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Exhibit 10.9
FORM OF ASSET PLEDGE AGREEMENT
This ASSET PLEDGE AGREEMENT (the "Pledge Agreement"), dated as of
December ___, 1998, by and between CORRECTIONAL MANAGEMENT SERVICES CORPORATION,
a Tennessee corporation (the "Pledgor"), and CORRECTIONS CORPORATION OF AMERICA,
a Tennessee corporation (the "Company").
WITNESSETH:
WHEREAS, the Pledgor has obtained from the Company all of the Company's
right, title and interest in and to those certain management contracts (the
"Management Contracts") and those certain accounts receivable and accounts
payable and other net assets exclusively related to the management and operation
of certain correction and detention facilities (collectively, with the
Management Contracts, the "Management Contract Assets") pursuant to that certain
Contribution Agreement dated as of the ___ day of December, 1998, by and among
the Pledgor and the Company (the "Contribution Agreement");
WHEREAS, a portion of the consideration for the transfer of the
Management Contract Assets is evidenced by a promissory note of even date
herewith (the "Note"), in the principal amount of one hundred thirty-seven
million dollars ($137,000,000), payable to the order of the Company; and
WHEREAS, as security for amounts due and payable to the Company under
the Note, the Company desires to obtain from Pledgor and Pledgor desires to
grant to Company, a security interest in all of Pledgor's Management Contract
Assets.
NOW, THEREFORE, in exchange for good and valuable consideration, and
the mutual covenants and promises herein, the receipt and sufficiency of which
are hereby acknowledged, the parties herto hereby agree as follows,
1. Pledge. As collateral security for the full payment by the Pledgor
of the Note, and all principal thereon, when and as due, together with all
renewals, extensions, and modifications thereof, and all notes given in part or
full payment of amounts due thereunder, and all costs, including reasonable
attorneys' fees, incurred by the Company in the collection or administration of
same (all the foregoing, including the Note, being collectively referred to as
"Secured Obligations"), the Pledgor individually hereby assigns, pledges, and
delivers to the Company all of its right, title, and interest in and to the
Management Contract Assets, whether now existing or hereafter arising, including
but not limited to, all contract rights and rights to payment due thereunder.
The Pledgor hereby authorizes the Company to take such action as may be
necessary for the Company to perfect
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its security interest in the Management Contract Assets, including but not
limited to the filing of financing statements pursuant to Tenn. Code Xxx.
section 47-9-304, as may be amended.
2. Release of Management Contract Assets Pledged as Collateral
Security. The Note provides that the principal balance of the Note shall be due
on or before December 31, 2008, provided, however, that Pledgor must prepay, in
whole or in part, at any time or from time to time, without penalty, the
principal balance before the due date, to the extent that Pledgor generates
available cash flow from operations in excess of amounts required to make
payments under any Pledgor credit facility or other similar financing
arrangement. The Company and Pledgor hereby agree that upon receipt by the
Company of the full amount due under the Note, the Company shall release in full
the Management Contract Assets pledged hereunder. Upon payment in full of
amounts due under the Note, the obligation of Pledgor evidenced by this Pledge
Agreement and the Note relating to the Management Contract Assets, shall,
without the necessity of any further action, be fully and automatically
released; the Company shall, by the acceptance of such payment, relinquish any
and all claims to or rights in and to the Management Contract Assets, and shall
release, remise, and forever discharge the Pledgor from any and all claims or
demands of whatsoever kind relating to such released Management Contract Assets
arising from, under, or by reason of this Pledge Agreement. The Management
Contract Assets shall not for any purpose whatsoever be deemed Management
Contract Assets pledged under this Pledge Agreement once the same are released
hereunder. The Company agrees promptly to execute and deliver to the Pledgor
such instruments or documents, satisfactory to counsel for the Pledgor,
evidencing the release of the Management Contract Assets pursuant to this Pledge
Agreement.
3. Default. In the event of (a) the failure of Pledgor to make payment
of amounts due under the Note secured hereby, when such shall be due and payable
under the terms of the Note and such default continues for more than forty-five
(45) days after its due date, or (b) a general assignment for the benefit of
creditors by the Pledgor, or (c) any order, judgment, or decree is entered
adjudicating the Pledgor bankrupt or insolvent, or (d) the sale or transfer of
the Management Contract Assets pledged under this Agreement but not yet released
without the prior consent of the Company, the Company is hereby vested with
authority to use, transfer, hypothecate, or sell the remaining Management
Contract Assets secured by this Pledge Agreement, or any part thereof, or to
cause the same to be done at public or private sale, upon thirty (30) days'
written notice, at such place and on such terms as the Company may deem
advisable in its sole discretion, and the Company is authorized to purchase the
remaining Management Contract Assets when sold for its own protection; and the
proceeds of such sale, transfer, or hypothecation shall be applied to the
payment of the Secured Obligations in the order prescribed by the Company in its
sole discretion, together with all damages, interests, costs, and charges
incurred by reason of Pledgor's nonpayment of the Secured Obligations when due.
The surplus, if any, after payment of the Secured Obligations, shall be paid to
the Pledgor.
4. Warranties of Pledge or Regarding the Management Contract Assets.
The Pledgor hereby warrants and represents that upon the execution of the
Contribution Agreement, the Pledgor will
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have the exclusive right, title, and interest in and to the pledged Management
Contract Assets and that the same shall be unencumbered by any interest of any
kind of any other person or party.
5. Governing Law; Modification, etc, This Agreement and the right and
obligations of the Company and Pledgor hereunder shall be construed under and in
accordance with and shall be governed by the local laws of the State of
Tennessee, and not the conflicts of laws of such state, cannot be changed
orally, and shall bind and inure to the benefit of Pledgor and the Company and
their respective personal representatives, heirs, successors and assigns.
6. Severability. If any term of provision or this Agreement is held to
be invalid, illegal or unenforceable, the validity of the other terms and
provisions shall not be affected thereby.
7. Notices. All notices, offers, or any other communication provided
for herein shall be given in writing, and shall be deemed to have been duly
given if delivered in person, or within five (5) days after being sent by
registered or certified United States mail, postage prepaid, or as otherwise
actually delivered to the Company or the Pledgor, respectively, at the following
addresses:
If to the Company, to:
Corrections Corporation of America
00 Xxxxxx Xxxxx Xxxxxxxxx
Xxxxxxxxx, XX 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
If to the Pledgor, to:
Correctional Management Services Corporation
00 Xxxxxx Xxxxx Xxxxxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxxxx, Chief Financial Officer
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with a copy to:
Xxxxxx & Xxxxxxxxxxx, P.A.
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxxxxx X. Xxxxx
Any party hereto may change the address at which he or it receives
written notices by so notifying the other parties hereto in writing.
8. Successors and Assigns. The Pledge Agreement shall be binding upon,
and shall inure to the benefit of, the respective parties hereto and their
successors, representatives, executors, and permitted assigns.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and date first above written.
PLEDGOR:
CORRECTIONAL MANAGEMENT
SERVICES CORPORATION, a Tennessee
corporation
By:
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Its:
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COMPANY:
CORRECTIONS CORPORATION OF
AMERICA, a Tennessee corporation
By:
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Its:
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