest to a
Delaware corporation of the same name (the "Corporation").
W I T N E S S E T H:
WHEREAS, the Corporation and the Purchaser are parties to that certain
Securities Purchase Agreement, dated as of June 23, 1994, as amended on July 11,
1995, December 31, 1996 and December 31, 1997 (the Securities Purchase
Agreement, as amended, known as the "Securities Purchase Agreement"), pursuant
to which, among other things, the Corporation offered and sold to Purchaser its
8.5% Convertible Subordinated Note in the aggregate principal amount of
$7,000,000, which Note, pursuant to Amendment No. 2 to the 1994 Securities
Purchase Agreement and Note and Warrant Modification Agreement, dated as of
December 31, 1996, was subsequently canceled and replaced by an 8.5% Convertible
Subordinated Note (the original canceled 8.5% Convertible Subordinated Note and
the subsequent 8.5% Convertible Subordinated Note known, collectively, as the
"8.5% Note");
WHEREAS, the Corporation and CCA Prison Realty Trust, a Maryland real
estate investment trust ("Prison Realty"), have entered into an Amended and
Restated Agreement and Plan of Merger, dated September 29, 1998 (the "Merger
Agreement"), pursuant to which: (i) CCA will merge with and into Prison Realty
Corporation, a Maryland corporation ("New Prison Realty"), with New Prison
Realty as the surviving entity (the "CCA Merger"); and (ii) Prison Realty will
merge with and into New Prison Realty, with New Prison Realty as the surviving
entity (the "Prison Realty Merger") (collectively, the "Merger");
WHEREAS, in connection with the Merger and in order that New Prison
Realty will qualify and operate as a real estate investment trust for federal
income tax purposes under all applicable laws, rules and regulations after
completion of the Merger, immediately prior to completion of the Merger, CCA
will, among other things, (i) sell all of the issued and outstanding capital
stock of certain of its wholly-owned corporate subsidiaries to Correctional
Management Services Corporation, a Tennessee corporation ("CMSC"), and (ii)
sell, transfer, assign and convey all right, title and interest in and to
certain contracts with government entities relating to the management and
operation of correctional and detention facilities by CCA, together with certain
accounts receivable and accounts payable related thereto and certain other net
assets used in connection therewith, to CMSC;
WHEREAS, Purchaser, together with Baron Asset Fund, a Massachusetts
business trust, on behalf of the Baron Asset Fund Series ("Baron"), has entered
into a Stock Purchase Agreement, dated as of even date herewith (the "Stock
Purchase Agreement"), with CMSC, pursuant to which each of
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Purchaser and Baron has agreed to purchase one million seven hundred forty-nine
thousand five hundred thirty-two (1,749,532) shares of common stock, $0.01 par
value per share, of CMSC in accordance with the terms and conditions thereof;
and
WHEREAS, in connection with the Merger and the Stock Purchase
Agreement, the Purchaser now desires, and the Corporation has agreed, to amend
the 8.5% Note to provide that the ability of the Purchaser to effect the
conversion of the 8.5% Note is conditioned upon completion of the Merger, but
that, upon completion of the Merger, the 8.5% Note shall be convertible upon its
original terms.
NOW, THEREFORE, for and in consideration of the premises and the mutual
promises, covenants and conditions set forth in this Modification Agreement and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Corporation and the Purchaser hereby agree as follows:
1. Amendment of Section 1. Section 1 of the 8.5% Note is hereby amended
by inserting the following:
"Merger" means, collectively, the mergers of the Corporation
and CCA Prison Realty Trust, a Maryland real estate investment
trust ("Prison Realty"), with and into Prison Realty
Corporation, a Maryland corporation ("New Prison Realty"),
pursuant to the Amended and Restated Agreement and Plan of
Merger, dated as of September 29, 1998, by and among the
Corporation, Prison Realty and New Prison Realty.
"New Prison Realty Ownership Limit" means, with respect to
shares of New Prison Realty common stock, $0.01 par value per
share (the "New Prison Realty Common Stock"), 9.8% of the
outstanding shares of New Prison Realty Common Stock.
2. Amendment of Section 2(a). The first sentence of Section 2(a) of the
8.5% Note is hereby amended by deleting such sentence from the 8.5% Note in its
entirety, and by substituting in lieu thereof the following:
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 November 7, 1999, or in case
this Note or a portion thereof is called for conversion by the
Corporation, or the Holder requests prepaying in accordance
with the terms hereof, then in respect of this Note or such
portion thereof until and including, but not after, the close
of business on the third Business Day prior to the Mandatory
Prepayment Date, to convert this Note into fully paid and
nonassessable shares of Common Stock; provided, however, that:
(i) the Corporation shall not be entitled to call all or any
portion of this Note and the Holder shall not be entitled to
convert all or a portion of this Note into fully paid and
nonassessable shares of Common Stock unless and until the
Merger is consummated; and (ii) the Holder shall not be
entitled to convert
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all or a portion of this Note into fully paid and
nonassessable shares of New Prison Realty Common Stock if New
Prison Realty if such conversion would result in the Holder
beneficially (through the application of Section 544 of the
Internal Revenue Code of 1986, as amended (the "Code"), as
modified by Section 856(h)(1)(B) of the Code) or
constructively (through the application of Section 318 of the
Code, as modified by Section 856(d)(5) of the Code) owning,
directly or indirectly, shares of New Prison Realty Common
Stock in excess of the New Prison Realty Ownership Limit.
3. Amendment of Section 9(a). The first sentence of Section 9(a) of the
8.5% Note is hereby amended by deleting such sentence from the 8.5% Note in its
entirety, and by substituting in lieu thereof the following:
At such time as the Closing Price of the Common Stock has
equaled or exceeded one hundred sixty percent (160%) of the
Conversion Price (as it may from time to time be adjusted) for
ten (10) trading days out of twenty (20) consecutive trading
day period, the Corporation may require the Holder to convert
all or a portion of the principal amount of this Note into
shares of Common Stock; provided, however, that: (i) the
Corporation shall not be entitled to call all or any portion
of this Note and the Holder shall not be entitled to convert
all or a portion of this Note into fully paid and
nonassessable shares of Common Stock unless and until the
Merger is consummated; and (ii) the Holder shall not be
entitled to convert all or a portion of this Note into fully
paid and nonassessable shares of New Prison Realty Common
Stock if such conversion would result in the Holder
beneficially (through the application of Section 544 of the
Internal Revenue Code of 1986, as amended (the "Code"), as
modified by Section 856(h)(1)(B) of the Code) or
constructively (through the application of Section 318 of the
Code, as modified by Section 856(d)(5) of the Code) owning,
directly or indirectly, shares of New Prison Realty Common
Stock in excess of the New Prison Realty Ownership Limit.
4. Amendment of Other Documents. All other provisions contained in the
8.5% Note, the Securities Purchase Agreement, any exhibits or attachments
thereto, and any documents or instruments referred to therein, shall be hereby
amended, where appropriate and the context permits, to reflect the amendments
contained in Sections 1, 2 and 3 above.
5. Effectiveness of this Modification Agreement. This Modification
Agreement shall become effective immediately upon the effectiveness of the CCA
Merger.
6. Corporate Power and Authorization. The Corporation hereby warrants
and represents to Purchaser that: (i) it has the requisite corporate power and
authority to execute, deliver and perform its obligations under this
Modification Agreement; (ii) the execution and delivery by the Corporation of
this Modification Agreement and the consummation of the transactions
contemplated hereby (a) have been duly authorized by all necessary corporate
action on the part of
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the Corporation and (b) do not and will not require any authorization, consent,
approval or license from or any registration, qualification, designation,
declaration or filing with, any court or governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign; and (iii) this
Modification Agreement has been duly and validly executed and delivered by the
Corporation and constitutes the legal, valid and binding obligation of the
Corporation, enforceable in accordance with its terms.
7. Miscellaneous.
7.1. Amendment to Securities Purchase Agreement. The Securities
Purchase Agreement is hereby, and shall henceforth be deemed to be,
amended, modified and supplemented in accordance with the provisions
hereof, and the respective rights, duties and obligations under the
Securities Purchase Agreement shall hereafter be determined, exercised
and enforced under the Securities Purchase Agreement, as amended,
subject in all respects to such amendments, modifications and
supplements and all terms and conditions of this Modification
Agreement. Initially capitalized terms used in this Modification
Agreement shall have the meanings ascribed thereto in the Securities
Purchase Agreement, as amended hereby, unless otherwise defined herein.
7.2. Ratification of the Securities Purchase Agreement. Except as
expressly set forth in this Modification Agreement, all agreements,
covenants, undertakings, provisions, stipulations and promises
contained in the Securities Purchase Agreement and the 8.5% Note are
hereby ratified, re-adopted, approved and confirmed and remain in full
force and effect.
7.3. No Implied Waiver. The execution, delivery and performance of this
Modification Agreement shall not, except as expressly provided herein,
constitute a waiver or modification of any provision of, or operate as
a waiver of any right, power or remedy of the Purchaser under, the
Securities Purchase Agreement or prejudice any right or remedy that the
Purchaser may have or may have in the future under or in connection
with the Securities Purchase Agreement or any instrument or agreement
referred to therein. The Corporation acknowledges and agrees that the
representations and warranties of the Corporation contained in the
Securities Purchase Agreement and in this Modification Agreement shall
survive the execution and delivery of this Modification Agreement and
the effectiveness hereof.
7.4. Governing Law. The parties hereby expressly agree that this
Modification Agreement shall be governed by, and construed and enforced
in accordance with, the laws of the State of New York. The English
language version of all documents relating to the transactions
contemplated hereby will govern.
7.5. Counterparts; Facsimile Execution. This Modification Agreement may
be executed in counterparts, each of which shall be deemed to be an
original, but all of which together shall constitute one and the same
instrument. Delivery of an executed counterpart of this
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Modification Agreement by facsimile shall be equally as effective as
delivery of a manually executed counterpart. Any party delivering an
executed counterpart of this Modification Agreement by facsimile shall
also deliver a manually executed counterpart, but the failure to
deliver a manually executed counterpart shall not affect the validity,
enforceability, and binding effect of this Modification Agreement.
7.6. Successors and Assigns. This Modification Agreement, and all
covenants contained herein, shall bind and inure to the benefit of the
parties hereto and their respective successors and assigns.
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IN WITNESS WHEREOF, the undersigned have caused this Modification
Agreement to be executed by their duly authorized officers as of the date first
written above.
PURCHASER:
SODEXHO ALLIANCE, S.A.
By: /s/ Xxxx-Xxxxxx Cuny
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Its: Senior Vice President
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CORPORATION:
CORRECTIONS CORPORATION OF AMERICA
By: /s/ Xxxxxxx X. Xxxxxxxxxx
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Its: Chief Financial Officer and Secretary
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