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EXHIBIT 10.35
INTERCREDITOR
AND SUBORDINATION AGREEMENT
INTERCREDITOR AND SUBORDINATION AGREEMENT, dated as of
December 31, 1998, by and among PRISON REALTY CORPORATION, a Maryland
corporation (together with any other holder of the Subordinated Obligations (as
hereinafter defined) from time to time, collectively, the "Subordinated
Noteholder"), CORRECTIONAL MANAGEMENT SERVICES CORPORATION, a Tennessee
corporation (together with its successors and assigns, the "Borrower"), and
GENERAL ELECTRIC CAPITAL CORPORATION, a New York corporation, as agent (in such
capacity "Senior Agent") for the lenders from time to time party to the Senior
Credit Agreement referred to below (the "Lenders" and together with Senior Agent
and their respective successors and assigns, the "Senior Lenders").
W I T N E S S E T H
WHEREAS, the Borrower, the other Credit Parties signatory
thereto and the Senior Lenders have entered into the Senior Credit Agreement
(such terms and all other capitalized terms used herein without definition have
the meanings provided in Section 1 hereof) pursuant to which the Senior Lenders
have agreed, among other things, to make the Loans and other extensions of
credit to the Borrower; and
WHEREAS, the Senior Lenders are willing to make the Loans
to the Borrower as and to the extent provided for in the Senior Credit
Agreement, but only upon the condition, among others, that the Borrower and the
Subordinated Noteholder shall have executed and delivered this Agreement;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants herein contained, the parties hereby agree as follows:
1. Definitions.
(a) Unless otherwise defined herein, terms defined in the Senior
Credit Agreement and used herein shall have the meanings given to them in the
Senior Credit Agreement.
(b) The following terms shall have the following respective
meanings when used in this Agreement:
"Agreement" shall mean this Intercreditor and
Subordination Agreement, as the same may be amended, modified or otherwise
supplemented from time to time.
"Contribution Agreement" shall mean that certain
Contribution Agreement, dated as of December __, 1998, among Corrections
Corporation of America, certain of its subsidiaries signatory thereto and the
Borrower.
"Insolvency Event" shall mean (A) the Borrower commencing
any case, proceeding or other action (1) under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization, conservatorship or relief of debtors, seeking to have an order
for relief entered with respect to it, or seeking to adjudicate it a bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect to it or its
debts, (2) seeking appointment of a receiver, trustee, custodian, conservator or
other similar official for it or for all or any
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substantial part of its assets, or (3) the Borrower making a general assignment
for the benefit of its creditors; or (B) there being commenced against the
Borrower any case, proceeding or other action of a nature referred to in clause
(A) above which (1) results in the entry of an order for relief or any such
adjudication or appointment or (2) remains undismissed, undischarged or unbonded
for a period of 60 days; or (C) there being commenced against the Borrower any
case, proceeding or other action seeking issuance of a warrant of attachment,
execution, distraint or similar process against all or any substantial part of
its assets which results in the entry of an order for any such relief which
shall not have been vacated, discharged, or stayed or bonded pending appeal
within 30 days from the entry thereof; or (D) the Borrower taking any action in
furtherance of, or indicating its consent to, approval of, or acquiescence in,
any of the acts set forth in clause (A), (B) or (C) above; or (E) the Borrower
generally not paying, or being unable to pay, or admitting in writing its
inability to pay, its debts as they become due.
"Payment or Distribution" shall mean any payment or
distribution of assets of any kind or character, whether in cash, property or
securities, by offset or otherwise, on or with respect to the Subordinated
Obligations, including without limitation any principal of or interest on the
Subordinated Obligations.
"Senior Credit Agreement" shall mean the Credit Agreement
dated as of the date hereof by and among the Borrower, the other Credit Parties
signatory thereto and the Senior Lenders, as such agreement may be amended,
modified or supplemented from time to time, including, without limitation,
amendments, modifications, supplements and restatements thereof giving effect to
increases, renewals, extensions, refundings, deferrals, restructurings,
replacements or refinancings (including any replacement or rollover
debtor-in-possession financing) of, or additions to, the arrangements provided
in such agreement (whether provided by the original Senior Lenders under such
agreement or by successor assignee or refinancing lenders).
"Senior Agent" shall have the meaning provided in the
first paragraph hereof and shall be deemed to include any agent for Persons
providing replacement or refinancing indebtedness for the then outstanding
Senior Obligations.
"Senior Lenders" shall have the meaning provided in the
first paragraph hereof and shall be deemed to include any Persons providing
replacement or refinancing indebtedness for the then outstanding Senior
Obligations.
"Senior Loan Documents" shall mean the collective
reference to the Senior Credit Agreement, the other Loan Documents and all other
documents that from time to time evidence the Senior Obligations or secure or
support payment or performance thereof.
"Senior Loan" shall mean collectively the Loans made by
the Senior Lenders to the Borrower pursuant to the Senior Credit Agreement.
"Senior Obligations" shall mean the collective reference
to the unpaid principal of and interest on the Senior Loan and all other
Obligations of the Borrower or any other Credit Party to the Senior Lenders
(including, without limitation, interest accruing at the then applicable rate
provided in the Senior Credit Agreement after the maturity of the Senior Loan
and interest accruing at the then applicable rate provided in the Senior Credit
Agreement after the filing of any petition in bankruptcy, or the commencement of
any insolvency, reorganization or like proceeding, relating to the Borrower,
whether or not a claim for post-filing or post-petition
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interest is allowed in such proceeding), whether direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter incurred, which
may arise under, out of, or in connection with, this Agreement, the Senior Loan
Documents or any other document made, delivered or given in connection herewith
or therewith, in each case whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses or otherwise
(including, without limitation, all fees and disbursements of counsel to the
Senior Lenders that are required to be paid by the Borrower pursuant to the
terms of this Agreement or any Senior Loan Document). This term shall not
include, for purposes of the definition of Termination Date and determining
whether all Senior Obligations have been paid in full, contingent obligations
for which no Claim then exists but which may arise in the future solely by
virtue of the continued effectiveness after the Termination Date of indemnities
and other obligations under the Senior Loan Documents which expressly survive
termination thereof.
"Subordinated Loan Documents" shall mean the collective
reference to the Subordinated Note and any other documents or instruments, if
any, that from time to time evidence the Subordinated Obligations or secure or
support payment or performance thereof, as amended, supplemented or otherwise
modified in accordance with the terms hereof.
"Subordinated Note" shall mean that certain [Subordinated
Promissory Note] in the original aggregate principal amount of $137,000,000
issued by the Borrower to the Subordinated Noteholder in connection with the
Contribution Agreement, as amended, supplemented or otherwise modified in
accordance with the terms hereof.
"Subordinated Obligations" shall mean, collectively, the
unpaid principal of and interest on the Subordinated Note and all other
obligations and liabilities of the Borrower and any other Credit Party to the
Subordinated Noteholder (including, without limitation, interest accruing at the
then applicable rate provided in the Subordinated Note after the maturity of the
indebtedness evidenced thereby and interest accruing at the then applicable rate
provided in the Subordinated Note after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization or like
proceeding, relating to the Borrower, whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding), whether direct or
indirect, absolute or contingent, due or to become due, or now existing or
hereafter incurred, which may arise under, out of, or in connection with, this
Agreement, the Subordinated Note or any other Subordinated Loan Document, in
each case whether on account of principal, interest, reimbursement obligations,
fees, indemnities, costs, expenses or otherwise (including, without limitation,
all fees and disbursements of counsel to the Subordinated Noteholder that are
required to be paid by the Borrower pursuant to the terms of the Subordinated
Note, this Agreement or any other Subordinated Loan Document), and further
including any claims for recission, claims for damages or other claims in
connection with the Subordinated Loan Documents.
"Termination Date" shall mean the date on which the Senior
Obligations are paid in full and the Senior Lenders have no further obligation
to extend to any financial accommodations to the Borrower.
(c) The words "hereof, "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement, and
section and paragraph references are to this Agreement unless otherwise
specified.
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(d) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms. The
words "including", "includes" and "include" shall be deemed to be followed by
the words "without limitation."
(e) The expressions "prior payment in full," "payment in
full," "paid in full", "pay in full" and any other similar terms or phrases when
used herein with respect to the Senior Obligations shall mean (i) the
indefeasible payment in full, in immediately available funds, of all of the
Senior Obligations, (ii) the cash collateralization of all outstanding Letter of
Credit Obligations and (iii) the termination of the Revolving Loan Commitment.
2. Subordination.
(a) The Borrower and the Subordinated Noteholder agrees, for
itself and each future holder of the Subordinated Obligations, that the
Subordinated Obligations are expressly "subordinate and junior in right of
payment" (as that phrase is defined in paragraph 2(b)) to all Senior
Obligations.
(b) "Subordinate and junior in right of payment" means that
(1) no part of the Subordinated Obligations shall have any claim to the assets
of the Borrower on a parity with or prior to the claim of the Senior
Obligations; and (2) until the Termination Date without the express prior
written consent of the Senior Lenders, no Subordinated Noteholder will take,
demand, seek to collect, or receive (by setoff or otherwise) from the Borrower
or any other Person, and the Borrower will not make, give or permit, directly or
indirectly, by redemption, purchase or in any other manner, any Payment or
Distribution; provided, however, that the Borrower may make, and the
Subordinated Noteholder may receive, scheduled payments on account of interest
(at the non-default rate) when due, without acceleration, on the Subordinated
Note in accordance with the terms thereof, so long as (i) no Default or Event of
Default under the Senior Credit Agreement has occurred and is continuing or
would occur as a result thereof or with the giving of notice or passage of time
or both and (ii) such scheduled payment is otherwise permitted under the Credit
Agreement.
3. Additional Provisions Concerning Subordination.
(a) The Subordinated Noteholder and the Borrower agree that upon
the occurrence and during the continuance of any Insolvency Event:
(1) all Senior Obligations shall be paid in full before
any Payment or Distribution is made or received by the Subordinated Noteholder;
and
(2) any Payment or Distribution to which the Subordinated
Noteholder would be entitled except for the provisions hereof, shall be paid or
delivered by the Borrower, or any receiver, trustee in bankruptcy, liquidating
trustee, disbursing agent or other Person making such Payment or Distribution,
directly to the Senior Agent for the benefit of the Senior Lenders to the extent
necessary to pay in full all Senior Obligations, before any Payment or
Distribution shall be made to the Subordinated Noteholder.
(b) Upon the occurrence and during the continuance of any
Insolvency Event:
(1) the Subordinated Noteholder hereby irrevocably
authorizes and empowers the Senior Lenders (A) to demand, xxx for, collect and
receive for and on behalf of the
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Subordinated Noteholder every Payment or Distribution on account of the
Subordinated Obligations payable or deliverable in connection with such
Insolvency Event and give acquittance therefor, (B) if the Subordinated
Noteholder shall not file proper claims or proofs of claim as shall be necessary
to have the claims of the Subordinated Noteholder in respect of the Subordinated
Obligations allowed in any Insolvency Proceeding, in the form required in such
Insolvency Proceeding, at least [30/60] days prior to the last date fixed by
statute, court rule or court order for the filing of such claims and proofs of
claim, the Subordinated Noteholder hereby irrevocably authorizes and empowers
the Senior Agent to file such claims and proofs of claim and (C) take such other
actions, in its own name as the Senior Lenders, or in the name of the
Subordinated Noteholder or otherwise, as the Senior Lenders may deem necessary
or advisable for the enforcement of the provisions of this Agreement; provided,
however, that the foregoing authorization and empowerment imposes no obligation
on the Senior Lenders to take any such action;
(2) the Subordinated Noteholder shall take such action,
duly and promptly, as the Senior Lenders may request from time to time (A) to
demand, xxx for, collect and receive the Subordinated Obligations for the
account of the Senior Lenders and (B) to file appropriate proofs of claim in
respect of the Subordinated Obligations; and
(3) the Subordinated Noteholder shall execute and deliver
such further powers of attorney, assignments or proofs of claim or other
instruments as the Senior Agent may request to enable the Senior Lenders to
enforce any and all claims in respect of the Subordinated Obligations and to
collect and receive any and all payments and distributions which may be payable
or deliverable at any time upon or in respect of the Subordinated Obligations.
(c) If any Payment or Distribution shall be collected or received
by the Subordinated Noteholder, except payments permitted to be made at the time
of payment as provided in paragraph 2(b) hereof, the Subordinated Noteholder
forthwith shall deliver the same to the Senior Agent, in the form received, duly
indorsed to the Senior Agent, if required, to be applied in accordance with the
Senior Credit Agreement to the payment or prepayment of the Senior Obligations
until the Senior Obligations are paid in full. Until so delivered, such Payment
or Distribution shall be held in trust by the Subordinated Noteholder as the
property of the Senior Lenders, segregated from other funds and property held by
the Subordinated Noteholder.
4. Subrogation. On and after the Termination Date, the
Subordinated Noteholder shall be subrogated to the rights of the Senior Lenders
to receive payments or distributions of assets of the Borrower in respect of the
Senior Obligations. For the purposes of such subrogation, no Payments or
Distributions to the Senior Lenders to which the Subordinated Noteholder would
be entitled except for the provisions of this Agreement shall be deemed, as
between the Borrower and its creditors other than the Senior Lenders and the
Subordinated Noteholder, to be a payment by the Borrower to or on account of the
Senior Obligations, it being understood that the provisions of this Agreement
are, and are intended solely, for the purpose of defining the relative rights of
the Subordinated Noteholder, on the one hand, and the Senior Lenders, on the
other hand.
5. Consent of Subordinated Noteholder.
(a) The Subordinated Noteholder consents that, without the
necessity of any reservation of rights against him, and without notice to or
further assent by the Subordinated Noteholder:
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(1) any demand for payment of any Senior Obligations made
by the Senior Lenders may be rescinded in whole or in part by the Senior
Lenders, and the Senior Obligations, or the liability of the Borrower or any
other Credit Party or any other party upon or for any part thereof, or any
collateral security or guarantee therefor or right of offset with respect
thereto, or any obligation or liability of the Borrower or any other party under
the Senior Credit Agreement or any other agreement, may, from time to time, in
whole or in part, be increased, continued, renewed, extended, modified,
accelerated, compromised, waived, surrendered, or released by the Senior
Lenders; and
(2) any Senior Loan Document may be amended, modified,
supplemented or terminated, in whole or in part, as the Senior Lenders may deem
advisable from time to time, and any collateral security at any time held by the
Senior Lenders for the payment of any of the Senior Obligations may be sold,
exchanged, waived, surrendered or released, in each case all without notice to
or further assent by the Subordinated Noteholder, which will remain bound under
this Agreement, and all without impairing, abridging, releasing or affecting the
subordination and other provisions hereof.
(b) The Subordinated Noteholder acknowledges and agrees that
the Senior Lenders have relied upon the subordination and other provisions
hereof in entering into the Senior Credit Agreement and in making funds
available to the Borrower thereunder. The Subordinated Noteholder waives any and
all notice of the creation, renewal, increase, extension or accrual of any of
the Senior Obligations and notice of or proof of reliance by the Senior Lenders
upon this Agreement. The Senior Obligations, and any of them, shall be deemed
conclusively to have been created, contracted or incurred in reliance upon this
Agreement, and all dealings between the Borrower and the Senior Lenders shall be
deemed to have been consummated in reliance upon this Agreement. The
Subordinated Noteholder waives notice of or proof of reliance on this Agreement
and protests demand for payment and notice of default.
6. Negative Covenants of the Subordinated Noteholder. The
Subordinated Noteholder shall not (and hereby releases and waives any right to),
without the prior written consent of the Senior Agent:
(a) sell, assign, or otherwise transfer, in whole or in part,
the Subordinated Obligations or any interest therein to any other Person (a
"Transferee") or create, incur or suffer to exist any security interest, lien,
charge or other encumbrance whatsoever upon the Subordinated Obligations in
favor of any Transferee unless (1) such action is made expressly subject to this
Agreement and (2) the Transferee expressly acknowledges to the Senior Agent, by
a writing in form and substance satisfactory to the Senior Agent, the
subordination and other provisions hereof and agrees to be bound by all of the
terms hereof applicable to the Subordinated Noteholder;
(b) permit to exist any security interest, lien, charge or
other encumbrance on any property or assets of any Credit Party to secure or
provide for payment or performance of the Subordinated Obligations, permit the
Subordinated Obligations to be Guaranteed Indebtedness of any Credit Party
(other than Borrower), or exercise any right of set off or counterclaim which
the Subordinated Noteholder may have with respect to any amounts payable or to
be paid by the Subordinated Noteholder to any Credit Party;
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(c) except as otherwise permitted in the Senior Credit Agreement,
permit any of the Subordinated Loan Documents to be amended, modified or
otherwise supplemented;
(d) commence, or join with any creditors other than the Senior
Lenders in commencing, any proceeding referred to in clause (A), (B) or (C) of
the definition of "Insolvency Event";
(e) assert, collect, or enforce all or any part of the
Subordinated Obligations or any claims in respect thereof, except as
specifically provided for herein (including as permitted by Section 2(b)
hereof); or
(f) take any action to foreclose upon, take possession of,
liquidate or proceed against any property or assets, or otherwise institute any
action or proceeding, to secure or provide for payment of the Subordinated
Obligations or otherwise exercise any rights or remedies under or with respect
to the Subordinated Obligations or hinder or delay the Senior Lenders in the
exercise of any rights and remedies under or in respect of the Senior
Obligations.
7. Obligations Unconditional. All rights and interests of the
Senior Lenders hereunder, and all agreements and obligations of the Subordinated
Noteholder and the Borrower hereunder, shall be absolute and irreversible
notwithstanding (a) any lack of validity or enforceability of any Senior Loan
Document; (b) any change in time, manner or place of payment of, or in any other
term of, all or any of the Senior Obligations, any increase in the amount of the
Senior Obligations, or any amendment or waiver or other modification, whether by
course of conduct or otherwise, of the terms of any Senior Loan Document; (c)
any exchange, release or nonperfection of any security interest in any
Collateral, or any release, amendment, waiver or other modification, whether in
writing or by course of conduct or otherwise, of all or any of the Senior
Obligations or any guarantee thereof; or (d) any other circumstances which
otherwise might constitute a defense available to, or a discharge of, the
Borrower in respect of the Senior Obligations, or of the Subordinated Noteholder
or the Borrower in respect of this Agreement.
8. Representations and Warranties. Subordinated Noteholder
represents and warrants to the Senior Lenders that:
(a) the Subordinated Note (1) is owned by the Subordinated
Noteholder free and clear of any security interests, liens, charges or
encumbrances whatsoever arising from, through or under such Subordinated
Noteholder, other than the interest of the Senior Lenders under this Agreement,
(2) is payable solely and exclusively to the Subordinated Noteholder and to no
other Person, and (3) constitutes the only evidence of the obligations evidenced
thereby;
(b) this Agreement constitutes a legal, valid and binding
obligation of the Subordinated Noteholder enforceable against the Subordinated
Noteholder in accordance with its terms, subject to applicable bankruptcy,
insolvency, moratorium, reorganization or other similar laws affecting
creditors' rights and to equitable principles of general applicability;
(c) the execution, delivery and performance of this Agreement by
the Subordinated Noteholder will not violate any law or regulation, or any order
or decree of any court or governmental instrumentality applicable to the
Subordinated Noteholder; and
(d) no consent or authorization of, filing with, or other act by
or in respect of, any arbitrator or Governmental Authority and no consent of any
other Person (including, without
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limitation, any creditor of the Subordinated Noteholder), is required in
connection with the execution, delivery, and performance of this Agreement by
the Subordinated Noteholder.
9. No Representation by Senior Lenders. The Senior Lenders have
not made and do not hereby or otherwise make to the Subordinated Noteholder, any
representations or warranties, express, or implied, nor do the Senior Lenders
assume any liability to the Subordinated Noteholder with respect to: (a) the
financial or other condition of obligors under any instruments of guarantee, if
any, with respect to the Senior Obligations, (b) the enforceability, validity,
value or collectibility of the Senior Obligations or the Subordinated
Obligations, any collateral therefor, or any guarantee or security which may
have been granted in connection with any of the Senior Obligations or the
Subordinated Obligations or the validity, priority or perfections of any Liens,
or (c) the Borrower's title or right to transfer any collateral or security.
10. Waiver of Claims. To the maximum extent permitted by law, the
Subordinated Noteholder waives any claim it might have against the Senior
Lenders with respect to, or arising out of, any action or failure to act on the
part of the Senior Lenders or their respective directors, officers, employees or
agents in connection with this Agreement, the Senior Loan Documents, any of the
transactions contemplated hereby and thereby, any of the Senior Obligations or
any of the Collateral. Neither the Senior Lenders nor any of their respective
directors, officers, employees or agents shall be liable for failure to demand,
collect or realize upon, or enforce any remedies under the Senior Loan Documents
or otherwise in respect of, any of the Senior Obligations or Collateral or for
any delay in doing so.
11. Bankruptcy. The provisions of this Agreement shall continue in
full force and effect notwithstanding the occurrence of any Insolvency Event.
The Subordinated Noteholder agrees that the Senior Lenders may consent to the
use of cash collateral or provide financing to the Borrower on such terms and
conditions and in such amounts as the Senior Lenders, in its sole discretion may
decide and that, in connection with such cash collateral usage or such
financing, the Borrower (or a trustee appointed for the estate of the Borrower)
may grant to the Senior Lenders liens and security interests upon all or any
part of the assets of the Borrower, which liens and security interests (i) shall
secure payments of all Senior Obligations (whether such Senior Obligations arose
prior to the filing of the petition for relief or arise thereafter); and (ii)
shall be superior in priority to the liens on and security interests in the
assets of the Borrower, if any, held by the Subordinated Noteholder. All
allocations of payments between the Senior Lenders and the Subordinated
Noteholder shall, subject to any court order, continue to be made after the
filing of a petition under the United States Bankruptcy Code, as amended (the
"Bankruptcy Code"), or any similar proceeding on the same basis that the
payments were to be allocated prior to the date of such filing. The Subordinated
Noteholder agrees that it will not object to or oppose a sale or other
disposition of any assets securing the Senior Obligations (or any portion
thereof) free and clear of security interests, liens or other claims under
Section 363 of the Bankruptcy Code or any other provision of the Bankruptcy Code
if the Senior Lenders have consented to such sale or disposition of such assets.
In the event that the Subordinated Noteholder has or at any time acquires any
security for the Subordinated Obligations, the Subordinated Noteholder agrees
not to assert any right it may have to "adequate protection" of its interest in
such security in any bankruptcy proceeding and agrees that it will not seek to
have the automatic stay lifted with respect to such security, without the prior
written consent of the Senior Lenders. The Subordinated Noteholder waives any
claim it may now or hereafter have arising out of the Senior Lenders' election,
in any proceeding instituted under Chapter 11 of the Bankruptcy Code, of the
application of Section 1111(b)(2) of the Bankruptcy Code, and/or any borrowing
or grant of a security interest under Section 364 of the Bankruptcy Code by the
Borrower, as debtor in
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possession. The Subordinated Noteholder (both in its capacity as Subordinated
Noteholder and in its capacity as a party which may be obligated to the Borrower
and the Borrower's Affiliates with respect to contracts which are part of the
Senior Lender's Collateral) agrees not to initiate or prosecute or encourage any
other Person to initiate or prosecute any claim, action or other proceeding (i)
challenging the enforceability of the Senior Lenders' claim (ii) challenging the
enforceability of any liens or security interests in assets securing the Senior
Obligations or (iii) asserting any claims which the Borrower may hold with
respect to the Senior Lenders.
12. Invalidated Payments. To the extent that the Senior Lenders
receive payments on, or proceeds of Collateral for, the Senior Obligations which
are subsequently invalidated, declared to be fraudulent or preferential, set
aside and/or required to be repaid to a trustee, receiver or any other party
under any bankruptcy law, state or federal law, common law, or equitable cause,
then to the extent of such payment or proceeds received, the Senior Obligations,
or part thereof, intended to be satisfied shall be revived and continue in full
force and effect as if such payments or proceeds had not been received by the
Senior Lenders.
13. Further Assurances. The Subordinated Noteholder and the
Borrower, at their own expense and at any time from time to time, upon the
written request of the Senior Agent will promptly and duly execute and deliver
such further instruments and documents and take such further actions as the
Senior Agent reasonably may request for the purposes of obtaining or preserving
the full benefits of this Agreement and of the rights and powers herein granted.
14. Provisions Define Relative Rights. This Agreement is intended
solely for the purpose of defining the relative rights of the Senior Lenders on
the one hand and the Subordinated Noteholder on the other, and no other Person
shall have any right, benefit or other interest under this Agreement.
15. Legend. The Subordinated Noteholder and the Borrower will
cause the Subordinated Note to bear conspicuously the following legend:
ALL INDEBTEDNESS EVIDENCED BY THIS NOTE IS SUBORDINATED TO OTHER
INDEBTEDNESS PURSUANT TO, AND TO THE EXTENT PROVIDED IN, AND IS
OTHERWISE SUBJECT TO THE TERMS OF, THE INTERCREDITOR AND
SUBORDINATION AGREEMENT, DATED AS OF DECEMBER , 1998, AS THE SAME
MAY BE AMENDED, MODIFIED OR OTHERWISE SUPPLEMENTED FROM TIME TO
TIME (THE "SUBORDINATION AGREEMENT"), BY AND AMONG CORRECTIONAL
MANAGEMENT SERVICES CORPORATION, PRISON REALTY CORPORATION AND
GENERAL ELECTRIC CAPITAL CORPORATION, AS AGENT FOR THE LENDERS
UNDER THE SENIOR CREDIT AGREEMENT REFERRED TO IN THE SUBORDINATION
AGREEMENT. THE TERMS OF THE SUBORDINATION AGREEMENT ARE HEREBY
INCORPORATED BY REFERENCE INTO THIS NOTE AS IF SET FORTH IN FULL
HEREIN. BY MAKING AVAILABLE TO THE BORROWER THE INDEBTEDNESS
EVIDENCED BY THIS NOTE (AND WHETHER OR NOT THE PROMISEE HAS
EXECUTED AND DELIVERED THE SUBORDINATION AGREEMENT), THE PROMISEE
HEREBY AGREES THAT IT SHALL BE DEEMED TO HAVE EXECUTED AND
DELIVERED THE SUBORDINATION AGREEMENT AND TO BE BOUND BY ALL THE
TERMS OF THE SUBORDINATION AGREEMENT APPLICABLE TO THE
"SUBORDINATED NOTEHOLDER" (AS DEFINED
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THEREIN). THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAW, AND MAY NOT
BE SOLD, ASSIGNED, MORTGAGED, PLEDGED, HYPOTHECATED OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION
THEREFROM UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS AND
THE OTHER RESTRICTIONS SET FORTH HEREIN AND IN THE SUBORDINATION
AGREEMENT.
16. Powers Coupled With An Interest. All powers,
authorizations and agencies contained in this Agreement are coupled with an
interest and are irrevocable until the Termination Date.
17. Specific Performance. The Senior Lenders are hereby
authorized to demand specific performance of this Agreement at any time when the
Subordinated Noteholder shall have failed to comply with any of the provisions
of this Agreement applicable to the Subordinated Noteholder, whether or not the
Borrower shall have complied with any of the provisions hereof applicable to the
Borrower, and the Subordinated Noteholder hereby irrevocably waives any defense
based on the adequacy of a remedy at law which might be asserted as a bar to
such remedy of specific performance.
18. Notices. Except as otherwise provided herein, whenever it
is provided herein that any notice, demand, request, consent, approval,
declaration or other communication shall or may be given to or served upon any
of the parties by any other party, or whenever any of the parties desire to give
or serve upon any other party any communication with respect to this Agreement,
each such notice, demand, request, consent, approval, declaration or other
communication shall be in writing and shall be given in the manner as provided
for in Section 11.10 of the Senior Credit Agreement; provided that any notice to
the Subordinated Noteholder shall be at his address or transmission number for
notices set forth under its signature below.
19. Counterparts. This Agreement may be executed by one or
more of the parties on any number of separate counterparts, and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument.
20. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
21. Integration. This Agreement represents the agreement of
the Senior Lenders and the Subordinated Noteholder with respect to the subject
matter hereof and there are no promises or representations by the Senior Lenders
or the Subordinated Noteholder relative to the subject matter hereof not
reflected herein.
22. Amendments in Writing; No Waiver; Cumulative Remedies.
(a) None of the terms or provisions of this Agreement may be
waived, amended, supplemented or otherwise modified, except by a written
instrument executed by the Senior
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Lenders, the Borrower and the Subordinated Noteholder; provided that any
provision of this Agreement may be waived by the Senior Lenders in a letter or
agreement executed by the Senior Lenders or by telex or facsimile transmission
from the Senior Lenders.
(b) No failure to exercise, nor any delay in exercising, on the
part of the Senior Lenders, any right, power or privilege hereunder shall
operate as a waiver thereof. No single or partial exercise of any right, power
or privilege hereunder shall preclude any other or further exercise thereof or
the exercise of any other right, power or privilege.
(c) The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any other rights or
remedies provided by law.
23. Section Headings. The section headings used in this Agreement
are for convenience of reference only and are not to affect the construction
hereof or be taken into consideration in the interpretation hereof.
24. Successors and Assigns. This Agreement shall be binding upon
the successors and assigns of the Borrower and the Subordinated Noteholder and
shall inure to the benefit of the Senior Lenders and their successors and
assigns.
25. GOVERNING LAW; CONSENT TO JURISDICTION AND VENUE. EXCEPT AS
OTHERWISE EXPRESSLY PROVIDED IN ANY OF THE LOAN DOCUMENTS, IN ALL RESPECTS,
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AGREEMENT
AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND PERFORMED IN SUCH STATE, AND ANY APPLICABLE LAWS OF THE
UNITED STATES OF AMERICA WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES. EACH OF
THE BORROWER, THE SUBORDINATED NOTEHOLDER AND THE SENIOR LENDERS HEREBY CONSENTS
AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN NEW YORK CITY SHALL HAVE
EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES AMONG THE
BORROWER, THE SUBORDINATED NOTEHOLDER AND THE SENIOR LENDERS PERTAINING TO THIS
AGREEMENT OR TO ANY MATTER ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
OF THE SENIOR LOAN DOCUMENTS, PROVIDED, THAT THE PARTIES HERETO ACKNOWLEDGE THAT
ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF
NEW YORK CITY AND, PROVIDED, FURTHER, THAT NOTHING IN THIS AGREE MENT SHALL BE
DEEMED OR OPERATE TO PRECLUDE THE SENIOR LENDERS FROM BRINGING SUIT OR TAKING
OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO REALIZE ON THE COLLATERAL OR ANY
OTHER SECURITY FOR THE SENIOR OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER
COURT ORDER IN FAVOR OF THE SENIOR LENDERS EACH OF THE BORROWER AND THE
SUBORDINATED NOTEHOLDER EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH
JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH OF THE
BORROWER AND THE SUBORDINATED NOTEHOLDER HEREBY WAIVES ANY OBJECTION WHICH IT
MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON
CONVENIENS. EACH OF THE BORROWER AND THE SUBORDINATED NOTEHOLDER HEREBY WAIVES
PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED
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IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT
AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO IT AT
THE ADDRESS SET FORTH IN SECTION 11.10 OF THE SENIOR CREDIT AGREEMENT OR BENEATH
ITS SIGNATURE LINE BELOW, AS THE CASE MAY BE, AND THAT SERVICE SO MADE SHALL BE
DEEMED COMPLETED UPON THE EARLIER OF THE BORROWER'S OR THE SUBORDINATED
NOTEHOLDER'S ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S.
MAILS, PROPER POSTAGE PREPAID.
26. MUTUAL WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN
CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY
RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE
STATE AND FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES
DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS.
THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL
SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY
IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER
SOUNDING IN CONTRACT, TORT, OR OTHERWISE, BETWEEN THE PARTIES ARISING OUT OF,
CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
BETWEEN THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY OF THE SENIOR LOAN
DOCUMENTS OR THE TRANSACTIONS RELATED THERETO.
27. Termination. This Agreement shall terminate on the Termination
Date. At such time, at the expense of the Subordinated Noteholder, the Senior
Lenders will promptly and duly execute and deliver such instruments and
documents and take such actions as the Subordinated Noteholder may reasonably
request for evidencing the termination of this Agreement.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and delivered as of the day and year first above written.
Borrower:
CORRECTIONAL MANAGEMENT
SERVICES CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxxxxx
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Name: Xxxxxxx X. Xxxxxxxxxx
Title: Secretary
Senior Agent:
GENERAL ELECTRIC CAPITAL
CORPORATION, as Agent
By: /s/ Xxxx Xxxxxxxx
------------------------------------------
Name: Xxxx Xxxxxxxx
Its: Duly Authorized Signatory
Subordinated Noteholder:
PRISON REALTY CORPORATION
By: /s/ Doctor X. Xxxxxx
-------------------------------------------
Name: Doctor X. Xxxxxx
Title: Chief Executive Officer
Address: 00 Xxxxxx Xxxxx Xxxx.
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Xxxxxxxxx, XX 00000
--------------------------------------
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Facsimile: 000-000-0000
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