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EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
DATED AS OF JUNE 30, 2000,
BY AND AMONG
PRISON REALTY TRUST, INC. AND CCA ACQUISITION SUB, INC.,
AND
CORRECTIONS CORPORATION OF AMERICA.
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, dated as of June 30, 2000 (the
"Agreement"), is by and among PRISON REALTY TRUST, INC., a Maryland corporation
("Prison Realty"), CCA ACQUISITION SUB, INC., a Tennessee corporation and a
wholly-owned subsidiary of Prison Realty ("CCA Sub"), and CORRECTIONS
CORPORATION OF AMERICA, a Tennessee corporation ("CCA").
WITNESSETH:
WHEREAS, the Boards of Directors of CCA, CCA Sub and Prison Realty have
approved the merger of CCA with and into CCA Sub (the "Merger") upon the terms
and subject to the conditions set forth in this Agreement;
WHEREAS, the Merger requires the approval by the affirmative vote of the
holders of eighty percent (80%) of the Class A common stock, $0.01 par value per
share (the "CCA Class A Common Stock"), and the Class B common stock, $0.01 par
value per share (the "CCA Class B Common Stock" and, together with the CCA Class
A Common Stock, the "CCA Common Stock"), of CCA, voting together as a single
class, as well as the separate consent of Baron Asset Fund ("Baron"), a
Massachusetts business trust and holder of approximately sixteen and nine-tenths
percent (16.9%) of the CCA Class A Common Stock (collectively, the "CCA
Shareholder Approval");
WHEREAS, in connection with the Merger, Prison Realty intends to amend and
restate its charter and intends to alter its operating structure such that
Prison Realty will not qualify as a real estate investment trust (a "REIT") as
defined by the Internal Revenue Code of 1986, as amended (the "Code"),
commencing with its taxable year ending December 31, 2000, which actions require
approval by the affirmative vote of the holders of two-thirds (2/3) of the
outstanding shares of common stock, $0.01 par value per share, of Prison Realty
(the "Prison Realty Common Stock") (the "Prison Realty Stockholder Approval");
WHEREAS, Prison Realty, CCA Sub and CCA desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger; and
WHEREAS, for federal income tax purposes, it is intended that the Merger
qualify as a reorganization within the meaning of Section 368(a) of the Code,
and this Agreement is intended to be and is adopted as a plan of reorganization
with respect to the Merger.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
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ARTICLE I
THE MERGER
Section 1.01 The Merger. At the Effective Time (as defined in Section 1.03
herein) and subject to and upon the terms and conditions of this Agreement, and
in accordance with the Tennessee Business Corporation Act (the "TBCA"), CCA
shall be merged with and into CCA Sub, whereupon the separate corporate
existence of CCA shall cease and CCA Sub shall continue as the surviving
company. Following the Merger, CCA Sub (the "Surviving Company") shall succeed
to and assume all the rights and obligations of CCA in accordance with the TBCA.
Section 1.02 Closing. Unless this Agreement shall have been terminated and
the transactions contemplated herein abandoned pursuant to Section 7.01, and
subject to the satisfaction or waiver of the conditions set forth in Article VI,
the closing of the Merger (the "Closing") will take place at 10:00 a.m., local
time, on a date to be specified by the parties, which shall be no later than the
fifth business day following the satisfaction or waiver of all the conditions
set forth in Article VI herein which by their terms are capable of being
satisfied prior to the Closing (the "Closing Date"), at the offices of Xxxxxx &
Xxxxxxxxxxx, P.A. in Nashville, Tennessee, unless another time, date or place is
agreed to by the parties hereto.
Section 1.03 Effective Time. Subject to the provisions of this Agreement,
as promptly as practicable on the Closing Date, articles of merger and all other
appropriate documents (in any such case, the "Articles of Merger") shall be duly
prepared, executed, acknowledged and filed by the parties in accordance with the
relevant provisions of the TBCA with the Secretary of State of the State of
Tennessee (the "Tennessee Secretary of State"). The Merger shall become
effective on the Closing Date at the time of day specified in the Articles of
Merger filed with the Tennessee Secretary of State (the "Effective Time").
Section 1.04 Effects of the Merger. At the Effective Time, the Merger
shall have the effects set forth in Section 00-00-000 of the TBCA. Without
limiting the foregoing, and subject thereto, at the Effective Time all the
property, rights, privileges, powers and franchises of CCA and CCA Sub shall
vest in the Surviving Company, and all debts, liabilities and duties of CCA and
CCA Sub shall become the debts, liabilities and duties of the Surviving Company.
Section 1.05 Constituent Documents.
(a) Charter. The charter of CCA Sub as in effect immediately prior to the
Effective Time shall continue to be the charter of the Surviving Company (with
such amendments as may be set forth in the Articles of Merger in accordance with
this Agreement) until thereafter changed or amended as provided therein or by
applicable law.
(b) Bylaws. The bylaws of CCA Sub as in effect immediately prior to the
Effective Time shall continue to be the bylaws of the Surviving Company until
thereafter changed or amended as provided therein or by applicable law.
Section 1.06 Directors. The persons named in Schedule 1.06 attached hereto
shall be the directors of the Surviving Company, until the earlier of their
resignation or removal or until their respective successors are duly elected and
qualified, as the case may be.
Section 1.07 Officers. The persons named in Schedule 1.07 attached hereto
shall be the officers of the Surviving Company, serving in such capacity as is
set forth on Schedule 1.07 until the earlier of their resignation or removal or
until their respective successors are duly elected and qualified, as the case
may be.
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ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL SHARES, INDEBTEDNESS AND
AGREEMENTS OF THE CONSTITUENT ENTITIES; EXCHANGE OF CERTIFICATES
Section 2.01 Effect on Capital Shares, Indebtedness and Agreements. By
virtue of the Merger and without any action on the part of Prison Realty, CCA
Sub, CCA or the holders of the Constituent Capital Stock (as defined herein):
(a) Cancellation of Certain Shares, Indebtedness and Agreements. As
of the Effective Time: (i) each share of Constituent Capital Stock that is
owned by any of the parties hereto or their Subsidiaries (as defined in
Section 8.03 herein) (except for any shares of Prison Realty Stock (as
defined in Section 3.01(c) herein) owned by CCA Sub which are to be
delivered as the CCA Merger Consideration) shall automatically be canceled
and retired and shall cease to exist, and no consideration shall be
delivered in exchange therefor; (ii) any indebtedness between any of the
parties hereto shall be canceled and shall cease to exist and no
consideration shall be delivered therefor; and (iii) all agreements between
any of the parties hereto shall be canceled and shall cease to exist. For
purposes hereof, the term "Constituent Capital Stock" means collectively
the Prison Realty Stock and the CCA Common Stock.
(b) Conversion of CCA Common Stock. As of the Effective Time, each
issued and outstanding share of CCA Common Stock (other than shares
canceled pursuant to subparagraph (a) above) shall be converted into the
right to receive that number of shares of Prison Realty Common Stock
(collectively, the "CCA Merger Consideration") determined by: (i)
multiplying $20,000,000 by a fraction, the numerator of which shall be the
total number of shares of CCA Common Stock outstanding immediately prior to
the Effective Time which are not to be canceled pursuant to subparagraph
(a) above, and the denominator of which shall be the total number of shares
of CCA Common Stock outstanding immediately prior to the Effective Time,
inclusive of shares which are to be canceled pursuant to subparagraph (a)
above; (ii) dividing the amount determined under clause (i) by the Prison
Realty Closing Price (as herein defined); and (iii) dividing the amount
determined under clause (ii) by the total number of shares of CCA Common
Stock outstanding immediately prior to the Effective Time which are not to
be canceled pursuant to subparagraph (a) above. All computations made in
accordance with the preceding sentence shall be rounded to two decimal
places. As of the Effective Time, each issued and outstanding share of CCA
Common Stock converted into Prison Realty Common Stock in accordance
herewith shall no longer be outstanding and shall automatically be canceled
and retired and shall cease to exist, and each holder of a certificate
representing any such shares of CCA Common Stock shall cease to have any
rights with respect thereto except the right to receive the CCA Merger
Consideration, without interest thereon. Shares of Prison Realty Common
Stock that are issued in exchange for shares of CCA Common Stock which are
subject to forfeiture under the CCA Restricted Stock Plan (as defined in
Section 2.04 herein) shall become subject to the terms and restrictions of
the Prison Realty Restricted Stock Plan (as defined in Section 2.04 herein)
in accordance with Section 2.04. All remaining shares of Prison Realty
Common Stock issued in the CCA Merger shall be subject to the terms and
conditions of a Lock-Up Agreement (as defined in Section 5.12 herein). For
purposes hereof, the term "Prison Realty Closing Price" means the average
closing price of Prison Realty Common Stock over the five trading days
ending two trading days prior to the Closing Date.
Section 2.02 Exchange of Certificates.
(a) Exchange. Immediately after the Effective Time, Prison Realty shall
exchange certificates representing CCA Common Stock (each, a "CCA Certificate"
and, collectively, the "CCA
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Certificates") for the CCA Merger Consideration. Promptly after the Effective
Time, Prison Realty shall send to each holder of shares of CCA Common Stock
(other than Prison Realty or any of its Subsidiaries) at the Effective Time a
letter of transmittal for use in such exchange (which shall specify that the
delivery shall be effected, and risk of loss and title shall pass, only upon
proper delivery of the CCA Certificates to Prison Realty) and instructions for
use in effecting the surrender of the CCA Certificates for payment therefor.
(b) Exchange of Certificates. Each holder of shares of CCA Common Stock
that have been converted into the right to receive the CCA Merger Consideration
will be entitled to receive, upon surrender to Prison Realty of a CCA
Certificate, together with a properly completed letter of transmittal, the CCA
Merger Consideration in respect of each share of CCA Common Stock represented by
such CCA Certificate. Until so surrendered, each such CCA Certificate shall,
after the Effective Time, represent for all purposes only the right to receive
such CCA Merger Consideration.
(c) Form of Certain Transfers. If any portion of the CCA Merger
Consideration is to be paid to a person (as defined in Section 8.03 herein)
other than the person in whose name a CCA Certificate is registered, it shall be
a condition to such payment that the CCA Certificate so surrendered shall be
properly endorsed or otherwise be in proper form for transfer and that the
person requesting such payment shall pay to Prison Realty any transfer or other
taxes required as a result of such payment to a person other than the registered
holder of such CCA Certificate or establish to the satisfaction of Prison Realty
that such tax has been paid or is not payable.
(d) Transfers After the Effective Time. After the Effective Time, there
shall be no further registration of transfers of shares of CCA Common Stock. If,
after the Effective Time, CCA Certificates are presented to Prison Realty or the
Surviving Company, they shall be canceled and promptly exchanged for the
consideration provided for, in accordance with the procedures set forth in this
Article.
(e) Unclaimed Shares. Neither Prison Realty nor the Surviving Company
shall be liable to any holder of CCA Common Stock for any amount paid to a
public official pursuant to applicable abandoned property laws.
(f) Dividends. No dividends, interest or other distributions with respect
to securities of Prison Realty constituting part of the CCA Merger Consideration
shall be paid to the holder of any unsurrendered CCA Certificates until such CCA
Certificates are surrendered as provided in this Section. Upon such surrender,
there shall be paid, without interest, to the person in whose name the
securities of Prison Realty have been registered, all dividends, interest and
other distributions payable in respect of such securities on a date subsequent
to, and in respect of a record date after, the Effective Time.
Section 2.03 Qualified Plans. As of the Effective Time, Prison Realty
shall adopt the Corrections Corporation of America 401(k) Savings and Retirement
Plan (the "CCA 401(k) Plan"), and shall cause benefits under the Prison Realty
401(k) Savings and Retirement Plan (the "Prison Realty 401(k) Plan") to cease to
accrue. After the Effective Time, the Prison Realty 401(k) Plan and the CCA
Prison Realty Trust Employee Savings and Stock Ownership Plan (the "Prison
Realty ESOP") (the benefits under which ceased to accrue as of December 31,
1998) may, at the discretion of Prison Realty, be maintained as frozen plans in
compliance with applicable law. Prior to the Effective Time, Prison Realty and
CCA shall take all actions (including, if appropriate, amending the terms of the
CCA 401(k) Plan, the Prison Realty 401(k) Plan and the Prison Realty ESOP) that
are necessary to give effect to the transactions contemplated by this Section.
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Section 2.04 Restricted Stock Plans. As of the Effective Time, the
Correctional Management Services Corporation 1998 Restricted Stock Plan (the
"CCA Restricted Stock Plan") shall be merged into a new restricted stock plan
(the "Prison Realty Restricted Stock Plan") with terms and conditions similar to
those of the CCA Restricted Stock Plans, except that any shares forfeited under
the Prison Realty Restricted Stock Plan shall be forfeited to all plan
participants. Prison Realty, CCA Sub and CCA shall take all actions that are
necessary to give effect to the transactions contemplated by this Section.
Section 2.05 Warrants to Purchase CCA Common Stock. At the Effective Time,
each warrant to purchase shares of CCA Common Stock (the "CCA Warrants"),
whether or not exercisable, shall be deemed to constitute a warrant to acquire,
on substantially the same terms and conditions as were applicable to the
original warrant to which it relates (a "Substitute Warrant"), the same number
of shares of Prison Realty Common Stock as the holder of such warrant would have
been entitled to receive pursuant to the Merger had such holder exercised such
CCA Warrant in full immediately prior to the Effective Time, at a price per
share of Prison Realty Common Stock computed in compliance with the terms of
such CCA Warrant; provided, however, that the number of shares of Prison Realty
Common Stock that may be purchased upon exercise of such Substitute Warrant
shall not include any fractional share. Prior to the Effective Time, CCA will
use its best efforts to obtain such consents, if any, as may be necessary to
give effect to the transactions contemplated by this Section. In addition, prior
to the Effective Time, CCA will use its best efforts to make any amendments to
the terms of the CCA Warrants that are necessary to give effect to the
transactions contemplated by this Section. Except as contemplated by this
Section, CCA will not, after the date hereof, without the written consent of
Prison Realty, amend any outstanding CCA Warrants. Prison Realty, CCA Sub and
CCA shall take all actions that are necessary to give effect to the transactions
contemplated by this Section, including without limitation such actions, if any,
as are described in the CCA Warrants.
Section 2.06 Fractional Shares. No fractional shares of Prison Realty
Common Stock shall be issued to shareholders of CCA in connection with the
Merger, but in lieu thereof each holder of shares of CCA Common Stock otherwise
entitled to receive as a result of the Merger a fractional share of Prison
Realty Common Stock shall be entitled to receive a cash payment (without
interest), rounded to the nearest cent, representing such holder's proportionate
interest in the net proceeds resulting from the sale (after deduction of all
expenses resulting from such sale) on the New York Stock Exchange ("NYSE")
through one or more of its member firms of the fractional shares of Prison
Realty Common Stock all holders of shares of CCA Common Stock would otherwise be
entitled to receive as a result of the Merger.
Section 2.07 Lost Certificates. If any CCA Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such CCA Certificate to be lost, stolen or destroyed and, if
required by the Surviving Company, the posting by such person of a bond, in such
reasonable amount as the Surviving Company may direct, as indemnity against any
claim that may be made against it with respect to such CCA Certificate, Prison
Realty (or its duly appointed transfer agent) will issue in exchange for such
lost, stolen or destroyed CCA Certificate the CCA Merger Consideration to be
paid in respect of the shares represented by such CCA Certificates as
contemplated by this Article.
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Article III
REPRESENTATIONS AND WARRANTIES
Section 3.01 Representations and Warranties of Prison Realty. Except as
set forth in Prison Realty SEC Documents (as defined in Section 3.01(e) herein)
filed with the Securities and Exchange Commission (the "SEC") and publicly
available prior to the date hereof (the "Prison Realty Filed SEC Documents") or
on the Disclosure Schedule delivered by Prison Realty to CCA prior to the
execution of this Agreement (the "Prison Realty Disclosure Schedule"), which
Prison Realty Disclosure Schedule constitutes a part hereof and is true and
correct in all material respects, Prison Realty hereby represents and warrants
to CCA as follows:
(a) Organization and Authority. Prison Realty is a corporation duly
incorporated and validly existing and in good standing under the laws of
the State of Maryland with full corporate power and authority to own its
properties and conduct its business as now conducted and is duly qualified
or authorized to do business and is in good standing in all jurisdictions
where the failure to so qualify could have a material adverse effect (as
defined in Section 8.03 herein). Prison Realty has all requisite corporate
power and authority, and has been duly authorized by all necessary
consents, approvals, authorizations, orders, registrations, qualifications,
licenses and permits of and from all public, regulatory or governmental
agencies and bodies, to own, lease and operate its assets and properties
and to conduct its business as it is now being conducted and is duly
qualified or licensed to do business and is in good standing in each
jurisdiction in which the failure to do so could have a material adverse
effect upon the conduct of its business or the ownership or leasing of
property by it in such jurisdiction.
(b) Subsidiaries.
(i) Except for CCA Sub, the only direct or indirect Subsidiaries of
Prison Realty are those listed in Section 3.01(b) of the Prison Realty
Disclosure Schedule. Except for Prison Realty's ownership of all of the
issued and outstanding common stock of CCA Sub and except for the
ownership interests set forth in Section 3.01(b) of the Prison Realty
Disclosure Schedule, Prison Realty does not own or control, directly or
indirectly, a 50% or greater capital stock interest in a corporation, a
general partnership interest or a 50% or greater limited partnership
interest in a partnership, or a managing membership interest or a 50% or
greater membership interest in a limited liability company, association
or other entity or project.
(ii) Except for CCA Sub or the entities listed in Section 3.01(b)
of the Prison Realty Disclosure Schedule, Prison Realty does not hold,
directly or indirectly, any equity interest or equity investment in any
corporation, partnership, association or other entity.
(iii) Except as set forth in Section 3.01(b) of the Prison Realty
Disclosure Schedule, all of the issued and outstanding shares of capital
stock of, or other equity interests in, each Subsidiary of Prison Realty
have been validly issued, are fully paid and nonassessable and are
owned, directly or indirectly, by Prison Realty free and clear of any
Liens (as hereinafter defined) and there are no outstanding
subscriptions, options, calls, contracts, voting trusts, proxies or
other commitments, understandings, restrictions, arrangements, rights or
warrants, including any right of conversion or exchange under any
outstanding security, instrument or other agreement, obligating any
Subsidiary of Prison Realty to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares of its capital stock or
obligating it to grant, extend or enter into any such agreement or
commitment.
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(c) Capital Structure of Prison Realty. The authorized stock of
Prison Realty consists of 300,000,000 shares of Prison Realty Common Stock
and 20,000,000 shares of preferred stock, $0.01 par value per share, of
Prison Realty, of which 4,300,000 shares have been designated Series A
Preferred Stock (the "Prison Realty Series A Preferred Stock" and,
collectively with the Prison Realty Common Stock, the "Prison Realty
Stock"). At the close of business on June 22, 2000, (A) 118,409,619 shares
of Prison Realty Common Stock were outstanding, (B) 4,300,000 shares of
Prison Realty Series A Preferred Stock were outstanding, (C) options
("Prison Realty Options") to acquire 2,396,734 shares of Prison Realty
Common Stock from Prison Realty pursuant to Prison Realty's equity
incentive plans ("Prison Realty Stock Plans") listed on the Prison Realty
Disclosure Schedule were outstanding, (D) 294,897 deferred share awards
("Prison Realty Deferred Share Awards") granted pursuant to Prison Realty
Stock Plans were outstanding, (E) subordinated notes ("Prison Realty
Notes") convertible into 2,962,336 shares of Prison Realty Common Stock
were outstanding, and (F) options to purchase 70,000 shares of Prison
Realty Common Stock not granted under any equity incentive plan to Xxxxxx
X. Xxxxxxx, Xx. (the "Xxxxxxx Option"), as set forth in Section 3.01(c) of
the Prison Realty Disclosure Schedule, were outstanding. Other than as set
forth above, at the close of business on June 22, 2000, there were
outstanding no shares of Prison Realty Stock or any other class or series
of stock of Prison Realty or options, warrants or other rights to acquire
Prison Realty Stock or any other class or series of stock of Prison Realty
from Prison Realty. No bonds, debentures, notes or other indebtedness
having the right to vote (or convertible into or exchangeable for
securities having the right to vote) on any matters on which stockholders
of Prison Realty may vote are issued or outstanding, except the Prison
Realty Notes.
All outstanding shares of Prison Realty Stock are, and any shares of Prison
Realty Common Stock which may be issued upon the exercise of Prison Realty
Options, the vesting of the Prison Realty Deferred Share Awards, the conversion
of the Prison Realty Notes or the exercise of the Xxxxxxx Option when issued
will be, duly authorized, validly issued, fully paid and nonassessable, and will
be delivered free and clear of all claims, mortgages, deeds of trust, charges,
liens, encumbrances, pledges or security interests of any kind or nature
whatsoever (collectively, "Liens") and are not now in violation of or subject to
any preemptive rights or other rights to subscribe for or purchase securities
and conform to the description thereof in the Prison Realty Filed SEC Documents.
Other than as set forth above, and except for this Agreement, the Prison Realty
Stock Plans, the Prison Realty Options, the Prison Realty Deferred Share Awards,
the Prison Realty Notes and the Xxxxxxx Option, there are no outstanding
securities, options, warrants, calls, rights, commitments, agreements or
undertakings of any kind to which Prison Realty or any of its Subsidiaries is a
party or by which Prison Realty or any of its Subsidiaries is bound obligating
Prison Realty or any of its Subsidiaries to issue, deliver or sell, or cause to
be issued, delivered or sold, additional shares of capital stock or other equity
or voting securities of Prison Realty or of any Subsidiary of Prison Realty or
obligating Prison Realty or any of its Subsidiaries to issue, grant, extend or
enter into any such security, option, warrant, call, right, commitment,
agreement or undertaking. There are no outstanding obligations of Prison Realty
or any of its Subsidiaries to repurchase, redeem or otherwise acquire any shares
of capital stock of Prison Realty or any of its Subsidiaries and, to the
knowledge of the executive officers of Prison Realty, as of the date hereof, no
irrevocable proxies have been granted with respect to shares of Prison Realty
Common Stock or equity of Subsidiaries of Prison Realty.
(d) Authorization. Prison Realty has all requisite corporate power
and authority to enter into this Agreement and, subject to obtaining the
Prison Realty Stockholder Approval, to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Prison Realty,
subject to obtaining the Prison Realty Stockholder Approval. This Agreement
has been duly executed and delivered by
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Prison Realty and constitutes a valid and binding obligation of Prison
Realty, enforceable against Prison Realty in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance, fraudulent transfer and other similar laws from time
to time in effect. The execution and delivery of this Agreement does not,
and the consummation of the transactions contemplated hereby will not,
conflict with, or result in any breach or violation of, or default (with or
without notice or lapse of time or both) under, or result in the
termination of, or accelerate the performance required by, or give rise to
a right of termination, cancellation or acceleration of any obligation
under, or the creation of a Lien pursuant to, (i) any provision of the
charter (or similar organizational documents) or bylaws of Prison Realty or
any of its Subsidiaries or (ii) subject to obtaining or making the
consents, approvals, orders, authorizations, registrations, declarations
and filings referred to in the following sentence, any loan or credit
agreement, note, mortgage, indenture, lease, Prison Realty Stock Plan or
other agreement, obligation, instrument, permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to Prison Realty or any of its Subsidiaries or their
respective properties or assets, in any case under this clause (ii) which
would, individually or in the aggregate, have a material adverse effect on
Prison Realty. No consent, approval, order or authorization of, or
registration, declaration or filing with, any court, administrative agency
or commission or other governmental authority or instrumentality (a
"Governmental Entity") is required by or with respect to Prison Realty or
any of its Subsidiaries in connection with the execution and delivery of
this Agreement by Prison Realty or the consummation by Prison Realty of the
transactions contemplated hereby, the failure of which to be obtained or
made would, individually or in the aggregate, have a material adverse
effect on Prison Realty or would prevent or materially delay the
consummation of the transactions contemplated hereby, except for (A) the
filing with the SEC of: (i) a proxy statement relating to the consideration
of the transaction contemplated by this Agreement at a meeting of the
stockholders of Prison Realty (the "Prison Realty Stockholders' Meeting")
duly called and convened to consider the approval of such transaction, as
amended or supplemented from time to time (the "Proxy Statement"); (ii) a
registration statement relating to the issuance of shares of Prison Realty
Stock in the Merger, which shall also contain a proxy statement-prospectus
relating to the consideration of the transaction contemplated by this
Agreement at a meeting of the shareholders of CCA (the "CCA Shareholders'
Meeting") duly called and convened to consider the approval of such
transaction, as amended and supplemented from time to time (the
"Registration Statement"); and (iii) such reports under the Securities
Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder (the "Exchange Act"), as may be required in connection with this
Agreement and the transaction contemplated hereby, (B) the filing of the
Articles of Merger with the Tennessee Secretary of State and appropriate
documents with the relevant authorities of other states in which Prison
Realty is qualified to do business, (C) filings required pursuant to the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended, and the
rules and regulations promulgated thereunder (the "HSR Act"), (D) filings
necessary to satisfy the applicable requirements of state securities or
"blue sky" laws, (E) filings required under the rules and regulations of
the New York Stock Exchange (the "NYSE") and (F) filings required pursuant
to Prison Realty's leases and related agreements with Governmental
Entities, which are set forth on the Prison Realty Disclosure Schedule
(collectively, the "Required Filings").
(e) SEC Documents; Financial Statements. Prison Realty has timely
filed all forms, reports, schedules, registration statements, definitive
proxy statements and other documents required to be filed by Prison Realty
with the SEC since January 1, 1999 (the "Prison Realty SEC Documents"). As
of their respective dates, the Prison Realty SEC Documents complied in all
material respects with the requirements of the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder (the
"Securities Act") and the Exchange Act, as
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the case may be, applicable to such Prison Realty SEC Documents. None of
the Prison Realty SEC Documents when filed contained any untrue statement
of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.
Prison Realty and its Subsidiaries are not parties to or otherwise subject
to any contracts or other agreements that were or are required to be filed
as exhibits to, or otherwise disclosed in, the Prison Realty Filed SEC
Documents and have not been so filed or disclosed. The financial statements
of Prison Realty included in the Prison Realty SEC Documents (the "Prison
Realty Financial Statements") comply as to form in all material respects
with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, have been prepared in
accordance with generally accepted accounting principles applied on a
consistent basis ("GAAP") during the periods involved and fairly present in
all material respects the consolidated financial position of Prison Realty
and its consolidated Subsidiaries as at the dates thereof and the
consolidated results of their operations and cash flows for the periods
then ended. Except as set forth in the Prison Realty Filed SEC Documents
(including any item accounted for in the financial statements contained in
the Prison Realty Filed SEC Documents or set forth in the notes thereto)
and except for the effect of the contemplated transactions under this
Agreement and related agreements, since March 31, 2000, (i) neither Prison
Realty nor any of its Subsidiaries has incurred any claims, liabilities or
obligations of any nature (whether accrued, absolute, contingent or
otherwise) which, individually or in the aggregate, would have a material
adverse effect on Prison Realty (other than claims, liabilities or
obligations contemplated by this Agreement or expressly permitted to be
incurred pursuant to this Agreement), and (ii) Prison Realty and each of
its Subsidiaries have conducted their respective businesses only in the
ordinary course consistent with past practice.
(f) Information Supplied. None of (i) the information supplied or to
be supplied by Prison Realty specifically for inclusion or incorporation by
reference in the Proxy Statement, at the date it is first mailed to
stockholders of Prison Realty or at the time of the Prison Realty
Stockholders' Meeting, and (ii) the information supplied or to be supplied
by Prison Realty specifically for inclusion or incorporation by reference
in the Registration Statement, at the date the proxy statement-prospectus
comprising a portion of the Registration Statement is first mailed to
shareholders of CCA or at the time of the CCA Shareholders' Meeting, will
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading, except that in each case no representation or
warranty is made by Prison Realty with respect to statements made or
incorporated by reference therein based on information supplied by CCA,
Prison Management Services, Inc., a Tennessee corporation ("PMSI"), or
Juvenile and Jail Facility Management Services, Inc., a Tennessee
corporation ("JJFMSI"), specifically for inclusion or incorporation by
reference therein. The Proxy Statement and the Registration Statement will
comply as to form in all material respects with the requirements of the
Exchange Act and the Securities Act, except that in each case no
representation or warranty is made by Prison Realty with respect to
statements made or incorporated by reference therein based on information
supplied by CCA, PMSI or JJFMSI for inclusion or incorporation by reference
therein. If at any time prior to the date of the Prison Realty
Stockholders' Meeting or the CCA Shareholders' Meeting, any event with
respect to Prison Realty, or with respect to information supplied by Prison
Realty specifically for inclusion in the Proxy Statement or the
Registration Statement, shall occur which is required to be described in an
amendment of, or supplement to, the Proxy Statement or the Registration
Statement, such event shall be so described by Prison Realty.
(g) Proxy Statement and Registration Statement. The Proxy Statement
and Registration Statement to be filed with the SEC with respect to the
Merger and the offering of Prison Realty
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Stock in connection with the Merger, and any amendments or supplements
thereto, will, when filed, comply as to form in all material respects with
the applicable requirements of the Securities Act and Exchange Act. At the
time the Proxy Statement, or any amendment or supplement thereto, is
cleared by the SEC and at the time the Registration Statement, or any
amendment or supplement thereto, becomes effective, and at the Effective
Time, the Proxy Statement and the Registration Statement, each as amended
or supplemented, if applicable, shall not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements contained therein not
misleading. The foregoing representations and warranties will not apply to
statements or omissions included in the Proxy Statement or the Registration
Statement or any amendment or supplement thereto based upon information
furnished by CCA for use therein.
(h) Absence of Certain Changes or Events. Except for the effect of
the contemplated transaction under this Agreement and related agreements,
subsequent to March 31, 2000, neither Prison Realty nor any Subsidiary has
sustained any material loss or interference with its business or properties
from fire, flood, hurricane, accident or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental
action, order or decree, which is not disclosed in the Prison Realty
Disclosure Schedule; and subsequent to the respective dates as of which
information is given in the Prison Realty Filed SEC Documents, (i) neither
Prison Realty nor any Subsidiary has incurred any material liabilities or
obligations, direct or contingent, or entered into any transactions not in
the ordinary course of business consistent with past practice, and (ii)
there has not been any issuance of options, warrants or rights to purchase
Prison Realty Stock or any interests therein, or any adverse change, in the
general affairs, management, business, prospects, financial position, net
worth or results of operations of Prison Realty or any Subsidiary.
(i) Compliance with Laws; Litigation. Except as described in the
Prison Realty Disclosure Schedule or the Prison Realty Filed SEC Documents,
there are no claims, actions, suits, arbitration, grievances, proceedings
or investigations pending or, to Prison Realty's knowledge, threatened,
against Prison Realty or any Subsidiary, or any properties or rights of
Prison Realty or any Subsidiary, or any officers or directors of Prison
Realty or any Subsidiary in their capacity as such, by or before any
Governmental Entity which, individually or in the aggregate, is reasonably
likely to have a material adverse effect on Prison Realty or prevent,
materially delay or intentionally delay the ability of Prison Realty to
consummate the transactions contemplated hereby. Neither Prison Realty nor
its Subsidiaries is subject to any judgment, order or decree which could
reasonably be expected to result in a material adverse effect.
Prison Realty and its Subsidiaries have at all times operated and
currently operate their business in conformity in all material respects
with all applicable statutes, common laws, ordinances, decrees, orders,
rules and regulations of Governmental Entities. Prison Realty and each of
its Subsidiaries has all licenses, approvals or consents to operate its
businesses in all locations in which such businesses are currently being
operated, and to its knowledge is not aware of any existing or imminent
matter which may materially adversely impact its operations or business
prospects other than as specifically disclosed in the Prison Realty Filed
SEC Documents or the Prison Realty Disclosure Schedule. None of Prison
Realty or its Subsidiaries have failed to file with the applicable
regulatory authorities any material statements, reports, information or
forms required by all applicable laws, regulations or orders; all such
filings or submissions were in material compliance with applicable laws
when filed, and no material deficiencies have been asserted by any
regulatory commission, agency or authority with respect to such filings or
submissions. None of Prison Realty or its Subsidiaries have failed to
maintain in full force and effect any material licenses, registrations or
permits necessary or proper for the
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conduct of its business, or received any notification that any revocation
or limitation thereof is threatened or pending, and there is not to the
knowledge of Prison Realty pending any change under any law, regulation,
license or permit which would materially adversely affect the business,
operations, property or business prospects of Prison Realty. None of Prison
Realty or its Subsidiaries have received any notice of violation of or been
threatened with a charge of violating or are under investigation with
respect to a possible violation of any provision of any law, regulation or
order. Neither Prison Realty nor any of its Subsidiaries has at any time
(i) made any unlawful contribution to any candidate for domestic or foreign
office or failed to disclose fully any contribution in violation of law or
(ii) made any payment to any federal or state governmental officer or
official, or other person charged with similar public or quasi-public
duties, other than payments required or permitted by the laws of the United
States or any jurisdiction thereof.
(j) Taxes.
(i) Prison Realty has timely filed (or there have been filed on its
behalf) all Tax Returns required to be filed by it under applicable law,
and all such Tax Returns were and are true, complete and correct in all
material respects. Except to the extent adequately reserved for in
accordance with GAAP and reflected on the most recent balance sheets of
Prison Realty contained in the Prison Realty Filed SEC Documents, all
Taxes due and payable by Prison Realty have been timely paid in full.
(ii) There are no Tax liens upon the assets of Prison Realty except
liens for Taxes not yet due.
(iii) Prison Realty has complied with the provisions of the Code
relating to the withholding of Taxes, as well as similar provisions
under any other laws, and has, within the time and in the manner
prescribed by law, withheld, collected and paid over to the proper
governmental authorities all amounts required.
(iv) No audits or other administrative proceedings or court
proceedings are presently pending or, to the knowledge of Prison Realty,
asserted with regard to any Taxes or Tax Returns of Prison Realty.
(v) Prison Realty has not received a written ruling of a taxing
authority relating to Taxes or entered into a written and legally
binding agreement with a taxing authority relating to Taxes with any
taxing authority.
(vi) Except with respect to Prison Realty's election to be taxed as
a REIT with respect to its taxable year ended December 31, 1999, Prison
Realty has not requested any extension of time within which to file any
Tax Return, which Tax Return has not since been filed.
(vii) Prison Realty has not agreed to and is not required to make
any adjustment pursuant to Section 481(a) of the Code (or any
predecessor provision) by reason of any change in any accounting method
of Prison Realty, and there is no application pending with any taxing
authority requesting permission for any changes in any accounting method
of Prison Realty. To the knowledge of Prison Realty, the Internal
Revenue Service (the "IRS") has not proposed any such adjustment or
change in accounting method.
(viii) Prison Realty has not joined in the filing of a consolidated
return for federal income tax purposes. Prison Realty is not and has
never been subject to the provisions of Section 1503(f) of the Code.
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(ix) Prison Realty is not a party to any agreement providing for
the allocation or sharing of Taxes or indemnification by Prison Realty
of any other person in respect of Taxes.
(x) Prison Realty is not a party to any agreement, contract, or
arrangement that would result, individually or in the aggregate, in the
payment of any "excess parachute payments" within the meaning of Section
280G of the Code.
(xi) To the knowledge of Prison Realty, Prison Realty does not
have, nor has it ever had, any income which is includable in computing
the taxable income of a United States person (as determined under
Section 7701 of the Code) under Section 951 of the Code. To the
knowledge of Prison Realty, none of the Subsidiaries of Prison Realty is
or has ever been a "passive foreign investment company" within the
meaning of Section 1297 of the Code. To the knowledge of Prison Realty,
Prison Realty is not and never has been a "personal holding company"
within the meaning of Section 542 of the Code. To the knowledge of
Prison Realty, there are no gain recognition agreements, within the
meaning of Treasury Regulation 1.367(a)-8 or any predecessor provision,
between Prison Realty, on one hand, and a stockholder of Prison Realty,
on the other. There is no pending or, to the knowledge of Prison Realty,
threatened, action, proceeding or investigation by any taxing authority
for assessment or collection of Taxes with respect to Prison Realty in
any jurisdiction where Prison Realty has not filed a Tax Return. All
dealings and arrangements between and among Prison Realty and its
Subsidiaries are at arm's length and consistent with arm's length
dealings and arrangements between or among unrelated, uncontrolled
taxpayers.
(xii) Each Subsidiary which is a partnership, joint venture or
limited liability company has been treated since its formation, and
continues to be treated for federal income tax purposes, as a
partnership or as a disregarded entity, and not as a corporation or as
an association taxable as a corporation.
(xiii) For purposes of this Section 3.01(j), other than Section
3.01(j)(xii), all representations and warranties with respect to Prison
Realty are deemed to include and to apply to each of its Subsidiaries
and predecessors (and the Subsidiaries of such predecessors). For
purposes of this Section 3.01(j), the term "predecessors" shall include,
without limitation, Corrections Corporation of America, a Tennessee
corporation ("Old CCA"), and CCA Prison Realty Trust, a Maryland real
estate investment trust ("Old Prison Realty"), which entities merged
with and into Prison Realty on December 31, 1998 and January 1, 1999,
respectively.
(xiv) For each of its taxable years, Old Prison Realty was
organized, operated and duly qualified as a REIT under Section 856 of
the Code.
(xv) As used in this Agreement, (A) the term "Taxes" means any
federal, state, county, local or foreign taxes, charges, fees, levies or
other assessments, including all net income, gross income, sales and
use, ad valorem, transfer, gains, profits, excise, franchise, real and
personal property, gross receipt, capital stock, production, business
and occupation, disability, employment, payroll, license, estimated,
stamp, custom duties, severance or withholding taxes or charges imposed
by any governmental entity, and includes any interest and penalties
(civil or criminal) on or additions to any such taxes, and (B) the term
"Tax Return" means a report, return or other information required to be
supplied to a governmental entity with respect to Taxes including, where
permitted or required, combined or consolidated returns.
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(k) No Defaults. Except for violations or defaults which,
individually or in the aggregate, would not have a material adverse effect,
or for which valid waivers have been obtained by Prison Realty or its
Subsidiaries, neither Prison Realty nor any of its Subsidiaries is in
violation or default under any provision of its charter, by-laws,
partnership agreements or other governing or organizational documents, or
is in breach of or default with respect to any provision of any note, bond,
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 are bound; and there does not
exist any state of facts which would constitute an event of default on the
part of any of Prison Realty or its Subsidiaries as defined in such
documents which, with notice or lapse of time or both, would constitute a
default. Neither Prison Realty nor any of its Subsidiaries is a party to
any contract (other than leases) containing any covenant restricting its
ability to conduct its business as currently conducted except for any such
covenants that would not, individually or in the aggregate, have a material
adverse effect on Prison Realty.
(l) Properties.
(i) Prison Realty Real Property. For purposes of this Agreement,
"Prison Realty Permitted Liens" means (a) mechanics', carriers',
workers', repairers', materialmen's, warehousemen's and other similar
Liens arising or incurred in the ordinary course of business for sums
not yet due and payable and such Liens as are being contested by Prison
Realty in good faith, (b) Liens for current Taxes not yet due or
payable, (c) any covenants, conditions, restrictions, reservations,
rights, Liens, easements, encumbrances, encroachments and other matters
affecting title which are shown as exceptions on Prison Realty's title
insurance policies and/or title commitments or reports which have been
made available to CCA and (d) any other covenants, conditions,
restrictions, reservations, rights, non-monetary Liens, easements,
encumbrances, encroachments and other matters affecting title which
would not individually or in the aggregate, be reasonably expected to
have a material adverse effect. "Prison Realty Leases" means the real
property leases, subleases, licenses and use or occupancy agreements
pursuant to which Prison Realty or any of its Subsidiaries is the
lessee, sublessee, licensee, user or occupant of real property other
than the Prison Realty Owned Real Property, or interests therein
necessary for the conduct of, or otherwise material to, the business of
Prison Realty and its Subsidiaries as it is currently conducted. "Prison
Realty Leased Real Property" means all interests in real property
pursuant to the Prison Realty Leases. "Prison Realty Owned Real
Property" means the real property owned in fee by Prison Realty and its
Subsidiaries necessary for the conduct of, or otherwise material to, the
business of Prison Realty and its Subsidiaries as it is currently
conducted. "Prison Realty Real Property" means, collectively, the Prison
Realty Owned Real Property and the Prison Realty Leased Real Property.
The Prison Realty Filed SEC Documents describe all material Prison
Realty Real Property. Except as disclosed therein, or in the title
insurance policies relating to the Prison Realty Real Property or in the
Prison Realty Disclosure Schedule, each of Prison Realty and its
Subsidiaries has good, valid and marketable title to the Prison Realty
Real Property free of all Liens, in each case except Prison Realty
Permitted Liens. Except as set forth in Section 3.01(l)(i) of the Prison
Realty Disclosure Schedule, there are no outstanding contracts for the
sale of any of the Prison Realty Real Property, except those contracts
relating to Prison Realty Real Property the value in respect of which
does not exceed $5,000,000 individually or $15,000,000 in the aggregate.
Except for such exceptions as would not, in the aggregate, have a
material adverse effect, (a) each Prison Realty Lease is valid and
binding upon Prison Realty and its Subsidiaries and in full force and
effect and grants the lessee under the Prison Realty Lease the exclusive
right to use and occupy the premises, and (b) either Prison Realty or
its Subsidiaries has good and valid title to the leasehold estate or
other interest created under
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the Prison Realty Leases. No non-monetary defaults exist under the
Prison Realty Leases which, individually or in the aggregate, would have
a material adverse effect. The use and operation of the Prison Realty
Real Property in the conduct of the business of Prison Realty and its
Subsidiaries does not violate any instrument of record or agreement
affecting the Prison Realty Real Property, except for such violations
that, individually or in the aggregate, would not reasonably be expected
to have a material adverse effect. Valid policies of title insurance
have been issued insuring Prison Realty's or, if applicable, its
Subsidiary's, fee simple title to the Prison Realty Owned Real Property
owned by it, subject only to Prison Realty Permitted Liens, except where
the failure of such policies to be in full force and effect would not
reasonably be expected, in the aggregate, to have a material adverse
effect. To the best knowledge of Prison Realty, such policies are, at
the date hereof, in full force and effect, except where the failure to
have such valid policies of title insurance would not reasonably be
expected, in the aggregate, to have a material adverse effect. To the
best knowledge of Prison Realty, no material claim has been made against
any such policy. Except as provided in Schedule 3.01(l) of the Prison
Realty Disclosure Schedule, Prison Realty and its Subsidiaries have no
knowledge (a) that any certificate, permit or license from any
Governmental Entity having jurisdiction over any of the Prison Realty
Real Property or any agreement, easement or other right which is
necessary to permit the lawful use and operation of the buildings and
improvements on any of the Prison Realty Real Property or which is
necessary to permit the lawful use and operation of all driveways, roads
and other means of egress and ingress to and from any of the Prison
Realty Real Property has not been obtained and is not in full force and
effect, or of any pending threat of modification or cancellation of any
of the same which would have a material adverse effect, (b) of any
written notice of any violation of any federal, state or municipal law,
ordinance, order, regulation or requirement issued by any Governmental
Entity having a material adverse effect, (c) of any structural defects
relating to any Prison Realty Real Property which would have a material
adverse effect, (d) of any Prison Realty Real Property whose building
systems are not in working order so as to have a material adverse
effect, or (e) of any physical damage to any Prison Realty Real Property
which would have a material adverse effect for which there is no
insurance in effect covering the cost of the restoration. "Prison Realty
Space Lease" means each lease or other right of occupancy affecting or
relating to a property in which Prison Realty or its Subsidiaries (or an
entity in which it directly or indirectly has an interest) is the
landlord, either pursuant to the terms of a lease agreement or as
successor to any prior landlord. No default exists under any Prison
Realty Space Lease, except for such defaults as would, individually or
in the aggregate, not reasonably be expected to have a material adverse
effect.
(ii) Improvements Under Construction. With respect to those
Improvements (as defined herein) being constructed or under development
and located on any Prison Realty Real Property as set forth in the
Prison Realty Disclosure Schedule, to the knowledge of Prison Realty:
(a) the budget for the construction of the Improvements fairly and
accurately reflects Prison Realty's good faith estimate of the costs and
expenses shown thereon reasonably necessary to develop and construct the
Improvements in accordance with the plans and specifications therefor,
and Prison Realty has strictly adhered to said budget in all material
respects and has permitted no material deviations from said budget or
the plans and specifications for the Improvements; (b) the plans and
specifications for the Improvements have been approved by all applicable
Governmental Entities having jurisdiction over the Prison Realty Real
Property, the development and construction of the Improvements and the
use and occupancy thereof for its intended purposes, and/or any utility
services to the Prison Realty Real Property; (c) all utility services
necessary for the development and construction of the Improvements and
the use and occupancy thereof for
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its intended purposes are available through public or private easements
or rights-of-way at the boundaries of the Prison Realty Real Property,
including, without limitation, sanitary sewer, electricity, gas, water,
telephone, and storm water drainage; (d) all roads necessary for ingress
and egress to the Prison Realty Real Property, and for the full
utilization of the Prison Realty Real Property for its intended
purposes, have either been completed pursuant to public or private
easements, or the necessary rights-of-way therefor have been dedicated
to public use and accepted by the appropriate Governmental Entity; (e)
all building permits, curb cuts, sewer and water taps, and other
permits, licenses, approvals, authorizations and consents required for
the development and construction of the Improvements have been obtained;
(f) the plans and specifications for the Improvements, the development
and construction of the Improvements pursuant thereto, and the use and
occupancy of the Improvements for their respective intended purposes
comply and will comply with all applicable zoning ordinances, building
regulations, restrictive covenants and governmental laws, rules,
regulations and ordinances, and comply and will comply with all
applicable requirements, standards and regulations of appropriate
supervising boards of fire underwriters and similar agencies,
authorities or boards; (g) Prison Realty has: (A) diligently pursued the
development, construction and installation of the Improvements; and (B)
performed such duties as may be necessary to complete the development,
construction and installation of the Improvements in accordance with the
plans and specifications and without Liens, claims or assessments,
actual or contingent, asserted against Prison Realty Real Property for
any material, labor or other items furnished in connection therewith,
and all in full compliance with all construction, use, building, zoning
and other similar laws, ordinances, rules, regulations, codes and
restrictions of any applicable Governmental Entities or authorities or
otherwise applicable thereto; (h) Prison Realty has complied with all
laws, ordinances, rules, regulations, judgments, orders, injunctions,
writs and decrees of any government or political subdivision or agency
thereof, or any court or similar entity established by any of them,
applicable to the construction of the Improvements, and has paid when
due all taxes and assessments upon the Improvements or Prison Realty
Real Property, and all claims for labor or materials, rents, and other
obligations that, if unpaid, will or might become a Lien against the
Improvements or the Prison Realty Real Property; (i) Prison Realty has
maintained, in sufficient amount, and in satisfactory form and sub
stance, and with satisfactory insurers: (A) builder's risk insurance,
all-risk nonreporting completed value form, insuring the Improvements
against fire, theft, extended coverage, vandalism, and such other
hazards in full force and effect at all times until the completion of
construction of all of the Improvements; and (B) such other insurance,
in such amounts and for such terms, as may from time to time be
reasonably required insuring against such other casualties or losses
which at the time are commonly insured against in the case of premises
similarly situated; and (j) the Improvements have been constructed in
accordance with the plans and specifications therefor, and in compliance
with all laws, ordinances, rules and regulations applicable thereto, and
in a good and workmanlike manner. For the purposes of this Agreement
"Improvements" shall mean all buildings, improvements, structures and
fixtures now or on the Closing Date located on the Prison Realty Real
Property, including, without limitation, landscaping, parking lots and
structures, roads, drainage and all above ground and underground utility
structures, equipment systems and other so-called "infrastructure"
improvements.
(m) Environmental Matters.
(i) To the knowledge of Prison Realty, the Prison Realty Real
Property and the Improvements thereon (the "Prison Realty Facilities")
are presently operated in compliance in all material respects with all
Environmental Laws (as defined below).
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(ii) There are no Environmental Laws requiring any material
remediation, clean up, repairs, constructions or capital expenditures
(other than normal maintenance) with respect to the Prison Realty
Facilities.
(iii) There are no (A) notices of any violation or alleged
violation of any Environmental Laws relating to the Prison Realty
Facilities or their uses that have been received by Prison Realty, or
(B) writs, injunctions, decrees, orders or judgments outstanding, or any
actions, suits, claims, proceedings or investigations pending, or, to
the knowledge of Prison Realty, threatened, relating to the ownership,
use, maintenance or operation of the Prison Realty Facilities.
(iv) To the knowledge of Prison Realty, there are no past, present
or anticipated future events, conditions, circumstances, activities,
practices, incidents, actions, or plans relating to Prison Realty and
its Subsidiaries that may interfere with or prevent compliance or
continued compliance with applicable Environmental Laws or which may
give rise to any liability under the Environmental Laws.
(v) All material permits and licenses required under any
Environmental Laws in respect of the operations of the Prison Realty
Facilities have been obtained, and the Prison Realty Facilities and
Prison Realty are in compliance, in all material respects, with the
terms and conditions of such permits and licenses.
(vi) For purposes of this Agreement, "Environmental Laws" mean all
applicable statutes, regulations, rules, ordinances, codes, licenses,
permits, orders, demands, approvals, authorizations and similar items of
all governmental agencies, departments, commissions, boards, bureaus or
instrumentalities of the United States, states and political
subdivisions thereof and all applicable judicial, administrative and
regulatory decrees, judgments and orders relating to the protection of
human health, the environment, or worker or public health and safety as
in effect as of the date hereof, including but not limited to those
pertaining to reporting, licensing, permitting, investigation and
remediation of emissions, discharges, releases or threatened releases of
Hazardous Materials (as defined herein), substances, pollutants,
contaminants or hazardous or toxic substances, materials or wastes,
whether solid, liquid or gaseous in nature, into the air, surface water,
ground water or land, or relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling
of substances, pollutants, contaminants or hazardous or toxic
substances, materials or wastes, whether solid, liquid or gaseous in
nature, including by way of illustration and not by way of limitation,
(A) the Comprehensive Environmental Response, Compensation and Liability
Act (42 U.S.C. sec.sec. 960111 et seq.), the Resource Conservation and
Recovery Act (42 U.S.C. sec.sec. 69011 et seq.), the Clean Air Act (42
U.S.C. sec.sec. 7401 et seq.), the Federal Water Pollution Control Act
(33 U.S.C. sec.sec. 1251), the Safe Drinking Water Act (42 U.S.C.
sec.sec. 300f et seq.), the Toxic Substances Control Act (15 U.S.C.
sec.sec. 2601 et seq.), the Endangered Species Act (16 U.S.C. sec.sec.
1531 et seq.), the Emergency Planning and Community Right-to-Know Act of
1986 (42 U.S.C. sec.sec. 11001 et seq.) and (B) analogous state and
local provisions.
(vii) For purposes of this Agreement, "Hazardous Material" means
any chemical substance:
(A) the presence of which requires investigation or remediation
under any federal, state or local statute, regulation, ordinance,
order, action or policy, administrative request or civil complaint
under any of the foregoing or under common law; or
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(B) which is defined as a "hazardous waste" or "hazardous
substance" under any federal, state or local statute, regulation or
ordinance or amendments thereto as in effect as of the date hereof,
or as hereafter amended, including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act
(42 U.S.C. sec.sec. 9601 et seq.) and/or the Resource Conservation
and Recovery Act (42 U.S.C. sec.sec. 6901 et seq.); or
(C) which is toxic, explosive, corrosive, flammable, infectious,
radioactive, carcinogenic, mutagenic or otherwise hazardous and is
regulated by any governmental authority, agency, department,
commission, board, agency or instrumentality of the United States, or
any state or any political subdivision thereof having or asserting
jurisdiction over any of the Prison Realty Facilities; or
(D) the presence of which on any of the Prison Realty Facilities
causes a nuisance upon such facilities or to adjacent properties or
poses a hazard to the health or safety of persons on or about any of
the Prison Realty Facilities; or
(E) the presence of which on adjacent properties constitutes a
trespass by any owner or operator of the Prison Realty Facilities; or
(F) which contains gasoline, diesel fuel or other petroleum
hydrocarbons, polychlorinated biphenyls (PCBs) or asbestos or
asbestos-containing materials or urea formaldehyde foam insulation,
or lead-based paint, solder or other building materials; or
(G) radon gas.
(n) Benefit Plans.
(i) All "employee benefit plans" (as defined in Section 3(3) of
ERISA) and all other compensation, bonus, pension, profit sharing,
deferred compensation, stock ownership, stock purchase, stock option,
phantom stock, retirement, employment, change-in-control, welfare,
collective bargaining, severance, disability, death benefit,
hospitalization and medical plans, agreements, arrangements or
understandings that are maintained or contributed to (or previously
contributed to) for the benefit of any current or former employee,
officer or director of Prison Realty or any of its Subsidiaries and with
respect to which Prison Realty or any of its Subsidiaries would
reasonably be expected to have direct or contingent liability are
defined as the "Prison Realty Benefit Plans." Prison Realty has
heretofore delivered or made available to CCA true and complete copies
of all Prison Realty Benefit Plans and, with respect to each Prison
Realty Benefit Plan, true and complete copies of the following
documents: the most recent actuarial report, if any; the most recent
annual report, if any; any related trust agreement, annuity contract or
other funding instrument, if any; the most recent determination letter,
if any; and the most recent summary plan description, if any.
(ii) Except as disclosed in Section 3.01(n) of the Prison Realty
Disclosure Schedule: (A) none of the Prison Realty Benefit Plans is a
"multiemployer plan" within the meaning of Section 3(37) of ERISA or is
otherwise subject to Title IV of ERISA; (B) none of the Prison Realty
Benefit Plans promises or provides retiree medical or life insurance
benefits to any person; (C) neither Prison Realty nor any of its
Subsidiaries has any obligation to adopt or has taken any corporate
action to adopt, any new Prison Realty Benefit Plan or, except as
required by law, to amend any existing Prison Realty Benefit Plan; (D)
Prison Realty and its Subsidiaries are in compliance in all material
respects with and each Prison Realty Benefit Plan is and has been
administered in all material respects in compliance with its terms and
the applicable provisions of ERISA, the Code and all other applicable
laws, rules
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and regulations except for any failures to so administer any Prison
Realty Benefit Plan as would not have a material adverse effect on
Prison Realty; (E) each Prison Realty Benefit Plan that is intended to
be qualified within the meaning of Section 401(a) of the Code, to Prison
Realty's knowledge, has been determined by the IRS to be so qualified,
and no circumstances exist that could reasonably be expected to result
in the revocation of any such determination; (F) each Prison Realty
Benefit Plan intended to provide for the deferral of income, the
reduction of salary or other compensation, or to afford other income tax
benefits, complies with the requirements of the applicable provisions of
the Code or other laws, rules and regulations required to provide such
income tax benefits; (G) no prohibited transactions (as defined in
Section 406 or 407 of ERISA or Section 4975 of the Code) have occurred
for which a statutory exemption is not available with respect to any
Prison Realty Benefit Plan, and which could give rise to liability on
the part of Prison Realty, any of its Subsidiaries, any Prison Realty
Benefit Plan, or any fiduciary, party in interest or disqualified person
with respect thereto that would be material to Prison Realty or would be
material to Prison Realty if it were its liability; (H) neither Prison
Realty nor any entity required to be treated as a single employer with
Prison Realty under Section 414 of the Code has any unsatisfied
liability under Title IV of ERISA that would have a material adverse
effect on Prison Realty; (I) other than funding obligations and benefits
claims payable in the ordinary course, to Prison Realty's knowledge, no
event has occurred and no circumstance exists with respect to any Prison
Realty Benefit Plan that could give rise to any material liability
arising under the Code, ERISA or any other applicable law, or under any
indemnity agreement to which Prison Realty or any of its Subsidiaries is
a party, excluding liability relating to benefit claims and funding
obligations payable in the ordinary course, whether directly or by
reason of its affiliation with any entity required to be treated as a
single employer with Prison Realty under Section 414 of the Code; (J) as
of the date hereof there are no pending or, to the knowledge of the
executive officers of Prison Realty, threatened investigations, claims
or lawsuits in respect of any Prison Realty Benefit Plan that would have
a material adverse effect on Prison Realty; (K) other than continuation
coverage required to be provided under Section 4980B of the Code or Part
6 of Title I of ERISA or otherwise as provided by state law, none of the
Prison Realty Benefit Plans that are "welfare plans," within the meaning
of Section 3(1) of ERISA, provides for any benefits with respect to
current or former employees for periods extending beyond their
retirement or other termination of service; (L) no amount payable
pursuant to a Prison Realty Benefit Plan or any other plan, contract or
arrangement of Prison Realty would be considered an "excess parachute
payment" under Section 280G of the Code; and (M) no Prison Realty
Benefit Plan exists that could result in the payment to any current or
former employee, officer or director of Prison Realty any money or other
property or accelerate or provide any other rights or benefits as a
result of the transactions contemplated by this Agreement which would
constitute an excess parachute payment within the meaning of Section
280G of the Code.
(o) Material Contracts. There are no contracts or other documents
required by the Securities Act to be described in or to be filed as
exhibits to the Prison Realty Filed SEC Documents which have not been
described or filed as required. All such contracts to which Prison Realty
or any of its Subsidiaries is a party have been duly authorized, executed
and delivered by Prison Realty or such Subsidiary, constitute valid and
binding agreements of Prison Realty or such Subsidiary and are enforceable
against Prison Realty or such Subsidiary in accordance with the terms
thereof. Each of Prison Realty and its Subsidiaries has performed all
material obligations required to be performed by it, and is neither in
default in any material respect nor has it received notice of any default
or dispute under, any such contract or other material instrument to which
it is a party or by which its property is bound or affected. To the
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best knowledge of Prison Realty, no other party under any such contract or
other material instrument to which it or any of its Subsidiaries is a party
is in default in any material respect thereunder.
(p) No Undisclosed Liabilities. Except (a) as set forth in the Prison
Realty Filed SEC Documents, (b) as set forth in Section 3.01(p) of the
Prison Realty Disclosure Schedule, (c) as incurred in the ordinary course
of the business of Prison Realty subsequent to March 31, 2000 which would,
individually or in the aggregate, not have, or be reasonably expected not
to have, a material adverse effect, (d) for any expenses incurred in
connection with transactions contemplated by this Agreement or for
liabilities or obligations relating to contractual obligations,
indebtedness, litigation or other matters which are covered by other
representations and warranties in this Agreement or otherwise identified in
the Prison Realty Disclosure Schedule, neither Prison Realty nor any of its
Subsidiaries has any liabilities or obligations (direct or indirect,
contingent or fixed, known or unknown, matured or unmatured accrued or
unaccrued), whether arising out of contract, tort, statute or otherwise,
and whether or not required by GAAP to be reflected on or in footnotes to
the Prison Realty Financial Statements.
(q) Investment Company Act. Neither Prison Realty nor any of the
Subsidiaries is (i) an "investment company" or a company "controlled" by an
investment company within the meaning of the Investment Company Act of
1940, as amended, (ii) a "holding company" or a "subsidiary company" of a
holding company or an "affiliate" thereof within the meaning of the Public
Utility Holding Company Act of 1935, as amended, or (iii) subject to
regulation under the Federal Power Act or the Interstate Commerce Act.
(r) Reporting. Prison Realty is subject to Section 13 of the Exchange
Act and is in compliance in all material respects with the provisions of
such section.
(s) Labor Matters. Except as set forth in Section 3.01(s) of the
Prison Realty Disclosure Schedule: (i) neither Prison Realty nor its
Subsidiaries is a party to, or bound by, any collective bargaining
agreement, contract or other agreement or understanding with a labor union
or labor organization; (ii) to the knowledge of Prison Realty, no union
claims to represent the employees of Prison Realty and its Subsidiaries
currently exist; (iii) none of the employees of Prison Realty or its
Subsidiaries is represented by any labor organization and Prison Realty has
no knowledge of any current union organizing activities among the employees
of Prison Realty or its Subsidiaries, nor does any question concerning
representation exist concerning such employees; neither Prison Realty nor
its Subsidiaries is the subject of any proceeding asserting that it has
committed an unfair labor practice or seeking to compel it to bargain with
any labor organization as to wages or conditions of employment; (iv) there
is no strike, work stoppage, lockout or other labor dispute involving
Prison Realty or its Subsidiaries pending or threatened; (v) no action,
suit, complaint, charge, arbitration, inquiry, proceeding or investigation
by or before any Governmental Entity brought by or on behalf of any
employee, prospective employee, former employee, retiree, labor
organization or other representative of its employees is pending or, to the
knowledge of Prison Realty, threatened, against Prison Realty or its
Subsidiaries; (vi) to the knowledge of Prison Realty, no grievance is
threatened against Prison Realty or its Subsidiaries; (vii) neither Prison
Realty nor its Subsidiaries is a party to, or otherwise bound by, any
consent decree with, or citation by, any Governmental Entity relating to
employees or employment practices; (viii) there are no written personnel
policies, rules or procedures applicable to employees of Prison Realty or
its Subsidiaries, other than those set forth in Section 3.01(s) of the
Prison Realty Disclosure Schedule, true and correct copies of which have
heretofore been delivered or made available to CCA; (ix) Prison Realty and
its Subsidiaries are, and have at all times been, in material compliance
with all applicable laws respecting employment and employment practices,
terms and conditions of employment, wages, hours of work and
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occupational safety and health, and are not engaged in any unfair labor
practices as defined in the National Labor Relations Act or other
applicable law, ordinance or regulation; (x) since the enactment of the
Worker Adjustment and Retraining Notification Act (the "WARN Act"), neither
Prison Realty nor its Subsidiaries has effectuated (A) a "plant closing"
(as defined in the WARN Act) affecting any site of employment or one or
more facilities or operating units within any site of employment or
facility of any of Prison Realty or its Subsidiaries; or (B) a "mass
layoff" (as defined in the WARN Act) affecting any site of employment or
facility of any of Prison Realty or its Subsidiaries, in either case, other
than in substantial compliance with the WARN Act; nor has Prison Realty or
its Subsidiaries been affected by any transaction or engaged in layoffs or
employment terminations sufficient in number to trigger application of any
similar state, local or foreign law or regulation; and (xi) neither Prison
Realty nor any of its Subsidiaries is aware that it has any liability or
potential liability under the Multi-Employer Pension Plan Act.
(t) Insurance. Prison Realty and its Subsidiaries maintain primary,
excess and umbrella insurance of types and amounts customary for their
business against general liability, fire, workers= compensation, products
liability, theft, damage, destruction, acts of vandalism and all other
risks customarily insured against, all of which insurance is in full force
and effect and with respect to property insurance for assets for which it
is customary to have replacement cost coverage or there are coinsurance
provisions, the amount of such insurance is sufficient to provide for such
coverage or to prevent the application of the coinsurance provision.
Section 3.01(t) of the Prison Realty Disclosure Schedule sets forth a
complete list of the insurance policies maintained by Prison Realty and its
Subsidiaries.
(u) Affiliate Transactions. Except as set forth in Section 3.01(u) of
the Prison Realty Disclosure Schedule, there is no transaction and no
transaction is now proposed, to which Prison Realty or its Subsidiaries is
or is to be a party in which any current stockholder (holding in excess of
5% of the Prison Realty Common Stock or any securities convertible into or
exchangeable for Prison Realty Common Stock), general partner, limited
partner (holding in excess of 5% of the limited partnership interests),
director or executive officer of Prison Realty or its Subsidiaries has a
direct or indirect interest.
(v) Internal Accounting Controls. Prison Realty=s system of internal
accounting controls is sufficient to meet the broad objectives of internal
accounting controls insofar as those objectives pertain to the prevention
or detection of errors or irregularities in amounts that would be material
in relation to Prison Realty=s financial statements.
(w) Board Recommendation. Prior to the date hereof with respect to
this Agreement, the Board of Directors of Prison Realty, at a meeting duly
called and held, by the majority vote of the directors present at such
meeting and voting, (i) determined that such Agreement and the Merger and
the other transactions contemplated hereby or thereby are fair to and in
the best interests of the shareholders of Prison Realty, (ii) adopted such
Agreement and approved the Merger and (iii) approved the delivery of the
CCA Merger Consideration to the holders of CCA Certificates pursuant to the
terms and conditions of this Agreement.
(x) Maryland Law on Business Combinations and Control Shares. None of
the parties to the Merger is an interested stockholder (as defined in
Section 3-601 of the Maryland General Corporation Law (the "MGCL")) of
Prison Realty or an affiliate (as defined in Section 3-601 of the MGCL) of
an interested stockholder who was not exempted from the provisions of
Section 3-602 of the MGCL prior to the most recent date on which such
person became an interested stockholder. None of the shares of Prison
Realty Stock issued in the Merger constitute "control shares" as such term
is defined in Section 3-701 of the MGCL. The approval of the
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Merger, and the issuance of the Prison Realty Stock in connection
therewith, by the Board of Directors of Prison Realty referred to in
Section 3.01(w) constitutes approval of the Merger and the issuance of the
Prison Realty Stock and related transactions for purposes of Sections 3-602
and 3-702 of the MGCL.
(y) Brokers. No broker, investment banker, financial advisor or other
person, other xxxx Xxxxxxx Xxxxx & Co. ("Xxxxxxx Xxxxx") and Xxxxxxxxxxx
Xxxxxxx & Co., Inc. ("Xxxxxxxxxxx Xxxxxxx"), the fees and expenses of which
will be paid by Prison Realty, is entitled to any brokers, finders,
financial advisors or other similar fee or commission in connection with
the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of Prison Realty. Prison Realty's arrangements with
Xxxxxxx Xxxxx and Xxxxxxxxxxx Xxxxxxx have been disclosed to CCA prior to
the date hereof.
(z) Share Ownership. Prison Realty owns 981,393 shares of the issued
and outstanding Class B Common Stock of CCA. All of such shares shall be
canceled in connection with the Merger as set forth in Section 2.01 (a)
hereof.
Section 3.02 Representations and Warranties of CCA Sub. CCA Sub hereby
represents and warrants, severally and not jointly and with respect to itself
only, to CCA as follows:
(a) Organization and Authority. CCA Sub is a corporation duly
incorporated and validly existing in good standing under the laws of the
State of Tennessee with full corporate power and authority to own its
properties and conduct its business as now conducted and is duly qualified
or authorized to do business and is in good standing in all jurisdictions
where the failure to so qualify could have a material adverse effect. CCA
Sub does not have a direct or indirect ownership interest in any subsidiary
corporation, joint venture, partnership or other entity. CCA Sub has made
available to CCA complete and correct copies of its charter and bylaws, in
each case as amended to the date of this Agreement. CCA Sub is a
newly-formed entity and, except for activities incident to the Merger and
the transactions contemplated hereby, CCA Sub has not engaged in any
business activity of any type or kind whatsoever prior to the date hereof.
(b) Capital Structure. The authorized capital stock of CCA Sub
consists of 10,000 shares of common stock, no par value per share, of which
1,000 shares are issued and outstanding.
(c) Authorization. CCA Sub has all requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of CCA Sub. This
Agreement has been duly executed and delivered by CCA Sub and constitutes a
valid and binding obligation of CCA Sub, enforceable against CCA Sub in
accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance, fraudulent transfer and
other similar laws from time to time in effect. The execution and delivery
of this Agreement does not, and the consummation of the transactions
contemplated hereby will not, conflict with, or result in any breach or
violation of, or default (with or without notice or lapse of time or both)
under, or result in the termination of, or accelerate the performance
required by, or give rise to a right of termination, cancellation or
acceleration of any obligation under, or the creation of a Lien pursuant
to, (i) any provision of the charter (or similar organizational documents)
or bylaws of CCA Sub or (ii) subject to obtaining or making the consents,
approvals, orders, authorizations, registrations, declarations and filings
referred to in the following sentence, any loan or credit agreement, note,
mortgage, indenture, lease, or other agreement, obligation, instrument,
permit, concession, franchise, license, judgment, order, decree, statute,
law, ordinance, rule or regulation applicable to CCA Sub or its respective
properties or assets, in any
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case under this clause (ii) which would, individually or in the aggregate,
have a material adverse effect on CCA Sub. No consent, approval, order or
authorization of, or registration, declaration or filing with, any
Governmental Entity is required by or with respect to CCA Sub in connection
with the execution and delivery of this Agreement by CCA Sub or the
consummation by CCA Sub of the transactions contemplated hereby, the
failure of which to be obtained or made would, individually or in the
aggregate, have a material adverse effect on CCA Sub or would prevent or
materially delay the consummation of the transactions contemplated hereby,
except for (A) the filing of the Articles of Merger with the Tennessee
Secretary of State and appropriate documents with the relevant authorities
of other states in which CCA Sub is qualified to do business, (B) filings
required pursuant to the HSR Act, and (C) filings necessary to satisfy the
applicable requirements of state securities or "blue sky" laws.
(d) Information Supplied. None of (i) the information supplied or to
be supplied by CCA Sub specifically for inclusion or incorporation by
reference in the Proxy Statement, at the date it is first mailed to
stockholders of Prison Realty or at the time of the Prison Realty
Stockholders' Meeting, and (ii) the information supplied or to be supplied
by CCA Sub specifically for inclusion or incorporation by reference in the
Registration Statement, at the date the proxy statement-prospectus
comprising a portion of the Registration Statement is first mailed to
shareholders of CCA or at the time of the CCA Shareholders' Meeting, will
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading, except that in each case no representation or
warranty is made by CCA Sub with respect to statements made or incorporated
by reference therein based on information supplied by CCA, PMSI or JJFMSI
specifically for inclusion or incorporation by reference therein. If at any
time prior to the date of the Prison Realty Stockholders' Meeting or the
CCA Shareholders' Meeting, any event with respect to CCA Sub, or with
respect to information supplied by CCA Sub specifically for inclusion in
the Proxy Statement or the Registration Statement, shall occur which is
required to be described in an amendment of, or supplement to, the Proxy
Statement or the Registration Statement, such event shall be so described
by CCA Sub.
(e) Certain Agreements. CCA Sub is not in default under any material
agreement, commitment, lease or other instrument to which it or any of its
properties is subject, and there has not occurred any event that, with the
giving of notice or the lapse of time or both, would constitute such a
default by CCA Sub or, to the knowledge of the executive officers of CCA
Sub, a default thereunder by any other party thereto, except in all cases
where such defaults, individually or in the aggregate, would not have a
material adverse effect on CCA Sub. CCA Sub is not in breach in any
material respect under its charter, bylaws or other organizational
documents.
(f) Board Recommendation. Prior to the date hereof with respect to
this Agreement, the Board of Directors of CCA Sub, at a meeting duly called
and held, by the majority vote of the directors present at such meeting and
voting, (i) determined that such Agreement and the Merger and the other
transactions contemplated hereby or thereby are fair to and in the best
interests of the shareholders of CCA Sub, (ii) adopted such Agreement and
approved the Merger and (iii) resolved to recommend that its shareholder
approve the Agreement and the Merger.
(g) Tennessee Business Combination Act. The approval of the Merger by
the Board of Directors of CCA Sub referred to in Section 3.02(f)
constitutes approval of the Merger for purposes of the TBCA and represents
all the actions necessary to ensure that Sections 00-000-000, et seq., of
the TBCA do not apply to the Merger.
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Section 3.03 Representations and Warranties of CCA. Except as set forth in
the Prison Realty Filed SEC Documents or on the Disclosure Schedule delivered by
CCA to Prison Realty prior to the execution of this Agreement (the "CCA
Disclosure Schedule"), which CCA Disclosure Schedule constitutes a part hereof
and is true and correct in all material respects, CCA represents and warrants to
Prison Realty and CCA Sub as follows:
(a) Organization and Authority. CCA is duly formed and validly
existing and in good standing under the laws of the State of Tennessee with
full power and authority to own its properties and conduct its business as
now conducted and is duly qualified or authorized to do business and is in
good standing in all jurisdictions where the failure to so qualify could
have a material adverse effect on CCA. CCA has all requisite corporate
power and authority, and has been duly authorized by all necessary
consents, approvals, authorizations, orders, registrations, qualifications,
licenses and permits of and from all public, regulatory or governmental
agencies and bodies, to own, lease and operate its assets and properties
and to conduct its business as it is now being conducted and is duly
qualified or licensed to do business in each jurisdiction in which the
failure to do so could have a material adverse effect upon the conduct of
its business or the ownership or leasing of property by it in such
jurisdiction.
(b) Subsidiaries.
(i) The only direct or indirect Subsidiaries of CCA are those
listed in Section 3.03(b) of the CCA Disclosure Schedule. Except for the
ownership interests set forth in Section 3.03(b) of the CCA Disclosure
Schedule, CCA does not own or control, directly or indirectly, a 50% or
greater capital stock interest in a corporation, a general partnership
interest or a 50% or greater limited partnership interest in a
partnership, or a managing membership interest or a 50% or greater
membership interest in a limited liability company, association or other
entity or project.
(ii) Except for the entities listed in Section 3.03(b) of the CCA
Disclosure Schedule, CCA does not hold, directly or indirectly, any
equity interest or equity investment in any corporation, partnership,
association or other entity.
(iii) Except as set forth in Section 3.03(b) of the CCA Disclosure
Schedule, all of the issued and outstanding shares of capital stock of,
or other equity interests in, each Subsidiary of CCA have been validly
issued, are fully paid and nonassessable and are owned, directly or
indirectly, by CCA free and clear of any Liens and there are no
outstanding subscriptions, options, calls, contracts, voting trusts,
proxies or other commitments, understandings, restrictions,
arrangements, rights or warrants, including any right of conversion or
exchange under any outstanding security, instrument or other agreement,
obligating any Subsidiary of CCA to issue, deliver or sell, or cause to
be issued, delivered or sold, additional shares of its capital stock or
obligating it to grant, extend or enter into any such agreement or
commitment.
(iv) CCA's Subsidiaries do not own or operate or possess any
material assets, licenses, management contracts, or franchises or other
rights nor are such Subsidiaries liable with respect to any material
indebtedness, obligations, liabilities, or claims. For purposes of this
section, "material" means with respect to assets, licenses, management
contracts, franchises or rights of the Subsidiaries that the aggregate
value of such items for the Subsidiaries taken as a whole does not
exceed 5.0% of the aggregate value of such items for CCA and its
Subsidiaries taken as a whole; and with respect to indebtedness,
obligations, liabilities, and claims of the Subsidiaries, that the
aggregate amount of such items for the Subsidiaries
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taken as a whole does not exceed 5.0% of the aggregate amount of such
items for CCA and its Subsidiaries taken as a whole.
(c) Capital Structure. The authorized capital stock of CCA consists
of 100,000,000 shares of CCA Class A Common Stock, 100,000,000 shares of
CCA Class B Common Stock and 50,000,000 shares of preferred stock, $0.01
par value per share. At the close of business on June 22, 2000, (A)
9,349,061 shares of CCA Class A Common Stock were outstanding, (B) 981,393
shares of CCA Class B Common Stock were outstanding, (C) no shares of
preferred stock were outstanding and (D) warrants to acquire 546,729 shares
of CCA Class A Common Stock were outstanding. Other than as set forth
above, at the close of business on June 22, 2000, there were outstanding no
shares of CCA Common Stock or any other class or series of stock of CCA or
options, warrants or other rights to acquire shares of CCA Common Stock or
any other class or series of stock of CCA from CCA. No bonds, debentures,
notes or other indebtedness having the right to vote (or convertible into
or exchangeable for securities having the right to vote) on any matters on
which shareholders of CCA may vote are issued or outstanding.
All outstanding shares of CCA Common Stock are duly authorized,
validly issued, fully paid and nonassessable, and will be delivered free
and clear of Liens and will not be in violation of or subject to any
preemptive rights or other rights to subscribe for or purchase securities.
Other than as set forth above, and except for this Agreement and for
certain contractual preemptive rights granted to each of Prison Realty,
Sodexho (as defined herein) and Baron, there are no outstanding securities,
options, warrants, calls, rights, commitments, agreements or undertakings
of any kind to which CCA or any Subsidiary of CCA is a party or by which
CCA or any Subsidiary of CCA is bound obligating CCA or any Subsidiary of
CCA to issue, deliver or sell, or cause to be issued, delivered or sold,
additional shares of CCA Common Stock or other equity or voting securities
of CCA or of any Subsidiary of CCA or obligating CCA or any Subsidiary of
CCA to issue, grant, extend or enter into any such security, option,
warrant, call, right, commitment, agreement or undertaking. There are no
outstanding obligations of CCA or any of its Subsidiaries to repurchase,
redeem or otherwise acquire any shares of CCA Common Stock or any of its
Subsidiaries and, to the knowledge of the executive officers of CCA, as of
the date hereof, no irrevocable proxies have been granted with respect to
shares of CCA Common Stock or equity of Subsidiaries of CCA.
(d) Authorization. CCA has all requisite power and authority to enter
into this Agreement and, subject to obtaining the CCA Shareholder Approval
with respect to the Merger, to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly authorized by all
necessary action on the part of CCA, subject to obtaining CCA Shareholder
Approval with respect to the Merger. This Agreement has been duly executed
and delivered by CCA and constitutes a valid and binding obligation of CCA,
enforceable against CCA in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance,
fraudulent transfer and other similar laws from time to time in effect. The
execution and delivery of this Agreement does not, and the consummation of
the transactions contemplated hereby will not, conflict with, or result in
any breach or violation of, or default (with or without notice or lapse of
time or both) under, or result in the termination of, or accelerate the
performance required by, or give rise to a right of termination,
cancellation or acceleration of any obligation under, or the creation of a
Lien pursuant to, (i) any provision of the charter (or similar
organizational documents) or bylaws of CCA or any Subsidiary of CCA or (ii)
subject to obtaining or making the consents, approvals, orders,
authorizations, registrations, declarations and filings referred to in the
following sentence, any loan or credit
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agreement, note, mortgage, indenture, lease, or other agreement,
obligation, instrument, permit, concession, franchise, license, judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to
CCA or any Subsidiary of CCA or their respective properties or assets, in
any case under this clause (ii) which would, individually or in the
aggregate, have a material adverse effect on CCA. No consent, approval,
order or authorization of, or registration, declaration or filing with, any
Governmental Entity is required by or with respect to CCA or any Subsidiary
of CCA in connection with the execution and delivery of this Agreement by
CCA or the consummation by CCA of the transactions contemplated hereby, the
failure of which to be obtained or made would, individually or in the
aggregate, have a material adverse effect on CCA or would prevent or
materially delay the consummation of the transactions contemplated hereby,
except for (A) the filing of the Articles of Merger with the Tennessee
Secretary of State and appropriate documents with the relevant authorities
of other states in which CCA is qualified to do business, (B) filings
required pursuant to the HSR Act, (C) filings necessary to satisfy the
applicable requirements of state securities or "blue sky" laws, and those
required pursuant to CCA's agreements or management contracts with
Governmental Entities.
(e) Information Supplied. None of (i) the information supplied or to
be supplied by CCA specifically for inclusion or incorporation by reference
in the Proxy Statement, at the date it is first mailed to stockholders of
Prison Realty or at the time of the Prison Realty Stockholders' Meeting,
and (ii) the information supplied or to be supplied by CCA specifically for
inclusion or incorporation by reference in the Registration Statement, at
the date the proxy statement-prospectus comprising a portion of the
Registration Statement is first mailed to shareholders of CCA or at the
time of the CCA Shareholders' Meeting, will contain any untrue statement of
a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading, except that
in each case no representation or warranty is made by CCA with respect to
statements made or incorporated by reference therein based on information
supplied by Prison Realty, CCA Sub, PMSI or JJFMSI specifically for
inclusion or incorporation by reference therein. The Proxy Statement and
the Registration Statement will comply as to form in all material respects
with the requirements of the Exchange Act and the Securities Act, except
that in each case no representation or warranty is made by CCA with respect
to statements made or incorporated by reference therein based on
information supplied by Prison Realty, CCA Sub, PMSI or JJFMSI for
inclusion or incorporation by reference therein. If at any time prior to
the date of the Prison Realty Stockholders' Meeting or the CCA
Shareholders' Meeting, any event with respect to CCA, or with respect to
information supplied by CCA specifically for inclusion in the Proxy
Statement or the Registration Statement, shall occur which is required to
be described in an amendment of, or supplement to, the Proxy Statement or
the Registration Statement, such event shall be so described by CCA.
(f) Absence of Certain Changes or Events. Subsequent to March 31,
2000, neither CCA nor any Subsidiary has sustained any material loss or
interference with its business or properties from fire, flood, hurricane,
accident or other calamity, whether or not covered by insurance, or from
any labor dispute or court or governmental action, order or decree, which
is not disclosed; and subsequent to March 31, 2000 (i) neither CCA nor any
Subsidiary has incurred any material liabilities or obligations, direct or
contingent, or entered into any transactions not in the ordinary course of
business consistent with past practice, and (ii) there has not been any
issuance of options, warrants or rights to purchase CCA Common Stock, or
any interests therein, or any adverse change, or any development involving
a prospective adverse change, in the general affairs, management, business,
prospects, financial position, net worth or results of operations of CCA or
any Subsidiary.
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(g) Compliance with Laws; Litigation. Except as described in the CCA
Disclosure Schedule or in the Prison Realty Filed SEC Documents, there are
no claims, actions, suits, arbitration, grievances, proceedings or
investigations pending or, to CCA's knowledge, threatened, against CCA or
any Subsidiary, or any properties or rights of CCA or any Subsidiary, or
any officers or directors of CCA or any Subsidiary in their capacity as
such, by or before any Governmental Entity which, individually or in the
aggregate, is reasonably likely to have a material adverse effect on CCA or
prevent, materially delay or intentionally delay the ability of CCA to
consummate the transactions contemplated hereby. Neither CCA nor its
Subsidiaries is subject to any judgment, order or decree which could
reasonably be expected to result in a material adverse effect.
Each of CCA and its Subsidiaries has at all times operated and
currently operates its business in conformity in all material respects with
all applicable statutes, common laws, ordinances, decrees, orders, rules
and regulations of Governmental Entities. Each of CCA and its Subsidiaries
has all licenses, approvals or consents to operate its businesses in all
locations in which such businesses are currently being operated, and to its
knowledge is not aware of any existing or imminent matter which may
materially adversely impact its operations or business prospects other than
as specifically disclosed in the CCA Disclosure Schedule. CCA and each
Subsidiary have not failed to file with the applicable regulatory
authorities any material statements, reports, information or forms required
by all applicable laws, regulations or orders, all such filings or
submissions were in material compliance with applicable laws when filed,
and no material deficiencies have been asserted by any regulatory
commission, agency or authority with respect to such filings or
submissions. CCA and each Subsidiary have not failed to maintain in full
force and effect any material licenses, registrations or permits necessary
or proper for the conduct of its or their business, or received any
notification that any revocation or limitation thereof is threatened or
pending, and there is not to the knowledge of CCA pending any change under
any law, regulation, license or permit which would materially adversely
affect the business, operations, property or business prospects of CCA. CCA
and each Subsidiary have not received any notice of violation of or been
threatened with a charge of violating and are not under investigation with
respect to a possible violation of any provision of any law, regulation or
order. Neither CCA nor any of its Subsidiaries has at any time (i) made any
unlawful contribution to any candidate for domestic or foreign office or
failed to disclose fully any contribution in violation of law or (ii) made
any payment to any federal or state governmental officer or official, or
other person charged with similar public or quasi-public duties, other than
payments required or permitted by the laws of the United States or any
jurisdiction thereof.
(h) Taxes.
(i) CCA has timely filed (or there have been filed on its behalf)
all Tax Returns required to be filed by it under applicable law, and all
such Tax Returns were and are true, complete and correct in all material
respects. Except to the extent adequately reserved for in accordance
with GAAP and reflected on the most recent balance sheets of CCA, all
Taxes due and payable by CCA have been timely paid in full.
(ii) There are no Tax liens upon the assets of CCA except liens for
Taxes not yet due.
(iii) CCA has complied with the provisions of the Code relating to
the withholding of Taxes, as well as similar provisions under any other
laws, and has, within the time and in the manner prescribed by law,
withheld, collected and paid over to the proper governmental authorities
all amounts required.
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(iv) No audits or other administrative proceedings or court
proceedings are presently pending or, to the knowledge of CCA, asserted
with regard to any Taxes or Tax Returns of CCA.
(v) CCA has not received a written ruling of a taxing authority
relating to Taxes or entered into a written and legally binding
agreement with a taxing authority relating to Taxes with any taxing
authority.
(vi) Except as described on the CCA Disclosure Schedule, CCA has
not requested any extension of time within which to file any Tax Return,
which Tax Return has not since been filed.
(vii) CCA has not agreed to and is not required to make any
adjustment pursuant to Section 481(a) of the Code (or any predecessor
provision) by reason of any change in any accounting method of CCA, and
there is no application pending with any taxing authority requesting
permission for any changes in any accounting method of CCA. To the
knowledge of CCA, the IRS has not proposed any such adjustment or change
in accounting method.
(viii) CCA has not joined in the filing of a consolidated return
for federal income tax purposes. CCA is not and has never been subject
to the provisions of Section 1503(f) of the Code.
(ix) CCA is not a party to any agreement providing for the
allocation or sharing of Taxes or indemnification by CCA of any other
person in respect of Taxes.
(x) CCA is not a party to any agreement, contract, or arrangement
that would result, individually or in the aggregate, in the payment of
any "excess parachute payments" within the meaning of Section 280G of
the Code.
(xi) To the knowledge of CCA, CCA does not have, nor has it ever
had, any income which is includable in computing the taxable income of a
United States person (as determined under Section 7701 of the Code)
under Section 951 of the Code. To the knowledge of CCA, none of the
Subsidiaries of CCA is or has ever been a "passive foreign investment
company" within the meaning of Section 1297 of the Code. To the
knowledge of CCA, CCA is not and never has been a "personal holding
company" within the meaning of Section 542 of the Code. To the knowledge
of CCA, there are no gain recognition agreements, within the meaning of
Treasury Regulation 1.367(a)-8 or any predecessor provision, between
CCA, on one hand, and a stockholder of the CCA, on the other. There is
no pending or, to the knowledge of CCA, threatened, action, proceeding
or investigation by any taxing authority for assessment or collection of
Taxes with respect to CCA in any jurisdiction where CCA has not filed a
Tax Return. All dealings and arrangements between and among CCA and its
Subsidiaries are at arm=s length and consistent with arm=s length
dealings and arrangements between or among unrelated, uncontrolled
taxpayers.
(xii) For purposes of this Section 3.03(h), all representations and
warranties with respect to CCA are deemed to include and to apply to
each of its Subsidiaries and predecessors.
(i) No Defaults. Except for violations or defaults which,
individually or in the aggregate, would not have a material adverse effect,
or for which valid waivers have been obtained by CCA or its Subsidiaries,
neither CCA nor any of its Subsidiaries is in violation or default under
any provision of its charter, by-laws, partnership agreements or other
organizational documents, or is in breach of or default with respect to any
provision of any note, bond, 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
are bound; and there does
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not exist any state of facts which would constitute an event of default on
the part of any of CCA or its Subsidiaries as defined in such documents
which, with notice of lapse of time or both, would constitute a default.
Neither CCA nor any of its Subsidiaries is a party to any contract (other
than leases) containing any covenant restricting its ability to conduct its
business as currently conducted except for any such covenants that would
not, individually or in the aggregate, have a material adverse effect on
CCA.
(j) Environmental Matters.
(i) To the knowledge of CCA, the correctional and detention
facilities operated or managed by CCA (the "CCA Facilities") are
presently operated in compliance in all material respects with all
Environmental Laws.
(ii) There are no Environmental Laws requiring any material
remediation, clean up, repairs, constructions or capital expenditures
(other than normal maintenance) with respect to the CCA Facilities.
(iii) There are no (A) notices of any violation or alleged
violation of any Environmental Laws relating to the CCA Facilities or
their uses that have been received by CCA, or (B) writs, injunctions,
decrees, orders or judgments outstanding, or any actions, suits, claims,
proceedings or investigations pending, or, to the knowledge of CCA,
threatened, relating to the ownership, use, maintenance or operation of
the CCA Facilities.
(iv) To the knowledge of CCA, there are no past, present or
anticipated future events, conditions, circumstances, activities,
practices, incidents, actions, or plans relating to CCA and its
Subsidiaries that may interfere with or prevent compliance or continued
compliance with applicable Environmental Laws or which may give rise to
any liability under the Environmental Laws.
(v) All material permits and licenses required under any
Environmental Laws in respect of the operations of the CCA Facilities
have been obtained, and the CCA Facilities and CCA are in compliance, in
all material respects, with the terms and conditions of such permits and
licenses.
(k) Benefit Plans.
(i) All "employee benefit plans" (as defined in Section 3(3) of
ERISA) and all other compensation, bonus, pension, profit sharing,
deferred compensation, stock ownership, stock purchase, stock option,
phantom stock, retirement, employment, change-in-control, welfare,
collective bargaining, severance, disability, death benefit,
hospitalization and medical plans, agreements, arrangements or
understandings that are maintained or contributed to (or previously
contributed to) for the benefit of any current or former employee,
officer or director of CCA or any of its Subsidiaries and with respect
to which CCA or any of its Subsidiaries would reasonably be expected to
have direct or contingent liability are defined as the "CCA Benefit
Plans." CCA has heretofore delivered or made available to Prison Realty
true and complete copies of all CCA Benefit Plans and, with respect to
each CCA Benefit Plan, true and complete copies of the following
documents: the most recent actuarial report, if any; the most recent
annual report, if any; any related trust agreement, annuity contract or
other funding instrument, if any; the most recent determination letter,
if any; and the most recent summary plan description, if any.
(ii) Except as disclosed in Section 3.03(k) of the CCA Disclosure
Schedule: (A) none of the CCA Benefit Plans is a "multiemployer plan"
within the meaning of Section 3(37) of ERISA or is otherwise subject to
Title IV of ERISA; (B) none of the
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XXX Benefit Plans promises or provides retiree medical or life insurance
benefits to any person; (C) neither CCA nor any of its Subsidiaries has
any obligation to adopt or has taken any corporate action to adopt, any
new CCA Benefit Plan or, except as required by law, to amend any
existing CCA Benefit Plan; (D) CCA and its Subsidiaries are in
compliance in all material respects with and each CCA Benefit Plan is
and has been administered in all material respects in compliance with
its terms and the applicable provisions of ERISA, the Code and all other
applicable laws, rules and regulations except for any failures to so
administer any CCA Benefit Plan as would not have a material adverse
effect on CCA; (E) each CCA Benefit Plan that is intended to be
qualified within the meaning of Section 401(a) of the Code, to CCA's
knowledge, has been determined by the IRS to be so qualified, and no
circumstances exist that could reasonably be expected to result in the
revocation of any such determination; (F) each CCA Benefit Plan intended
to provide for the deferral of income, the reduction of salary or other
compensation, or to afford other income tax benefits, complies with the
requirements of the applicable provisions of the Code or other laws,
rules and regulations required to provide such income tax benefits; (G)
no prohibited transactions (as defined in Section 406 or 407 of ERISA or
Section 4975 of the Code) have occurred for which a statutory exemption
is not available with respect to any CCA Benefit Plan, and which could
give rise to liability on the part of CCA, any of its Subsidiaries, any
CCA Benefit Plan, or any fiduciary, party in interest or disqualified
person with respect thereto that would be material to CCA or would be
material to CCA if it were its liability; (H) neither CCA nor any entity
required to be treated as a single employer with CCA under Section 414
of the Code has any unsatisfied liability under Title IV of ERISA that
would have a material adverse effect on CCA; (I) other than funding
obligations and benefits claims payable in the ordinary course, to CCA's
knowledge, no event has occurred and no circumstance exists with respect
to any CCA Benefit Plan that could give rise to any liability arising
under the Code, ERISA or any other applicable law, or under any
indemnity agreement to which CCA or any of its Subsidiaries is a party,
excluding liability relating to benefit claims and funding obligations
payable in the ordinary course, whether directly or by reason of its
affiliation with any entity required to be treated as a single employer
with CCA under Section 414 of the Code; (J) as of the date hereof there
are no pending or, to the knowledge of the executive officers of CCA,
threatened investigations, claims or lawsuits in respect of any CCA
Benefit Plan that would have a material adverse effect on CCA; (K) other
than continuation coverage required to be provided under Section 4980B
of the Code or Part 6 of Title I of ERISA or otherwise as provided by
state law, none of the CCA Benefit Plans that are "welfare plans,"
within the meaning of Section 3(1) of ERISA, provides for any benefits
with respect to current or former employees for periods extending beyond
their retirement or other termination of service; (L) no amount payable
pursuant to a CCA Benefit Plan or any other plan, contract or
arrangement of CCA would be considered an "excess parachute payment"
under Section 280G of the Code; and (M) no CCA Benefit Plan exists that
could result in the payment to any current or former employee, officer
or director of CCA any money or other property or accelerate or provide
any other rights or benefits as a result of the transactions
contemplated by this Agreement which would constitute an excess
parachute payment within the meaning of Section 280G of the Code.
(l) Material Contracts. All contracts to which CCA or any Subsidiary
is a party have been duly authorized, executed and delivered by CCA or any
Subsidiary, constitute valid and binding agreements of CCA or any
Subsidiary and are enforceable against CCA or any Subsidiary in accordance
with the terms thereof. Each of CCA and each Subsidiary has performed all
material obligations required to be performed by it, and is neither in
default in any material respect nor has it received notice of any default
or dispute under, any such contract or
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other material instrument to which it is a party or by which its property
is bound or affected. To the best knowledge of CCA, no other party under
any such contract or other material instrument to which it is a party is in
default in any material respect thereunder.
(m) No Undisclosed Liabilities. Except (a) as set forth in the Prison
Realty Filed SEC Documents, (b) as set forth in Section 3.03(m) of the CCA
Disclosure Schedule, (c) as incurred in the ordinary course of the business
of CCA subsequent to March 31, 2000 which would, individually or in the
aggregate, not have, or be reasonably expected not to have, a material
adverse effect, (d) for any expenses incurred in connection with
transactions contemplated by this Agreement or for liabilities or
obligations relating to contractual obligations, indebtedness, litigation
or other matters which are covered by other representations and warranties
in this Agreement or otherwise identified in the CCA Disclosure Schedule,
neither CCA nor any of its Subsidiaries has any liabilities or obligations
(direct or indirect, contingent or fixed, known or unknown, matured or
unmatured accrued or unaccrued), whether arising out of contract, tort,
statute or otherwise, and whether or not required by GAAP to be reflected
on or in footnotes to the financial statements of CCA.
(n) Labor Matters. Except as set forth in Section 3.03(n) of the CCA
Disclosure Schedule: (i) neither CCA nor its Subsidiaries is a party to, or
bound by, any collective bargaining agreement, contract or other agreement
or understanding with a labor union or labor organization; (ii) to the
knowledge of CCA, no union claims to represent the employees of CCA and its
Subsidiaries; (iii) none of the employees of CCA or its Subsidiaries is
represented by any labor organization and CCA has no knowledge of any
current union organizing activities among the employees of CCA or its
Subsidiaries, nor does any question concerning representation exist
concerning such employees; neither CCA nor its Subsidiaries is the subject
of any proceeding asserting that it has committed an unfair labor practice
or seeking to compel it to bargain with any labor organization as to wages
or conditions of employment; (iv) there is no strike, work stoppage,
lockout or other labor dispute involving CCA or its Subsidiaries pending or
threatened; (v) no action, suit, complaint, charge, arbitration, inquiry,
proceeding or investigation by or before any Governmental Entity brought by
or on behalf of any employee, prospective employee, former employee,
retiree, labor organization or other representative of its employees is
pending or, to the knowledge of CCA, threatened against CCA or its
Subsidiaries; (vi) to the knowledge of CCA, no grievance is threatened
against CCA or its Subsidiaries; (vii) neither CCA nor its Subsidiaries is
a party to, or otherwise bound by, any consent decree with, or citation by,
any Governmental Entity relating to employees or employment practices;
(viii) there are no written personnel policies, rules or procedures
applicable to employees of CCA or its Subsidiaries, other than those set
forth in Section 3.03(n) of the CCA Disclosure Schedule, true and correct
copies of which have heretofore been delivered or made available to Prison
Realty, PMSI and JJFMSI; (ix) CCA and its Subsidiaries are, and have at all
times been, in material compliance with all applicable laws respecting
employment and employment practices, terms and conditions of employment,
wages, hours of work and occupational safety and health, and are not
engaged in any unfair labor practices as defined in the National Labor
Relations Act or other applicable law, ordinance or regulation; (x) since
the enactment of the WARN Act, neither CCA nor its Subsidiaries has
effectuated (A) a "plant closing" (as defined in the WARN Act) affecting
any site of employment or one or more facilities or operating units within
any site of employment or facility of any of CCA or its Subsidiaries; or
(B) a "mass layoff" (as defined in the WARN Act) affecting any site of
employment or facility of any of CCA or its Subsidiaries, in either case,
other than in substantial compliance with the WARN Act; nor has CCA or its
Subsidiaries been affected by any transaction or engaged in layoffs or
employment terminations sufficient in number to trigger application of any
similar state, local or foreign law or regulation; and
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(xi) neither CCA nor any of its Subsidiaries is aware that it has any
liability or potential liability under the Multi-Employer Pension Plan Act.
(o) Insurance. CCA and its Subsidiaries maintain primary, excess and
umbrella insurance of types and amounts customary for their business
against general liability, fire, workers' compensation, products liability,
theft, damage, destruction, acts of vandalism and all other risks
customarily insured against, all of which insurance is in full force and
effect and with respect to property insurance for assets for which it is
customary to have replacement cost coverage or there are coinsurance
provisions, the amount of such insurance is sufficient to provide for such
coverage or to prevent the application of the coinsurance provision.
Section 3.03(o) of the CCA Disclosure Schedule sets forth a complete list
of the insurance policies maintained by CCA and its Subsidiaries.
(p) Affiliate Transactions. Except as set forth in Section 3.03(p) of
the CCA Disclosure Schedule, there is no transaction and no transaction is
now proposed, to which CCA or its Subsidiaries is or is to be a party in
which any current stockholder (holding in excess of 5% of the CCA's Common
Stock or any securities convertible into or exchangeable for Common Stock),
general partner, limited partner (holding in excess of 5% of the limited
partnership interests), director or executive officer of CCA or its
Subsidiaries has a direct or indirect interest.
(q) Internal Accounting Controls. CCA's system of internal accounting
controls is sufficient to meet the broad objectives of internal accounting
controls insofar as those objectives pertain to the prevention or detection
of errors or irregularities in amounts that would be material in relation
to CCA's financial statements.
(r) Vote Required. The CCA Shareholder Approval is the only vote of
the holders of any class or series of CCA's securities necessary to approve
this Agreement and the transactions contemplated hereby.
(s) Board Recommendation. On the date hereof with respect to this
Agreement, the Board of Directors of CCA, at a meeting duly called and
held, by the majority vote of the directors present at such meeting, (i)
determined that such Agreement and the Merger and the other transactions
contemplated hereby and thereby are fair to and in the best interests of
the shareholders of CCA, (ii) adopted such Agreement and approved the
Merger and (iii) resolved to recommend that the holders of CCA Common Stock
approve such Agreement and the Merger.
(t) Tennessee Business Combination Act. CCA has received the opinion
of Xxxxxxxx & Xxx, PLC, counsel to CCA, that the approval of the Merger by
the Board of Directors of CCA referred to in Section 3.03(s) constitutes
approval of the Merger for purposes of the TBCA and represents all the
actions necessary to ensure that Sections 00-000-000, et seq., of the TBCA
do not apply to the Merger.
(u) Brokers. No broker, investment banker, financial advisor or other
person, other xxxx Xxxxxxx Xxxxx, the fees and expenses of which will be
paid by Prison Realty, is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by
or on behalf of CCA.
(v) Stock Ownership. CCA does not, directly or indirectly, own any
shares of Prison Realty Stock other than shares, if any, held in CCA
Benefit Plans.
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ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 4.01 Covenants of Prison Realty. Except as set forth in Section
4.01 of the Prison Realty Disclosure Schedule or as otherwise contemplated by
this Agreement and the transactions related thereto, during the period from the
date of this Agreement until the Effective Time, Prison Realty agrees that:
(a) Ordinary Course. Prison Realty and its Subsidiaries shall carry
on their respective businesses only in the usual, regular and ordinary
course consistent with past practice in all material respects and use their
reasonable best efforts to preserve intact their present business
organizations, maintain their rights and franchises and preserve their
relationships with customers, suppliers and others having business dealings
with them to the end that their goodwill and ongoing businesses shall not
be impaired at the Effective Time.
(b) REIT Qualification. Prison Realty shall conduct its operations in
a manner so as to continue to qualify as a REIT under the Code.
(c) Other Actions. Prison Realty shall not take any action that would
result in any of its representations and warranties set forth in this
Agreement that are qualified as to materiality being untrue, any of such
representations and warranties that are not so qualified being untrue in
any material respect or any of the conditions to the Merger set forth in
Article VI not being satisfied.
(d) Structure of Transactions. Prison Realty shall advise CCA from
time to time of the proposed structure of Prison Realty and its
Subsidiaries and affiliated entities at and after the Effective Time for
purposes of CCA's evaluation of the Merger.
(e) Advice of Changes; Filings. Prison Realty shall advise CCA of any
change or event which would cause or constitute a material breach of any of
its representations or warranties contained herein. Prison Realty shall
file all reports required to be filed by it with the SEC or the NYSE
between the date of this Agreement and the Effective Time and shall deliver
to CCA copies of all such reports promptly after the same are filed.
Section 4.02 Covenants of CCA Sub. During the period from the date of this
Agreement until the Effective Time, CCA Sub agrees that it shall not take any
action that would result in any of its representations and warranties set forth
in this Agreement that are qualified as to materiality being untrue, any of such
representations and warranties that are not so qualified being untrue in any
material respect or any of the conditions to the Merger set forth in Article VI
herein not being satisfied.
Section 4.03 Covenants of CCA. Except as set forth in Section 4.03 of the
CCA Disclosure Schedule or as otherwise contemplated by this Agreement and the
transactions related thereto, during the period from the date of this Agreement
through and including the Effective Time, CCA shall, and shall cause its
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 as set forth in Section 4.03 of the CCA
Disclosure Schedule or as otherwise contemplated by this
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Agreement, during the period from the date of this Agreement through the
Effective Time, CCA shall not, and shall not permit any of its Subsidiaries to:
(a) Dividends; Changes in Stock. Other than dividends and
distributions by a direct or indirect wholly owned Subsidiary to CCA or one
of their wholly owned Subsidiaries, (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 of CCA or any of its Subsidiaries or any other securities
thereof or any rights, warrants or options to acquire any such shares or
other securities;
(b) Issuance of Securities. 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) Governing Documents. Amend its charter, bylaws or other
comparable organizational documents;
(d) No Acquisitions. 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) No Dispositions. Other than the obligations for capital
commitments set forth in Section 4.03 of the CCA Disclosure Schedule, (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, or (C)
enter into any new development projects;
(f) Accounting Methods. Change its methods of accounting (or
underlying assumptions) in effect at December 31, 1999, except as required
by changes (i) in generally accepted accounting principles ("GAAP"), (ii)
in law or regulation, or (iii) due to events subsequent to March 31, 2000
related or consequential to the execution of this Agreement or consummation
of the Merger and related transactions (including, but not limited to, the
effects of any changes required by the SEC as part of its review of the
Prison Realty Filed SEC Documents, the Proxy Statement or the Registration
Statement); 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 CCA for the taxable years ended December
31, 1999, except as required by changes in law or regulation;
(g) No Settlements. Effect any settlement or compromise of any
pending or threatened proceeding in respect of which CCA is or could have
been a party, unless such settlement (i) includes an unconditional written
release of CCA, in form and substance reasonably satisfactory to CCA, 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 CCA and (iii) is less than
$100,000;
(h) No Cancellation. Other than the obligations for capital
commitments set forth in Section 4.03 of the CCA Disclosure Schedule,
create, renew, amend, terminate or cancel, or take any other action that
could reasonably be expected to result in the creation, renewal,
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amendment, termination or cancellation of any agreement or instrument that
is material to CCA and its respective Subsidiaries, taken as a whole;
(i) Indebtedness. Other than the obligations for capital commitments
set forth in Section 4.03 of the CCA Disclosure Schedule and any
indebtedness incurred by CCA in connection with this Agreement and the
transactions related thereto, and except for an increase in amounts
outstanding under its revolving credit agreement and/or the renewal or
refinancing of its existing revolving credit facility, incur any
indebtedness for borrowed money;
(j) No Commitments. Other than the obligations for capital
commitments set forth in Section 4.03 of the CCA Disclosure Schedule, enter
into any new capital or take out commitments or increase any existing
capital or take out commitments;
(k) Compensation. Except pursuant to agreements or arrangements in
effect on the date hereof, (A) grant to any current or former director,
executive officer or other key employee of CCA 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), (B) grant to
any such current or former director, executive officer or other employee
any increase in severance or termination pay, (C) amend or adopt any
employment, deferred compensation, consulting, severance, termination or
indemnification agreement with any such current or former director,
executive officer or employee, or (D) amend, adopt or terminate any CCA
Benefit Plan, except as may be required to retain qualification of any such
plan under Section 401(a) of the Code;
(l) Related Party Transactions. 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 4.03 of the CCA
Disclosure Schedule, 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) Insurance. Permit any material insurance policy naming CCA or any
Subsidiary as a beneficiary or a loss payable payee to be canceled or
terminated;
(n) Advise of Changes. Neglect or fail to advise Prison Realty of any
change or event which would cause or constitute a material breach of any of
the representations or warranties of CCA contained herein; or
(o) Other Actions. Authorize, or commit or agree to take, any of the
foregoing actions.
Section 4.04 No Solicitation by Prison Realty.
(a) Prison Realty shall not, nor shall it permit any of its Subsidiaries
to, nor shall it authorize or permit any officer, director or employee of, or
any investment banker, attorney or other advisor or representative of, Prison
Realty or any of its Subsidiaries to, directly or indirectly, (i) solicit,
initiate, encourage or knowingly facilitate the submission of any alternative
proposal or (ii) enter into or participate in any discussions or negotiations
regarding, or furnish to any person any information with respect to, any
alternative proposal; provided, however, that prior to the receipt of the Prison
Realty Stockholder Approval, Prison Realty may, in response to a bona fide
alternative proposal that constitutes a superior proposal (as defined in Section
4.04(b) herein) and that was made after the
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date hereof (and not solicited by Prison Realty after the date hereof) by any
person, and subject to compliance with Section 4.04(c) herein, (A) furnish
information with respect to Prison Realty and its Subsidiaries to such person
and its representatives pursuant to a customary confidentiality agreement and
discuss such information with such person and its representatives and (B)
participate in negotiations regarding such alternative proposal. For purposes of
this Section 4.04, the term "alternative proposal" means any inquiry, proposal
or offer from any person relating to any direct or indirect acquisition or
purchase of 10% or more of the assets (based on the fair market value thereof)
of Prison Realty and its Subsidiaries, taken as a whole, other than the
transactions contemplated by this Agreement, or of 10% or more of any class of
equity securities of Prison Realty or any of its Subsidiaries or any tender
offer or exchange offer (including by Prison Realty or any of its Subsidiaries)
that if consummated would result in any person beneficially owning 10% or more
of any class of equity securities of Prison Realty or any of its Subsidiaries,
or any merger, consolidation, business combination, sale of substantially all
assets, recapitalization, liquidation, dissolution or similar transaction
involving Prison Realty or any of its Subsidiaries other than the transactions
contemplated by this Agreement.
(b) Except as set forth in this Section 4.04, the Board of Directors of
Prison Realty shall not (i) withdraw or modify, or publicly propose to withdraw
or modify, in a manner adverse to CCA, the approval or recommendation by such
Board of Directors of the Merger or this Agreement, (ii) approve or recommend,
or propose publicly to approve or recommend, any alternative proposal or (iii)
cause or agree to cause Prison Realty to enter into any letter of intent,
agreement in principle, acquisition agreement or similar agreement related to
any alternative proposal. Notwithstanding the foregoing, if the Board of
Directors of Prison Realty receives a superior proposal, such Board of Directors
may, prior to the receipt of the Prison Realty Stockholder Approval, withdraw or
modify its approval or recommendation of the Merger and this Agreement, approve
or recommend a superior proposal or terminate this Agreement, but in each case
only at a time that is at least five business days after receipt by CCA of
written notice advising CCA that the Board of Directors of Prison Realty has
resolved to accept a superior proposal if it continues to be a superior proposal
at the end of such five business day period. For purposes of this Section 4.04,
the term "superior proposal" means any bona fide alternative proposal (which,
for purposes of Section 4.04(a) only, may be subject to a due diligence
condition), which proposal was not solicited by Prison Realty after the date of
execution of this Agreement, made by a third party to acquire, directly or
indirectly, for consideration consisting of cash and/or securities, more than
10% of the shares of capital stock of Prison Realty then outstanding or all or
substantially all the assets of Prison Realty and its Subsidiaries and otherwise
on terms which the Board of Directors of Prison Realty determines in good faith
(after consultation with its financial advisor) to be more favorable to Prison
Realty=s stockholders than the Merger and the issuance of securities pursuant to
the Securities Purchase Agreement and for which financing, to the extent
required, is then committed or which, in the good faith judgment of such Board
of Directors, is reasonably capable of being financed by such third party.
(c) In addition to the obligations of Prison Realty set forth in paragraphs
(a) and (b) above, Prison Realty promptly shall advise CCA orally and in writing
of any request for information or of any alternative proposal, the material
terms and conditions of such request or alternative proposal and the identity of
the person making any such request or alternative proposal and any determination
by the Board of Directors of Prison Realty that a alternative proposal is or may
be a superior proposal. Prison Realty will keep CCA informed as to the status
and material details (including amendments or proposed amendments) of any such
request or alternative proposal.
Section 4.05 No Solicitation by CCA. Without the prior written consent of
Prison Realty, (a) CCA shall not, nor shall it permit any of its Subsidiaries
to, nor shall it authorize or permit any
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officer, director or employee of, or any investment banker, attorney or other
advisor or representative of, CCA or any of its Subsidiaries to, directly or
indirectly, (i) solicit, initiate, encourage or knowingly facilitate the
submission of any alternative proposal or (ii) enter into or participate in any
discussions or negotiations regarding, or furnish to any person any information
with respect to, any alternative proposal. For purposes of this Section 4.05,
the term "alternative proposal" means any inquiry, proposal or offer from any
person relating to any direct or indirect acquisition or purchase of 10% or more
of the assets (based on the fair market value thereof) of CCA and its
Subsidiaries, taken as a whole, other than the transactions contemplated by this
Agreement, or of 10% or more of any class of equity securities of CCA or any of
its Subsidiaries or any tender offer or exchange offer (including by CCA or any
of its Subsidiaries) that if consummated would result in any person beneficially
owning 10% or more of any class of equity securities of CCA or any of its
Subsidiaries, or any merger, consolidation, business combination, sale of
substantially all assets, recapitalization, liquidation, dissolution or similar
transaction involving CCA or any of its Subsidiaries other than the transactions
contemplated by this Agreement.
(b) Except as set forth in this Section 4.05, the Board of Directors of CCA
shall not (i) withdraw or modify, or publicly propose to withdraw or modify, in
a manner adverse to Prison Realty, the approval or recommendation by such Board
of Directors of the Merger or this Agreement, (ii) approve or recommend, or
propose publicly to approve or recommend, any alternative proposal or (iii)
cause or agree to cause CCA to enter into any letter of intent, agreement in
principle, acquisition agreement or similar agreement related to any alternative
proposal.
(c) In addition to the obligations of CCA set forth in paragraphs (a) and
(b) above, CCA promptly shall advise Prison Realty orally and in writing of any
request for information or of any alternative proposal, the material terms and
conditions of such request or alternative proposal and the identity of the
person making any such request or alternative proposal and any determination by
the Board of Directors of CCA that an alternative proposal is or may be a
superior proposal. CCA will keep Prison Realty informed as to the status and
material details (including amendments or proposed amendments) of any such
request or alternative proposal.
ARTICLE V
ADDITIONAL AGREEMENTS
Section 5.01 Preparation of the Proxy Statement and Registration
Statement. As promptly as practicable following the date of this Agreement,
Prison Realty, CCA Sub and CCA shall prepare and file with the SEC the Proxy
Statement and the Registration Statement. Each party hereto will cooperate with
the other party in connection with the preparation of the Proxy Statement and
the Registration Statement, including, but not limited to, furnishing all
information as may be required to be disclosed therein. The Proxy Statement
shall contain the recommendation of the Board of Directors of Prison Realty that
the stockholders of Prison Realty approve this Agreement and the transaction
contemplated hereby. The proxy statement-prospectus which constitutes a portion
of the Registration Statement shall contain the recommendation of the Board of
Directors of CCA that the shareholders of CCA approve this Agreement and the
transaction contemplated hereby. Each of Prison Realty, CCA Sub and CCA shall
use its reasonable best efforts to have the Proxy Statement cleared by the SEC
and to have the proxy statement-prospectus which constitutes a portion of the
Registration Statement declared effective by the SEC as promptly as practicable
after such filing. Each party hereto will use its reasonable best efforts to
cause the Proxy Statement and the proxy statement-prospectus which constitutes a
portion of the Registration Statement to be mailed to its shareholders as
promptly as practicable after the clearance of the Proxy Statement by the SEC
and the declaration of the effectiveness of the Registration Statement by the
SEC under the Securities
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Act. No filing of, or amendment or supplement to the Proxy Statement or the
Registration Statement will be made by any party hereto without providing the
other parties and their Boards of Directors the opportunity to review and
comment thereon and to approve the same, provided that such approvals shall not
be unreasonably withheld. Each party hereto will advise the other parties,
promptly after it receives notice thereof, of any request by the SEC for
amendment of the Proxy Statement or the Registration Statement or comments
thereon and responses thereto or requests by the SEC for additional information.
If at any time prior to the Effective Time any information relating to any of
the parties hereto or any of their respective affiliates, officers or directors,
should be discovered by a party hereto which should be set forth in an amendment
or supplement to the Proxy Statement or Registration Statement, so that the
Proxy Statement or the Registration Statement would not include any misstatement
of a material fact or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, the party which discovers such information shall promptly notify
the other parties hereto and an appropriate amendment or supplement describing
such information shall be promptly filed with the SEC and, to the extent
required by law, such amended or supplemented Proxy Statement or the proxy
statement-prospectus which constitutes a portion of such amended or supplemented
Registration Statement, as applicable, disseminated to the shareholders of
Prison Realty and CCA.
Section 5.02 Access to Information. Each party shall, and shall cause each
of its Subsidiaries to, afford to the other party hereto and to its officers,
employees, accountants, counsel and other representatives (including
environmental consultants), reasonable access, during normal business hours
during the period prior to the Effective Time, to their respective properties,
books, records and personnel and, during such period, each party hereto shall,
and shall cause each of its Subsidiaries to, furnish promptly to the other party
hereto (a) a copy of each report, schedule, registration statement and other
document filed or received by it during such period pursuant to the requirements
of Federal or state securities laws and (b) such other information concerning
its business, properties and personnel as the other party may reasonably
request. With respect to matters disclosed in the Prison Realty Disclosure
Schedule or the CCA Disclosure Schedule, respectively, each party agrees to
supplement from time to time the information set forth therein.
Section 5.03 Shareholders' Meetings. Prison Realty shall, as promptly as
practicable after the date hereof, (a) duly call, give notice of, convene and
hold a Stockholders' Meeting for the purpose of obtaining the Prison Realty
Stockholder Approval, and (b) subject in the case of Prison Realty to Section
4.04, through its respective Board of Directors, recommend to its stockholders
that they grant the Prison Realty Stockholder Approval. Prison Realty shall use
all reasonable efforts to solicit from its stockholders proxies in favor of
Prison Realty Stockholder Approval and shall take all other action necessary or,
in the reasonable opinion of such party, advisable to secure Prison Realty
Stockholder Approval. CCA shall vote, or cause to be voted, in favor of the
transactions for which Prison Realty is seeking Prison Realty Stockholder
Approval, all shares of Prison Realty Common Stock directly or indirectly
beneficially owned by it.
CCA shall, as promptly as practicable after the date hereof, (a) duly call,
give notice of, convene and hold a Shareholders' Meeting for the purpose of
obtaining the CCA Shareholder Approval, and (b) through its respective Board of
Directors, recommend to its shareholders that they grant the CCA Shareholder
Approval. CCA shall use all reasonable efforts to solicit from its shareholders
proxies in favor of CCA Shareholder Approval and shall take all other action
necessary or, in the reasonable opinion of such party, advisable to secure CCA
Shareholder Approval. Prison Realty shall vote, or cause to be voted, in favor
of the transactions for which CCA is seeking CCA Shareholder Approval, all
shares of CCA Common Stock directly or indirectly beneficially owned by it.
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Section 5.04 Reasonable Best Efforts. Subject to the terms and conditions
of this Agreement, each party hereto shall, and shall cause its Subsidiaries to,
use all 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 Merger and the other
transactions contemplated by this Agreement, including (i) the obtaining of any
necessary consent, authorization, order or approval of, or any exemption by, any
Governmental Entity and/or any other public or private third party which is
required to be obtained by such party or any of its Subsidiaries in connection
with the Merger and the other transactions contemplated by this Agreement
(provided that no party to this Agreement shall pay or agree to pay any material
amount to obtain a consent without the prior approval of the remaining parties,
which approval shall not be unreasonably withheld or delayed), and the making or
obtaining of all necessary filings and registrations with respect thereto, (ii)
the defending of any lawsuits or other legal proceedings challenging this
Agreement, and (iii) the execution and delivery of any additional instruments
necessary to consummate the transactions contemplated by, and to fully carry out
the purposes of, this Agreement.
Section 5.05 Benefits Matters. Except as otherwise provided herein,
following the Effective Time, Prison Realty shall honor, or cause to be honored,
all obligations under employment agreements, Prison Realty Benefit Plans and all
other employee benefit plans, programs, policies and arrangements of any of the
parties hereto in accordance with the terms thereof. Nothing herein shall be
construed to prohibit Prison Realty from amending or terminating such
agreements, programs, policies and arrangements in accordance with the terms
thereof and with applicable law.
Section 5.06 Fees and Expenses. Whether or not the Merger is consummated,
all costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such costs
or expenses.
Section 5.07 Indemnification, Exculpation and Insurance.
(a) From and after the Effective Time, Prison Realty shall indemnify,
defend and hold harmless to the fullest extent permitted by applicable federal
and state law each person who is on the date hereof, or has been at any time
prior to the date hereof or who becomes prior to the Effective Time, a director
or officer of CCA or was serving at the request of CCA as a director or officer
of any domestic or foreign corporation, joint venture, trust, employee benefit
plan or other enterprise (collectively, the "Indemnities") arising out of CCA's
Charter or Bylaws in effect at the Effective Time against any and all losses in
connection with or arising out of any claim which is based upon, arises out of
or in any way relates to any actual or alleged act or omission occurring at or
prior to the Effective Time in the Indemnitee's capacity as a director or
officer (whether elected or appointed), of CCA.
(b) In the event Prison Realty or any of its successors or assigns: (i)
consolidates with or merges into any other corporation or entity and shall not
be the continuing or surviving corporation or entity of such consolidation or
merger; or (ii) transfers or conveys all or substantially all of its properties
and assets to any person or entity, then, and in each case, to the extent
necessary, proper provisions shall be made so that the successors and assigns of
Prison Realty assume the obligations set forth in this Section 5.07.
(c) Prison Realty shall maintain in effect for not less than two (2) years
from the Effective Time the policies of directors' and officers' liability
insurance most recently maintained by CCA; provided, however, that Prison Realty
may substitute therefor policies with reputable and financially sound carriers
for substantially similar coverage containing terms and conditions which are no
less advantageous for so long as such substitution does not result in gaps or
lapses in coverage with
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respect to claims arising from or relating to matters occurring prior to the
Effective Time. Prison Realty shall pay all expenses, including attorneys' fees,
that may be incurred by any Indemnitee in enforcing the indemnity and other
obligations provided for in this Section 5.07.
(d) The provisions of this Section 5.07 are intended to be for the benefit
of, and shall be enforceable by, each Indemnitee and their respective heirs and
representatives.
Section 5.08 Transfer Taxes. All state, local, foreign or provincial
sales, use, real property transfer, stock transfer or similar taxes (including
any interest or penalties with respect thereto, but not including any
shareholder-level taxes based upon net income) attributable to the Merger shall
be timely paid by Prison Realty.
Section 5.09 Stock Exchange Listing. The Surviving Company and Prison
Realty shall each use their reasonable best efforts to cause the Prison Realty
Stock to be issued in connection with the Merger to be listed on the NYSE,
subject to official notice of issuance, if applicable.
Section 5.10 Tax-Free Reorganization. Prior to the Effective Time, each
party shall use its reasonable best efforts to cause the Merger to qualify as a
reorganization qualifying under the provisions of Section 368(a) of the Code.
Section 5.11 Shareholders' Agreement. As of the Effective Time, the
Shareholders' Agreement, dated September 22, 1998, among certain shareholders of
CCA shall each be terminated and shall no longer have any force or effect.
Section 5.12 Lock-Up Agreement. As of the Effective Time, each of the
holders of shares of CCA Common Stock whose shares are not subject to forfeiture
under the CCA Restricted Stock Plan shall enter into a lock-up agreement with
Prison Realty (the "Lock-Up Agreement"), a form of which is attached hereto as
Exhibit A, pursuant to which each such holder shall agree not to sell, assign or
otherwise transfer (collectively, a "Transfer") any shares of Prison Realty
Common Stock received in connection with the Merger (the "Shares"), nor enter
into any agreement regarding the same, for a period of one hundred eighty (180)
days (the "180-Day Period") following the date of closing of the Merger, and
further agrees not to Transfer such Shares thereafter except as follows: (i)
after expiration of the 180-Day Period, a holder may Transfer up to twenty-five
percent (25%) of the aggregate amount of the Shares; (ii) after December 31,
2001, a holder may Transfer up to fifty percent (50%) of the aggregate amount of
the Shares; (iii) after December 31, 2002, a holder may Transfer up to
seventy-five percent (75%) of the aggregate amount of the Shares; and (iv) after
December 31, 2003, a holder may Transfer up to one hundred percent (100%) of the
aggregate amount of the Shares.
Section 5.13 Equity Incentive Plan. Following the consummation of the
Merger and the related transactions, Prison Realty shall adopt a new equity
incentive plan pursuant to which it will have the authority to grant options to
purchase shares of Prison Realty Common Stock and other types of equity-based
incentive compensation, on such terms and conditions as are approved by the
Board of Directors of Prison Realty following the consummation of the Merger.
Section 5.14 Change of Corporate Name. In connection with the Merger and
the related transactions, Prison Realty shall amend its charter, bylaws and
organizational documents to change the name of the corporation to "Corrections
Corporation of America" and the business and affairs of Prison Realty following
the consummation of the Merger and the related transactions shall be conducted
using the name "Corrections Corporation of America."
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ARTICLE VI
CONDITIONS PRECEDENT
Section 6.01 Conditions to Each Party's Obligation To Effect the
Merger. The respective obligations of each party to effect the Merger shall be
subject to the satisfaction or waiver at or prior to the Effective Time of the
following conditions:
(a) HSR Act. The waiting period applicable to the consummation of the
Merger under the HSR Act shall have expired or been terminated.
(b) No Injunctions or Restraints; Illegality. No statute, rule,
regulation, judgment, writ, decree, order, temporary restraining order,
preliminary or permanent injunction shall have been promulgated, enacted,
entered or enforced, and no other action shall have been taken, by any
Governmental Entity of competent jurisdiction enjoining or otherwise
preventing the consummation of the Merger shall be in effect; provided,
however, that each of the parties shall use its reasonable best efforts to
prevent the entry of any such injunction or other order or decree and to
cause any such injunction or other order or decree that may be entered to
be vacated or otherwise rendered of no effect.
(c) Listing of Merger Consideration. The Prison Realty Stock to be
issued in the Merger shall have been approved for listing on the NYSE,
subject to official notice of issuance, if applicable.
(d) Proxy Statement and Registration Statement. The Proxy Statement
and Registration Statement shall be satisfactory in all material respects
to Prison Realty and CCA, the Proxy Statement shall have been cleared by
the SEC, and the Registration Statement shall have been declared effective
by the SEC under the Securities Act, and no stop order suspending the use
of the Proxy Statement or 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.
(e) Tax-Free Reorganization. The receipt by each of Prison Realty and
CCA of an opinion of its respective tax counsel to the effect that the
Merger qualifies as a reorganization within the meaning of Section 368(a)
of the Code.
Section 6.02 Conditions to Obligation of Prison Realty and CCA Sub To
Effect the Merger. The obligation of Prison Realty and CCA Sub to effect the
Merger is subject to the satisfaction of the following conditions unless waived
by Prison Realty and CCA Sub:
(a) Shareholder Approval. The Prison Realty Stockholder Approval and
the CCA Shareholder Approval shall have been obtained.
(b) Representations and Warranties. The representations and
warranties of CCA 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 CCA
as of the date of this Agreement and as of the Closing Date, except as
otherwise contemplated by this Agreement, and Prison Realty and the CCA Sub
shall have received a certificate to such effect signed on the Closing Date
on behalf of CCA by the Chief Executive Officer and Secretary.
(c) Performance of Obligations of Other Parties. CCA shall have
performed in all material respects all material obligations required to be
performed by them under this Agreement at or prior to the Closing Date, and
Prison Realty shall have received a certificate to such effect signed on
behalf of each party by its Chief Executive Officer or Chief Financial
Officer.
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(x) Consents, etc. Prison Realty shall have received evidence, in
form and substance reasonably satisfactory to it, that such consents,
approvals, authorizations, qualifications and orders of Governmental
Entities and other third parties as are necessary in connection with the
transactions contemplated hereby have been obtained, other than those the
failure of which to be obtained, individually or in the aggregate, would
not have a material adverse effect on Prison Realty or CCA.
(e) Consents to Assignment of Management Contracts. To the extent
required by applicable law and the provisions of the contracts, CCA shall
have obtained all necessary written consents of governmental authorities to
the performance of their respective facility management contracts by Prison
Realty and/or CCA Sub after the Merger.
(f) Purchase of CCA Common Stock Held by Baron. Prison Realty shall
have purchased the CCA Common Stock held by Baron pursuant to the terms and
conditions reasonably acceptable to Prison Realty.
(g) Execution of Lock-Up Agreements. The Lock-Up Agreements shall
have been executed and delivered in accordance with Section 5.12.
Section 6.03 Conditions to Obligation of CCA To Effect the Merger. The
obligation of CCA to effect the Merger is subject to the satisfaction of the
following conditions unless waived by CCA:
(a) Representations and Warranties. The representations and
warranties of Prison Realty 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
Prison Realty as of the date of this Agreement and as of the Closing Date,
except as otherwise contemplated by this Agreement, and CCA shall have
received a certificate to such effect signed on the Closing Date on behalf
of Prison Realty by its Chief Executive Officer and Secretary.
(b) Performance of Obligations of Prison Realty. Prison Realty shall
have performed in all material respects all material obligations required
to be performed by it under this Agreement at or prior to the Closing Date,
and CCA shall have received a certificate to such effect signed on behalf
of Prison Realty by its Chief Executive Officer or Chief Financial Officer.
(c) Shareholder Approval. The Prison Realty Stockholder Approval and
the CCA Shareholder Approval shall have been obtained.
Section 6.04 Frustration of Closing Conditions. No party to this Agreement
may rely on the failure of any condition set forth in Sections 6.01 through
6.03, as the case may be, to be satisfied if such failure was caused by such
partys failure to use all reasonable best efforts to consummate the Merger and
the other transactions contemplated by this Agreement.
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ARTICLE VII
TERMINATION AND AMENDMENT
Section 7.01 Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after the Prison Realty
Stockholder Approval and the CCA Shareholder Approval are received:
(a) by mutual written consent of the parties hereto;
(b) by Prison Realty or CCA upon written notice to the other parties:
(i) if any Governmental Entity of competent jurisdiction shall have
issued a permanent injunction or other order or decree enjoining or
otherwise preventing the consummation of the Merger and such injunction
or other order or decree shall have become final and nonappealable;
provided that the party seeking to terminate this Agreement pursuant to
this clause (i) shall have used its reasonable best efforts to prevent
or contest the imposition of, or seek the lifting or stay of, such
injunction, order or decree;
(ii) if the Merger shall not have been consummated on or before
October 31, 2000, unless the failure to consummate the Merger is the
result of a material breach of this Agreement by the party seeking to
terminate this Agreement;
(iii) if, upon a vote at a duly held Prison Realty Stockholders=
Meeting or any adjournment thereof, the Prison Realty Stockholder
Approval shall not have been obtained;
(c) by Prison Realty upon written notice to CCA if, upon a vote at a
duly held CCA Shareholders' Meeting or any adjournment thereof, the CCA
Shareholder Approval shall not have been obtained;
(d) by Prison Realty upon written notice to CCA, if the Board of
Directors of CCA or any committee thereof shall have withdrawn or modified
in a manner adverse to Prison Realty its approval or recommendation of the
Merger or this Agreement or resolved to do so;
(e) by CCA upon written notice to Prison Realty, if the Board of
Directors of Prison Realty or any committee thereof shall have withdrawn or
modified in a manner adverse to such terminating party its approval or
recommendation of the Merger or this Agreement or resolved to do so;
(f) unless CCA is in material breach of its obligations hereunder, by
CCA upon written notice to Prison Realty if Prison Realty breaches or fails
to perform any of its representations, warranties, covenants or other
agreements hereunder, which breach or failure to perform (A) would give
rise to the failure of a condition set forth in Section 6.03 hereof and (B)
is incapable of being cured by Prison Realty or is not cured within thirty
(30) days after CCA gives written notice of such breach to Prison Realty
and such a cure is not effected during such period; or
(g) unless Prison Realty is in material breach of its obligations
hereunder, by Prison Realty upon written notice to CCA if CCA breaches or
fails to perform any of its representations, warranties, covenants or other
agreements hereunder, which breach or failure to perform (A) would give
rise to the failure of a condition set forth in Section 6.02 hereof and (B)
is incapable of being cured by CCA or is not cured within thirty (30) days
after Prison Realty gives written notice of such breach to the breaching
party and such a cure is not effected during such period.
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Section 7.02 Effect of Termination. In the event of termination of this
Agreement by Prison Realty or CCA as provided in Section 7.01 herein, this
Agreement shall forthwith become void and have no effect and, except to the
extent that such termination results from the wilful and material breach by a
party of any of its representations, warranties, covenants or agreements set
forth in this Agreement, there shall be no liability or obligation on the part
of Prison Realty or CCA except with respect to Section 5.06, this Section 7.02
and Article VIII hereof, which provisions shall survive such termination.
Section 7.03 Amendment. This Agreement may be amended by the parties
hereto at any time before or after the Prison Realty Stockholder Approval and
the CCA Shareholder Approval is received, provided that after receipt of the
Prison Realty Stockholder Approval or the CCA Shareholder Approval, no amendment
shall be made which by law requires further approval by such shareholders
without such further approval. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
Section 7.04 Extension; Waiver. At any time prior to the Effective Time,
the parties hereto may, to the extent legally allowed, (a) extend the time for
the performance of any of the obligations or other acts of the other party
hereto, (b) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto and (c) subject to
the proviso of Section 7.03, waive compliance with any of the agreements or
conditions contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in a written
instrument signed on behalf of such party. The failure of any party to this
Agreement to assert any of its rights under this Agreement or otherwise shall
not constitute a waiver of those rights.
Section 7.05 Procedure for Termination, Amendment, Extension or Waiver. A
termination of this Agreement pursuant to Section 7.01, an amendment of this
Agreement pursuant to Section 7.03 or an extension or waiver pursuant to Section
7.04 shall, in order to be effective, require action by the Board of Directors,
or the duly authorized committee of such Board to the extent permitted by law,
of the party authorizing such action.
ARTICLE VIII
GENERAL PROVISIONS
Section 8.01 Nonsurvival of Representations and Warranties. None of the
representations and warranties in this Agreement shall survive the Effective
Time. This Section 8.01 shall not limit any covenant or agreement of the parties
which by its terms contemplates performance after the Effective Time.
Section 8.02 Notices. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally, telecopied
(with confirmation) or sent by overnight or same-day courier (providing proof of
delivery) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
if to Prison Realty, to:
Prison Realty Trust, Inc.
00 Xxxxxx Xxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Chairman
of the Board of Directors
Facsimile: (000) 000-0000
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with a copy to:
Xxxxxx & Xxxxxxxxxxx, P.A.
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxxx 00000-0000
Attention: Xxxxxxxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
if to CCA, to:
Corrections Corporation of America
00 Xxxxxx Xxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: J. Xxxxxxx Xxxxxxx,
President and
Chief Operating Officer
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxxx & Xxx, PLC
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
Section 8.03 Definitions; Interpretation.
(a) As used in this Agreement:
(i) unless otherwise expressly provided herein, an "affiliate" of any
person means another person that directly or indirectly, through one or
more intermediaries, controls, is controlled by, or is under common control
with, such first person, where "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management
policies of a person, whether through the ownership of voting securities,
by contract or otherwise;
(ii) "business day" means any day on which banks are not required or
authorized to close in the City of New York;
(iii) "material adverse effect" means any change, effect, event,
occurrence or development that is, or is reasonably likely to be,
materially adverse to the business, results of operations or financial
condition of a party hereto or its 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, (B) this Agreement or the
transactions contemplated hereby or the announcement thereof, including,
but not limited to, changes in methods of accounting with respect to the
financial statements of a party hereto or its Subsidiaries as precipitated
by this Agreement or the transactions contemplated hereby or by the review
of the SEC of the Prison Realty Filed SEC Documents, the Proxy Statement or
the Registration Statement, or (C) private corrections industry in general,
and not specifically relating to the parties hereto or their Subsidiaries;
(iv) "person" means an individual, corporation, partnership, limited
liability company, joint venture, association, trust, unincorporated
organization or other entity; and
(v) "Subsidiary" of any person means another person, an amount of the
voting securities, other voting ownership or voting partnership interests
of which is sufficient to elect at least a majority of its Board of
Directors or other governing body (or, if there are not such voting
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interests, more than 50% of the equity interests of which) is owned
directly or indirectly by such first person.
(b) When a reference is made in this Agreement to Articles, Sections,
Exhibits or Schedules, such reference shall be to an Article, Section of or
Exhibit or Schedule to this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include", "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation". 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. The term "or" when used in
this Agreement is not exclusive. All terms defined in this Agreement shall have
the defined meanings when used in any certificate or other document made or
delivered pursuant hereto unless otherwise defined therein. The definitions
contained in this Agreement are applicable to the singular as well as the plural
forms of such terms. Any agreement, instrument or statute defined or referred to
herein or in any agreement or instrument that is referred to herein means such
agreement, instrument or statute as from time to time amended, modified or
supplemented, including (in the case of agreements or instruments) by waiver or
consent and (in the case of statutes) by succession of comparable successor
statutes and references to all attachments thereto and instruments incorporated
therein. References to a person are also to its permitted successors and
assigns.
Section 8.04 Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other party.
Section 8.05 Entire Agreement; No Third-Party Beneficiaries; Rights of
Ownership. This Agreement (a) constitutes the entire agreement and supersedes
all prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof, and (b) other than Section
5.07 of this Agreement, is not intended to confer upon any person other than the
parties hereto any rights or remedies hereunder.
Section 8.06 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Tennessee, without regard
to any principles of conflicts of law of such State.
Section 8.07 Publicity. Except as otherwise permitted by this Agreement or
required by law or the rules of the NYSE, so long as this Agreement is in
effect, no party to this Agreement shall, or shall permit any of its affiliates
to, issue or cause the publication of any press release or other public
announcement or statement with respect to this Agreement or the transactions
contemplated hereby without first obtaining the consent of the other parties
hereto. The parties agree that the initial press release to be issued with
respect to the transactions contemplated by this Agreement shall be in the form
heretofore agreed to by the parties.
Section 8.08 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned, in whole or in part, by
any of the parties hereto (whether by operation of law or otherwise) without the
prior written consent of the other parties, and any such assignment that is not
so consented to shall be null and void; provided that, if necessary or advisable
under applicable provisions of corporate or tax law, Prison Realty may assign
its rights hereunder to any of its Subsidiaries or affiliates to cause CCA to
merge with a Subsidiary or affiliate of Prison Realty, but no such assignment
shall relieve Prison Realty of its obligations hereunder including the
obligations to deliver the CCA Merger Consideration. Subject to the preceding
sentence, this Agreement will be
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binding upon, inure to the benefit of and be enforceable by the parties and
their respective successors and assigns.
Section 8.09 Enforcement. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any Federal court located in the
State of Tennessee or in any Tennessee state court, this being in addition to
any other remedy to which they are entitled at law or in equity. In addition,
each of the parties hereto (a) consents to submit itself to the personal
jurisdiction of any Federal court located in the State of Tennessee or any
Tennessee state court in the event any dispute arises out of this Agreement or
any of the transactions contemplated by this Agreement and (b) agrees that it
will not attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court.
[SIGNATURE PAGES TO FOLLOW]
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Accepted and agreed to this 30th day of June, 2000.
PRISON REALTY TRUST, INC.
By: /s/ Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title: Chairman of the Board of
Directors
CCA ACQUISITION SUB, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxxx
Name: Xxxxxxx X. Xxxxxxxxxx
Title: Chief Executive Officer and
President
CORRECTIONS CORPORATION OF AMERICA
By: /s/ Xxxxxxx X. Xxxxxxxxxx
Name: Xxxxxxx X. Xxxxxxxxxx
Title: Chief Financial Officer and
Secretary
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EXHIBIT A
FORM OF LOCK-UP AGREEMENT
, 2000
Prison Realty Trust, Inc.
00 Xxxxxx Xxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000
Re: Shares of Common Stock to be Issued by Prison Realty Trust, Inc. in
Connection with the Merger of Corrections Corporation of America with and
into Prison Realty Trust, Inc.
Ladies and Gentlemen:
The undersigned understands that as a result of the merger (the "Merger")
of Corrections Corporation of America, a Tennessee corporation formerly known as
Correctional Management Services Corporation ("CCA"), with and into CCA
Acquisition Sub, Inc., a Tennessee corporation and wholly-owned subsidiary of
Prison Realty Trust, Inc. (the "Company"), shares of capital stock held by the
undersigned in CCA will be exchanged or converted into shares of common stock
(the "Common Stock") of the Company. In consideration of the foregoing and in
connection with the Merger, the undersigned hereby agrees that the undersigned
will not, without the prior written approval of the Board of Directors of the
Company, offer for sale, sell, transfer, assign, pledge, hypothecate or
otherwise dispose of, directly or indirectly (collectively, a "Transfer"), any
shares of Common Stock received in connection with the Merger (the "Shares"),
nor enter into any agreement regarding the same, for a period of one hundred
eighty (180) days (the "180-Day Period") following the date of closing of the
Merger, and further agrees not to Transfer such Shares thereafter except as
follows: (i) after expiration of the 180-Day Period, a holder may Transfer up to
twenty-five percent (25%) of the aggregate amount of the Shares; (ii) after
December 31, 2001, a holder may Transfer up to fifty percent (50%) of the
aggregate amount of the Shares; (iii) after December 31, 2002, a holder may
Transfer up to seventy-five percent (75%) of the aggregate amount of the Shares;
and (iv) after December 31, 2003, a holder may Transfer up to one hundred
percent (100%) of the aggregate amount of the Shares.
The foregoing agreements shall be binding on the undersigned and the
undersigned's respective heirs, personal representatives, successors and
assigns.
It is understood that if the Merger is not consummated this agreement shall
terminate.
Sincerely,
Signature:
--------------------------------------
Name:
--------------------------------------
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[ADDITIONAL EXHIBITS AND SCHEDULES INTENTIONALLY OMITTED]
