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EXHIBIT 10.3
RIGHT TO PURCHASE AGREEMENT
THIS RIGHT TO PURCHASE AGREEMENT (the "Agreement"), dated as of January
1, 1999, is made and entered into by and between CORRECTIONAL MANAGEMENT
SERVICES CORPORATION, a Tennessee corporation (hereinafter referred to as
"CMSC") and PRISON REALTY CORPORATION, a Maryland corporation (hereinafter
referred to as the "Company").
RECITALS
WHEREAS, CMSC may have an ownership interest in certain existing
correctional or detention facilities in the future and may develop or acquire
additional correctional and detention facilities in the future; and
WHEREAS, CMSC desires to grant to the Company herewith a right of first
refusal under certain circumstances to purchase all Future Facilities (as
defined herein) pursuant to the terms of this Agreement; and
WHEREAS, CMSC further desires to grant the Company herewith a right of
first refusal to finance CMSC's future acquisition of certain facilities,
pursuant to the terms of this Agreement; and
WHEREAS, CMSC desires to grant to the Company herewith an option under
certain circumstances to purchase Future Facilities (as defined herein).
NOW, THEREFORE, in consideration of the sum of Ten Dollars ($10.00) and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, CMSC and the Company hereby agree as follows:
1. Right of First Refusal (Purchase). The Company shall have a right of
first refusal to purchase (hereinafter referred to as the "Purchase Refusal
Right") any correctional or detention facility which is acquired or developed,
and owned, by CMSC or any of its Affiliates (as defined herein) in the future
(hereinafter referred to as the "Future Facilities"), subject to the terms and
conditions hereof. If, following the date hereof, CMSC shall receive a bona fide
third party offer to Transfer(as hereinafter defined) any Future Facilities,
then, prior to accepting such third party offer, CMSC shall send written notice
and a copy thereof to the Company ("CMSC's Sale Notice"). The Company shall have
ninety (90) days after receipt of CMSC's Sale Notice to exercise the Company's
Purchase Refusal Right, by giving CMSC written notice thereof. Failure of the
Company to exercise the Purchase Refusal Right within such time period set forth
above shall be deemed to extinguish the Purchase Refusal Right for a period of
one hundred eighty (180) days. Thereafter, prior to the expiration of such one
hundred eighty (180) days, CMSC may Transfer (as hereinafter defined) such
Future Facility provided, however, that the Transfer (as hereinafter defined) of
the Future Facility is at a price equal to or greater than the price contained
in CMSC's Sale Notice, and otherwise consistent in all material respects with
the terms and conditions set forth in CMSC's Sale Notice. The Company's Purchase
Refusal Right shall revive in the event that CMSC fails to Transfer (as
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hereinafter defined) the Future Facility within said one hundred eighty (180)
days. In the event that the Company elects to exercise the Purchase Refusal
Right and to acquire the Future Facility thereby, the Company shall acquire such
Future Facility on the same terms and conditions and subject to all time periods
and other limitations as provided in CMSC's Sale Notice (provided, however, the
Company shall in all events have not less than ninety (90) days to close its
acquisition of the Future Facility following its written notice exercising its
Purchase Refusal Right).
Notwithstanding the foregoing provisions, the Purchase Refusal Right
shall not be applicable to any Transfer (as hereinafter defined) of a Future
Facility to any Affiliate (as hereinafter defined) of CMSC.
2. Right of First Refusal (Financing). The Company shall have a right
of first refusal to provide CMSC with first mortgage financing for CMSC's costs
of acquiring, developing or financing any correctional or detention facility
(the "Financed Facilities"), subject to the terms and conditions hereof. If,
following the date hereof, CMSC determines to acquire, develop or finance any
Financed Facility and receives a proposal or commitment from a third party
lender to provide financing for at least ninety percent (90%) of the costs of
such acquisition or development (or 90% of the value of the Financed Facility in
the case of a financing of a facility not being acquired or developed) secured
by a first mortgage on such Financed Facility, CMSC shall send written notice
and a copy thereof to the Company (the "Financing Notice") and further setting
forth in reasonable detail the anticipated terms and conditions of such
acquisition, development or financing and such other information regarding the
Financed Facility as is reasonably available to CMSC. If the Company, within
thirty (30) days after receipt of such Financing Notice, provides a financing
commitment on terms substantially similar or more favorable to CMSC than that
set forth in such Financing Notice (the "Financing Commitment"), CMSC shall
accept the Financing Commitment and acquire, develop or finance the subject
Financed Facility, and the financing shall proceed to close in accordance with
terms of the Financing Commitment. If the Company does not provide a Financing
Commitment, CMSC may proceed to acquire, develop or finance the Financed
Facility and may obtain such alternative first mortgage financing for such
acquisition, development or financing as it shall desire provided, the terms,
conditions and costs of any such alternative first mortgage financing shall be
no less favorable to CMSC than those contained in such Financing Notice, unless
CMSC shall have again presented the Company with a Financing Notice and complied
with the provisions of this Section 2 with respect thereto.
3. Option. The Company shall have an option to acquire any Future
Facility for a period of ten (10) years following the date CMSC first receives
inmates in such Future Facility (the "Service Commencement Date"). The price at
which the Company may acquire such Future Facility shall be the fair market
value of the Future Facility, as reasonably and mutually determined by the
Company and CMSC, provided, the Company and CMSC agree that for the first two
(2) years following the Service Commencement Date the fair market value of any
such Future Facility shall be deemed to be equal to CMSC's actual costs and
expenses to acquire, develop, design, construct and equip such Future Facility
("CMSC's Cost"), as reflected on the books of CMSC, plus five percent (5%) of
CMSC's Cost. The Company's exercise of such option shall require the Company to
acquire such
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Future Facility on such terms and conditions as the Company and CMSC shall
reasonably agree. Upon such acquisition, the Company shall lease such Future
Facility to CMSC, and the Company and CMSC shall execute a new lease, or an
amendment to the existing lease, with respect thereto (any such new lease or
amendment to an existing lease shall constitute an "operating lease" for all tax
and accounting purposes). For Future Facilities acquired pursuant to this
Paragraph 3, the Base Rent shall be the fair market rental value of such Future
Facility, as reasonably and mutually determined by the Company and CMSC.
4. Definitions. An "Affiliate" as used herein shall mean any Person
directly or indirectly controlling, controlled by, or under common control with
that Person.
A "Person" as used herein shall mean and include natural persons,
corporations, limited partnerships, general partnerships, joint stock companies,
joint ventures, associations, companies, trusts, banks, trust companies, land
trusts, business trusts, Indian tribes or other organizations, whether or not
legal entities, and governments and agencies and political subdivisions thereof.
A "Transfer" is any direct or indirect sale, conveyance or other
disposition, including any transfer of a controlling ownership interest in any
owning Person, and including any lease with a term in excess of five (5) years.
5. Term of the Agreement. This Agreement shall be effective upon the
consummation of the merger by and between Corrections Corporation of America, a
Tennessee corporation, CCA Prison Realty Trust, a Maryland real estate
investment trust, and the Company, and shall expire on the earlier to occur of
(i) the expiration or termination of all of the Leases relating to any Future
Facilities or (ii) fifteen (15) years from the effective date hereof.
6. Remedies. In the event CMSC breaches this Agreement, the Company
shall have all rights and remedies available at law or in equity and the Company
shall be entitled, and is expressly and irrevocably authorized by CMSC, to
demand and obtain specific performance, including, without limitation, temporary
and permanent injunctive relief, and all other appropriate and equitable relief
against CMSC in order to enforce against CMSC any of the covenants and
agreements contained in this Agreement and/or to prevent any breach or threat of
breach by CMSC of the covenants and agreements of CMSC contained in this
Agreement. Should the Company prevail in any action to enforce this Agreement,
the Company shall be entitled to recover all of its costs and expenses relating
thereto, including reasonable attorney's fees and expenses.
7. Notices. CMSC and the Company hereby agree that all notices,
demands, requests and consents (hereinafter "Notices") required to be given
pursuant to the terms of this Agreement shall be in writing and shall be
addressed as follows:
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If to CMSC: Correctional Management Services Corporation
00 Xxxxxx Xxxxx Xxxxxxxxx.
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxxx, Chief Financial
Officer
With a copy to: Xxxxxx & Xxxxxxxxxxx, P.A.
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxxxxx X. Xxxxx, Esq.
If to the Company: Prison Realty Corporation
00 Xxxxxx Xxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Chief Operating Officer
With a copy to: Xxxxxx & Xxxxxxxxxxx, P.A.
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxxxxx X. Xxxxx, Esq.
and shall be served by (i) personal delivery, (ii) certified mail, return
receipt requested, postage prepaid, or (iii) nationally recognized overnight
courier. All Notices shall be deemed to be given upon the earlier of actual
receipt or three (3) days after mailing, or one (1) business day after deposit
with the overnight courier. Any Notices meeting the requirements of this Section
shall be effective, regardless of whether or not actually received. CMSC or the
Company may change its notice address at any time by giving the other party
Notice of such change.
8. Captions and Headings. The captions and headings are inserted only
as a matter of convenience and for reference and in no way define, limit or
describe the scope of this Agreement or the intent of any provision hereof.
9. Governing Law. This Agreement shall be construed under the laws of
the State of Tennessee.
10. Binding Effect. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective heirs,
executors, administrators, legal representatives, successors, and assigns.
11. Time is of the Essence. With respect to all provisions of this
Agreement, time is of the essence.
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12. Recordation. At the option of CMSC or the Company, this Agreement,
or a memorandum hereof, may be recorded in the real estate records of any county
which the Company or CMSC deems appropriate in order to provide legal notice of
the existence hereof.
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IN WITNESS WHEREOF, CMSC and the Company have executed this Agreement
or caused the same to be executed by their respective duly authorized officers
as of the date set forth above.
CMSC:
CORRECTIONAL MANAGEMENT SERVICES
CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxxxxx
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Title: Chief Financial Officer
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COMPANY:
PRISON REALTY CORPORATION
By: /s/ D. Xxxxxx Xxxxxx, III
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Title: President
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STATE OF TENNESSEE)
COUNTY OF DAVIDSON)
Before me, Xxxx X. Xxxxxxxx, a Notary Public of the State and County
aforesaid, personally appeared Xxxxxxx X. Xxxxxxxxxx, with whom I am personally
acquainted (or proved to me on the basis of satisfactory evidence), and who,
upon oath, acknowledged himself to be Chief Financial Officer of CORRECTIONAL
MANAGEMENT SERVICES CORPORATION, the within named bargainor, a Tennessee
corporation, and that he as such Chief Financial Officer being authorized so to
do, executed the foregoing instrument for the purposes therein contained, by
signing the name of the corporation by himself as Chief Financial Officer.
WITNESS my hand and official seal at Nashville, Davidson County,
Tennessee, this 1st day of January, 1999
Xxxx X. Xxxxxxxx
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Notary Public
My Commission Expires: 9/29/01
STATE OF TENNESSEE)
COUNTY OF DAVIDSON)
Before me, Xxxx X. Xxxxxxxx, a Notary Public of the State and County
aforesaid, personally appeared D. Xxxxxx Xxxxxx, III, with whom I am personally
acquainted (or proved to me on the basis of satisfactory evidence), and who,
upon oath, acknowledged himself to be President of PRISON REALTY CORPORATION,
the within named bargainor, a Maryland corporation, and that he as such
President being authorized so to do, executed the foregoing instrument for the
purposes therein contained, by signing the name of the real estate investment
trust by himself as President.
WITNESS my hand and official seal at Nashville, Davidson County,
Tennessee, this 1st day of January, 1999.
Xxxx X. Xxxxxxxx
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Notary Public
My Commission Expires: 9/29/01
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