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EXHIBIT 10.142
NOTE PURCHASE AGREEMENT
BETWEEN
PACIFIC MUTUAL LIFE INSURANCE COMPANY
PM GROUP LIFE INSURANCE COMPANY
AND
CORRECTIONS CORPORATION OF AMERICA
DATED AS OF JUNE 22, 1992
$7,500,000 CONVERTIBLE, EXTENDABLE, SUBORDINATED NOTES
ORIGINALLY DUE SEPTEMBER 30, 1998
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This NOTE PURCHASE AGREEMENT (this "Agreement"), dated as of
June 22, 1992, between PACIFIC MUTUAL LIFE INSURANCE COMPANY, a California
corporation ("PM"), PM GROUP LIFE INSURANCE COMPANY ("PMGLIC") and CORRECTIONS
CORPORATION OF AMERICA, a Delaware corporation (the "Corporation").
WHEREAS, the Corporation has duly authorized the issuance of
convertible, extendable, subordinated notes in the aggregate principal amount
of $7,500,000 that are to be convertible into shares of the Corporation's
common stock;
WHEREAS, Purchaser wishes to purchase the convertible,
extendable, subordinated notes from the Corporation, and the Corporation wishes
to sell such convertible, extendable, subordinated notes to Purchaser; and
WHEREAS, Purchaser and the Corporation are entering into this
Agreement to provide for such purchase and sale and to establish various rights
and obligations in connection therewith.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants herein set forth, the parties hereto agree as follows:
1. AUTHORIZATION OF ISSUE OF THE NOTES. The Corporation has duly
authorized the issuance of convertible, extendable, subordinated notes (the
"Notes") in the aggregate principal amount of $7,500,000, to be dated the date
of issuance thereof, to bear interest on the unpaid balance thereof from the
date thereof quarterly at the Coupon Rate and, upon the occurrence of a
Triggering Event and until the date on which such Triggering Event is cured or
waived or until the date that is ninety (90) days from the initial occurrence
of Triggering Event, whichever is later, at the Triggering Event Rate, until
the principal thereof shall become due and payable. The indebtedness evidenced
by the Notes shall be convertible into shares of the Corporation's common
stock, $1.00 par value, upon such terms and at a conversion rate as set forth
in the Notes. The Tranche A Notes shall be substantially in the form attached
hereto as Exhibit A, the Tranche B Notes shall be substantially in the form
attached hereto as Exhibit B, and the Tranche C Notes shall be substantially in
the form attached hereto as Exhibit C. The Tranche A Notes shall be issued to
Purchaser on the Closing Date; the Tranche B Notes shall be issued to Purchaser
on the Tranche B Closing Date; and the Tranche C Notes shall be issued to
Purchaser on the Tranche C Closing Date.
2. SALE AND PURCHASE OF THE NOTES; CLOSING DATES; CONDITIONS
PRECEDENT; CONDITION SUBSEQUENT.
2.1 Sale and Purchase of the Notes. Subject to the terms
and conditions of this Agreement, PM, either directly or through one or more
Affiliates, agrees to purchase, and the Corporation agrees to sell and issue to
PM, or such Affiliates: (i) on the Closing
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Date, a Tranche A Note for a purchase price of Two Million One Hundred
Seventy-Five Thousand Dollars ($2,175,000); (ii) on the Tranche B Closing Date,
a Tranche B Note for a purchase price of Two Million One Hundred Seventy-Five
Thousand Dollars (2,175,000); and (iii) at PM's sole option, on the Tranche C
Closing Date, a Tranche C Note for a purchase price of Two Million One Hundred
Fifty Thousand Dollars ($2,150,000), for a total purchase price of Six Million
Five Hundred Thousand Dollars ($6,500,000). Subject to the terms and
conditions of this Agreement, PMGLIC, either directly or through one or more
Affiliates, agrees to purchase, and the Corporation agrees to sell and issue to
PMGLIC, or such Affiliates: (i) on the Closing Date, a Tranche A Note for a
purchase price of Three Hundred Twenty-Five Thousand Dollars ($325,000); (ii)
on the Tranche B Closing Date, a Tranche B Note for a purchase price of Three
Hundred Twenty-Five Thousand Dollars ($325,000); and (iii) at PMGLIC's sole
option, on the Tranche C Closing Date, a Tranche C Note for a purchase price of
Three Hundred Fifty Thousand Dollars ($350,000), for a total purchase price of
One Million Dollars ($1,000,000).
2.2 Closing Date; Tranche B Closing Date; Tranche C
Closing Date. The closing of the sale and purchase of the Tranche A Notes
shall take place at the offices of Xxxxxxx, Xxxxxxx & Xxxxxxxx, 000 Xxxxx Xxxx
Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000, counsel to Purchaser at 10:00 a.m.,
local time, on June 22, 1992 or at such other time, date, or place as the
Corporation and Purchaser shall mutually agree (which time, date, and place are
referred to in this Agreement as the "Closing Date"). To exercise their
respective rights to cause the issuance and sale of the Tranche B Notes, the
Corporation or the Purchaser must provide the other with a Tranche B Notice at
least five (5) Business Days days prior to the proposed Tranche B Closing Date
which Tranche B Notice shall specify the proposed Tranche B Closing Date. The
closing of the sale and purchase of the Tranche B Notes shall take place on the
Tranche B Closing Date so specified in the Tranche B Notice and at such time
and place on such date as the Corporation and Purchaser shall mutually agree.
To exercise its right to cause the issuance and sale of the Tranche C Notes, if
in its sole and absolute discretion it determines to do so, the Purchaser must
provide the Corporation with a Tranche C Notice at least five (5) Business Days
days prior to the proposed Tranche C Closing Date which Tranche C Notice shall
specify the proposed Tranche C Closing Date. The closing of the sale and
purchase of the Tranche C Notes shall take place on the Tranche C Closing Date
so specified in the Tranche C Notice and at such time and place on such date as
the Corporation and Purchaser shall mutually agree.
2.3 Closing Date Conditions. Purchaser's obligation to
purchase the Tranche A Notes on the Closing Date shall be subject to the
performance by the Corporation of its agreements hereunder that by the terms
hereof are to be performed at or prior to the time of delivery of the Tranche A
Notes and to the following further conditions precedent:
(i) Closing Date. The Closing Date shall
occur on or before June 26, 1992;
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(ii) Closing Certificate. Purchaser shall
have received a certificate dated the Closing Date, signed by the
President or a Vice President of the Corporation, to the effect that:
(i) the representations and warranties of the Corporation set forth in
Sections 4.1 through 4.22 are true and correct in all material
respects on and with respect to the Closing Date; (ii) the Corporation
has performed all of its obligations hereunder that are to be
performed on or prior to the Closing Date; and (iii) no Unmatured
Event of Default or Event of Default has occurred and is continuing;
(iii) Legality. The Tranche A Notes shall
qualify as a legal investment for Purchaser under the laws and
regulations of each jurisdiction to which Purchaser is subject
(without reference to any so- called "basket" provision which permits
the making of an investment without restrictions to the character of
the particular investment being made) and the purchase of and payment
for the Tranche A Notes shall not be prohibited by any applicable law
or governmental regulation.
(iv) Satisfactory Proceedings. All corporate
proceedings taken in connection with the transactions contemplated by
this Agreement, and all documents necessary to the consummation
thereof, shall be satisfactory in form and substance to Purchaser and
special counsel to Purchaser, and Purchaser shall have received a copy
(executed or certified as may be appropriate) of all documents or
corporate proceedings taken in connection with the consummation of
said transactions, including the following:
a. Certified copies of the
Certificate of Incorporation and By-laws of the Corporation;
b. Certified copies of resolutions
of the Board of Directors of the Corporation authorizing the
execution, delivery, and performance of this Agreement, the
Notes, the Registration Rights Agreement, and any other
documents provided for in this Agreement; and
c. A certificate of the Secretary of
the Corporation certifying the names of the officer or
officers of the Corporation authorized to sign this Agreement,
the Notes, the Registration Rights Agreement, and any other
documents provided for in this Agreement, together with a
sample of the true signature of each such officer;
(v) Legal Opinion. Purchaser shall have
received from Xxxxxx & Xxxxxxxxxxx and Irell & Xxxxxxx, counsel and
local counsel to the Corporation, opinion letters dated the Closing
Date, in form and substance satisfactory to Purchaser and their
counsel, and covering the matters set forth in Exhibit D hereto;
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(vi) Issuance of the Tranche A Notes. The
Corporation shall have executed and delivered the Tranche A Notes to
Purchaser or their nominees;
(vii) Registration Rights Agreement. The
Corporation and Purchaser shall have entered into a registration
rights agreement in the form of Exhibit E hereto (the "Registration
Rights Agreement");
(viii) Closing Fee. The Corporation shall pay to
Purchaser a closing fee of $75,000 (net of any commitment delivery fee
($25,000) or commitment acceptance fee ($50,000) previously paid to
Purchaser) by wire transfer of immediately available funds;
(ix) No Material Adverse Change. No material
adverse change in the business, condition, or operations (financial or
otherwise) of the Corporation and its Subsidiaries taken as a whole
from that set forth in the balance sheet as of March 31, 1992,
included in the SEC Reports, other than changes disclosed to Purchaser
in writing prior to the execution and delivery by Purchaser of this
Agreement, shall have occurred;
(x) Approvals and Consents. The Corporation
shall have duly received all authorizations, consents, approvals,
licenses, franchises, permits, and certificates by or of all federal,
state, and local governmental authorities necessary for the issuance
of the Tranche A Notes;
(xi) Payment of Legal Fees. The Corporation
shall have reimbursed the Purchaser in full for the fees and expenses
of its counsel, Xxxxxxx, Xxxxxxx & Xxxxxxxx, incurred in connection
with the preparation, negotiation, and execution of this Agreement,
the Notes, the Registration Rights Agreement, and any other documents
executed in connection herewith;
(xii) Representations and Warranties. The
representations and warranties of the Corporation contained in this
Agreement shall be true and correct in all respects on and as of the
Closing Date, as though made on and as of such date (except to the
extent that such representations and warranties relate solely to an
earlier date); and
(xiii) Events of Default. No Unmatured Event of
Default or Event of Default shall have occurred and be continuing on
the Closing Date, nor shall either result from the purchase and sale
of the Tranche A Notes.
2.4 Waiver of Conditions. If, on the Closing Date, the
Corporation fails to deliver the Tranche A Notes to Purchaser or if any of the
other conditions specified in Section 2.3 have not been satisfied, Purchaser
shall be relieved of all further obligations under this Agreement. Without
limiting the foregoing, if the conditions specified in
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Section 2.3 have not been satisfied, Purchaser may waive compliance by the
Corporation with any such condition to such extent as it may in its sole
discretion determine. Nothing in this Section 2.4 shall operate to relieve the
Corporation of any of its obligations hereunder or to waive any of Purchaser's
rights against the Corporation occassioned by any such breach.
2.5 Condition Subsequent. The following shall be a condition
subsequent to the purchase and sale of the Tranche A Notes and the failure to
satisfy the following shall constitute an Event of Default hereunder:
(i) Escrow Agreement. Withing thirty (30)
days of the Closing Date, the Corporation, the Purchaser, and NationsBank (or
another third party acceptable to Purchaser in its sole and absolute
discretion) shall have entered into an escrow agreement (the "Escrow
Agreement"), together with appropriate financing statements signed by the
Corporation, in each case in form and substance satisfactory to Purchaser.
2.6 Tranche B Closing Date Conditions. Purchaser's
obligation to purchase the Tranche B Notes on the Tranche B Closing Date shall
be subject to the performance by the Corporation of its agreements hereunder
that by the terms hereof are to be performed at or prior to the time of
delivery of the Tranche B Notes and to the following further conditions
precedent:
(i) Closing Certificate. Purchaser shall have
received a certificate dated the Tranche B Closing Date, signed by the
President or a Vice President of the Corporation, to the effect that:
(i) the representations and warranties of the Corporation set forth in
Sections 4.1 through 4.22 are true and correct in all material
respects on and with respect to the Tranche B Closing Date (except to
the extent that such representations and warranties relate solely to
an earlier date); (ii) the Corporation has performed all of its
obligations hereunder that are to be performed on or prior to the
Tranche B Closing Date; and (iii) no Unmatured Event of Default or
Event of Default has occurred and is continuing;
(ii) Legality. The Tranche B Notes shall
qualify as a legal investment for Purchaser under the laws and
regulations of each jurisdiction to which Purchaser is subject
(without reference to any so-called "basket" provision which permits
the making of an investment without restrictions to the character of
the particular investment being made) and the purchase of and payment
for the Tranche B Notes shall not be prohibited by any applicable law
or governmental regulation.
(iii) Satisfactory Proceedings. All corporate
proceedings taken in connection with the issuance of the Tranche B
Notes, shall be satisfactory in form and substance to Purchaser and
special counsel to Purchaser, and Purchaser shall have received a copy
(executed or certified as may be appropriate) of all documents
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or corporate proceedings taken in connection with the consummation of said
issuance, including the following:
a. Certified copies of the
Certificate of Incorporation and By-laws of the Corporation or
a certificate of the Secretary of the Corporation certifying
that such documents have not been changed from the copies that
were provided to Purchaser on the Closing Date;
b. Certified copies of resolutions
of the Board of Directors of the Corporation authorizing the
execution, delivery, and performance of this Agreement, the
Notes, the Registration Rights Agreement, and any other
documents provided for in this Agreement or a certificate of
the Secretary of the Corporation certifying that such
resolutions have not been changed from the copies that were
provided to Purchaser on the Closing Date and that such
resolutions remain in full force and effect; and
c. A certificate of the Secretary of
the Corporation certifying the names of the officer or
officers of the Corporation authorized to sign this Agreement,
the Notes, the Registration Rights Agreement, and any other
documents provided for in this Agreement, together with a
sample of the true signature of each such officer or a
certificate of the Secretary of the Corporation certifying
that such certifications have not been changed from the copies
that were provided to Purchaser on the Closing Date and that
such resolutions remain in full force and effect;
(iv) Legal Opinion. Purchaser shall have
received from Xxxxxx & Xxxxxxxxxxx and Irell & Xxxxxxx, counsel and
local counsel to the Corporation, updated opinion letters dated the
Tranche B Closing Date, in the form and substance of the opinions
rendered by such counsel on the Closing Date;
(v) Issuance of the Tranche B Notes. The
Corporation shall have executed and delivered the Tranche B Notes to
Purchaser or their nominees;
(vi) Tranche B Closing Fee. The Corporation
shall pay to Purchaser a closing fee of $75,000 by wire transfer of
immediately available funds;
(vii) No Material Adverse Change. No material
adverse change in the business, condition, or operations (financial or
otherwise) of the Corporation and its Subsidiaries taken as a whole
from that set forth in the balance sheet as of March 31, 1992,
included in the SEC Reports, other than changes disclosed to Purchaser
in writing prior to the execution and delivery by Purchaser of this
Agreement, shall have occurred;
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(viii) Approvals and Consents. The Corporation
shall have duly received all authorizations, consents, approvals,
licenses, franchises, permits, and certificates by or of all federal,
state, and local governmental authorities necessary for the issuance
of the Tranche B Notes;
(ix) Payment of Legal Fees. The Corporation
shall have reimbursed the Purchaser in full for the fees and expenses
of its counsel, Xxxxxxx, Xxxxxxx & Xxxxxxxx, incurred in connection
with the preparation, execution, and delivery of the Escrow Agreement
and the Tranche B Notes;
(x) Representations and Warranties. The
representations and warranties of the Corporation contained in this
Agreement shall be true and correct in all respects on and as of the
Tranche B Closing Date, as though made on and as of such date (except
to the extent that such representations and warranties relate solely
to an earlier date);
(xi) Events of Default. No Unmatured Event of
Default or Event of Default shall have occurred and be continuing on
the Tranche B Closing Date, nor shall either result from the purchase
and sale of the Tranche B Notes;
(xii) Escrow Agreement. The Corporation shall
have deposited into the escrow account created under and pursuant to
the Escrow Agreement (either from the proceeds of sale from the sale
of its Estancia Facility or otherwise) the sum of not less than Five
Million Dollars ($5,000,000); provided, however, that the Corporation
shall be able to satisfy this condition in the event that it has
deposited into the escrow account created under and pursuant to the
Escrow Agreement (either from the proceeds of sale from the sale of
its Estancia Facility or otherwise) the sum of not less than Two
Million Five Hundred Thousand Dollars ($2,500,000) and if it instructs
the Purchaser to deposit up to Two Million Five Hundred Thousand
Dollars ($2,500,000) of the proceeds from the sale of the Tranche B
Notes into such escrow account so that after giving effect to such
additional deposit the total amount of funds contained in such escrow
account is not less than Five Million Dollars ($5,000,000); and
(xiii) Tranche B Closing Date. The Tranche B
Closing Date shall occur on or before December 15, 1992.
2.7 Waiver of Conditions. If, on the Tranche B Closing
Date, the Corporation fails to deliver the Tranche B Notes to Purchaser or if
any of the other conditions specified in Section 2.6 have not been satisfied,
Purchaser shall be relieved of all further obligations under this Agreement.
Without limiting the foregoing, if the conditions specified in Section 2.6 have
not been satisfied, Purchaser may waive compliance by the Corporation with any
such condition to such extent as it may in its sole discretion determine, it
being expressly understood and agreed that the Corporation is to use its best
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efforts to satisfy the conditions specified in Section 2.6 and the Corporation
is obligated to accept the financing provided by the purchase and sale of the
Tranche B Notes if Purchaser is prepared to provide it. Nothing in this
Section 2.7 shall operate to relieve the Corporation of any of its obligations
hereunder or to waive any of Purchaser's rights against the Corporation
occassioned by any such breach.
2.8 Tranche C Closing Date Conditions. Purchaser shall have
no obligation to purchase the Tranche C Notes unless it, in its sole and
absolute discretion it determines to do so. If it does so determine to
purchase the Tranche C Notes then its obligation to purchase the Tranche C
Notes on the Tranche C Closing Date shall be subject to the performance by the
Corporation of its agreements hereunder that by the terms hereof are to be
performed at or prior to the time of delivery of the Tranche C Notes and to the
following further conditions precedent:
(i) Tranche C Closing Date. The Tranche C
Closing Date shall occur on or before December 15, 1992;
(ii) Closing Certificate. Purchaser shall have
received a certificate dated the Tranche C Closing Date, signed by the
President or a Vice President of the Corporation, to the effect that:
(i) the representations and warranties of the Corporation set forth in
Sections 4.1 through 4.22 are true and correct in all material
respects on and with respect to the Tranche C Closing Date (except to
the extent that such representations and warranties relate solely to
an earlier date); (ii) the Corporation has performed all of its
obligations hereunder that are to be performed on or prior to the
Tranche C Closing Date; and (iii) no Unmatured Event of Default or
Event of Default has occurred and is continuing;
(iii) Legality. The Tranche C Notes shall
qualify as a legal investment for Purchaser under the laws and
regulations of each jurisdiction to which Purchaser is subject
(without reference to any so- called "basket" provision which permits
the making of an investment without restrictions to the character of
the particular investment being made) and the purchase of and payment
for the Tranche C Notes shall not be prohibited by any applicable law
or governmental regulation.
(iii) Satisfactory Proceedings. All corporate
proceedings taken in connection with the issuance of the Tranche C
Notes, shall be satisfactory in form and substance to Purchaser and
special counsel to Purchaser, and Purchaser shall have received a copy
(executed or certified as may be appropriate) of all documents or
corporate proceedings taken in connection with the consummation of
said issuance, including the following:
d. Certified copies of the
Certificate of Incorporation and By-laws of the Corporation or
a certificate of the Secretary of the Corporation certifying
that such documents have not been changed from the copies that
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were provided to Purchaser on the Closing Date or the Tranche
B Closing Date, as applicable;
e. Certified copies of resolutions
of the Board of Directors of the Corporation authorizing the
execution, delivery, and performance of this Agreement, the
Notes, the Registration Rights Agreement, and any other
documents provided for in this Agreement or a certificate of
the Secretary of the Corporation certifying that such
resolutions have not been changed from the copies that were
provided to Purchaser on the Closing Date, or the Tranche B
Closing Date, as applicable, and that such resolutions remain
in full force and effect; and
f. A certificate of the Secretary of
the Corporation certifying the names of the officer or
officers of the Corporation authorized to sign this Agreement,
the Notes, the Registration Rights Agreement, and any other
documents provided for in this Agreement, together with a
sample of the true signature of each such officer or a
certificate of the Secretary of the Corporation certifying
that such certifications have not been changed from the copies
that were provided to Purchaser on the Closing Date, or the
Tranche B Closing Date, as applicable, and that such
resolutions remain in full force and effect;
(iv) Legal Opinion. Purchaser shall have
received from Xxxxxx & Xxxxxxxxxxx and Irell & Xxxxxxx, counsel and
local counsel to the Corporation, updated opinion letters dated the
Tranche C Closing Date, in the form and substance of the opinions
rendered by such counsel on the Closing Date;
(v) Issuance of the Tranche C Notes. The
Corporation shall have executed and delivered the Tranche C Notes to
Purchaser or their nominees;
(vi) Tranche C Closing Fee. The Corporation
shall pay to Purchaser a closing fee of $75,000 by wire transfer of
immediately available funds;
(vii) No Material Adverse Change. No material
adverse change in the business, condition, or operations (financial or
otherwise) of the Corporation and its Subsidiaries taken as a whole
from that set forth in the balance sheet as of March 31, 1992,
included in the SEC Reports, other than changes disclosed to Purchaser
in writing prior to the execution and delivery by Purchaser of this
Agreement, shall have occurred;
(viii) Approvals and Consents. The Corporation
shall have duly received all authorizations, consents, approvals,
licenses, franchises, permits, and certificates by or of all federal,
state, and local governmental authorities necessary for the issuance
of the Tranche C Notes;
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(ix) Payment of Legal Fees. The Corporation
shall have reimbursed the Purchaser in full for the fees and expenses
of its counsel, Xxxxxxx, Xxxxxxx & Xxxxxxxx, incurred in connection
with the preparation, execution, and delivery of the Tranche C Notes;
(x) Representations and Warranties. The
representations and warranties of the Corporation contained in this
Agreement shall be true and correct in all respects on and as of the
Tranche C Closing Date, as though made on and as of such date (except
to the extent that such representations and warranties relate solely
to an earlier date); and
(xi) Events of Default. No Unmatured Event of
Default or Event of Default shall have occurred and be continuing on
the Tranche C Closing Date, nor shall either result from the purchase
and sale of the Tranche C Notes.
2.9 Waiver of Conditions. If, on the Tranche C Closing
Date, the Corporation fails to deliver the Tranche C Notes to Purchaser or if
any of the other conditions specified in Section 2.8 have not been satisfied,
Purchaser shall be relieved of all further obligations under this Agreement.
Without limiting the foregoing, if the conditions specified in Section 2.8 have
not been satisfied, Purchaser may waive compliance by the Corporation with any
such condition to such extent as it may in its sole discretion determine, it
being expressly understood and agreed that the Corporation is to use its best
efforts to satisfy the conditions specified in Section 2.8 and the Corporation
is obligated to accept the financing provided by the purchase and sale of the
Tranche C Notes if Purchaser is prepared to provide it. Nothing in this
Section 2.9 shall operate to relieve the Corporation of any of its obligations
hereunder or to waive any of Purchaser's rights against the Corporation
occassioned by any such breach.
2.10 Effect of Exercise of Certain Mandatory Prepayment
Options. Anything contained herein to contrary notwithstanding, if Purchaser,
or any one of them, exercises the right contained in Section 6(a) of the
Tranche A Notes or the Tranche B Notes, as applicable, to require the
Corporation to prepay such Notes, then, thereafter, the Corporation shall not
be obligated to accept the financing provided by the purchase and sale of the
Tranche B Notes or the Tranche C Notes, as applicable, irrespective of whether
Purchaser is prepared to provide it.
3. DEFINITIONS; CONSTRUCTION.
3.1 Definitions. For purposes of this Agreement,
the following terms shall have the following meanings:
"Affiliate" has the meaning set forth in Rule 12b-2 under the
Exchange Act (as in effect on the date of this Agreement), it being
understood that any limited
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partner of a partnership shall not be an Affiliate of such partnership
solely by virtue of its status as such a limited partner.
"Agreement" shall have the meaning ascribed thereto in the
preamble.
"Business Day" means each Monday, Tuesday, Wednesday,
Thursday, or Friday that is not a day on which banking institutions in
Los Angeles, California are authorized or obligated by law or
executive order to close.
"Capital Lease" means as to any Person any lease or rental of
real or personal property that, under generally accepted accounting
principles, is or will be required to be capitalized on the balance
sheet of such Person.
"Capital Lease Obligation" means any rental obligation in
respect of a Capital Lease taken at the amount thereof accounted for
as indebtedness (net of interest expense) in accordance with generally
accepted accounting principles.
"Certificate of Designation" means the Certificate of
Designation that sets forth the rights and preferences of the
Preferred Stock.
"Closing Date" shall have the meaning ascribed thereto in
Section 2.2 hereof.
"Commission" means the United States Securities and Exchange
Commission.
"Common Stock" means the common stock of the Corporation, par
value $l.00 per share.
"Confidential Information" shall have the meaning ascribed
thereto in Section 9.1 hereof.
"Consolidated Fixed Charge Coverage" means at the end of any
fiscal quarter the quotient of (a) twice the Consolidated Operating
Cash Flow for such fiscal quarter and the immediately preceding fiscal
quarter, divided by (b) Consolidated Fixed Charges for the next
succeeding four fiscal quarters.
"Consolidated Fixed Charges" means, for any period, the sum of
Consolidated Rentals and Consolidated Interest Expense for such
period. In the event that Consolidated Fixed Charges are to be
determined for any future period or periods and any component of
Consolidated Rentals or Consolidated Interest Expense may fluctuate or
is determined on the basis of a rate or criterion that may fluctuate
during such period, Consolidated Rentals or Consolidated Interest
Expense, as the case may be, shall be calculated assuming that such
amount, rate, or criterion in effect on the date such calculation is
made shall be in effect throughout such period.
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"Consolidated Interest Expense" means, for any period, total
interest, whether paid or accrued (including that attributable to
Capital Leases), of the Corporation and the Restricted Subsidiaries on
a consolidated basis, including all amounts payable on the First
Mortgage Notes and all commissions, discounts, and other fees and
charges owed with respect to letters of credit and banker's acceptance
financing and net costs under interest rate exchange or cap agreements
providing interest rate protection, all as determined in conformity
with generally accepted accounting principles.
"Consolidated Net Income" means, for any period, the net
earnings (or losses) of the Corporation and the Restricted
Subsidiaries, on a consolidated basis, for such period taken as a
single accounting period determined in conformity with generally
accepted accounting principles consistently applied, but excluding:
a. any gain that under generally accepted accounting
principles consistently applied would be properly classified
as an extraordinary gain;
b. any gain arising from a sale of capital assets that
is not made in the ordinary course of business of the
Corporation or its Restricted Subsidiaries;
c. any gain arising from any write-up of assets;
d. the proceeds of any life insurance policy;
e. earnings of any Person substantially all of the
assets of that have been acquired in any manner (whether
through merger or otherwise) to the extent that such earnings
were realized prior to the date of such acquisition; and
f. earnings of any Person to which substantially all the
assets of the Corporation shall have been sold or transferred,
into which the Corporation shall have been merged, or with
which the Corporation shall have been consolidated, to the
extent that such earnings were realized prior to the date of
such transfer, merger, or consolidation.
All losses (including any loss that, under generally accepted
accounting principles consistently applied, would be properly
classified as an extraordinary loss) shall be included in determining
such net earnings (or losses).
"Consolidated Net Worth" means, as of the time of any
determination thereof, the excess of (a) the sum of (i) the par value
(or value stated on the books of the Corporation) of the capital stock
of all classes of the Corporation, plus (or minus in the case of
surplus deficit) (ii) the amount of consolidated surplus, whether
capital or earned, of the Corporation and the Restricted Subsidiaries,
plus (iii) the face amount of the Subordinated Funded Debt, over (b)
the amount of all treasury stock; all determined on a consolidated
basis for the Corporation and the Restricted
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Subsidiaries in accordance with generally accepted accounting
principles consistent with those followed in the preparation of the
financial statements referred to in Section 4.5, including the making
of appropriate deductions for minority interests, if any, in the
Restricted Subsidiaries.
"Consolidated Operating Cash Flow" means for any period,
without duplication, (a) Consolidated Net Income plus (b) to the
extent deducted in computing Consolidated Net Income, depreciation and
amortization and other similar non-cash charges, accrued income tax
expense and interest expense of the Corporation and the Restricted
Subsidiaries for such period.
"Consolidated Rentals" means, for any period, all amounts
payable by the Corporation and any Restricted Subsidiary as lessee or
sublessee relating to Operating Leases.
"Consolidated Senior Funded Debt" means all Funded Debt other
than Subordinated Funded Debt.
"Consolidated Total Capitalization" means, as of the time of
any determination thereof, the sum of Consolidated Senior Funded Debt
and Consolidated Net Worth.
"Conversion Shares" means the shares of Common Stock issuable
upon conversion of the indebtedness evidenced by the Notes.
"Convertible Notes" means the Corporation's (a) $7,000,000
aggregate principal amount 8.5% Convertible Subordinated Notes due
November 7, 1999, and (b) the Corporation's $2,700,000 aggregate
principal amount 8.5% Convertible Subordinated Notes due on various
dates, the latest of which is January 16, 2000.
"Corporation" shall have the meaning ascribed thereto in the
preamble to this Agreement and shall include the Corporation's
permitted successors and assigns.
"Coupon Rate" means (i) with respect to the Tranche A Notes
and the Tranche B Notes, eight and one-half percent (8.5%) per annum;
and (ii) with respect to the Tranche C Notes, the greater of: (a)
eight and one-half percent (8.5%) per annum, or (b) two and
nine-tenths percentage points (2.90) above the Treasury Rate as of the
Tranche C Closing Date for notes having a maturity of three years from
the date of issuance thereof.
"ERISA" means the Employee Retirement Income Security Act of
1974.
"Escrow Agreement" shall have the meaning ascribed thereto in
Section 2.5(i) hereof.
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"Estancia Facility" means the Corporation's Torrance County
Detention Center located in Estancia, New Mexico.
"Event of Default" shall have the meaning set forth in Section
7.1.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any similar federal statute, and the rules and regulations
of the Commission thereunder, all as the same shall be in effect at
the time. Reference to a particular section of the Exchange Act shall
include reference to the comparable section, if any, of any successor
federal statute.
"Federal Government Contract" means a contract between the
Corporation and the federal government of the United States of America
or any subdivision or agency thereof.
"Foreign Government Contract" means a contract between the
Corporation and any foreign (other nation) government or any
subdivision or agency thereof.
"First Mortgage Note Purchase Agreement" means the Note
Purchase Agreement dated as of December 6, 1990, as amended, between
the Corporation and the purchasers of the First Mortgage Notes listed
therein.
"First Mortgage Notes" means the Corporation's $20,000,000
aggregate principal amount of 11.08% first mortgage notes due November
30, 2000 issued pursuant to the First Mortgage Note Purchase
Agreement.
"Funded Debt" means and includes without duplication (a) any
obligation payable more than one year from the date of the creation
thereof (including the current portion of Funded Debt), that under
generally accepted accounting principles is shown on the balance sheet
as a liability (including obligations under Capital Leases and
excluding reserves for deferred income taxes and other reserves to the
extent that such reserves do not constitute an obligation), (b)
guarantees, endorsements (other than endorsements of negotiable
instruments for collection in the ordinary course of business), and
other contingent liabilities (whether direct or indirect) in
connection with the obligations, stock, or dividends of any Person,
including obligations under contracts to supply funds to or in any
other manner invest in any Person, (c) obligations under any contract
to purchase, sell, or lease (as lessee or lessor) property or to
purchase or sell services, primarily for the purpose of enabling a
Person to make payment of obligations or to assure the holder of such
obligations against loss including obligations under any contract for
the purchase of materials, supplies, or other property or services if
such contract (or any related document) requires that payment for such
materials, supplies, or other property or services shall be made
regardless of whether delivery of such materials, supplies, or other
property or services is ever made or tendered, (d) obligations under
any
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contract to pay or purchase obligations of a Person, or to advance or
supply funds for the payment or purchase of such obligations, and (e)
any agreement to assure a creditor of a Person against loss.
"Government Contract" means any Federal Government Contract,
Foreign Government Contract, or any State Government Contract.
"indemnified party" shall have the meaning ascribed thereto in
Section 10.1 hereof.
"indemnifying party" shall have the meaning ascribed thereto
in Section 10.1 hereof.
"Margin Stock" shall have the meaning given such term in
Regulation G (12 CFR part 207) of the Board of Governors of the
Federal Reserve System.
"Notes" shall have the meaning ascribed thereto in Section 1
hereof.
"Operating Lease" means any lease of real, personal, or mixed
property that is not a Capital Lease.
"Permitted Businesses" means the design, construction,
ownership, start up, management, or operation of detention and
correctional facilities together with associated consulting and
educational services.
"Person" means any individual, partnership, joint venture,
corporation, trust, unincorporated organization, government, or
department or agency of a government.
"PM" shall have the meaning ascribed thereto in the preamble
to this Agreement.
"PMGLIC" shall have the meaning ascribed thereto in the
preamble to this Agreement.
"Preferred Stock" means the Corporation's Series A Cumulative
Convertible Preferred Stock, $1.00 par value per share.
"Purchaser" shall mean PM and PMGLIC, individually and
collectively, and shall include PM's and PMGLIC's permitted successors
and assigns.
"Registration Rights Agreement" shall have the meaning
ascribed thereto in Section 2.3(vii) hereof.
"Representative" shall have the meaning ascribed thereto in
Section 7.1 hereof.
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"Restricted Subsidiary" means a Subsidiary of the Corporation
that is (a) organized under the laws of any state of the United States
of America and at least 80% of the total combined voting power of all
classes of Voting Stock shall at the time as of which any
determination is being made, be owned by the Corporation either
directly or through any Restricted Subsidiary, (b) engaged in a
Permitted Business and (c) whose assets and operations are located
within the United States of America.
"Security" or "Securities" means the Notes or the Conversion
Shares.
"SEC Reports" shall have the meaning ascribed thereto in
Section 4.4 hereof.
"Securities Act" means the Securities Act of 1933.
"Senior Indebtedness" shall have the meaning ascribed to such
term in the Notes.
"State Government Contract" means a contract between the
Corporation or any of its Subsidiaries and the government of any
state, county, or municipality or any political subdivision or agency
thereof.
"Subordinated Funded Debt" means the indebtedness of the
Corporation evidenced by the Convertible Notes.
"Subsidiary" means any corporation, partnership, or other
entity of which a majority of the total combined voting power of all
classes of Voting Stock at the time as of which any determination is
being made, is owned by a Person either directly, through one or more
Subsidiaries or both.
"Tranche B Closing Date" means the Business Day specified by
the Corporation or PM, on behalf of the Purchaser, as applicable, in
compliance with the provisions hereof, as the date on which all of the
Tranche B Notes are to be issued by the Corporation and purchased by
Purchaser in accordance with the provisions hereof.
"Tranche B Notice" means a written notice substantially in the
form of the notice attached hereto as Exhibit F and incorporated
herein by this reference.
"Tranche C Closing Date" means the Business Day specified by
PM, on behalf of the Purchaser, in compliance with the provisions
hereof, as the date on which all of the Tranche C Notes are to be
issued by the Corporation and purchased by Purchaser in accordance
with the provisions hereof.
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"Tranche C Notice" means a written notice substantially in the
form of the notice attached hereto as Exhibit G and incorporated
herein by this reference.
"Tranche A Note" means any one or more of the Notes issued on
the Closing Date or any substitute or replacement therefor; the
aggregate amount of the Tranche A Notes shall be Two Million Five
Hundred Thousand Dollars ($2,500,000).
"Tranche B Note" means any one or more of the Notes issued on
the Tranche B Closing Date or any substitute or replacement therefor;
the aggregate amount of the Tranche B Notes shall be Two Million Five
Hundred Thousand Dollars ($2,500,000).
"Tranche C Note" means any one or more of the Notes issued on
the Tranche C Closing Date or any substitute or replacement therefor;
the aggregate amount of the Tranche C Notes shall be Two Million Five
Hundred Thousand Dollars ($2,500,000).
"Transfer" shall have the meaning ascribed thereto in Section
8.4 hereof.
"Treasury Rate" shall mean, as of the date of any
determination thereof, the rate per annum, as determined by Purchaser,
equal to the arithmetic average of the two most recent weekly average
bid-side yields on issues of United States Treasury Securities, as
published by the Federal Reserve Board for release on the first
business day of the week in which such determination is made in its
Statistical Release H.15 (519) under the heading "Treasury Constant
Maturities" for the two calendar weeks ending on the two Wednesdays
immediately preceding the date of such release or, if such average is
not published for such periods, of such reasonably comparable index as
may be designated for such period by Purchaser.
"Triggering Event" means the occurrence of any Unmatured Event
of Default of Event of Default described in clauses (i), (ii), and
(iv) through (x), inclusive, of Section 7.1. For purposes of
determining the period during which the Triggering Event Rate shall be
in effect, a Triggering Event shall not be deemed to have occurred
until the date on which Purchaser shall have given notice of the
occurrence thereof to the Corporation.
"Triggering Event Rate" means (i) with respect to the Tranche
A Notes and the Tranche B Notes, ten and one-half percent (10.5%) per
annum; and (ii) with respect to the Tranche C Notes, the greater of:
(a) ten and one-half percent (10.5%) per annum, or (b) two and
nine-tenths percentage points (2.90) above the Treasury Rate as of the
Tranche C Closing Date for notes having a maturity of three years from
the date of issuance thereof.
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"Unmatured Event of Default" shall mean any event or
condition, the occurrence of which would, with the lapse of time or
the giving of notice, or both, constitute an Event of Default.
"Voting Stock" means, when used with respect to any Person,
any shares of stock or other ownership interests of such Person having
general voting power under ordinary circumstances to elect a majority
of the board of directors of such Person (irrespective of whether at
the time stock or ownership interests of any other class or classes
shall have or might have voting power by reason of the happening of
any contingency).
"Warrants" means the warrants dated as of December 6, 1990
evidencing the right to purchase 250,000 shares of Common Stock of the
Corporation between the Corporation and the purchasers of the First
Mortgage Notes.
3.2 Construction. Unless the context of this
Agreement clearly requires otherwise, references to the plural include the
singular and to the singular include the plural, the part includes the whole,
the terms "include" and "including" are not limiting, and the term "or" has,
except where otherwise indicated, the inclusive meaning represented by the
phrase "and/or". The words "hereof," "herein," "hereby," "hereunder" and
similar terms in this Agreement refer to this Agreement as a whole and not to
any particular provision of this Agreement. Section, subsection, clause,
exhibit, and schedule references are to this Agreement unless otherwise
specified. Any reference herein to this Agreement, the Notes, or the
Registration Rights Agreement includes any and all alterations, amendments,
changes, extensions, modifications, renewals, or supplements thereto or
thereof, as applicable.
3.3 Changes in Acccounting Principles. If any changes in
accounting principles from those in effect at the time of preparation of the
financial statements referred to in Section 4.5 are hereafter occasioned by the
promulgation of rules, regulations, pronouncements, and opinions by or required
by the Financial Accounting Standards Board or the American Institute of
Certified Public Accountants (or successors thereto or organizations with
similar functions) result in a change in the method of calculation of financial
covenants, standards, or terms found in this Agreement or there is any change
in the Corporation's fiscal quarters or fiscal year, the parties hereto agree
to enter into negotiations to amend this Agreement so as to equitably reflect
such changes with the desired result that the criteria for evaluating the
financial condition of the Corporation shall be the same after such changes as
if such changes had not been made.
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4. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION. The
Corporation represents and warrants to Purchaser, as of the date hereof, and as
of the Closing Date, the Tranche B Closing Date, and the Tranche C Closing
Date, that:
4.1 Organization and Qualification. Each of
the Corporation and its Subsidiaries is a corporation duly organized
and existing in good standing under the laws of the jurisdiction in
which it is incorporated and has the power to own its respective
property and to carry on its respective business as now being
conducted. Each of the Corporation and its Subsidiaries is duly
qualified as a foreign corporation to do business and in good standing
in every jurisdiction in which the nature of the respective business
conducted or property owned by it makes such qualification necessary
and where the failure so to qualify would have a material adverse
effect on the business or financial position of the Corporation and
its Subsidiaries taken as a whole.
4.2 Due Authorization. The execution and
delivery of this Agreement and the Registration Rights Agreement and
the issuance and sale of the Notes and the Conversion Shares by the
Corporation and compliance by the Corporation with all the provisions
of this Agreement, the Registration Rights Agreement, the Notes, and
the Conversion Shares (i) are within the corporate power and authority
of the Corporation; (ii) do not require the approval or consent of any
stockholders of the Corporation; and (iii) have been authorized by all
requisite corporate proceedings on the part of the Corporation. This
Agreement, the Notes, and the Registration Rights Agreement have been
duly executed and delivered by the Corporation and constitute valid
and binding agreements of the Corporation enforceable in accordance
with their respective terms, except that (i) such enforcement may be
subject to bankruptcy, insolvency, reorganization, moratorium, or
other similar laws now or hereafter in effect relating to creditors
rights, and (ii) the remedy of specific performance and injunctive and
other form of equitable relief may be subject to equitable defenses
and to the discretion of the court before which any proceeding
therefor may be brought. The Corporation has furnished to Purchaser
true and correct copies of the Corporation's current Certificate of
Incorporation and By-laws.
4.3 Subsidiaries. The Subsidiaries of the
Corporation, together with their jurisdiction of incorporation, are
set forth on Schedule 4.3 hereto.
4.4 SEC Reports. The Corporation has filed
all proxy statements, reports, and other documents required to be
filed by it under the Exchange Act and the Corporation has furnished
Purchaser copies of its Annual Report on Form 10-K for the fiscal year
ended December 31, 1991, and all proxy statements and reports under
the Exchange Act filed by the Corporation after such date, each as
filed with the Commission (collectively, the "SEC Reports"). Each SEC
Report was in
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substantial compliance with the requirements of its respective report
form and did not, on the date of filing, contain any untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
4.5 Financial Statements. The financial
statements (including any related schedules or notes) included in the
SEC Reports have been prepared in accordance with generally accepted
accounting principles consistently followed (except as indicated in
the notes thereto) throughout the periods involved and fairly present
the consolidated financial condition, results of operations, and
changes in stockholders' equity of the Corporation and its
Subsidiaries as of the dates thereof and for the periods ended on such
dates (in each case subject, as to interim statements, to changes
resulting from year-end adjustments (none of which will be material in
amount or effect)), and the Corporation has no material liabilities,
contingent or otherwise, not reflected in the balance sheet as of
March 31, 1992 included in the SEC Reports or otherwise referred to in
the SEC Reports or otherwise disclosed to Purchaser in writing prior
to the execution by Purchaser of this Agreement, other than any such
liabilities incurred in the ordinary course of business since March
31, 1992. There has been no material adverse change in the business,
condition, or operations (financial or otherwise) of the Corporation
and its Subsidiaries taken as a whole from that set forth in the
balance sheet as of March 31, 1992 included in the SEC Reports, other
than changes disclosed or referred to in the SEC Reports or otherwise
disclosed to Purchaser in writing prior to the execution by Purchaser
of this Agreement.
4.6 Actions Pending; Compliance with Law.
Except as disclosed on Schedule 4.6 hereto, there is no action, suit,
criminal investigation, or proceeding pending or, to the knowledge of
the Corporation, threatened by any public official or governmental
authority, against the Corporation or any of its Subsidiaries or any
of their respective properties or assets by or before any court,
arbitrator, or governmental body, department, commission, board,
bureau, agency, or instrumentality, which questions the validity of
this Agreement, the Notes, the Registration Rights Agreement, or the
Conversion Shares or any action taken or to be taken pursuant hereto
or thereto, or, except as set forth in the SEC Reports, that are
reasonably likely to result in any material adverse change in the
business or financial condition of Corporation, and neither the
Corporation nor any of its Subsidiaries is in default in any material
respect with respect to any judgment, order, writ, injunction, decree,
or award, and, except as disclosed in the SEC Reports, the businesses
of the Corporation and its Subsidiaries are in compliance in all
material respects with applicable federal, state, local, and foreign
governmental laws and regulations and all Government Contracts, all to
the extent necessary to avoid any material adverse effect on the
business, properties, or condition (financial or other) of the
Corporation and its Subsidiaries taken as a whole.
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4.7 Title to Properties; Insurance. The
Corporation and its Subsidiaries have good and valid title to their
respective properties and assets, free of all liens and encumbrances
other than those referred to in the financial statements of the
Corporation (or the notes thereto) for the quarter ended March 31,
1992, included in the SEC Reports, except in each case for such
defects in title and such other liens and encumbrances that are
otherwise disclosed or referred to in the SEC Reports or that do not
in the aggregate materially detract from the value to the Corporation
of the properties and assets of the Corporation and its Subsidiaries
taken as a whole. The Corporation and its Subsidiaries maintain
insurance in such amounts (to the extent available in the public
market), including self-insurance, retainage, and deductible
arrangements, and of such a character as the Corporation believes is
reasonable for companies engaged in the same or similar business.
4.8 Governmental Consents, Etc. The
Corporation is not required to obtain any consent, approval, or
authorization of, or to make any declaration or filing with, any
governmental authority as a condition to or in connection with the
valid execution, delivery, and performance of this Agreement, the
Notes, or the Registration Rights Agreement and the valid offer,
issue, sale, or delivery of the Notes or the Conversion Shares, or the
performance by the Corporation of its obligations in respect thereof,
except for any filings required to effect any registration pursuant to
the Registration Rights Agreement, and filings required pursuant to
state and federal securities laws that will be timely made after the
Closing Date, the Tranche B Closing Date, or the Tranche C Closing
Date, as applicable.
4.9 Holding Corporation Act and Investment
Corporation Act Status. The Corporation is not a "holding company" or
a "public utility company" as such terms are defined in the Public
Utility Holding Corporation Act of 1935. The Corporation is not an
"investment company," or a company "controlled" by an "investment
company," within the meaning of the Investment Corporation Act of 1940.
4.10 Taxes. The Corporation and its
Subsidiaries have filed or caused to be filed all income tax returns
that are required to be filed and have paid or caused to be paid all
taxes as shown on said returns and on all assessments received by it
to the extent that such taxes have become due, except taxes the
validity or amount of which is being contested in good faith by
appropriate proceedings and with respect to which adequate reserves
have been set aside. The federal income tax returns of the
Corporation and its Subsidiaries have been examined and reported on by
the Internal Revenue Service (or closed by applicable statutes) and
all tax liabilities including additional assessments have been
satisfied for all fiscal years prior to and including the fiscal year
ended December 31, 1987. The Corporation and its Subsidiaries have
paid or caused to be paid, or have established reserves that the
Corporation reasonably believes to be adequate in all material
respects, for all federal income tax liabilities and state income tax
liabilities
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applicable to the Corporation and its Subsidiaries for all fiscal
years that have not been examined and reported on by the taxing
authorities (or closed by applicable statutes).
4.11 Conflicting Agreements and Charter Provisions.
Neither the Corporation nor its Subsidiaries is a party to any
contract or agreement or subject to any charter or other corporate
restriction that materially and adversely affects its business,
property, or assets or financial condition. Except as set forth on
Schedule 4.11 attached hereto, neither the execution and delivery of
this Agreement, the Notes, or the Registration Rights Agreement nor
the issuance of the Conversion Shares nor fulfillment of or compliance
with the terms and provisions hereof or thereof or the prepayment of
the Notes as contemplated hereby and by the Notes, and the conversion
of the indebtedness evidenced by the Notes into the Conversion Shares
as contemplated hereby and by the Notes will conflict with or result
in a breach of the terms, conditions, or provisions of, or give rise
to a right of termination under, or constitute a default under, or
result in any violation of, the Certificate of Incorporation or
By-laws of the Corporation or any mortgage, agreement, instrument,
order, judgment, decree, statute, law, rule, or regulations to which
the Corporation or any of its Subsidiaries or any of their respective
properties is subject. Neither the Corporation nor any of its
Subsidiaries is in default under any outstanding indenture or other
debt instrument or with respect to the payment of the principal of or
interest on any outstanding obligations for borrowed money, is in
default under any of their respective contracts or agreements, or
under any instrument by which the Corporation or any of its
Subsidiaries is bound, in each case that materially and adversely
affects the business, operations, or financial condition of the
Corporation and its Subsidiaries taken as a whole.
4.12 Capitalization. The authorized capital
stock of the Corporation consists of (i) 30,000,000 shares of Common
Stock, of which, as of the date hereof, 9,288,881 shares are
outstanding and no shares are held in its treasury; and (ii) 1,000,000
shares of preferred stock, $1.00 par value, of which, as of the date
hereof, 50,000 shares are outstanding; all of such outstanding shares
have been validly issued and are fully paid and nonassessable. No
shares of Common Stock of the Corporation are entitled to preemptive
rights. The Preferred Stock is entitled to only those preemptive
rights that are set forth in the Certificate of Designation. Except
for the options and warrants listed on Schedule 4.12 hereto and except
for the Warrants, the Preferred Stock, and the Convertible Notes,
there are no outstanding options, warrants, scrip, rights to subscribe
to, calls, or commitments of any character whatsoever relating to, or
securities or rights convertible into, shares of any capital stock of
the Corporation, or contracts, commitments, understandings, or
arrangements by which the Corporation is or may become bound to issue
additional shares of its capital stock or options, warrants, or rights
to purchase or acquire any shares of its capital stock. Since March
31, 1992, the Corporation has not changed the amount of its authorized
capital stock or subdivided or otherwise changed any shares of any
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class of its capital stock, whether by way of reclassification,
recapitalization, stock split, or otherwise, or issued or reissued, or
agreed to issue or reissue, any of its capital stock, except as
disclosed in this Section 4.12 and has not since such date declared or
paid any dividend in cash or stock or made any other distribution of
assets to its stockholders.
4.13 Disclosure. Neither this Agreement nor
the SEC Reports nor the financial statements included in the SEC
Reports nor any certificate or written disclosure statement referred
to herein and furnished to Purchaser by or on behalf of the
Corporation in connection with the transactions contemplated hereby
contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained
herein and therein not misleading. There is no fact peculiar to the
Corporation or any of its Subsidiaries that the Corporation has not
disclosed to Purchaser in writing that materially affects adversely
or, so far as the Corporation can now reasonably foresee, will
materially affect adversely the properties, business, or condition
(financial or otherwise) of the Corporation and its Subsidiaries taken
as a whole or the ability of the Corporation to perform this
Agreement, the Notes, the Registration Rights Agreement or its
obligations in respect of the Conversion Shares.
4.14 Status of Conversion Shares. The
Conversion Shares have been duly authorized by all necessary corporate
action on the part of the Corporation (no consent or approval of
stockholders being required by law, the Certificate of Incorporation
or the By-laws of the Corporation, or otherwise), and such shares of
Common Stock have been validly reserved for issuance, and upon
issuance, will be validly issued and outstanding, fully paid, and
nonassessable.
4.15 Registration Under Exchange Act. The
Conversion Shares will not be registered as a class pursuant to
Section 12 of the Exchange Act and such registration is not required
except as otherwise required by the provisions of the Registration
Rights Agreement.
4.16 ERISA. No accumulated funding deficiency
(as defined in Section 302 of ERISA and Section 412 of the Code),
irrespective of whether waived, exists with respect to any Plan (as
defined below) (other than a Multiemployer Plan (as defined below)).
No liability to the Pension Benefit Guaranty Corporation has been
incurred with respect to any Plan (other than a Multiemployer Plan) by
the Corporation or any of its Subsidiaries that is or would be
materially adverse to the Corporation and its Subsidiaries taken as a
whole. Neither the Corporation nor any of its Subsidiaries has
incurred any withdrawal liability under Title IV of ERISA with respect
to any Multiemployer Plan that is or would be materially adverse to
the Corporation and its Subsidiaries taken as a whole. The execution
and delivery of this Agreement and the Registration Rights Agreement
and the issuance and sale of the Notes and the conversion of the
indebtedness evidenced by the Notes into the
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Conversion Shares will not involve any transaction that is subject to
the prohibitions of Section 406 of ERISA or in connection with which a
tax could be imposed pursuant to Section 4975 of the Code. The
representation by the Corporation in the immediately preceding
sentence is made in reliance upon and subject to the accuracy of
Purchaser's representation in Section 5.3 as to the source of the
funds to be used to pay the purchase price of the Conversion Shares.
As used in this Section 4.16, the term "Plan" shall mean an "employee
pension benefit plan" (as defined in Section 3(2) of ERISA) that is or
has been established or maintained, or to which contributions are or
have been made, by the Corporation or by any trade or business,
irrespective of whether incorporated, that, together with the
Corporation, is under common control, as described in Section 414(b)
or (c) of the Code, and the term "Multiemployer Plan" shall mean any
Plan that is a "multiemployer plan" (as such term is defined in
Section 4001 (a) (3) of ERISA).
4.17 Possession of Franchises, Licenses, Etc.
The Corporation and its Subsidiaries possess all franchises,
certificates, licenses, permits, and other authorizations from
governmental or political subdivisions or regulatory authorities and
all patents, trademarks, service marks, trade names, copyrights,
licenses, and other rights, free from burdensome restrictions, that
are necessary in any material respect to the Corporation and its
Subsidiaries, taken as a whole for the ownership, maintenance, and
operation of their respective properties and assets, and neither the
Corporation nor any of its Subsidiaries is in violation of any thereof
in any material respect.
4.18 Environmental and Other Regulations. The
Corporation and its Subsidiaries are in compliance in all material
respects with all laws and regulations, including those relating to
environmental control, equal employment opportunity, and employee
safety, in all jurisdictions in which the Corporation and its
Subsidiaries are presently doing business and where the failure to
effect such compliance would have a material adverse effect on the
business, operations, or financial condition of the Corporation and
its Subsidiaries taken as a whole.
4.19 Offering of Securities. Neither the
Corporation nor any Person acting on its behalf has offered the
Securities or any similar securities of the Corporation for sale to,
solicited any offers to buy the Securities or any similar securities
of the Corporation from, or otherwise approached or negotiated with
respect to the Corporation with any Person other than Purchaser and a
limited number of other "accredited investors" (as defined in Rule
501(a) under the Securities Act). Neither the Corporation nor any
Person acting on its behalf has taken or will take any action
(including any offering of any securities of the Corporation under
circumstances that would require the integration of such offering with
the offering of the Securities under the Securities Act and the rules
and regulations of the Commission thereunder) that might subject the
offering, issuance,
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or sale of the Securities to the registration requirements of Section
5 of the Securities Act.
4.20 Brokers or Finders. Except for the fee of
Page Capital Inc. that will be paid by the Corporation, no agent,
broker, investment banker, or other firm or Person is or will be
entitled to any broker's fee or any other commission or similar fee as
a result of the activities of the Corporation or its Subsidiaries,
agents, or employees undertaken in connection with any of the
transactions contemplated by this Agreement or the Registration Rights
Agreement.
4.21 Offering of Notes. Neither the
Corporation nor, to the best knowledge of the Corporation, any person
authorized to act on behalf of the Corporation has taken or will take
any action that would subject the issuance or sale of the Notes to the
provisions of Section 5 of the Securities Act or violate the
provisions of any securities, "blue sky", or similar law of any
applicable jurisdiction.
4.22 Regulations G, T, U, and X. Neither the
Corporation nor any of its Subsidiaries owns or has any present
intention of acquiring any Margin Stock. Neither the Corporation, any
of its Subsidiaries, nor any agent acting on its behalf has taken take
any action that might cause this Agreement to violate Regulations G,
T, U, or X or any other regulation of the Board of Governors of the
Federal Reserve System or to violate the Exchange Act.
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5. REPRESENTATIONS AND WARRANTIES OF PURCHASER.
Purchaser represents and warrants to the Corporation, as of the date hereof and
as of the Closing Date, the Tranche B Closing Date, and the Tranche C Closing
Date, as follows:
5.1 Due Authorization. Purchaser has all
right, power, and authority to enter into this Agreement and the
Registration Rights Agreement and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this
Agreement and the Registration Rights Agreement by Purchaser and the
consummation by Purchaser of the transactions contemplated hereby and
thereby have been duly authorized by all necessary corporate action on
behalf of Purchaser. This Agreement and the Registration Rights
Agreement have been duly executed and delivered by Purchaser and
constitute valid and binding agreements of Purchaser enforceable in
accordance with their terms, except that (i) such enforcement may be
subject to bankruptcy, insolvency, reorganization, moratorium, or
other similar laws now or hereafter in effect relating to creditors'
rights, and (ii) the remedy of specific performance and injunctive and
other forms of equitable relief may be subject to equitable defenses
and to the discretion of the court before which any proceeding
therefor may be brought.
5.2 Conflicting Agreements and Other Matters.
Neither the execution and delivery of this Agreement or the
Registration Rights Agreement nor the performance by Purchaser of its
obligations hereunder or thereunder will conflict with, result in a
breach of the terms, conditions, or provisions of, constitute a
default under, result in the creation of any mortgage, security
interest, encumbrance, lien, or charge of any kind upon any of the
properties or assets of Purchaser pursuant to, or require any consent,
approval, or other action by or any notice to or filing with any court
or administrative or governmental body pursuant to the organizational
documents or agreements of Purchaser or any agreement, instrument,
order, judgment, decree, statute, law, rule, or regulation by which
Purchaser is bound, except, possibly, for filings after the Closing
Date, the Tranche B Closing Date, and the Tranche C Closing Date, as
applicable, under Section 13(d) of the Exchange Act.
5.3 Acquisition for Investment; Source of
Funds. Purchaser is acquiring the Notes (and its rights with respect
to the Conversion Shares) for its own account for the purpose of
investment and not with a view to or for sale in connection with any
distribution thereof, and Purchaser has no present intention or plan
to effect any distribution of the Conversion Shares. No part of the
funds used by Purchaser to purchase the Notes hereunder constitutes
assets allocated to any separate account (as defined in Section 3 of
ERISA) maintained by Purchaser or assets of any employee benefit plan
(as defined in Section 3(3) of ERISA) other than a governmental plan
(as defined in Section 3(32) of ERISA).
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5.4 Brokers or Finders. No agent, broker,
investment banker, or other firm or Person is or will be entitled to
any broker's fee or any other commission or similar fee as a result of
the activities of Purchaser or its Subsidiaries, agents, or employees
undertaken in connection with any of the transactions contemplated by
this Agreement or the Registration Rights Agreement.
5.5 Accredited Investor. Purchaser is an
"accredited investor" within the meaning of Rule 501 promulgated under
the Securities Act.
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6. COVENANTS.
The Corporation covenants that so long as any amount due or to
become due under the Notes or this Agreement remains unpaid:
6.1 Financial Statements and Other Reports.
(i) it will, as soon as practicable
and in any event within 45 days after the end of each quarterly period
(other than the last quarterly period) in each fiscal year, furnish to
Purchaser statements of consolidated net income and cash flows and a
statement of changes in consolidated stockholders equity of the
Corporation and its Subsidiaries for the period from the beginning of
the then current fiscal year to the end of such quarterly period, and
a consolidated balance sheet of the Corporation and its Subsidiaries
as of the end of such quarterly period, setting forth in each case in
comparative form figures for the corresponding period or date in the
preceding fiscal year, all in reasonable detail and certified by an
authorized financial officer of the Corporation, subject to changes
resulting from year-end adjustments; provided, however, that delivery
pursuant to clause (iii) below of a copy of the Quarterly Report on
Form 10-Q of the Corporation for such quarterly period filed with the
Commission shall be deemed to satisfy the requirements of this clause
(i);
(ii) it will, as soon as practicable
and in any event within 90 days after the end of each fiscal year,
furnish to Purchaser statements of consolidated net income and cash
flows and a statement of changes in consolidated stockholders' equity
of the Corporation and its Subsidiaries for such year, and a
consolidated balance sheet of the Corporation and its Subsidiaries as
of the end of such year, setting forth in each case in comparative
form the corresponding figures from the preceding fiscal year, all in
reasonable detail and examined and reported on by independent public
accountants of recognized standing selected by the Corporation;
provided, however, that delivery pursuant to clause (iii) below of a
copy of the Annual Report on Form 10-K of the Corporation for such
fiscal year filed with the Commission shall be deemed to satisfy the
requirements of this clause (ii);
(iii) it will, promptly upon transmission
thereof, furnish to Purchaser copies of all financial statements,
proxy statements, notices, and reports as it shall send to its
stockholders and copies of all registration statements (without
exhibits), other than registration statements relating to employee
benefit or dividend reinvestment plans, and all regular and periodic
reports as it shall file with the Commission; and
(iv) it will, with reasonable promptness,
furnish to Purchaser such other financial and other data of the
Corporation and its Subsidiaries as such
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Purchaser may request, including operating financial information for
each facility owned or operated by the Corporation or any of its
Subsidiaries.
Together with each delivery of financial statements
required by clauses (i) and (ii) above, the Corporation will deliver
to Purchaser a certificate of an authorized financial officer of the
Corporation regarding compliance by the Corporation with the covenants
set forth in Sections 6.6., 6.7, and 6.8. At such other time or times
that the Corporation delivers a compliance certificate to any other
holder of Funded Debt, the Corporation will deliver such certificate,
and any supporting detail, to the Purchaser.
6.2 Inspection of Property. The Corporation
will permit representatives of Purchaser to visit and inspect, at
Purchaser's expense, any of the properties of the Corporation and its
Subsidiaries, to examine the corporate books and make copies or
extracts therefrom and to discuss the affairs, finances, and accounts
of the Corporation and its Subsidiaries with the principal officers of
the Corporation, all at such reasonable times, upon reasonable notice,
and as often as Purchaser may reasonably request; provided, however,
that the foregoing shall be subject to compliance with reasonable
safety requirements and shall not require the Corporation or any of
its Subsidiaries to permit any inspection that, in the reasonable
judgment of the Corporation, would result in the violation of any
statute or regulation with respect to confidentiality or security.
Purchaser agrees that the information received pursuant to this
Section 6.2 or Section 6.1(iv) is subject to Section 9 hereof.
6.3 Dividends, Distributions, and Redemptions.
The Corporation will not declare or pay any dividend on, or make any
other distribution in respect of, or redeem any shares of Common Stock
or any other shares of capital stock of the Corporation other than, so
long as no Event of Default or Unmatured Event of Default has occurred
and is continuing hereunder or under the Notes, cash dividends on its
Preferred Stock in accordance with the terms of the Certificate of
Designation; provided, however, that, so long as no Event of Default
or Unmatured Event of Default has occurred and is continuing hereunder
or under the Notes, nothing in this Section 6.3 shall prevent the
Corporation from purchasing or redeeming any shares of Preferred Stock
in accordance with the terms of the Certificate of Designation.
6.4 Certain Acquisitions. Without the prior
written consent of Purchaser, the Corporation will not purchase or
otherwise acquire the business, assets, or securities of any other
Person other than in the ordinary course of the Corporation's
business.
6.5 Use of Proceeds; Regulations G, T, U, and
X. All of the proceeds of the sale of the Notes will be used by the
Corporation for general corporate purposes. None of such proceeds
will be used, directly or indirectly, for
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the purpose of purchasing or carrying any Margin Stock or for the
purpose of reducing or retiring any indebtedness that was originally
incurred to purchase or carry Margin Stock or for any other purpose
that might constitute this transaction a "purpose credit" within the
meaning of Regulations G, T, U, or X.
6.6 Consolidated Net Worth. The Corporation
will not permit Consolidated Net Worth at any time to be less than the
sum of (a) $35,569,167 at March 31, 1992, plus (b) an amount during
each fiscal quarter thereafter equal to the sum of (i) the amount of
Consolidated Net Worth required hereunder for the immediately
preceding fiscal quarter, plus (ii) if positive, fifty percent (50%)
of Consolidated Net Income for such immediately preceding fiscal
quarter.
6.7 Consolidated Fixed Charges.
a. The Corporation shall not permit
Consolidated Fixed Charge Coverage to be less than (i) 1.75 as at the
end of any fiscal quarter occurring in 1992, and (ii) 2.00 as at the
end of any fiscal quarter occurring thereafter.
b. The Corporation will not, and
will not permit any Restricted Subsidiary to, incur, assume, or suffer
to exist any obligation under Operating Leases or under any
transaction giving rise to Consolidated Interest Expense after the
Closing Date unless, after giving effect on a pro forma basis to such
obligation or transaction, the Corporation will be in compliance with
Section 6.7(a) (calculated as at the end of the most recently
completed fiscal quarter).
6.8 Consolidated Senior Funded Debt. The
Corporation will not permit Consolidated Senior Funded Debt to exceed
eighty percent (80%) of Consolidated Total Capitalization.
6.9 Attendance at Board Meeting. The designee
of the Purchaser (such individual to be identified to the Corporation
in a writing signed by the Purchaser) shall have the right to attend
all meetings of the Board of Directors of the Corporation in a
nonvoting observer capacity, to receive notice of such meetings, and
to receive the information provided by the Corporation to the Board of
Directors. The Corporation agrees to provide the Purchaser with at
least fifteen (15) days prior written notice of any proposed meeting
of the Board of Directors of the Corporation. The reasonable
out-of-pocket costs and expenses of any such individual attending a
Board of Directors meeting of the Corporation shall be reimbursed by
the Corporation.
6.10 Compliance with laws. The Corporation at
all times will, and will cause each of its Subsidiaries to, observe
and comply in all material respects with all laws (including
environmental laws applicable to the Corporation and its
Subsidiaries), ordinances, orders, judgments, rules, regulations,
certifications,
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franchises, permits, licenses, directions, and requirements of all
governmental authorities that are now and may at any time be
applicable to the Corporation or its Subsidiaries, a violation of
which could reasonably be expected to have a material adverse effect
on the business, assets, operations, prospects, or condition
(financial or otherwise) of the Corporation and its Subsidiaries taken
as a whole, except such thereof as shall be contested in good faith
and by appropriate proceedings promptly instituted and diligently
conducted by the Corporation or its Subsidiaries, as the case may be,
so long as adequate reserves or other appropriate provisions as shall
be required in accordance with generally accepted accounting
principles shall have been made therefor.
6.11 Maintenance of Properties; Insurance. The
Corporation will maintain and will cause its Subsidiaries to maintain
in good repair, working order, and condition (normal wear and tear
excepted) all properties used or useful in the business of the
Corporation and its Subsidiaries and from time to time will make or
cause to be made all appropriate repairs, renewals, and replacements
thereof. The Corporation will maintain and will cause its
Subsidiaries to maintain in full force and effect, with financially
sound and reputable insurers acceptable to Purchaser, insurance
(subject to customary deductibles and retentions) with respect to its
properties and business and the properties and business of its
Subsidiaries against hazards, contingencies, loss, or damage of the
kinds customarily insured against by corporations of established
reputation or similar size engaged in the same or similar business and
similarly situated, of such types and in such amounts as are
customarily carried under similar circumstances by such other
corporations; provided, however, in no event shall the coverage and
amount of such insurance be less than the coverage and amount of
insurance in force on the Closing Date. Without limiting the
generality of the foregoing, the Corporation will maintain (i) public
liability insurance against claims for personal injury, death, or
property damage occurring upon, in, about or in connection with the
use of any property owned, occupied, or controlled by the Corporation
or any of its Subsidiaries in an amount per occurrence of at least
$10,000,000, (ii) workers' compensation and business interruption
insurance covering loss of rents and builders' all risk insurance, and
(iii) such other insurance for the Corporation and its Subsidiaries as
may be required by law.
6.12 Performance of Government Contracts. The
Corporation will, and will cause each of its Subsidiaries to perform
each and every term and condition of the Government Contracts relating
to the facilities owned or operated by the Corporation or such
Subsidiary and will not, and will not permit any Subsidiary to consent
to any termination, cancellation, or material amendment, modification,
or supplement to any Government Contract relating to the facilities
owned or operated by the Corporation or any of its Subsidiaries which
termination, cancellation, amendment, modification, or supplement
could reasonably be expected to have a material adverse effect on the
business, assets, operations, prospects, or condition (financial or
otherwise) of the Corporation and its Subsidiaries taken as a whole.
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6.13 Notice to Purchaser. When any Unmatured
Event of Default or Event of Default has occurred, the Corporation
agrees to give written notice thereof to Purchaser within three (3)
days of the Corporation's discovery of such event.
6.14 Waiver of Stay, Extension, or Usury Laws.
The Corporation covenants (to the extent that it may lawfully do so)
that it will not at any time insist upon, plead, or in any manner
whatsoever claim or take the benefit or advantage of any stay or
extension law or any usury law or other law which would prohibit or
forgive the Corporation from paying all or any portion of the
principal of, or interest, or premium, if any on the Notes as
contemplated herein, wherever enacted, now or at any time hereafter in
force, or which may affect the covenants or the performance of this
Agreement; and (to the extent that it may lawfully do so) the
Corporation hereby expressly waives all benefit or advantage of any
such law, and covenants that it will not hinder, delay, or impede the
execution of any power herein granted to the holders of the Notes, but
will suffer and permit the execution of every such power as though no
such law had been enacted.
6.15 Conduct of Business. The Corporation will
not, and will not permit any of its Subsidiaries to, engage in any
business other than the construction and management of prisons and
other correctional facilities for governmental agencies, the ownership
and operation of a proprietary school, and other businesses or
activities substantially similar or related thereto.
6.16 Amendments or Waivers of Certain
Documents. The Corporation will not agree to any material amendment,
modification, supplement to, or waiver of any agreement related to the
Convertible Notes. The Corporation agrees to give the Purchaser prior
written notice of any proposed material amendment, modification,
supplement to, or waiver of any agreement relating to Senior
Indebtedness.
6.17 Limitation on Issuance of Other
Subordinated Indebtedness Senior to the Notes. The Corporation will
not create, incur, assume, guarantee, or in any other manner become
liable with respect to any indebtedness that is subordinate in right
of payment to any Senior Indebtedness unless such indebtedness is also
pari passu with, or subordinate pursuant to provisions substantially
similar to those contained in the Notes, in right of payment to the
Notes.
6.18 Limitation on Subsidiary Funded Debt. The
Corporation shall not permit any of its Subsidiaries to incur, create,
assume, or guarantee any Funded Debt (which shall be deemed to include
preferred stock issued by a Subsidiary of the Corporation that is not
held by the Corporation), unless, after giving effect thereto, (a) the
total amount of Funded Debt of the Corporation's Subsidiaries does not
exceed 10% of Consolidated Total Capitalization, and (b) the
Corporation would be
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entitled to incur at least $1.00 of additional Consolidated Senior
Funded Debt under Section 6.8.
6.19 Sale of Estancia Facility; Funding of the
Escrow Account. The Corporation agrees that, within one (1) Business
Day of the date on which such sale is consummated, it will deposit the
net proceeds (after the payment of prior encumbrances and related tax
obligations and the payment of related transactional costs and
expenses) of sale of its Estancia Facility up to Five Million Dollars
($5,000,000) into the escrow account created under and pursuant to the
Escrow Agreement. In the event that the Estancia Facility is not sold
on or before August 31, 1992, then, on each of August 31, 1992,
September 30, 1992, and November 31, 1992, the Corporation shall
deposit into the escrow account created under and pursuant to the
Escrow Agreement an amount equal to one-third (1/3) of the outstanding
principal balance of the Notes as of August 31, 1992. In the event
that the Estancia Facility is sold but the net proceeds of sale
deposited into the escrow account created under and pursuant to the
Escrow Agreement are less than the outstanding principal balance of
the Notes, then, on each of August 31, 1992, September 30, 1992, and
November 31, 1992, the Corporation shall deposit equal additional
amounts into such escrow account (i.e., each equal to one-third (1/3)
of the required sum) so that, after giving effect to all of such
addditional deposits, the amount that has been deposited to the escrow
is equal to the outstanding principal balance of the Notes as of
August 31, 1992.
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7. EVENTS OF DEFAULT; REMEDIES THEREFOR.
7.1 Events of Default. Any one or more of the
following shall constitute an "Event of Default":
(i) default in the payment of any interest due
under the Notes when it becomes due and payable, and continuance of
such default for a period of five (5) days; or
(ii) default in the payment of the principal of
the Notes when due (whether at scheduled maturity, as a result of a
mandatory prepayment requirement, by acceleration, or otherwise); or
(iii) default under any bond, debenture, note,
or other evidence of indebtedness for money borrowed in excess of
$100,000 by the Corporation or any of its Subsidiaries, whether such
indebtedness now exists or shall hereafter be created, which default
(i) shall consist of a failure to pay such indebtedness at final
maturity and after the expiration of any applicable grace period, or
(ii) shall have resulted in such indebtedness (A) becoming or being
declared due and payable prior to the date on which it would otherwise
have become due and payable, without such acceleration having been
rescinded or annulled, or (B) having been discharged within a period
of ten (10) days after there shall have been given, by registered or
certified mail, to the Corporation or such Subsidiary, as applicable,
by any holder of such indebtedness a written notice specifying such
default and requiring the Corporation or such Subsidiary, as
applicable, to cause such indebtedness to be discharged; or
(iv) default shall occur in the observance or
performance of any covenant or agreement or any other provision of
this Agreement or the Notes that is not remedied within twenty (20)
days after receipt by the Corporation of written notice of such
default from Purchaser;
(v) any representation or warranty made by the
Corporation herein, or made by the Corporation in any statement or
certificate furnished by the Corporation in connection with the
consummation of the issuance and delivery of the Notes or thereafter
pursuant to the terms of this Agreement, is untrue in any material
respect as of the date of the issuance or making thereof; or
(vi) a final judgment or judgments entered by a
court of competent jurisdiction for the payment of money aggregating
in excess of $1,000,000 is or are outstanding against the Corporation
or any of its Subsidiaries and any one such judgment in excess of
$1,000,000 has, or such judgments aggregating in excess of $1,000,000
have remained unpaid, unvacated, unbonded, or unstayed by appeal or
otherwise for a period of thirty (30) days from the date of entry; or
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(vii) a court or other governmental authority or
agency having jurisdiction in the premises shall enter a decree or
order (a) for the appointment of a receiver, liquidator, assignee,
trustee, sequestrator, or other similar official of the Corporation or
any Subsidiary of the Corporation or of a material portion of the
assets of either, or for the winding-up or liquidation of its affairs,
and such decree or order shall remain in force, undischarged and
unstayed for a period of more than thirty (30) days, or (b) for the
sequestration or attachment of any material portion of the assets of
the Corporation or any Subsidiary of the Corporation, without its
unconditional return to the possession of the Corporation or such
Subsidiary, or its unconditional release from such sequestration or
attachment, within thirty (30) days thereafter; or
(viii) the Corporation or any Subsidiary of the
Corporation makes an assignment for the benefit of creditors, or the
Corporation or any Subsidiary of the Corporation applies for or
consents to the appointment of a custodian, liquidator, trustee, or
receiver for the Corporation or such Subsidiary or for a material
portion of the assets of either; or
(ix) the entry of a decree or order by a court
having jurisdiction in the premises adjudging the Corporation or any
of its Subsidiaries a bankrupt or insolvent, or approving as properly
filed a petition seeking reorganization, arrangement, adjustment, or
composition of or in respect of the Corporation under federal
bankruptcy law or any other applicable federal or state law, or
appointing a receiver, liquidator, assignee, trustee, sequestrator, or
other similar official for the Corporation or any of its Subsidiaries
or of any substantial part of its property, or ordering the winding up
or liquidation of its affairs, and the continuance of any such decree
or order unstayed and in effect for a period of sixty (60) consecutive
days or until an order for relief has been entered; or
(x) the institution by the Corporation or any
of its Subsidiaries of proceedings to be adjudicated a debtor or
insolvent, or the consent by it to the institution of bankruptcy or
insolvency proceedings against it, or the filing by it of a petition
or answer or consent seeking reorganization or relief under federal
bankruptcy law or any other applicable federal or state law or the
consent by it to the filing such petition or to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator, or similar
official for the Corporation or any of its Subsidiaries or of any
substantial part of its property, or the making by it of an assignment
for the benefit of creditors, or the admission by it in writing of its
inability to pay its debts generally as they become due, or the taking
of corporate action by the Corporation or any of its Subsidiaries in
furtherance of any such action.
7.2 Acceleration of Maturities. When any Event of Default
described in clauses (i) through (vi), inclusive, of Section 7.1 has
occurred and is continuing, Purchaser may, by notice in writing sent
to the Corporation, declare the entire
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principal and all interest accrued on the Notes to be, and the Notes
shall thereupon become, forthwith due and payable, without any
presentment, demand, protest, or other notice of any kind, all of
which are hereby expressly waived. When any Event of Default
described in clauses (vii) through (x), inclusive, of Section 7.1 has
occurred, then the Notes shall immediately become due and payable
without presentment, demand, protest, or notice of any kind. When any
Event of Default described in clause (iv) of Section 7.1 has occurred
and is continuing as a result of the Corporation's breach of its
obligation to use its best efforts to satisfy one or more of the
conditions to the issuance and sale of the Tranche B Notes or the
Tranche C Notes or as a result of the Corporation's breach of its
obligation to convert the indebtedness evidenced by the Notes into
Conversion Shares in accordance with the terms and conditions of the
Notes, Purchaser shall be entitled to specific performance of such
obligation of the Corporation; it being expressly acknowledged and
agreed by the Corporation that no adequate remedy at law exists for
any such breach and that Purchaser will be irreparably harmed by any
such breach by the Corporation. Upon the Notes becoming due and
payable as a result of any Event of Default as aforesaid, the
Corporation shall forthwith pay to Purchaser the entire principal and
interest accrued on the Notes. No course of dealing on the part of
Purchaser nor any delay or failure on the part of Purchaser to
exercise any right shall operate as a waiver of such right or
otherwise prejudice Purchaser's rights, powers, and remedies. The
Corporation further agrees, to the extent permitted by law, to pay to
Purchaser all costs and expenses (including attorneys' fees) incurred
by it in the collection of the Notes upon any default hereunder or
thereon (including such costs and expenses incurred in connection with
a workout or an insolvency or bankruptcy proceeding).
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8. AGREEMENTS OF PURCHASER. Purchaser agrees with the
Corporation as follows:
8.1 Transfer of the Notes. Purchaser will not attempt to
sell, transfer, convey, exchange, or otherwise dispose of all or any
part of the Notes, except in accordance with applicable law.
8.2 No General Solicitation. Purchaser acknowledges and
agrees that it has not received nor is it aware of any general
solicitation or general advertising of the Notes, including any
advertisement, article, notice, or other communication published in
any newspaper, magazine, or similar media or broadcast over television
or radio, and that it was not invited to attend any seminar or meeting
by means of any such general solicitation or general advertising.
8.3 No Registration. Purchaser understands and agrees
that, neither the Notes nor, except as provided in the Registration
Rights Agreement, any Conversion Shares will be registered under the
Securities Act or any state securities law, that the Notes and
Conversion Shares may be required to be held until they are
subsequently registered under the Securities Act and any applicable
state securities law, or any corresponding provisions of succeeding
laws, unless an exemption from the registration requirements of such
laws is available, and that the Corporation is under no obligation to
register the Notes or, except as provided in the Registration Rights
Agreement, any Conversion Shares, for resale.
8.4 Transfer Restrictions; Legends. Purchaser
understands and agrees that the Notes and, when issued, the Conversion
Shares have not been registered under the Securities Act or the
securities laws of any state and that they may be sold or otherwise
disposed of only in one or more transactions registered under the
Securities Act and, where applicable, such laws unless an exemption
from the registration requirements of the Securities Act and, where
applicable, such laws is available. Purchaser acknowledges that,
except as provided in the Registration Rights Agreement, the Purchaser
has no right to require the Corporation to register the Conversion
Shares. The Purchaser understands and agrees that each certificate
representing Conversion Shares shall bear the following legends:
"THE TRANSFER OF THE SECURITIES REPRESENTED BY
THIS CERTIFICATE IS RESTRICTED BY AN AGREEMENT ON
FILE AT THE OFFICES OF THE CORPORATION."
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT
BE SOLD OR OTHERWISE DISPOSED OF
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EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS OR AN APPLICABLE EXEMPTION TO THE
REGISTRATION REQUIREMENTS OF SUCH ACT OR SUCH LAWS."
Purchaser will not, directly or indirectly, sell, transfer, pledge,
encumber, or otherwise dispose of (collectively, "Transfers") any
Conversion Shares except for (i) Transfers to any Affiliate of
Purchaser, (ii) Transfers to other institutional investors that are
not competitors of the Corporation in blocks of not less than 10,000
shares (or such lesser number as may then be outstanding), (iii)
Transfers pursuant to any bona fide tender or exchange offer to
acquire Voting Stock of the Corporation or pursuant to any merger,
consolidation, or other business combination of the Corporation with
any other Person; or (iv) the redemption of the Conversion Shares.
8.5 Restrictions on Conversion. Purchaser further
understands and agrees that any conversion of the indebtedness
evidenced by the Notes into Conversion Shares must comply with all
applicable securities laws, including the Securities Act and any
applicable state securities laws, as such laws exist on the date
hereof and on such future dates that the indebtedness evidenced by the
Notes, or any portion thereof, may be converted into Conversion
Shares.
8.6 Further Cooperation. Purchaser will do all acts and
things reasonably requested of it by the Corporation in connection
with any attempt by the Corporation to achieve compliance with federal
and state securities laws in connection with the offering and sale of
the Notes or the conversion of all or any portion of the indebtedness
evidenced by the Notes into Conversion Shares.
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9. NONDISCLOSURE OF CONFIDENTIAL INFORMATION.
9.1 Without the prior written consent of the
Corporation, any information relating to the Corporation provided to
Purchaser in connection with its acquisition of the Notes or the
Conversion Shares that is either confidential, proprietary, or
otherwise not generally available to the public (but excluding
information Purchaser has obtained independently from third-party
sources without Purchaser's knowledge that the source has violated any
fiduciary or other duty not to disclose such information (the
"Confidential Information") will be kept confidential by Purchaser and
their directors, officers, employees, agents, auditors, participants,
transferees, assignees, and representatives (collectively,
"Representatives"), using the same standard of care in safeguarding
the Confidential Information as Purchaser employs in protecting its
own proprietary information that Purchaser desires not to disseminate
or publish. It is understood (a) that such Representatives shall be
informed by Purchaser of the confidential nature of the Confidential
Information, (b) that such Representatives shall be bound by the
provisions of this Section 9.1 as a condition of receiving the
Confidential Information, and (c) that, in any event, Purchaser shall
be responsible for any breach of Sections 9.1, 9.2, 9.3, or 9.4 of
this Agreement by any of its Representatives (other than Purchaser's
participants, transferees, or assignees).
9.2 Without the prior consent of the
Corporation, other than as required by applicable law, Purchaser will
not, and will direct its Representatives not to disclose to any Person
(other than its Representatives) either the fact that the Confidential
Information has been made available to Purchaser or that Purchaser has
inspected any portion of the Confidential Information.
9.3 If Purchaser or its Representatives are
requested or required (by oral question, interrogatories, requests for
information or documents, subpoena, civil investigative demand, or
similar process) to disclose any Confidential Information, Purchaser
will, as soon as practicable, notify the Corporation of such request
or requirement so that the Corporation may seek an appropriate
protective order. If, in the absence of a protective order or the
receipt of a waiver hereunder, Purchaser or its Representatives is, in
the opinion of Purchaser's counsel, compelled to disclose the
Confidential Information or else stand liable for contempt or suffer
other censure or significant penalty, Purchaser, or its
Representative, as the case may be, may disclose only such of the
Confidential Information to the party compelling disclosure as is
required by law. Purchaser shall not be liable for the disclosure of
Confidential Information pursuant to the preceding sentence.
Purchaser will exercise all reasonable efforts to assist the
Corporation in obtaining a protective order or other reliable
assurance that confidential treatment will be accorded the
Confidential Information.
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10. MISCELLANEOUS.
10.1 Indemnification. Each party (an "indemnifying
party") hereto agrees to indemnify and hold harmless the other parties
(an "indemnified party") against and in respect of any and all claims,
demands, losses, costs, expenses, obligations, liabilities, damages,
recoveries, and deficiencies, including reasonable attorneys' fees,
that such indemnified party and each of its officers and directors
shall incur or suffer, that arise, result from, or relate to any
breach of, or failure by such indemnifying party to perform, any of
its representations, warranties, covenants, or agreements set forth in
this Agreement, the Notes, or the Registration Rights Agreement.
10.2 Survival of Covenants, Representations, and
Warranties. All covenants, representations, and warranties made by
the Corporation herein and in any certificates delivered pursuant
hereto, irrespective of whether in connection with the transactions
occurring on the Closing Date, the Tranche B Closing Date, or the
Tranche C Closing Date, and shall survive the closing and the delivery
of this Agreement, the Notes, the Escrow Agreement, and the
Registration Rights Agreement, regardless of any investigation made by
Purchaser or on its behalf.
10.3 Successors and Assigns. This Agreement shall be
binding upon the Corporation and its successors and assigns and shall
inure to the Purchaser's benefit and to the benefit of its successors
and assigns, including each successive holder or holders of the Notes
or any interest therein.
10.4 Notices. Unless otherwise provided in this
Agreement, all notices or demands by any party relating to this
Agreement or any other agreement entered into in connection herewith
shall be in writing and (except for financial statements and other
informational documents which may be sent by first-class mail, postage
prepaid) shall be personally delivered or sent by registered or
certified mail, postage prepaid, return receipt requested, or by
prepaid telex, telefacsimile, or telegram (with messenger delivery
specified) to the Corporation or to Purchaser, as the case may be, at
the addresses set forth below:
If to PM, to: PACIFIC MUTUAL LIFE INSURANCE COMPANY
000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
Attention: Mezzanine Investments
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With a copy to: XXXXXXX, XXXXXXX & XXXXXXXX
000 Xxxxx Xxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
Attention: Xxxx Xxxxxxx Hilson, Esq.
If to PMGLIC, to: PM GROUP LIFE INSURANCE COMPANY
000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
Attention: Mezzanine Investments
With a copy to: XXXXXXX, XXXXXXX & XXXXXXXX
000 Xxxxx Xxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
Attention: Xxxx Xxxxxxx Hilson, Esq.
If to the Corporation, to: CORRECTIONS CORPORATION OF AMERICA
The CCA Building
000 Xxxxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Doctor X. Xxxxxx, Xx.
With a copy to: XXXXXX & XXXXXXXXXXX, P.A.
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxxxxx Xxxxx Xxxxx, Esq.
The parties hereto may change the address at which they are to
receive notices hereunder, by notice in writing in the foregoing
manner given to the other. The failure of the Corporation or
Purchaser to send a copy of notice to the individuals who are shown
above as being required to receive copies shall not invalidate or
otherwise affect the validity of a notice that is otherwise
effectively given. All notices or demands sent in accordance with
this Section 10.4 shall be deemed received on the earlier of the date
of actual receipt or three (3) days after the deposit thereof in the
mail or the transmission thereof by telefacsimile or other similar
method as set forth above.
10.5 Expenses. In addition to the payments provided for
in Section 2.3(xi), Section 2.6(ix), and Section 2.8(ix), the
Corporation agrees to pay Purchaser for all fees and all out-of-pocket
expenses incurred by Purchaser arising in connection with this
Agreement, the Notes, the Registration Rights Agreement, the Escrow
Agreement, and the transactions hereby and thereby contemplated,
including the conversion of the indebtedness evidenced by the Notes
into Conversion Shares, all stamp and other taxes payable with respect
to the issuance of the Conversion Shares,
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filing fees, reasonable fees and expenses of counsel, and all such
expenses incurred with respect to the preparation, execution,
delivery, or enforcement of any provision of such agreement or
instrument, or any amendment or waivers requested by the Corporation
(irrespective of whether the same become effective) under or in
respect of any such agreement, including costs and expenses in any
bankruptcy proceeding.
10.6 Descriptive Headings. The descriptive headings of
the various Sections or parts of this Agreement are for convenience
only and shall not affect the meaning or construction of any of the
provisions hereof.
10.7 Satisfaction Requirement. If any agreement,
certificate, or other writing, or any action taken or to be taken, is
by the terms of this Agreement required to be satisfactory to
Purchaser, the determination of such satisfaction shall be made by
Purchaser in its sole and exclusive judgment exercised in good faith.
10.8 Remedies. In case any one or more of the covenants
or agreements set forth in this Agreement, the Notes, the Escrow
Agreement, or the Registration Rights Agreement shall have been
breached by the Corporation or Purchaser, the Corporation or
Purchaser, as applicable, may proceed to protect and enforce its
rights either by suit in equity or by action at law, including an
action for damages as a result of any such breach or an action for
specific performance of any such covenant or agreement contained in
this Agreement, the Notes, the Escrow Agreement, or the Registration
Rights Agreement.
10.9 Entire Agreement. This Agreement, the Notes, the
Escrow Agreement, the Registration Rights Agreement, and the other
writings referred to herein or delivered pursuant hereto contain the
entire agreement among the parties with respect to the subject matter
hereof and supersede all prior and contemporaneous arrangements or
understandings with respect thereto.
10.10 Amendments. This Agreement may be amended, and the
observance of any term of this Agreement may be waived, with (and only
with) the written consent of the Corporation and Purchaser.
10.11 Severability. Should any part of this Agreement, for
any reason, be determined to be invalid or unenforceable, such
determination shall not affect the validity or enforceability of any
remaining portion, which remaining portion shall remain in full force
and effect as if this Agreement had been executed with the invalid or
unenforceable part hereof eliminated, and it is hereby declared the
intention of the parties hereto that they would have executed the
remaining portion of this Agreement without including therein any such
part which may, for any reason, be hereafter declared invalid or
unenforceable.
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10.12 Execution in Counterparts; Telecopy Execution. This
Agreement may be executed in any number of counterparts and by
different parties on separate counterparts, each of which
counterparts, when so executed and delivered, shall be deemed to be an
original and all of which counterparts, taken together, shall
constitute but one and the same Agreement. This Agreement shall
become effective upon the execution of a counterpart hereof by each of
the parties hereto. Delivery of an executed counterpart of the
signature page(s) of this Agreement by telecopier shall be equally
effective as delivery of a manually executed counterpart. Any party
delivering an executed counterpart of the signature page(s) of this
Agreement by telecopier shall thereafter also promptly deliver a
manually executed counterpart, but the failure to deliver such
manually executed counterpart shall not affect the validity,
enforceability, and binding effect of this Agreement.
10.13 Governing Law. This Agreement, the Notes issued and
sold hereunder, and the Escrow Agreement and the Registration Rights
Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of California.
10.14 Consent to Jurisdiction. The Corporation irrevocably
submits to the non-exclusive jurisdiction of any California state or
federal court sitting in the City of Los Angeles, California over any
suit, action, or proceeding arising out of or relating to this
Agreement, the Notes, the Escrow Agreement, or the Registration Rights
Agreement. To the fullest extent it may effectively do so under
applicable law, the Corporation irrevocably waives and agrees not to
assert, by way of motion, as a defense, or otherwise, any claim that
it is not subject to the jurisdiction of any such court, any objection
that it may now or hereafter have to the laying of the venue of any
such suit, action, or proceeding brought in any such court, and any
claim that any such suit, action, or proceeding brought in any such
court has been brought in an inconvenient forum.
10.15 Enforcement of Judgments; Service of Process; Jury
Trial Waiver. The Corporation agrees, to the fullest extent it may
effectively do so under applicable law, that a judgment in any suit,
action, or proceeding of the nature referred to in Section 10.14
brought in any such court shall be conclusive and binding upon the
Corporation and may be enforced in the courts of the United States of
America or the State of California (or any other court to the
jurisdiction of which the Corporation is or may be subject) by a suit
upon such judgment.
THE CORPORATION AGREES THAT SERVICE OF PROCESS SUFFICIENT FOR
PERSONAL JURISDICTION IN ANY ACTION, SUIT, OR PROCEEDING OF THE NATURE
REFERRED TO IN SECTION 10.14 MAY BE MADE BY REGISTERED OR CERTIFIED
MAIL TO THE CORPORATION'S ADDRESS SET FORTH IN SECTION 10.4.
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EACH PARTY HERETO HEREBY EXPRESSLY WAIVES ITS RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT, THE NOTES, THE ESCROW AGREEMENT, THE
REGISTRATION RIGHTS AGREEMENT, OR ANY OTHER RELATED DOCUMENT TO BE
DELIVERED PURSUANT HERETO, OR ANY DEALINGS BETWEEN THEM RELATING TO
THE SUBJECT MATTER OF THIS TRANSACTION AND THE CONTRACTUAL
RELATIONSHIP THAT IS BEING ESTABLISHED. THE SCOPE OF THIS WAIVER IS
INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE
FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS
TRANSACTION, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY
CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH PARTY
HERETO ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER
INTO A BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THIS
WAIVER IN ENTERING INTO THIS AGREEMENT, AND THAT EACH WILL CONTINUE TO
RELY ON THIS WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH PARTY
HERETO FURTHER WARRANTS AND REPRESENTS THAT EACH HAS REVIEWED THIS
WAIVER WITH ITS LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY
WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE
MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO
ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS, OR MODIFICATIONS TO
THIS AGREEMENT, THE NOTES, THE ESCROW AGREEMENT, THE REGISTRATION
RIGHTS AGREEMENT, OR THE RELATED DOCUMENTS TO BE DELIVERED PURSUANT
HERETO. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A
WRITTEN CONSENT TO A TRIAL BY THE COURT.
10.15 No Limitation on Service or Suit. Nothing herein
shall affect the right of Purchaser to serve process in any manner
permitted by law, or limit any right that Purchaser may have to bring
proceedings against the Corporation in the courts of any jurisdiction
or to enforce in any lawful manner a judgment obtained in one
jurisdiction in any other jurisdiction.
10.16 Direct Payment. Notwithstanding anything to the
contrary contained in this Agreement or the Notes, the Corporation
will punctually pay when due the principal of: (a) the Tranche A
Notes, and any interest thereon, without any presentment thereof,
directly to the Purchaser or to the nominee of the Purchaser at the
address set forth in Schedule 1 or such other address as the Purchaser
or the Purchaser's nominee may from time to time designate in writing
to the Corporation,
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or, if a bank account with a United States bank is designated for the
Purchaser or the Purchaser's nominee on Schedule 1 hereto or in any
written notice to the Corporation from the Purchaser or the
Purchaser's nominee, the Corporation will make such payments in
immediately available funds to such bank account, marked for attention
as indicated; (b) the Tranche B Notes, and any interest thereon,
without any presentment thereof, directly to the Purchaser or to the
nominee of the Purchaser at the address set forth in Schedule 2 or
such other address as the Purchaser or the Purchaser's nominee may
from time to time designate in writing to the Corporation, or, if a
bank account with a United States bank is designated for the Purchaser
or the Purchaser's nominee on Schedule 2 hereto or in any written
notice to the Corporation from the Purchaser or the Purchaser's
nominee, the Corporation will make such payments in immediately
available funds to such bank account, marked for attention as
indicated; and (c) the Tranche C Notes, and any interest thereon,
without any presentment thereof, directly to the Purchaser or to the
nominee of the Purchaser at the address set forth in Schedule 3 or
such other address as the Purchaser or the Purchaser's nominee may
from time to time designate in writing to the Corporation, or, if a
bank account with a United States bank is designated for the Purchaser
or the Purchaser's nominee on Schedule 3 hereto or in any written
notice to the Corporation from the Purchaser or the Purchaser's
nominee, the Corporation will make such payments in immediately
available funds to such bank account, marked for attention as
indicated. The Purchaser agrees that in the event that it shall sell
or transfer any Notes, it will, prior to the delivery of such Notes,
make a notation thereon of all principal, if any, prepaid on such
Notes and will also note thereon the date to which interest has been
paid on such Notes. The Corporation agrees that transferees of Notes
shall be entitled to the benefits of this Section 10.16 so long as any
such transferee has made the same agreements relating to the
transferred Notes as the Purchaser have made in this Section 10.16.
The Corporation shall be entitled to presume conclusively that the
Purchaser or any subsequent noteholders remain the holders of the
Notes until such Notes shall have been presented to the Corporation
as evidence of the transfer of such Notes.
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The execution hereof by the Corporation, PM, and PMGLIC shall
constitute a contract among them for the uses and purposes hereinabove set
forth.
CORRECTIONS CORPORATION OF
AMERICA
By:
--------------------------------
Title:
-----------------------------
PACIFIC MUTUAL LIFE INSURANCE
COMPANY
By:
--------------------------------
Title:
-----------------------------
PM GROUP LIFE INSURANCE
COMPANY
By:
--------------------------------
Title:
-----------------------------
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AMENDMENT NO. 1
TO
NOTE PURCHASE AGREEMENT
THIS AMENDMENT NO. 1 TO NOTE PURCHASE AGREEMENT (this
"Amendment"), dated as of August 25, 1992, is entered into by and among Pacific
Mutual Life Insurance Company ("PM"), PM Group Life Insurance Company
("PMGLIC") (PM and PMGLIC shall be referred to herein as the "Purchaser"), and
Corrections Corporation of America (the "Corporation").
R E C I T A L S
WHEREAS, the Corporation and the Purchaser are parties to that
certain Note Purchase Agreement dated as of June 22, 1992 (the "Agreement");
WHEREAS, the Corporation has requested that the Purchaser
agree to make certain amendments to the Agreement; and
WHEREAS, the Corporation is willing to amend the Agreement as
set forth herein.
A G R E E M E N T
NOW, THEREFORE, in consideration of the foregoing and subject
to the terms and conditions herein contained, the parties hereto agree as
follows:
SECTION 1. Definitions. Initially capitalized terms used in
this Amendment shall have the meanings ascribed thereto in the Agreement, as
amended hereby, unless otherwise defined herein.
SECTION 2. Amendments to the Agreement.
2.1 Amendment of Section 2.5 of the Agreement. Section
2.5 of the Agreement is hereby amended by deleting clause (i) thereof in its
entirety and inserting in its place the following new clause (i):
(i) Escrow Agreement. Within sixty-five (65)
days after the Closing Date, the Corporation, the Purchaser,
and NationsBank (or another third party acceptable to
Purchaser in its sole and absolute discretion) shall have
entered into an escrow agreement (the "Escrow Agreement"),
together with appropriate financing statements signed by the
Corporation, in each case in form and substance satisfactory
to Purchaser.
49
2.2 Amendment of Section 2.6 of the Agreement. Section
2.6 of the Agreement is hereby amended by deleting clause (xiii) thereof in its
entirety and inserting in its place the following new clause (xiii):
(xiii) Tranche B Closing Date. The Tranche B
Closing Date shall occur on or after November 1, 1992, and on
or before December 15, 1992.
2.3 Amendment of Section 2.8 of the Agreement. Section
2.8 of the Agreement is hereby amended by deleting clause (i) thereof in its
entirety and inserting in its place the following new clause (i):
(i) Tranche C Closing Date. The Tranche C Closing
Date shall occur on or after November 1, 1992, and on or
before December 15, 1992.
2.4 Amendment of Section 3.1 of the Agreement. Section
3.1 of the Agreement is hereby amended by deleting the definition of "Coupon
Rate" in its entirety and inserting in its place the following new definition:
"Coupon Rate" means (i) with respect to the Tranche A
Notes, eight and one-half percent (8.5%) per annum; and (ii)
with respect to the Tranche B Notes and the Tranche C Notes,
the greater of: (a) eight and one-half percent (8.5%) per
annum, or (b) two and nine-tenths (2.90) percentage points
above the Treasury Rate as of the Tranche B Closing Date or
the Tranche C Closing Date, as applicable, for notes having a
maturity of three (3) years from the date of issuance thereof.
2.5 Amendment of Section 6.19 of the Agreement. Section
6.19 of the Agreement is hereby amended and restated to read in its entirety as
follows:
6.19 Sale of Estancia Facility; Funding of the
Escrow Account.
(a) Within one (1) Business Day after
the date on which the sale of the Estancia Facility is
consummated, the Corporation shall deposit the net proceeds of
such sale (after the payment of prior encumbrances, related
tax obligations, related transactional costs and expenses, and
the Corporation's existing obligations to The Canada Life
Assurance Company in an amount not to exceed Seven Million
Dollars ($7,000,000), plus accrued interest) in an amount of
up to the outstanding principal balance of the Notes at the
time the sale is consummated into the escrow account created
under and pursuant to the Escrow Agreement.
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(b) In the event that the sale of the
Estancia Facility is not consummated on or before August 31,
1992, then, on each of August 31, 1992, September 30, 1992,
and October 31, 1992, the Corporation shall deposit into the
escrow account created under and pursuant to the Escrow
Agreement an amount equal to one-third (1/3) of the
outstanding principal balance of the Notes as of August 31,
1992.
(c) In the event that the sale of the
Estancia Facility is consummated on or before August 31, 1992,
but the net proceeds of the sale deposited into the escrow
account created under and pursuant to the Escrow Agreement are
less than the outstanding principal balance of the Notes,
then, on each of August 31, 1992, September 30, 1992, and
October 31, 1992, the Corporation shall deposit equal
additional amounts into such escrow account (i.e., each equal
to one-third (1/3) of the required sum) so that, after giving
effect to all of such additional deposits, the amount that has
been deposited into such escrow account is equal to the
outstanding principal balance of the Notes as of August 31,
1992.
(d) The Corporation shall grant to
Purchaser a security interest in all of the Corporation's
right, title and interest in and to the Escrow Agreement and
in the funds on deposit under the Escrow Agreement and the
proceeds thereof in order to secure prompt repayment of all of
the obligations owed by the Corporation to Purchaser under the
Notes and this Agreement. The Corporation and Purchaser shall
file any all UCC-1 financing statements and take such other
actions as may be necessary to perfect Purchaser's security
interest described above under Tennessee law. In connection
therewith, the Corporation shall pay any and all recording
taxes that may be payable under Tennessee law in order to file
such UCC-1 financing statements. In recognition of the fact
that at the time the Escrow Agreement is executed only the
Tranche A Notes will have been purchased, the Corporation,
contemporaneously with the execution of the Escrow Agreement
and the filing of the UCC-1 financing statements, shall pay
recording tax based on an obligation secured of Two Million
Five Hundred Thousand Dollars ($2,500,000). Upon the purchase
of the Tranche B Notes or the Tranche C Notes, the Corporation
and Purchaser shall file amendments to the UCC-1 financing
statements and take such other actions reflecting the
increased amount of the obligation secured and the Corporation
shall thereupon pay an additional recording tax in accordance
with the requirements of Tennessee law. The Corporation
hereby grants to Purchaser its power of attorney to execute
any and all such
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amendments to UCC-1 financing statements, on the Corporation's
behalf and in the Corporation's name. The Corporation agrees
that Purchaser may pay any and all such additional recording
taxes and may add the amount of any such payments to the
obligations owed by the Corporation to Purchaser under the
Notes and this Agreement.
2.6 Amendment of Section 6 of the Agreement. Section 6
of the Agreement is hereby amended by adding and inserting the following new
Section 6.20:
6.20 Issuance of Warrants with respect to Tranche
B Notes and Tranche C Notes. Upon the purchase of the Tranche
B Notes and the Tranche C Notes, the Corporation shall issue
warrants (in form and substance satisfactory to Purchaser) to
Purchaser, to compensate Purchaser for any dilution in the
value of its investment in the Corporation that Purchaser may
suffer due to the Corporation's proposed issuance of warrants
to its shareholders on or about September 15, 1992. The value
of the warrants to be issued to Purchaser in connection with
the purchase of the Tranche B Notes and the Tranche C Notes
shall be based on an assumption that the purchase of the
Tranche B Notes and the Tranche C Notes occurred one day prior
to the proposed issuance of warrants to the Corporation's
shareholders.
SECTION 3. Amendment of Exhibit B to the Agreement. Exhibit
B to the Agreement (form of Tranche B Notes) is hereby amended by deleting the
definition of Coupon Rate from Section 2 thereof in its entirety and inserting
in its place the following new definition:
"Coupon Rate" means _______________ percent (__%) per
annum.
SECTION 4. Effectiveness of this Amendment.
This Amendment shall become effective only upon the
satisfaction of the following conditions:
(a) The Corporation shall have delivered to the
Purchaser an executed copy of this Amendment;
(b) The Escrow Agreement shall have been duly
executed by the parties thereto and shall be in full force and effect, and two
fully executed original copies thereof shall have been delivered to the
Purchaser;
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(c) The Corporation shall have executed and
caused the recording of UCC-1 financing statement(s), in form and substance
satisfactory to the Purchaser, for the purpose of perfecting the Purchaser's
security interest in the Corporation's right, title, and interest in the Escrow
Agreement and the funds held in escrow pursuant thereto, and the Corporation
shall have paid recording taxes payable in connection with the recording
thereof based on an obligation secured of Two Million Five Hundred Thousand
Dollars ($2,500,000); and
(d) The Purchaser shall have received full
payment of all of its out-of-pocket expenses arising in connection with the
negotiation, preparation, execution, and delivery of this Amendment and the
Escrow Agreement, including the fees and expenses of the Purchaser's legal
counsel.
SECTION 5. Representations and Warranties of the Corporation.
In order to induce the Purchaser to enter into this Amendment,
the Corporation hereby makes the following representations and warranties to
the Purchaser:
5.1 Corporate Power and Authorization. The Corporation
has the requisite corporate power and authority to execute, deliver and perform
its obligations under this Amendment and the Escrow Agreement.
5.2 No Conflict. Neither the execution and delivery by
the Corporation of this Amendment and the Escrow Agreement nor the consummation
of the transactions contemplated or required hereby or thereby nor compliance
by the Corporation with the terms, conditions and provisions hereof or thereof
will conflict with or result in a breach of any of the terms, conditions or
provisions of the Certificate of Incorporation or Bylaws of the Corporation or
any law, regulation, order, writ, injunction or decree of any court or
governmental instrumentality or any agreement or instrument to which the
Corporation is a party or by which any of its properties is bound, or
constitute a default thereunder or result in the creation or imposition of any
lien.
5.3 Authorization; Governmental Approvals. The execution
and delivery by the Corporation of this Amendment and the Escrow Agreement and
the consummation of the transactions contemplated hereby and thereby (i) have
been duly authorized by all necessary corporate action on the part of the
Corporation and (ii) do not and will not require any authorization, consent,
approval or license from or any registration, qualification, designation,
declaration or filing with, any court or governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign.
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5.4 Valid and Binding Effect. This Amendment and the
Escrow Agreement have been duly and validly executed and delivered by the
Corporation and constitute the legal, valid and binding obligation of the
Corporation, enforceable in accordance with their respective terms.
5.5 Absence of Default. No event has occurred and is
continuing or will result from the consummation of the transactions
contemplated by this Amendment or the Escrow Agreement that would constitute an
Event of Default under the Agreement.
SECTION 6. Miscellaneous.
6.1 Ratification of the Agreement. Except as
specifically amended by this Amendment, the terms, conditions and provisions of
the Agreement shall not be affected by this Amendment and shall remain in full
force and effect and are hereby ratified and confirmed.
6.2 No Implied Waiver. The execution, delivery and
performance of this Amendment shall not, except as expressly provided herein,
constitute a waiver or modification of any provision of, or operate as a waiver
of any right, power or remedy of the Purchaser under, the Agreement or
prejudice any right or remedy that the Purchaser may have or may have in the
future under or in connection with the Agreement or any instrument or agreement
referred to therein. The Corporation acknowledges and agrees that the
representations and warranties of the Corporation contained in the Agreement
and in this Amendment shall survive the execution and delivery of this
Amendment and the effectiveness hereof.
6.3 Governing Law. This Amendment shall be governed by,
and construed and enforced in accordance with, the laws of the State of
California.
6.4 Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed to be an original, but all
of which together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the undersigned have caused this Amendment
to be executed by their duly authorized officers as of the date first written
above.
CORRECTIONS CORPORATION OF AMERICA PACIFIC MUTUAL LIFE
INSURANCE COMPANY
By: By:
--------------------------- -------------------------
Its: Its:
-------------------------- ------------------------
PM GROUP LIFE INSURANCE COMPANY
By:
--------------------------
Its:
-------------------------
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AMENDMENT NO. 2
TO
NOTE PURCHASE AGREEMENT
THIS AMENDMENT NO. 2 TO NOTE PURCHASE AGREEMENT (this
"Amendment"), dated as of October 29, 1992, is entered into by and among
Pacific Mutual Life Insurance Company ("PM"), PM Group Life Insurance Company
("PMGLIC") (PM and PMGLIC shall be referred to herein collectively as the
"Purchaser"), and Corrections Corporation of America (the "Corporation").
R E C I T A L S
WHEREAS, the Corporation and the Purchaser are parties to that
certain Note Purchase Agreement, dated as of June 22, 1992, that was amended by
that certain Amendment No. 1 to Note Purchase Agreement, dated as of August 25,
1992 (as so amended, the "Agreement");
WHEREAS, the Corporation has requested that the Purchaser
agree to make certain amendments to the Agreement; and
WHEREAS, the Purchaser is willing to amend the Agreement as
set forth herein.
A G R E E M E N T
NOW, THEREFORE, in consideration of the foregoing and subject
to the terms and conditions herein contained, the parties hereto agree as
follows:
SECTION 1. Definitions. Initially capitalized terms used in
this Amendment shall have the meanings ascribed thereto in the Agreement, as
amended hereby, unless otherwise defined herein.
SECTION 2. Amendments to the Agreement.
2.1 Amendment of Section 2.1 of the Agreement. Section
2.1 of the Agreement is hereby amended by deleting such Section in its
entirety and inserting in its place the following new Section 2.1:
2.1 Sale and Purchase of the Notes. Subject to
the terms and conditions of this Agreement, PM, either
directly or through one or more Affiliates, agrees to
purchase, and the Corporation agrees to sell and issue to PM,
or such Affiliates: (i) on the Closing Date, a Tranche A Note
for a purchase price of Two Million One Hundred Seventy-
56
Five Thousand Dollars ($2,175,000); (ii) on the Tranche B
Closing Date, a Tranche B Note for a purchase price of One
Million Three Hundred Five Thousand Dollars (1,305,000); and
(iii) at PM's sole option, on the Tranche C Closing Date, a
Tranche C Note for a purchase price of Three Million Twenty
Thousand Dollars ($3,020,000), for a total purchase price of
Six Million Five Hundred Thousand Dollars ($6,500,000).
Subject to the terms and conditions of this Agreement, PMGLIC,
either directly or through one or more Affiliates, agrees to
purchase, and the Corporation agrees to sell and issue to
PMGLIC, or such Affiliates: (i) on the Closing Date, a Tranche
A Note for a purchase price of Three Hundred Twenty-Five
Thousand Dollars ($325,000); (ii) on the Tranche B Closing
Date, a Tranche B Note for a purchase price of One Hundred
Ninety Five Thousand Dollars ($195,000); and (iii) at PMGLIC's
sole option, on the Tranche C Closing Date, a Tranche C Note
for a purchase price of Four Hundred Eighty Thousand Dollars
($480,000), for a total purchase price of One Million Dollars
($1,000,000).
2.2 Amendment of Section 2.6 of the Agreement. Section
2.6 of the Agreement is hereby amended by deleting clauses (vi), (xii), and
(xiii) thereof in their entirety and inserting in their place the following new
clauses (vi), (xii), and (xiii), and also adding the following new clause
(xiv):
(vi) Tranche B Closing Fee. The Corporation shall
pay to Purchaser a closing fee of $45,000 by wire transfer of
immediately available funds;
(xii) Casa Grande Approvals. The Corporation shall
have furnished Purchaser with evidence, satisfactory to
Purchaser, that all necessary regulatory approvals have been
obtained to permit the Corporation to build a 302 bed U.S.
Marshal Services staging area in Casa Grande, Arizona;
(xiii) Tranche B Closing Date. The Tranche B
Closing Date shall occur on or before December 15, 1992; and
(xiv) Bank Financing Commitment. The Corporation
shall have furnished Purchaser with evidence, satisfactory to
Purchaser, of a commitment by First Union Bank to provide at
least $5,000,000 of financial accommodations to the
Corporation.
2.3 Amendment of Section 2.8 of the Agreement. Section
2.8 of the Agreement is hereby amended by deleting clause (i) thereof in its
entirety and inserting in its place the following new clause (i):
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57
(i) Tranche C Closing Date. The Tranche C
Closing Date shall occur on or before June 30, 1993.
2.4 Amendment of Section 3.1 of the Agreement. Section
3.1 of the Agreement is hereby amended by deleting the definitions of "Tranche
B Note" and "Tranche C Note" in their entirety and inserting in their place the
following new definitions:
"Tranche B Note" means any one or more of the Notes
issued on the Tranche B Closing Date or any substitute or
replacement therefor; the aggregate amount of the Tranche B
Notes shall be One Million Five Hundred Thousand Dollars
($1,500,000).
"Tranche C Note" means any one or more of the Notes
issued on the Tranche C Closing Date or any substitute or
replacement therefor; the aggregate amount of the Tranche C
Notes shall be Three Million Five Hundred Thousand Dollars
($3,500,000).
2.5 Amendment of Section 6.19 of the Agreement. Section
6.19 of the Agreement is hereby amended by deleting such Section in its
entirety and inserting in its place the following new Section 6.19:
6.19 Sale of Estancia Facility; Funding of the
Escrow Account.
[Intentionally Omitted]
SECTION 3. Termination of the Escrow Agreement. Concurrently
with the effectiveness of this Amendment, the parties to the Escrow Agreement
shall terminate the Escrow Agreement and all funds then held in escrow pursuant
to the Escrow Agreement shall be delivered to the Corporation
SECTION 4. Effectiveness of this Amendment.
This Amendment shall become effective only upon the
satisfaction of the following conditions:
(a) The Corporation shall have delivered to the
Purchaser an executed copy of this Amendment; and
(b) The Purchaser shall have received full
payment of all of its out-of-pocket expenses arising in connection with the
negotiation, preparation, execution, and delivery of the Agreement, the Tranche
A Notes, Amendment No. 1 to the Agreement, and the Escrow Agreement, and all
related transactions,
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58
including the fees and expenses of the Purchaser's legal counsel that have not
previously been paid.
SECTION 5. Representations and Warranties of the Corporation.
In order to induce the Purchaser to enter into this Amendment,
the Corporation hereby makes the following representations and warranties to
the Purchaser:
5.1 Corporate Power and Authorization. The Corporation
has the requisite corporate power and authority to execute, deliver and perform
its obligations under this Amendment.
5.2 No Conflict. Neither the execution and delivery by
the Corporation of this Amendment nor the consummation of the transactions
contemplated or required hereby nor compliance by the Corporation with the
terms, conditions and provisions hereof will conflict with or result in a
breach of any of the terms, conditions or provisions of the Certificate of
Incorporation or Bylaws of the Corporation or any law, regulation, order, writ,
injunction or decree of any court or governmental instrumentality or any
agreement or instrument to which the Corporation is a party or by which any of
its properties is bound, or constitute a default thereunder or result in the
creation or imposition of any lien.
5.3 Authorization; Governmental Approvals. The execution
and delivery by the Corporation of this Amendment and the consummation of the
transactions contemplated hereby (i) have been duly authorized by all necessary
corporate action on the part of the Corporation and (ii) do not and will not
require any authorization, consent, approval or license from or any
registration, qualification, designation, declaration or filing with, any court
or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign.
5.4 Valid and Binding Effect. This Amendment has been
duly and validly executed and delivered by the Corporation and constitutes the
legal, valid and binding obligation of the Corporation, enforceable in
accordance with its terms.
5.5 Absence of Default. No event has occurred and is
continuing or will result from the consummation of the transactions
contemplated by this Amendment that would constitute an Event of Default under
the Agreement.
SECTION 6. Miscellaneous.
6.1 Ratification of the Agreement. Except as
specifically amended by this Amendment, the terms, conditions and provisions of
the Agreement shall not
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59
be affected by this Amendment and shall remain in full force and effect and are
hereby ratified and confirmed.
6.2 No Implied Waiver. The execution, delivery and
performance of this Amendment shall not, except as expressly provided herein,
constitute a waiver or modification of any provision of, or operate as a waiver
of any right, power or remedy of the Purchaser under, the Agreement or
prejudice any right or remedy that the Purchaser may have or may have in the
future under or in connection with the Agreement or any instrument or agreement
referred to therein. The Corporation acknowledges and agrees that the
representations and warranties of the Corporation contained in the Agreement
and in this Amendment shall survive the execution and delivery of this
Amendment and the effectiveness hereof.
6.3 Governing Law. This Amendment shall be governed by,
and construed and enforced in accordance with, the laws of the State of
California.
6.4 Counterparts; Telecopy Execution. This Agreement may
be executed in two or more counterparts, each of which shall be deemed to be an
original, but all of which together shall constitute one and the same
instrument. Delivery of an executed counterpart of this Amendment by
telefacsimile shall be equally as effective as delivery of a manually executed
counterpart. Any party delivering an executed counterpart of this Amendment by
telefacsimile shall also deliver a manually executed counterpart, but the
failure to deliver a manually executed counterpart shall not affect the
validity, enforceability, and binding effect of this Amendment.
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60
IN WITNESS WHEREOF, the undersigned have caused this Amendment
to be executed by their duly authorized officers as of the date first written
above.
CORRECTIONS CORPORATION PACIFIC MUTUAL LIFE
OF AMERICA INSURANCE COMPANY
By: By:
--------------------------- ----------------------------
Its: Its:
------------------------- --------------------------
PM GROUP LIFE INSURANCE COMPANY
By:
--------------------------
Its:
-------------------------
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AMENDMENT NO. 3
TO
NOTE PURCHASE AGREEMENT
THIS AMENDMENT NO. 3 TO NOTE PURCHASE AGREEMENT (this
"Amendment"), dated as of April 29, 1993, is entered into by and among Pacific
Mutual Life Insurance Company ("PM"), PM Group Life Insurance Company
("PMGLIC") (PM and PMGLIC shall be referred to herein collectively as the
"Purchaser"), and Corrections Corporation of America (the "Corporation").
R E C I T A L S
WHEREAS, the Corporation and the Purchaser are parties to that
certain Note Purchase Agreement, dated as of June 22, 1992, that was amended by
that certain Amendment No. 1 to Note Purchase Agreement, dated as of August 25,
1992 and by that certain Amendment No. 2 to Note Purchase Agreement, dated as
of October 29, 1992 (as so amended, the "Agreement");
WHEREAS, the Corporation has requested that the Purchaser
agree to make certain amendments to the Agreement; and
WHEREAS, the Purchaser is willing to amend the Agreement as
set forth herein.
A G R E E M E N T
NOW, THEREFORE, in consideration of the foregoing and subject
to the terms and conditions herein contained, the parties hereto agree as
follows:
SECTION 1. Definitions. Initially capitalized terms used in
this Amendment shall have the meanings ascribed thereto in the Agreement, as
amended hereby, unless otherwise defined herein.
SECTION 2. Amendments to the Agreement.
2.1 Amendment of Section 2.1 of the Agreement. Section
2.1 of the Agreement is hereby amended by deleting such Section in its entirety
and inserting in its place the following new Section 2.1:
2.1 Sale and Purchase of the Notes. Subject to
the terms and conditions of this Agreement, PM, either
directly or through one or more Affiliates, agrees to
purchase, and the Corporation agrees to sell and issue to
PM, or such Affiliates: (i) on the Closing Date, a Tranche
62
A Note for a purchase price of Two Million One Hundred
Seventy-Five Thousand Dollars ($2,175,000); (ii) on the
Tranche B Closing Date, a Tranche B Note for a purchase price
of One Million Three Hundred Five Thousand Dollars
(1,305,000); and (iii) at PM's sole option, on the Tranche C
Closing Date, a Tranche C Note for a purchase price of Three
Million Thirty-Three Thousand Four Hundred Fifty Dollars
($3,033,450), for a total purchase price of Six Million Five
Hundred Thirteen Thousand Four Hundred Fifty Dollars
($6,513,450). Subject to the terms and conditions of this
Agreement, PMGLIC, either directly or through one or more
Affiliates, agrees to purchase, and the Corporation agrees to
sell and issue to PMGLIC, or such Affiliates: (i) on the
Closing Date, a Tranche A Note for a purchase price of Three
Hundred Twenty-Five Thousand Dollars ($325,000); (ii) on the
Tranche B Closing Date, a Tranche B Note for a purchase price
of One Hundred Ninety Five Thousand Dollars ($195,000); and
(iii) at PMGLIC's sole option, on the Tranche C Closing Date,
a Tranche C Note for a purchase price of Four Hundred
Sixty-Six Thousand Five Hundred Fifty Dollars ($466,550), for
a total purchase price of Nine Hundred Eighty-Six Thousand
Five Hundred Fifty Dollars ($986,550).
2.2 Amendment of Section 2.8 of the Agreement. Section
2.8 of the Agreement is hereby amended by deleting clause (vi) thereof in its
entirety and inserting in its place the following new clause (vi), and also
adding the following new clauses (xii), (xiii), and (xiv):
(vi) Tranche C Closing Fee. The Corporation shall
pay to Purchaser a closing fee of $105,000 by wire transfer of
immediately available funds;
(xii) Financing for Repayment of New Mexico IRB
Indebtedness. The Corporation shall have obtained a
commitment for long term real estate secured financing, on
terms acceptable to Purchaser, to repay approximately
$5,000,000 of the New Mexico IRB Indebtedness;
(xiii) Use of Proceeds of Tranche C Notes. As a
condition subsequent to the purchase of the Tranche C Notes,
the Corporation shall use the entire proceeds of the Tranche C
Notes to repay the New Mexico IRB Indebtedness on or prior to
May 3, 1993;
(xiv) Repayment of New Mexico IRB Indebtedness.
As a condition subsequent to the purchase of the Tranche C
Notes, the Corporation shall repay in full the New Mexico IRB
Indebtedness on or prior to May 3, 1993.
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63
2.3 Amendment of Section 3.1 of the Agreement. Section
3.1 of the Agreement is hereby amended by inserting the following new
definition:
"New Mexico IRB Indebtedness" means the principal,
interest, and fees owing by the Corporation with respect to
those certain 9.2% taxable revenue bonds issued in 1989 and
scheduled to mature in 2004 in connection with financing for
the New Mexico Women's Prison.
SECTION 3. Effectiveness of this Amendment.
This Amendment shall become effective upon the execution and
delivery of this Amendment by the Purchaser and the Corporation.
SECTION 4. Representations and Warranties of the Corporation.
In order to induce the Purchaser to enter into this Amendment,
the Corporation hereby makes the following representations and warranties to
the Purchaser:
4.1 Corporate Power and Authorization. The Corporation
has the requisite corporate power and authority to execute, deliver and perform
its obligations under this Amendment.
4.2 No Conflict. Neither the execution and delivery by
the Corporation of this Amendment nor the consummation of the transactions
contemplated or required hereby nor compliance by the Corporation with the
terms, conditions and provisions hereof will conflict with or result in a
breach of any of the terms, conditions or provisions of the Certificate of
Incorporation or Bylaws of the Corporation or any law, regulation, order, writ,
injunction or decree of any court or governmental instrumentality or any
agreement or instrument to which the Corporation is a party or by which any of
its properties is bound, or constitute a default thereunder or result in the
creation or imposition of any lien.
4.3 Authorization; Governmental Approvals. The execution
and delivery by the Corporation of this Amendment and the consummation of the
transactions contemplated hereby (i) have been duly authorized by all necessary
corporate action on the part of the Corporation and (ii) do not and will not
require any authorization, consent, approval or license from or any
registration, qualification, designation, declaration or filing with, any court
or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign.
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64
4.4 Valid and Binding Effect. This Amendment has been
duly and validly executed and delivered by the Corporation and constitutes the
legal, valid and binding obligation of the Corporation, enforceable in
accordance with its terms.
4.5 Absence of Default. No event has occurred and is
continuing or will result from the consummation of the transactions
contemplated by this Amendment that would constitute an Event of Default under
the Agreement.
SECTION 5. Miscellaneous.
5.1 Ratification of the Agreement. Except as
specifically amended by this Amendment, the terms, conditions and provisions of
the Agreement shall not be affected by this Amendment and shall remain in full
force and effect and are hereby ratified and confirmed.
5.2 No Implied Waiver. The execution, delivery and
performance of this Amendment shall not, except as expressly provided herein,
constitute a waiver or modification of any provision of, or operate as a waiver
of any right, power or remedy of the Purchaser under, the Agreement or
prejudice any right or remedy that the Purchaser may have or may have in the
future under or in connection with the Agreement or any instrument or agreement
referred to therein. The Corporation acknowledges and agrees that the
representations and warranties of the Corporation contained in the Agreement
and in this Amendment shall survive the execution and delivery of this
Amendment and the effectiveness hereof.
5.3 Governing Law. This Amendment shall be governed by,
and construed and enforced in accordance with, the laws of the State of
California.
5.4 Counterparts; Telecopy Execution. This Agreement may
be executed in two or more counterparts, each of which shall be deemed to be an
original, but all of which together shall constitute one and the same
instrument. Delivery of an executed counterpart of this Amendment by
telefacsimile shall be equally as effective as delivery of a manually executed
counterpart. Any party delivering an executed counterpart of this Amendment by
telefacsimile shall also deliver a manually executed counterpart, but the
failure to deliver a manually executed counterpart shall not affect the
validity, enforceability, and binding effect of this Amendment.
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65
IN WITNESS WHEREOF, the undersigned have caused this Amendment
to be executed by their duly authorized officers as of the date first written
above.
CORRECTIONS CORPORATION PACIFIC MUTUAL LIFE
OF AMERICA INSURANCE COMPANY
By: By:
-------------------------- -------------------------
Its: Its:
-------------------------- -------------------------
PM GROUP LIFE INSURANCE COMPANY
By:
--------------------------
Its:
--------------------------
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AMENDMENT NUMBER FOUR
TO
NOTE PURCHASE AGREEMENT
THIS AMENDMENT NUMBER FOUR TO NOTE PURCHASE AGREEMENT (this
"Amendment"), dated as of April 25, 1995, is entered into by and among PACIFIC
MUTUAL LIFE INSURANCE COMPANY ("PM"), PM GROUP LIFE INSURANCE COMPANY
("PMGLIC") (PM and PMGLIC shall be referred to herein collectively as the
"Purchaser"), and CORRECTIONS CORPORATION OF AMERICA (the "Corporation").
R E C I T A L S
WHEREAS, the Corporation and the Purchaser are parties to that
certain Note Purchase Agreement, dated as of June 22, 1992, that was amended by
that certain Amendment No. 1 to Note Purchase Agreement, dated as of August 25,
1992, by that certain Amendment No. 2 to Note Purchase Agreement, dated as of
October 29, 1992, and by that certain Amendment No. 3 to Note Purchase
Agreement, dated as of April 29, 1993 (as so amended, the "Agreement");
WHEREAS, the Corporation has requested that the Purchaser
agree to make certain amendments to the Agreement; and
WHEREAS, the Purchaser is willing to amend the Agreement as
set forth herein.
A G R E E M E N T
NOW, THEREFORE, in consideration of the foregoing and subject
to the terms and conditions herein contained, the parties hereto agree as
follows:
SECTION 1. DEFINITIONS. Initially capitalized terms used in
this Amendment shall have the meanings ascribed thereto in the Agreement, as
amended hereby, unless otherwise defined herein.
SECTION 2. AMENDMENTS TO THE AGREEMENT.
2.1 Amendment of Section 3.1 of the Agreement.
Section 3.1 of the Agreement is hereby amended by (a) adding the defined terms
"Amendment Effective Date," "Concept," "Concept Acquisition," "Concept Acquired
Indebtedness," "Concept Share Exchange Agreement," "Eloy Facility," "UCI,"
"United Concept Partnership," and "United Concept Partnership Debt," as set
forth
67
below, and (b) deleting the defined term "Funded Debt" in its entirety and
substituting therefor the following defined term:
"Amendment Effective Date" means the date when each
of the conditions set forth in Section 4 of this Amendment have been satisfied
or waived.
"Concept" means Concept Incorporated, a Delaware
corporation.
"Concept Acquisition" means the acquisition by the
Corporation of Concept pursuant to the terms and conditions of the Concept
Share Exchange Agreement.
"Concept Acquired Indebtedness" means Funded Debt of
Concept existing immediately prior to the consummation of the Concept
Acquisition; provided, however, that the foregoing shall not include the United
Concept Partnership Debt.
"Concept Share Exchange Agreement" means a share
exchange agreement, containing such terms and conditions as reasonably may be
acceptable to Purchaser, involving the exchange of shares between the
Corporation and the stockholders of Concept.
"Eloy Facility" means the Bureau of Prisons facility
that is located in Eloy, Arizona and owned by United Concept Partnership.
"Funded Debt" means and includes without duplication
(a) any obligation payable more than one year from the date of the creation
thereof (including the current portion of Funded Debt), that under generally
accepted accounting principles is shown on the balance sheet as a liability
(including obligations under Capital Leases and excluding reserves for deferred
income taxes and other reserves to the extent that such reserves do not
constitute an obligation), (b) guarantees, endorsements (other than
endorsements of negotiable instruments for collection in the ordinary course of
business), and other contingent liabilities (whether direct or indirect) in
connection with the obligations, stock, or dividends of any Person, including
obligations under contracts to supply funds to or in any other manner invest in
any Person, (c) obligations under any contract to purchase, sell, or lease (as
lessee or lessor) property or to purchase or sell services, primarily for the
purpose of enabling a Person to make payment of obligations or to assure the
holder of such obligations against loss including obligations under any
contract for the purchase of materials, supplies, or other property or services
if such contract (or any related document) requires that payment for such
materials, supplies, or other property or services shall be made regardless of
whether delivery of such materials, supplies, or other property or services is
ever made or tendered, (d) obligations
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68
under any contract to pay or purchase obligations of a Person, or to advance or
supply funds for the payment or purchase of such obligations, and (e) any
agreement to assure a creditor of a Person against loss. For all purposes of
this Agreement (other than for purposes of calculating United Concept
Partnership Funded Debt), all United Concept Partnership Funded Debt shall be
deemed to constitute "Funded Debt."
"UCI" means United Concept, Inc., a Delaware
corporation, fifty percent of the issued and outstanding common stock of which
is owned by Concept.
"United Concept Partnership" means United Concept
Limited Partnership, a Delaware limited partnership of which UCI is the
managing general partner.
"United Concept Partnership Funded Debt" means (a)
the approximately $30,000,000 of indebtedness of United Concept Partnership
that is secured by a first mortgage lien upon the Eloy Facility, and (b) any
and all other indebtedness of United Concept Partnership that constitutes
Funded Debt (without giving effect to the last sentence of such definition).
2.2 Amendment of Section 6.18 of the Agreement. Section
6.18 of the Agreement is hereby amended by deleting such Section in its
entirety and adding and inserting in its place the following new Section 6.18:
"6.18 Limitation on Subsidiary Funded Debt. The
Corporation shall not permit any of its Subsidiaries to incur,
create, assume, or guarantee any Funded Debt (which shall be
deemed to include preferred stock issued by a Subsidiary of
the Corporation that is not held by the Corporation), unless,
after giving effect thereto, (a) the total amount of Funded
Debt of the Corporation's Subsidiaries does not exceed 10% of
Consolidated Total Capitalization, and (b) the Corporation
would be entitled to incur at least $1.00 of additional
Consolidated Senior Funded Debt under Section 6.8. The
foregoing to the contrary notwithstanding, Concept shall be
entitled to be obligated with respect to (and there shall be
excluded from the above calculation both on the Amendment
Effective Date and thereafter) the United Concept Partnership
Debt and the Concept Acquired Debt, so long as the aggregate
amount of Funded Debt of the Corporation incurred, assumed, or
acquired in connection with the Concept Acquisition (inclusive
of the United Concept Partnership Debt and the Concept
Acquired Debt does not exceed Forty Million Dollars
($40,000,000)."
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION.
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69
In order to induce the Purchaser to enter into this Amendment,
the Corporation hereby makes the following representations and warranties to
the Purchaser:
3.1 Corporate Power and Authorization. The Corporation
has the requisite corporate power and authority to execute, deliver, and
perform its obligations under this Amendment.
3.2 No Conflict. Neither the execution and delivery by
the Corporation of this Amendment nor the consummation of the transactions
contemplated or required hereby nor compliance by the Corporation with the
terms, conditions, and provisions hereof will conflict with or result in a
breach of any of the terms, conditions, or provisions of the Certificate of
Incorporation or Bylaws of the Corporation or any law, regulation, order, writ,
injunction, or decree of any court or governmental instrumentality or any
agreement or instrument to which the Corporation is a party or by which any of
its properties is bound, or constitute a default thereunder or result in the
creation or imposition of any lien.
3.3 Authorization; Governmental Approvals. The execution
and delivery by the Corporation of this Amendment and the consummation of the
transactions contemplated hereby (i) have been duly authorized by all necessary
corporate action on the part of the Corporation and (ii) do not and will not
require any authorization, consent, approval, or license from or any
registration, qualification, designation, declaration, or filing with, any
court or governmental department, commission, board, bureau, agency, or
instrumentality, domestic or foreign.
3.4 Valid and Binding Effect. This Amendment has been
duly and validly executed and delivered by the Corporation and constitutes the
legal, valid, and binding obligation of the Corporation, enforceable in
accordance with its terms.
3.5 Absence of Default. No event has occurred and is
continuing or will result from the consummation of the transactions
contemplated by this Amendment that would constitute an Event of Default under
the Agreement.
SECTION 4. CONDITIONS.
4.1 Conditions to the Effectiveness of this
Amendment. The effectiveness of this Amendment is subject to the fulfillment,
to the satisfaction of Purchaser, of each of the following conditions:
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70
(a) Purchaser shall have received an
executed counterpart of this Amendment duly executed and delivered by the
Corporation and each Purchaser; and
(b) Each Purchaser shall have received an
executed replacement Tranche A Note (in the form of Exhibit A attached hereto),
Tranche B Note (in the form of Exhibit B attached hereto), and Tranche C Note
(in the form of Exhibit C attached hereto), each duly executed and delivered by
the Corporation.
SECTION 5. MISCELLANEOUS.
5.1 Ratification of the Agreement. Except as
specifically amended by this Amendment, the terms, conditions and provisions of
the Agreement shall not be affected by this Amendment and shall remain in full
force and effect and are hereby ratified and confirmed.
5.2 No Implied Waiver. The execution, delivery, and
performance of this Amendment shall not, except as expressly provided herein,
constitute a waiver or modification of any provision of, or operate as a waiver
of any right, power, or remedy of the Purchaser under, the Agreement or
prejudice any right or remedy that the Purchaser may have or may have in the
future under or in connection with the Agreement or any instrument or agreement
referred to therein. The Corporation acknowledges and agrees that the
representations and warranties of the Corporation contained in the Agreement
and in this Amendment shall survive the execution and delivery of this
Amendment and the effectiveness hereof.
5.3 Governing Law. This Amendment shall be governed by,
and construed and enforced in accordance with, the laws of the State of
California.
5.4 Counterparts; Telecopy Execution. This Agreement may
be executed in two or more counterparts, each of which shall be deemed to be an
original, but all of which together shall constitute one and the same
instrument. Delivery of an executed counterpart of this Amendment by
telefacsimile shall be equally as effective as delivery of a manually executed
counterpart. Any party delivering an executed counterpart of this Amendment by
telefacsimile shall also deliver a manually executed counterpart, but the
failure to deliver a manually executed counterpart shall not affect the
validity, enforceability, and binding effect of this Amendment.
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71
IN WITNESS WHEREOF, the undersigned have caused this Amendment
to be executed by their duly authorized officers as of the date first written
above.
CORRECTIONS CORPORATION OF PACIFIC MUTUAL LIFE
AMERICA INSURANCE COMPANY
By: By:
------------------------- -------------------------
Its: Its:
------------------------- -------------------------
PM GROUP LIFE INSURANCE
COMPANY
By:
-------------------------
Its:
-------------------------
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