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EXHIBIT 1.1
EXECUTION COPY
$100,000,000
PRISON REALTY TRUST, INC.
12% SENIOR NOTES DUE 2006
AMENDED AND RESTATED UNDERWRITING AGREEMENT
June 11, 1999
Lehman Brothers Inc.
Three World Financial Center
New York, New York 10285
Dear Sirs:
Prison Realty Trust, Inc., a Maryland corporation (the "Company"),
proposes, upon the terms and considerations set forth herein, to issue and sell
to you ("Lehman Brothers") $100,000,000 in aggregate principal amount of its 12%
Senior Notes due 2006 (the "Notes") pursuant to the terms of an indenture, as
supplemented by an indenture supplement, dated as of June 11, 1999
(collectively, the "Indenture"), between the Company and State Street Bank and
Trust Company, as trustee (the "Trustee"), relating to the Notes. This is to
confirm the agreement concerning the purchase of the Notes from the Company by
Lehman Brothers.
1. Representations, Warranties and Agreements of the Company. The
Company represents, warrants and agrees that:
(a) A registration statement on Form S-3 (File No. 333-70419),
including a prospectus, with respect to the Notes has (i) been
prepared by the Company in conformity with the requirements of the
United States Securities Act of 1933, as amended (the "Securities
Act") and the rules and regulations (the "Rules and Regulations") of
the United States Securities and Exchange Commission (the
"Commission") promulgated thereunder, (ii) been filed with the
Commission under the Securities Act and (iii) become effective under
the Securities Act; and a registration statement on Form S-3 (File No.
333-80413), including a prospectus, with respect to the Notes has (i)
been prepared by the Company in conformity with the requirements of
the Securities Act and the Rules and Regulations, (ii) been filed with
the Commission under the Securities Act and (iii) become effective
under the Securities Act; and the Indenture shall be qualified under
the Trust Indenture Act of 1939 (the "Trust Indenture Act") and the
applicable rules and regulations thereunder. Copies of such
registration
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statements have been delivered by the Company to you. As used in this
Agreement, "Effective Time" means the date and the time as of which
each such registration statement, or the most recent post-effective
amendment thereto, if any, was declared effective by the Commission;
"Effective Date" means the date of the Effective Time; "Preliminary
Prospectus" means each prospectus included in each such registration
statement, or amendments thereof, before it became effective under the
Securities Act and any prospectus filed with the Commission by the
Company with the consent of Lehman Brothers pursuant to Rule 424(a) of
the Rules and Regulations; "Registration Statement" means
collectively, each such registration statement, as amended at the
Effective Time, including all information contained in the final
prospectus filed with the Commission pursuant to Rule 424(b) of the
Rules and Regulations in accordance with Section 5 hereof and deemed
to be a part of each registration statement as of the Effective Time
pursuant to paragraph (b) of Rule 430A of the Rules and Regulations;
"Prospectus" means such final prospectus including any supplemental
prospectus, as first filed with the Commission pursuant to Rule 424(b)
of the Rules and Regulations, or if no such prospectus was so filed
the form of prospectus that was included in the Registration Statement
at the Effective Time; and references herein to the Registration
Statement, a Preliminary Prospectus or the Prospectus shall be deemed
to refer to and include the documents and financial statements
incorporated or deemed to be incorporated therein pursuant to Item 12
of Form S-3 which were filed under the United States Securities
Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder (collectively, the "Exchange Act"), on or
before the Effective Date of the Registration Statement or the issue
date of such Preliminary Prospectus or Prospectus, as the case may be.
The Commission has not issued any order preventing or suspending the
use of any Preliminary Prospectus or Prospectus; and no stop order
suspending the effectiveness of the Registration Statement is in
effect, and no proceedings for such purpose are pending before or
threatened by the Commission.
(b) The Registration Statement conforms, and the Prospectus and
any further amendments or supplements to the Registration Statement or
the Prospectus will, when they become effective or are filed with the
Commission, as the case may be, conform in all respects to the
requirements of the Securities Act and the Rules and Regulations and
do not and will not, as of the applicable effective date (as to the
Registration Statement and any amendment thereto) and as of the
applicable filing date (as to the Prospectus and any amendment or
supplement thereto) contain an 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 not misleading; provided that
no representation or warranty is made as to information contained in
or omitted from the Registration Statement or the Prospectus in
reliance upon and in conformity with written information furnished to
the Company by Lehman Brothers specifically for inclusion therein; and
the Indenture conforms in all material respects to the requirements of
the Trust Indenture Act and the applicable rules and regulations
thereunder; provided that
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no representation or warranty is made as to the statement of
eligibility and qualification on Form T-1 of the Trustee under the
Trust Indenture Act or as to information contained in or omitted from
the Registration Statement or the Prospectus in reliance upon and in
conformity with written information furnished to the Company by Lehman
Brothers specifically for inclusion therein, which information is
described in Section 8(e) hereof.
(c) The market-related and industry-related data and estimates
included in the Prospectus are based on or derived from sources which
the Company believes to be reliable and accurate.
(d) The Company and each of its subsidiaries (as defined in
Section 14) have been duly incorporated and are validly existing as
corporations in good standing under the laws of their respective
jurisdictions of incorporation, are duly qualified to do business and
are in good standing as foreign corporations in each jurisdiction in
which their respective ownership or lease of property or the conduct
of their respective businesses requires such qualification, except to
the extent that the failure to be so qualified could not be reasonably
expected to have a material adverse effect on the general affairs,
management, consolidated financial position, stockholders' equity,
results of operations, business or prospects of the Company and its
subsidiaries, taken as a whole (a "Material Adverse Effect"), and have
all power and authority necessary to own or hold their respective
properties and to conduct the businesses in which they are engaged;
and none of the subsidiaries of the Company is a "significant
subsidiary," as such term is defined in Rule 405 of the Rules and
Regulations.
(e) The Company has an authorized capitalization as set forth in
the Prospectus, and all of the issued shares of capital stock of the
Company have been duly and validly authorized and issued, are fully
paid and non-assessable and conform to the description thereof
contained in the Prospectus; and all of the issued shares of capital
stock of each subsidiary of the Company have been duly and validly
authorized and issued and are fully paid and non-assessable and
(except for directors' qualifying shares) are owned directly or
indirectly by the Company, free and clear of all liens, encumbrances,
equities or claims other than liens or encumbrances in favor of the
lenders under the Company's Bank Credit Facility, dated as of January
1, 1999, as described in the Prospectus.
(f) This Agreement has been duly authorized, executed and
delivered by the Company.
(g) The Indenture has been duly authorized, and on the Delivery
Date (as defined below) when duly executed by the proper officers of
the Company (assuming due execution and delivery by the Trustee) and
delivered by the Company, will constitute a valid and binding
agreement of the Company enforceable against the Company in accordance
with its terms, subject to the
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effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally, general equitable principles
(whether considered in a proceeding in equity or at law).
(h) The Notes have been duly and validly authorized by the
Company and when duly executed by the Company in accordance with the
terms of the Indenture and, assuming due authentication of the Notes
by the Trustee, upon delivery to Lehman Brothers against payment
therefor in accordance with the terms hereof, will constitute valid
and binding obligations of the Company entitled to the benefits of the
Indenture and enforceable in accordance with their terms, subject to
the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally, general equitable principles
(whether considered in a proceeding in equity or at law); and the
Notes, when issued and delivered, will conform in all material
respects to the description thereof contained in the Prospectus.
(i) The execution, delivery and performance of this Agreement and
the Indenture by the Company and the consummation of the transactions
contemplated hereby and thereby (including the issuance and sale of
the Notes and the use of the proceeds from the sale thereof as
described in the Prospectus under the caption "Use of Proceeds") will
not conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement, lease or other agreement or
instrument to which the Company or any of its subsidiaries is a party
or by which the Company or any of its subsidiaries is bound or to
which any of the property or assets of the Company or any of its
subsidiaries is subject, except for such conflicts, breaches,
violations or defaults as could not, in the aggregate, be reasonably
expected to have a Material Adverse Effect, nor will such actions
result in any violation of the provisions of the charter or by-laws of
the Company or any of its subsidiaries or any statute or any order,
rule or regulation of any court or governmental agency or body having
jurisdiction over the Company or any of its subsidiaries or any of
their properties or assets, except for such violations as could not,
in the aggregate, be reasonably expected to have a Material Adverse
Effect; and except for (i) the registration of the Notes under the
Securities Act, (ii) the qualification of the Indenture under the
Trust Indenture Act and (iii) such consents, approvals,
authorizations, registrations or qualifications as may be required
under the Exchange Act and applicable state securities laws in
connection with the purchase and distribution of the Notes by Lehman
Brothers, no consent, approval, authorization or order of, or filing
or registration with, any such court or governmental agency or body is
required for the execution, delivery and performance of this
Agreement, or the Indenture by the Company and the consummation of the
transactions contemplated hereby and thereby.
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(j) With the exception of two Registration Rights Agreements,
each dated December 31, 1998, in connection with the Company's
issuance to PMI Mezzanine Fund, L.P. of its 7.5% convertible
subordinated notes in the aggregate principal amount of $30.0 million
and the Company's issuance to MDP Ventures IV LLC of its 9.5%
convertible subordinated notes in the aggregate principal amount of
$40.0 million, there are no contracts, agreements or understandings
between the Company and any person granting such person the right to
require the Company to file a registration statement under the
Securities Act with respect to any securities of the Company owned or
to be owned by such person or to require the Company to include such
securities in the securities registered pursuant to the Registration
Statement or in any securities being registered pursuant to any other
registration statement filed by the Company under the Securities Act.
(k) Except as described in the Prospectus, the Company has not
sold or issued any securities with terms that are substantially
similar to the Notes during the six-month period preceding the date of
the Prospectus, including any sales pursuant to Rule 144A under, or
Regulations D or S of, the Securities Act.
(l) Neither the Company nor any of its subsidiaries has
sustained, since the date of the latest audited financial statements
included or incorporated by reference in the Prospectus, any material
loss or interference with its business from fire, explosion, flood or
other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the Prospectus; and, since such
date, there has not been any change in the capital stock or long-term
debt of the Company or any of its subsidiaries or any material adverse
change, or any development involving a prospective material adverse
change, in or affecting the general affairs, management, financial
position, stockholders' equity or results of operations, business or
prospects of the Company and its subsidiaries (a "Material Adverse
Change"), otherwise than as set forth or contemplated in the
Prospectus.
(m) The financial statements (including the related notes and
supporting schedules) included or incorporated by reference in the
Prospectus present fairly the financial condition and results of
operations of the entities purported to be shown thereby, at the dates
and for the periods indicated, and have been prepared in conformity
with generally accepted accounting principals applied on a consistent
basis throughout the periods involved.
(n) Arthur Andersen LLP, who has certified certain financial
statements of the Company, whose report appears in the Prospectus or
is incorporated by reference therein and who has delivered the initial
letter referred to in Section 7(h) hereof, are independent public
accountants as required by the Securities Act and the Rules and
Regulations.
(o) The Company and each of its subsidiaries have good and
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marketable title in fee simple to all real property and good and
marketable title to all personal property owned by them, in each case
free and clear of all liens, encumbrances and defects except such as
are described in the Prospectus or such as do not materially affect
the value of such property and do not materially interfere with the
use made and proposed to be made of such property by the Company and
its subsidiaries; all real property and buildings held under lease by
the Company and its subsidiaries are held by them under valid,
subsisting and enforceable leases, with such exceptions as are not
material and do not interfere with the use made and proposed to be
made of such property and buildings by the Company and its
subsidiaries; neither the Company nor, to the best of the knowledge of
the Company, any lessee under a lease, relating to any of the real
property or facilities owned by the Company, is in default under or
has any rights to terminate any of the leases relating to the real
property or facilities owned by the Company and the Company does not
know of any event which, but for the passage of time or the giving of
notice, or both, would constitute a default or under or termination of
any of such leases, except such defaults or termination rights that
could not be reasonably expected to have a Material Adverse Effect on
the Company; and, except as disclosed in the Prospectus, neither the
Company nor, to the best of the knowledge of the Company, any other
party under a management contract, relating to any of the real
property or facilities owned by the Company, is in default under any
of the management contracts relating to the real property or
facilities owned by the Company, the Company has not received any
notice of any rights to terminate any of such management contracts and
the Company does not know of any event which, but for the passage of
time or the giving of notice, or both, would constitute a default or
under or termination of any of such management contracts, except such
defaults or termination rights that could not be reasonably expected
to have a Material Adverse Effect on the Company.
(p) The Company and each of its subsidiaries carry, or are
covered by, insurance in such amounts and covering such risks as is
reasonably adequate for the conduct of their respective businesses and
the value of their respective properties and as is customary for
companies engaged in similar businesses in similar industries.
(q) Except as described in the Prospectus, the Company and each
of its subsidiaries own or possess adequate rights to use all material
trademarks, service marks, trade names, trademark registrations,
service mark registrations and licenses necessary for the conduct of
their respective businesses and have no reason to believe that the
conduct of their respective businesses will conflict with, and have
not received any notice of any claim of conflict with, any such rights
of others.
(r) Except as described in the Prospectus, there are no legal or
governmental proceedings pending to which the Company or any of its
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subsidiaries is a party or of which any property or assets of the
Company or any of its subsidiaries is the subject which, if determined
adversely to the Company or any of its subsidiaries, could be
reasonably expected to have a Material Adverse Effect; and to the best
of the Company's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others.
(s) There are no contracts or other documents which are required
to be described in the Prospectus or filed as exhibits to the
Registration Statement by the Securities Act or by the Rules and
Regulations which have not been described in the Prospectus or filed
as exhibits to the Registration Statement incorporated therein by
reference as permitted by the Rules and Regulations.
(t) No relationship, direct or indirect, exists between or among
the Company on the one hand, and the directors, officers,
stockholders, customers or suppliers of the Company on the other hand,
which is required to be described in the Prospectus which is not so
described.
(u) No labor disturbance by the employees of the Company exists
or, to the knowledge of the Company, is imminent which could be
reasonably expected to have a Material Adverse Effect.
(v) The Company is in compliance in all material respects with
all presently applicable provisions of the Employee Retirement Income
Security Act of 1974, as amended, including the regulations and
published interpretations thereunder ("ERISA"); no "reportable event"
(as defined in ERISA) has occurred with respect to any "pension plan"
(as defined in ERISA) for which the Company would have any liability;
the Company has not incurred and does not expect to incur liability
under (i) Title IV of ERISA with respect to termination of, or
withdrawal from, any "pension plan" or (ii) Sections 412 or 4971 of
the Internal Revenue Code of 1986, as amended, including the
regulations and published interpretations thereunder (the "Code"); and
each "pension plan" for which the Company would have any liability
that is intended to be qualified under Section 401(a) of the Code is
so qualified in all material respects and nothing has occurred,
whether by action or by failure to act, which would cause the loss of
such qualification.
(w) The Company has filed all federal, state and local income and
franchise tax returns required to be filed through the date hereof and
has paid all taxes due thereon, and no tax deficiency has been
determined adversely to the Company or any of its subsidiaries which
has had (nor does the Company have any knowledge of any tax deficiency
which, if determined adversely to the Company or any of its
subsidiaries, could be reasonably expected to have) a Material Adverse
Effect.
(x) The Company has been organized in conformity with the
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requirements for qualification as a real estate investment trust under
the Internal Revenue Code of 1986, as amended (the "Code"), and it has
operated and intends to continue to operate in such a manner as to
enable it to meet the requirements for taxation as a real estate
investment trust under the Code commencing with the Company's taxable
year ending December 31, 1999.
(y) Since the date as of which information is given in the
Prospectus through the date hereof, and except as may otherwise be
disclosed in the Prospectus, the Company has not (i) issued or granted
any securities, (ii) incurred any liability or obligation, direct or
contingent, other than liabilities and obligations which were incurred
in the ordinary course of business, (iii) entered into any transaction
not in the ordinary course of business or (iv) declared or paid any
dividend on its capital stock.
(z) The Company (i) makes and keeps accurate books and records
and (ii) maintains internal accounting controls which provide
reasonable assurance that (A) transactions are executed in accordance
with management's authorization, (B) transactions are recorded as
necessary to permit preparation of its financial statements and to
maintain accountability for its assets, (C) access to its assets is
permitted only in accordance with management's authorization and (D)
the reported accountability for its assets is compared with existing
assets at reasonable intervals.
(aa) Neither the Company nor any of its subsidiaries (i) is in
violation of its charter or by-laws, (ii) is in default in any
material respect, and no event has occurred which, with notice or
lapse of time or both, would constitute such a default, in the due
performance or observance of any term, covenant or condition contained
in any material indenture, mortgage, deed of trust, loan agreement,
lease or other agreement or instrument to which it is a party or by
which it is bound or to which any of its properties or assets is
subject or (iii) is in violation in any material respect of any law,
ordinance, governmental rule, regulation or court decree to which it
or its property or assets may be subject or has failed to obtain any
material license, permit, certificate, franchise or other governmental
authorization or permit necessary to the ownership of its property or
to the conduct of its business.
(ab) Neither the Company nor any of its subsidiaries, nor any
director, officer, agent, employee or other person associated with or
acting on behalf of the Company or any of its subsidiaries, has used
any corporate funds for any unlawful contribution, gift, entertainment
or other unlawful expense relating to political activity; made any
direct or indirect unlawful payment to any foreign or domestic
government official or employee from corporate funds; violated or is
in violation of any provision of the Foreign Corrupt Practices Act of
1977; or made any bribe, rebate, payoff, influence payment, kickback
or other unlawful payment.
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(ac) There has been no storage, disposal, generation,
manufacture, refinement, transportation, handling or treatment of
toxic wastes, medical wastes, hazardous wastes or hazardous substances
by the Company or any of its subsidiaries (or, to the knowledge of the
Company, any of their predecessors in interest) at, upon or from any
of the property now or previously owned or leased by the Company or
its subsidiaries in violation of any applicable law, ordinance, rule,
regulation, order, judgment, decree or permit or which would require
remedial action under any applicable law, ordinance, rule, regulation,
order, judgment, decree or permit, except for any violation or
remedial action which could not be reasonably expected to have,
singularly or in the aggregate with all such violations and remedial
actions, a Material Adverse Effect; there has been no material spill,
discharge, leak, emission, injection, escape, dumping or release of
any kind onto such property or into the environment surrounding such
property of any toxic wastes, medical wastes, solid wastes, hazardous
wastes or hazardous substances due to or caused by the Company or any
of its subsidiaries or with respect to which the Company or any of its
subsidiaries have knowledge, except for any such spill, discharge,
leak, emission, injection, escape, dumping or release which could not
be reasonably expected to have, singularly or in the aggregate with
all such spills, discharges, leaks, emissions, injections, escapes,
dumpings and releases, a Material Adverse Effect; and the terms
"hazardous wastes," "toxic wastes," "hazardous substances" and
"medical wastes" shall have the meanings specified in any applicable
local, state, federal and foreign laws or regulations with respect to
environmental protection.
(ad) Neither the Company nor any subsidiary is an "investment
company" within the meaning of such term under the United States
Investment Company Act of 1940 and the rules and regulations of the
Commission thereunder.
2. Purchase of the Notes by Lehman Brothers. On the basis of the
representations, warranties and agreements contained in, and subject to the
terms and conditions of, this Agreement, the Company agrees to sell to Lehman
Brothers, and Lehman Brothers agrees to purchase from the Company, all of the
Notes at an aggregate purchase price equal to 97.00% of the principal amount
thereof (the "Purchase Price").
The Company shall not be obligated to deliver any of the Notes, except
upon payment for all the Notes to be purchased pursuant to this Agreement as
provided herein.
3. Offering of Notes by Lehman Brothers. Upon authorization by Lehman
Brothers of the release of the Notes, Lehman Brothers proposes to offer the
Notes for sale upon the terms and conditions set forth in the Prospectus.
4. Delivery of and Payment for the Notes. Delivery of and payment for
the Notes shall be made at the office of Latham & Watkins, 885 Third Avenue New
York, New York 10022 at 10:00 A.M., New York City time, on the third full
business day following the date of
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this Agreement or at such other date or place as shall be determined by
agreement between Lehman Brothers and the Company. This date and time are
sometimes referred to as the "Delivery Date." On the Delivery Date, the Company
shall deliver or cause to be delivered certificates representing the Notes to
Lehman Brothers for the account of Lehman Brothers against payment to or upon
the order of the Company of the purchase price by wire transfer in immediately
available funds. Time shall be of the essence, and delivery at the time and
place specified pursuant to this Agreement is a further condition of the
obligation of Lehman Brothers hereunder. Upon delivery, the Notes shall be
registered in such names and in such denominations as may be set forth in the
Indenture. For the purpose of expediting the checking and packaging of the
certificates for the Notes, the Company shall make the certificates representing
the Notes available for inspection by Lehman Brothers in New York, New York, not
later than 2:00 P.M., New York City time, on the business day prior to the
Delivery Date.
5. Further Agreements of the Company. The Company agrees:
(a) To prepare the Prospectus in a form approved by Lehman
Brothers and to file such Prospectus pursuant to Rule 424(b) under the
Securities Act not later than Commission's close of business on the
second business day following the execution and delivery of this
Agreement or, if applicable, such earlier time as may be required by
Rule 430A(a)(3) under the Securities Act; to make no further amendment
or any supplement to the Registration Statement or to the Prospectus
except as permitted herein; to advise Lehman Brothers, promptly after
it receives notice thereof, of the time when any amendment to the
Registration Statement has been filed or becomes effective or any
supplement to the Prospectus or any amended Prospectus has been filed
and to furnish Lehman Brothers with copies thereof; to advise Lehman
Brothers, promptly after it receives notice thereof, of the issuance
by the Commission of any stop order or of any order preventing or
suspending the use of any Preliminary Prospectus or the Prospectus, of
the suspension of the qualification of the Notes for offering or sale
in any jurisdiction, of the initiation or threatening of any
proceeding for any such purpose, or of any request by the Commission
for the amending or supplementing of the Registration Statement or the
Prospectus or for additional information; and, in the event of the
issuance of any stop order or of any order preventing or suspending
the use of any Preliminary Prospectus or the Prospectus or suspending
any such qualification, to use promptly its best efforts to obtain its
withdrawal;
(b) To furnish promptly to Lehman Brothers and to counsel for
Lehman Brothers a signed copy of the Registration Statement as
originally filed with the Commission, and each amendment thereto filed
with the Commission, including all consents and exhibits filed
therewith;
(c) To deliver promptly to Lehman Brothers such number of the
following documents as Lehman Brothers shall reasonably request: (i)
conformed copies of the Registration Statement as originally filed
with the Commission and each amendment thereto (in each case excluding
exhibits other than this
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Agreement, the Indenture and the computation of per share earnings)
and (ii) each Preliminary Prospectus, the Prospectus and any amended
or supplemented Prospectus; and, if the delivery of a prospectus is
required at any time after the Effective Time in connection with the
offering or sale of the Notes or any other securities relating thereto
and if at such time any events shall have occurred as a result of
which the Prospectus as then amended or supplemented would include an
untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made when such Prospectus is
delivered, not misleading, or, if for any other reason it shall be
necessary to amend or supplement the Prospectus in order to comply
with the Securities Act, to notify Lehman Brothers and, upon their
request, to file such document and to prepare and furnish without
charge to Lehman Brothers and to any dealer in securities as many
copies as Lehman Brothers may from time to time reasonably request of
an amended or supplemented Prospectus which will correct such
statement or omission or effect such compliance;
(d) To file promptly with the Commission any amendment to the
Registration Statement or the Prospectus or any supplement to the
Prospectus that may, in the judgment of the Company or Lehman
Brothers, be required by the Securities Act or requested by the
Commission;
(e) Prior to filing with the Commission any amendment to the
Registration Statement or supplement to the Prospectus or any
Prospectus pursuant to Rule 424 of the Rules and Regulations, to
furnish a copy thereof to Lehman Brothers and counsel for Lehman
Brothers and obtain the consent of Lehman Brothers to the filing;
(f) As soon as practicable, to make generally available to the
Company's security holders and to deliver to Lehman Brothers earnings
statements of the Company and its subsidiaries (which need not be
audited) complying with Section 11(a) of the Securities Act and the
Rules and Regulations (including, at the option of the Company, Rule
158);
(g) So long as any of the Notes are outstanding, to furnish to
Lehman Brothers copies of all materials furnished by the Company to
its shareholders and all public reports and all reports and financial
statements furnished by the Company to the principal national
securities exchange upon which the Common Stock may be listed pursuant
to requirements of or agreements with such exchange or to the
Commission pursuant to the Exchange Act or any rule or regulation of
the Commission thereunder;
(h) Promptly from time to time to take such action as Lehman
Brothers may reasonably request to qualify the Notes for offering and
sale under the securities laws of such jurisdictions as Lehman
Brothers may request and to
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comply with such laws so as to permit the continuance of sales and
dealings therein in such jurisdictions for as long as may be necessary
to complete the distribution of the Notes;
(j) To apply the net proceeds from the sale of the Notes being
sold by the Company as set forth in the Prospectus;
(k) To take such steps as shall be necessary to ensure that
neither the Company nor any subsidiary shall become an "investment
company" within the meaning of such term under the United States
Investment Company Act of 1940 and the rules and regulations of the
Commission thereunder; and
(l) For a period of 90 days from the date of the Prospectus, not
to, directly or indirectly, sell, offer to sell, contract to sell,
grant any option to purchase, issue any instrument convertible or
exchangeable for, or otherwise transfer or dispose of (or enter into
any transaction or device which is designed to, or could be expected
to, result in the disposition in the future of), any debt securities
of the Company or any of its subsidiaries, except with the prior
consent of Lehman Brothers.
6. Expenses. The Company agrees to pay (a) the costs incident to the
authorization, issuance, sale and delivery of the Notes and any taxes payable in
that connection; (b) the costs incident to the preparation, printing and filing
under the Securities Act of the Registration Statement and any amendments and
exhibits thereto; (c) the costs of distributing the Registration Statement as
originally filed and each amendment thereto and any post-effective amendments
thereof (including, in each case, exhibits), any Preliminary Prospectus, the
Prospectus (including, without limitation, exhibits) and any amendment or
supplement to the Preliminary Prospectus and Prospectus, all as provided in this
Agreement; (d) the costs of reproducing and distributing this Agreement; (e) the
filing fees incident to securing any required review by the National Association
of Securities Dealers, Inc. of the terms of sale of the Notes; (f) any
applicable listing or other fees; (g) the fees and expenses of qualifying the
Notes under the securities laws of the several jurisdictions as provided in
Section 5(h) and of preparing, printing and distributing a Blue Sky Memorandum
(including related fees and expenses of counsel to Lehman Brothers); (h) any
fees charged by securities rating services for rating the Notes; and (i) all
other costs and expenses incident to the performance of the obligations of the
Company under this Agreement; provided, that (x) the Company and Lehman Brothers
will bear their own "road show" expenses, (y) the Company, on the one hand, and
Lehman Brothers, on the other hand, will each bear one half of the cost of the
charter air craft used in connection with the "road show" relating to the
offering of the Notes and (z) the only legal expenses of Lehman Brothers to be
borne by the Company pursuant to this Section 6 are pursuant to clause (g) of
this Section 6.
7. Conditions of Lehman Brothers' Obligations. The obligations of
Lehman Brothers hereunder are subject to the accuracy, when made and on the
Delivery Date, of the representations and warranties of the Company contained
herein, to the performance by the
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Company of its obligations hereunder, and to each of the following additional
terms and conditions:
(a) The Prospectus shall have been timely filed with the
Commission in accordance with Section 5(a); no stop order suspending
the effectiveness of the Registration Statement or any part thereof
shall have been issued and no proceeding for that purpose shall have
been initiated or threatened by the Commission; any request of the
Commission for inclusion of additional information in the Registration
Statement or the Prospectus or otherwise shall have been complied
with.
(b) Lehman Brothers shall not have discovered and disclosed to
the Company on or prior to the Delivery Date that the Registration
Statement or the Prospectus or any amendment or supplement thereto
contains an untrue statement of a fact which, in the opinion of Latham
& Watkins, counsel for Lehman Brothers, is material or omits to state
a fact which, in the opinion of such counsel, is material and is
required to be stated therein or is necessary to make the statements
therein not misleading.
(c) All corporate proceedings and other legal matters incident to
the authorization, form and validity of this Agreement, the Indenture,
the Notes, the Registration Statement and the Prospectus, and all
other legal matters relating to this Agreement and the transactions
contemplated hereby shall be reasonably satisfactory in all material
respects to counsel for Lehman Brothers, and the Company shall have
furnished to such counsel all documents and information that they may
reasonably request to enable them to pass upon such matters.
(d) Miles & Stockbridge P.C. shall have furnished to Lehman
Brothers its written opinion, as counsel to the Company, addressed to
Lehman Brothers and dated the Delivery Date, in form and substance
reasonably satisfactory to Lehman Brothers, to the effect that:
(i) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Maryland and has the corporate power and authority to own or hold
its properties and conduct the businesses in which it is engaged
as such properties and businesses are described in the
Prospectus;
(ii) The Company has authorized capital stock as described
under the caption "Description of Common Stock--General" set
forth in the Prospectus, and all of the issued shares of capital
stock of the Company, comprising 117,076,081 shares of common
stock, $0.01 par value per share, and 4,300,000 shares of 8%
Series A Cumulative Preferred Stock, have been duly authorized
and validly issued and are fully paid and non-assessable, and the
description of the common stock, $0.01
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par value per share, of the Company and the preferred stock of
the Company, consisting solely of the shares of preferred stock,
$0.01 par value, designated 8.0% Series A Cumulative Preferred
Stock, conform to the description thereof set forth under the
caption "Description of Capital Stock" in the Prospectus,
including under the caption "New Prison Realty Capital Stock" in
the prospectus that is incorporated therein by reference;
(iii) The execution and delivery of and the performance of
its obligations under each of the Underwriting Agreement and the
Indenture by the Company have been duly authorized by the
Company;
(iv) The issuance and sale of the Notes by the Company have
been duly authorized by the Company;
(v) The execution and delivery by the Company of this
Agreement and the Indenture and the consummation by the Company
of the transactions contemplated hereby and thereby will not
result in any violation of the provisions of the charter or
bylaws of the Company or, to the knowledge of such counsel, any
applicable law, rule or regulation of any Maryland court or
governmental agency having jurisdiction over the Company, except
for such violations that could not, singly or in the aggregate,
be reasonably expected to have a Material Adverse Effect; and
(vi) No consent, approval, authorization, order,
registration or qualification of or with any Maryland
governmental agency or body or, to our knowledge, any Maryland
court is required for the issue and sale of the Notes by the
Company and the compliance by the Company with the provisions of
this Agreement, except for such consents, approvals,
authorizations, registrations or qualifications as may be
required under state securities or Blue Sky laws in connection
with the purchase and distribution of the Notes by Lehman
Brothers.
In rendering such opinion, such counsel may state that its
opinion is limited to matters governed by the laws of the State of
Maryland.
(e) Stokes & Bartholomew, P.A. shall have furnished to Lehman
Brothers its written opinion, as counsel to the Company, addressed to
Lehman Brothers and dated the Delivery Date, in form and substance
reasonably satisfactory to Lehman Brothers, to the effect that:
(i) The Company has been duly formed and is validly existing
as a corporation under the laws of the State of Maryland, with
corporate power and authority to own its properties and conduct
its businesses as now conducted, and based solely upon
certificates from public officials, is duly qualified to do
business and is in good standing as a foreign
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corporation in each jurisdiction in which its ownership or lease
of property or the conduct of its businesses requires such
qualification, except to the extent that the failure to be so
qualified could not be reasonably expected to have Material
Adverse Effect;
(ii) As of the dates specified therein, the Company had
authorized and issued capital stock as set forth under the
caption "Capitalization" in the Prospectus. All of the issued
shares of the capital stock of the Company have been duly
authorized and validly issued and conform to the description
thereof contained in the Prospectus;
(iii) The Indenture has been duly executed and delivered by
the Company, is duly qualified under the Trust Indenture Act and,
assuming that the Indenture is a valid and binding agreement of
the Trustee, constitutes a valid and binding agreement of the
Company;
(iv) The Notes have been duly executed and issued by the
Company and, assuming due authentication thereof by the Trustee
and upon payment delivery in accordance with the terms of this
Agreement, will constitute valid and binding obligations of the
Company;
(v) This Agreement has been duly executed and delivered by
the Company;
(vi) To such counsel's knowledge, there are no preemptive or
other rights to subscribe for or to purchase, nor any restriction
upon the transfer of, any Notes pursuant to the Company's charter
or by-laws or any agreement or other instrument known to such
counsel;
(vii) The Company and each of its subsidiaries have good and
marketable title in fee simple to all real property owned by
them, in each case free and clear of all liens, encumbrances and
defects except such as are described in the Prospectus or such as
do not materially affect the value of such property and do not
materially interfere with the use made and proposed to be made of
such property by the Company and its subsidiaries; and all real
property and buildings held under lease by the Company and its
subsidiaries are held by them under valid, subsisting and
enforceable leases, with such exceptions as are not material and
do not interfere with the use made and proposed to be made of
such property and buildings by the Company and its subsidiaries;
(viii) To the best of such counsel's knowledge, and other
than as set forth in the Prospectus, there are no legal or
governmental proceedings pending to which the Company or any of
its subsidiaries is a party or of which any property or assets of
the Company or any of its subsidiaries is
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the subject of which, if determined adversely to the Company or
any of its subsidiaries, could be reasonably expected to have a
Material Adverse Effect; and, to the best of such counsel's
knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others;
(ix) To the best of such counsel's knowledge, and with the
exception of two Registration Rights Agreements, each dated
December 31, 1998, in connection with the Company's issuance to
PMI Mezzanine Fund, L.P. of its 7.5% convertible subordinated
notes in the aggregate principal amount of $30.0 million and the
Company's issuance to MDP Ventures IV LLC of its 9.5% convertible
subordinated notes in the aggregate principal amount of $40.0
million, there are no contracts, agreements or understandings
between the Company and any person granting such person the right
to require the Company to file a registration statement under the
Securities Act with respect to any securities of the Company
owned or to be owned by such person or to require the Company to
include such securities in the securities registered pursuant to
the Registration Statement or in any securities being registered
pursuant to any other registration statement filed by the Company
under the Securities Act;
(x) The statements contained in the Prospectus under the
captions "Business-Relationship with CCA," "Business-CCA Leases,"
"Business-Other Agreements," "Business-CCA Note,"
"Business-License Fees," "Business-Relationship with the Service
Companies" and "Business-Governmental Regulation," insofar as
they describe charter documents, contracts, statutes, rules and
regulations and other legal matters, constitute an accurate
summary thereof in all material respects;
(xi) The statements contained in the Prospectus under the
caption "Material United States Federal Tax Considerations" or
"Material Federal Income Tax Consequences," insofar as they
purport to constitute summaries of matters of United States
federal tax law and regulations or legal conclusions with respect
thereto, constitute accurate summaries of the matters described
therein in all material respects;
(xii) All of the issued shares of capital stock of each
subsidiary of the Company have been duly and validly authorized
and issued and are fully paid and non-assessable and are owned
directly or indirectly by the Company, free and clear of all
liens, encumbrances, equities or claims other than liens or
encumbrances in favor of the lenders under the Company's Bank
Credit Facility, dated as of January 1, 1999, as described in the
Prospectus;
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(xiii) To such counsel's knowledge, there are no contracts
or documents of a character required by the Securities Act or by
the rules and regulations thereunder to be described in the
Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement which are not described or
filed as required by the Securities Act or by the rules and
regulations thereunder;
(xiv) The execution and delivery by the Company of this
Agreement and the Indenture and the consummation by the Company
of the other transactions contemplated hereby and thereby and by
the Prospectus will not (A) to the knowledge of such counsel,
result in a breach or violation of any of the terms or provisions
of, or constitute a default under, any indenture, mortgage, deed
of trust, loan agreement, lease or other agreement or instrument
of the Company or any of its subsidiaries, except for such
breaches or violations that could not, singly or in the
aggregate, be reasonably expected to have a Material Adverse
Effect or (B) result in any violation of the provisions of the
charter or bylaws of the Company or any of its subsidiaries, or,
to the knowledge of such counsel, any applicable law, rule or
regulation with respect to the Company or any of its subsidiaries
or, to the knowledge of such counsel, any rule or regulation or
order of any court or governmental agency having jurisdiction
over the Company or any of its subsidiaries, except for such
violations that could not, singly or in the aggregate, be
reasonably expected to have a Material Adverse Effect; and, to
the knowledge of such counsel, except for such consents,
approvals or authorizations of, or filings, registrations or
qualifications with, governmental authorities as may be required
under the Securities Act and the rules and regulations
thereunder, the Trust Indenture Act and the rules and regulations
thereunder or applicable states securities or Blue Sky laws,
rules or regulations in connection with the purchase and
distribution of the Notes by Lehman Brothers, no consent,
approval, authorization or order of, or filing or registration
with, any such court or governmental agency or body is required
in connection with the execution and delivery by the Company of
this Agreement or the Indenture or the consummation by the
Company of the other transactions contemplated hereby and thereby
and by the Prospectus and the issuance and sale of the Notes by
the Company; and
(xv) The Registration Statement and the Prospectus and any
further amendments or supplements thereto made by the Company
prior to the Delivery Date (other than the financial statements
and related schedules therein, as to which such counsel need
express no opinion) comply as to form in all material respects
with the requirements of the Securities Act and the Rules and
Regulations.
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In rendering such opinion, such counsel may (i) state that its
opinion is limited to matters governed by the Federal laws of the
United States of America, the laws of the State of Tennessee and the
General Corporation Law of the State of Delaware and that such counsel
is not admitted in the State of Delaware; (ii) rely (to the extent
such counsel deems proper and specifies in its opinion), as to matters
involving the application of the laws of other jurisdictions upon the
opinion of other counsel of good standing, provided that such counsel
is satisfactory to counsel for Lehman Brothers and furnishes a copy of
its opinion to Lehman Brothers.
Such counsel shall also have furnished to Lehman Brothers a
written statement, addressed to Lehman Brothers and dated the Delivery
Date, in form and substance satisfactory to Lehman Brothers, to the
following effect: Such counsel has not independently verified the
accuracy, completeness or fairness of the statements made or included
in the Registration Statement or the Prospectus and does not take
responsibility therefor, except as and to the extent set forth in
paragraphs (xi) and (xii) above. In the course of the preparation by
the Company of the Registration Statement and the Prospectus, such
counsel participated in conferences with certain officers and
employees of the Company and with representatives of Arthur Andersen
LLP, the Company's independent auditors. Based upon such counsel's
examination of the Registration Statement and the Prospectus, suhc
counsel's investigations made in connection with the preparation of
the Registration Statement and the Prospectus and such counsel's
participation in the conferences referred to above, (i) such counsel
is of the opinion that the Registration Statement, as of its effective
date, and the Prospectus, as of June 4, 1999, complied as to form in
all material respects with the requirements of the Securities Act and
the applicable rules and regulations of the Commission thereunder,
except that in each case such counsel need not express an opinion with
respect to the financial statements or other financial data contained
or incorporated by reference in the Registration Statement or the
Prospectus, and (ii) such counsel has no reason to believe that the
Registration Statement, as of its effective date, contained any untrue
statement of a material fact or omitted to state any material fact
required to be stated therein or necessary in order to make the
statements therein not misleading or that the Prospectus contains any
untrue statement of a material fact or omits to state any material
fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading,
except that in each case such counsel need not express an opinion with
respect to the financial statements or other financial data contained
or incorporated by reference in the Registration Statement or the
Prospectus.
In addition, Stokes & Bartholomew, P.A. shall have furnished to
Lehman Brothers its written opinion, as special tax counsel to the
Company, addressed to Lehman Brothers and dated the Delivery Date, in
form and substance reasonably satisfactory to Lehman Brothers.
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(f) Simpson Thacher & Bartlett, special New York counsel for the
Company, shall have furnished to Lehman Brothers its written opinion
addressed to Lehman Brothers and dated the Delivery Date, in form and
substance reasonably satisfactory to Lehman Brothers, to the effect
that:
(i) The Indenture was duly qualified under the Trust
Indenture Act and, assuming the Indenture has been duly
authorized, executed and delivered by the Company and, assuming
that the Indenture is a valid and binding agreement of the
Trustee, the Indenture constitutes a valid and legally binding
instrument of the Company enforceable against the Company in
accordance with its terms;
(ii) Assuming the Notes have been duly authorized, executed
and issued by the Company and, assuming due authentication
thereof by the Trustee and upon payment and delivery in
accordance with the terms of this Agreement, the Notes will
constitute valid and legally binding obligations of the Company
enforceable in accordance with their terms and entitled to the
benefits of the Indenture;
(iii) No consent, approval, authorization, order,
registration or qualification of or with any Federal or New York
governmental agency or body or, to our knowledge, any Federal or
New York court is required for the issue and sale of the Notes by
the Company and the compliance by the Company with all of the
provisions of this Agreement, except for the registration under
the Securities Act and the Exchange Act of the Notes and such
consents, approvals, authorizations, registrations or
qualifications as may be required under state securities or Blue
Sky laws in connection with the purchase and distribution of the
Notes by Lehman Brothers;
(iv) The statements made in the Prospectus under the caption
"Description of Notes," insofar as they purport to constitute
summaries of the documents referred to therein, constitute
accurate summaries of the terms of such documents in all material
respects;
(v) The Registration Statement has become effective under
the Securities Act and the Prospectus was filed pursuant to Rule
424(b) of the Rules and Regulations and, to our knowledge, no
stop order suspending the effectiveness of the Registration
Statement has been issued or proceeding for that purpose has been
instituted or threatened by the Commission; and
(vi) The Company is not an "investment company" within the
meaning of and subject to regulation under the Investment Company
Act of 1940, as amended.
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In rendering such opinion, such counsel may state that its
opinion is limited to matters governed by the Federal laws of the
United States of America and the laws of the State of New York.
(g) Lehman Brothers shall have received from Latham & Watkins,
counsel for Lehman Brothers, such opinion or opinions, dated the
Delivery Date, with respect to the issuance and sale of the Notes, the
Registration Statement, the Prospectus and other related matters as
Lehman Brothers may reasonably require, and the Company shall have
furnished to such counsel such documents as they reasonably request
for the purpose of enabling them to pass upon such matters.
(h) At the time of execution of this Agreement, Lehman Brothers
shall have received from Arthur Andersen LLP a letter, in form and
substance satisfactory to Lehman Brothers, addressed to Lehman
Brothers and dated the date hereof (i) confirming that they are
independent public accountants within the meaning of the Securities
Act and are in compliance with the applicable requirements relating to
the qualification of accountants under Rule 2-01 of Regulation S-X of
the Commission and (ii) stating, as of the date hereof (or, with
respect to matters involving changes or developments since the
respective dates as of which specified financial information is given
in the Prospectus, as of a date not more than five days prior to the
date hereof), the conclusions and findings of such firm with respect
to the financial information and other matters ordinarily covered by
accountants' "comfort letters" to underwriters in connection with
registered public offerings.
(i) With respect to the letter of Arthur Andersen LLP referred to
in the preceding paragraph and delivered to Lehman Brothers
concurrently with the execution of this Agreement (the "initial
letter"), the Company shall have furnished to Lehman Brothers a letter
(the "bring-down letter") of such accountants, in form and substance
satisfactory to Lehman Brothers, addressed to Lehman Brothers and
dated the Delivery Date (i) confirming that they are independent
public accountants within the meaning of the Securities Act and are in
compliance with the applicable requirements relating to the
qualification of accountants under Rule 2-01 of Regulation S-X of the
Commission, (ii) stating, as of the date of the bring-down letter (or,
with respect to matters involving changes or developments since the
respective dates as of which specified financial information is given
in the Prospectus, as of a date not more than five days prior to the
date of the bring-down letter), the conclusions and findings of such
firm with respect to the financial information and other matters
covered by the initial letter and (iii) confirming in all material
respects the conclusions and findings set forth in the initial letter.
(j) The Company shall have furnished to Lehman Brothers a
certificate, dated the Delivery Date, of its Chairman of the Board,
its President or a Vice President and its chief financial officer
stating that:
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(i) The representations, warranties and agreements of the
Company in Section 1 are true and correct as of the Delivery
Date; the Company has complied with all its agreements contained
herein; and the conditions set forth in Sections 7(a), 7(k), 7(l)
and 7(m) have been fulfilled; and
(ii) They have carefully examined the Registration Statement
and the Prospectus and, in their opinion (A) as of the Effective
Date, the Registration Statement and Prospectus did not include
any untrue statement of a material fact and did not omit to state
a material fact required to be stated therein or necessary to
make the statements therein not misleading, and (B) since the
Effective Date no event has occurred which should have been set
forth in a supplement or amendment to the Registration Statement
or the Prospectus.
(k) (i) Neither the Company nor any of its subsidiaries shall
have sustained since the date of the latest audited financial
statements included in the Prospectus any loss or interference with
its business from fire, explosion, flood or other calamity, whether or
not covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth or
contemplated in the Prospectus or (ii) since such date there shall not
have been any change in the capital stock or long-term debt of the
Company or any of its subsidiaries or any change, or any development
involving a prospective change, in or affecting the general affairs,
management, financial position, stockholders' equity or results of
operations of the Company and its subsidiaries, otherwise than as set
forth or contemplated in the Prospectus, the effect of which, in any
such case described in clause (i) or (ii), is, in the judgment of
Lehman Brothers, so material and adverse as to make it impracticable
or inadvisable to proceed with the public offering or the delivery of
the Notes being delivered on the Delivery Date on the terms and in the
manner contemplated in the Prospectus.
(l) Subsequent to the execution and delivery of this Agreement
(i) no downgrading shall have occurred in the rating accorded the
Company's debt securities by any "nationally recognized statistical
rating organization," as that term is defined by the Commission for
purposes of Rule 436(g)(2) of the Rules and Regulations and (ii) no
such organization shall have publicly announced that it has under
surveillance or review, with possible negative implications, its
rating of any of the Company's debt securities.
(m) Subsequent to the execution and delivery of this Agreement
there shall not have occurred any of the following: (i) trading in
securities generally on the New York Stock Exchange or the American
Stock Exchange or in the over-the-counter market, or trading in any
securities of the Company on any exchange or in the over-the-counter
market, shall have been suspended or minimum prices
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shall have been established on any such exchange or such market by the
Commission, by such exchange or by any other regulatory body or
governmental authority having jurisdiction, (ii) a banking moratorium
shall have been declared by Federal or state authorities, (iii) the
United States shall have become engaged in hostilities, there shall
have been an escalation in hostilities involving the United States or
there shall have been a declaration of a national emergency or war by
the United States or (iv) there shall have occurred such a material
adverse change in general economic, political or financial conditions
(or the effect of international conditions on the financial markets in
the United States shall be such) as to make it, in the judgment of
Lehman Brothers, impracticable or inadvisable to proceed with the
public offering or delivery of the Notes being delivered on the
Delivery Date on the terms and in the manner contemplated in the
Prospectus.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for Lehman Brothers.
8. Indemnification and Contribution.
(a) The Company shall indemnify and hold harmless Lehman
Brothers, its officers and employees and each person, if any, who
controls Lehman Brothers within the meaning of the Securities Act,
from and against any loss, claim, damage or liability, joint or
several, or any action in respect thereof (including, but not limited
to, any loss, claim, damage, liability or action relating to purchases
and sales of Notes), to which Lehman Brothers, that officer, employee
or controlling person may become subject, under the Securities Act or
otherwise, insofar as such loss, claim, damage, liability or action
arises out of, or is based upon, (i) any untrue statement or alleged
untrue statement of a material fact contained (A) in any Preliminary
Prospectus, the Registration Statement or the Prospectus or in any
amendment or supplement thereto, or (B) in any blue sky application or
other document prepared or executed by the Company (or based upon any
written information furnished by the Company) specifically for the
purpose of qualifying any or all of the Notes under the securities
laws of any state or other jurisdiction (any such application,
document or information being hereinafter called a "Blue Sky
Application"), (ii) the omission or alleged omission to state in any
Preliminary Prospectus, the Registration Statement or the Prospectus,
or in any amendment or supplement thereto, or in any Blue Sky
Application any material fact required to be stated therein or
necessary to make the statements therein not misleading or (iii) any
act or failure to act or any alleged act or failure to act by Lehman
Brothers in connection with, or relating in any manner to, the Notes
or the offering contemplated hereby, and which is included as part of
or referred to in any loss, claim, damage, liability or action arising
out of or based upon matters covered by clause (i) or (ii) above
(provided that the Company shall not be liable in the case of any
matter covered by this clause (iii) to the extent that it is
determined in a final judgment by a court of
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competent jurisdiction that such loss, claim, damage, liability or
action resulted directly from any such acts or failures to act
undertaken or omitted to be taken by Lehman Brothers through its gross
negligence or willful misconduct), and shall reimburse Lehman Brothers
and each such officer, employee or controlling person promptly upon
demand for any legal or other expenses reasonably incurred by Lehman
Brothers, that officer, employee or controlling person in connection
with investigating or defending or preparing to defend against any
such loss, claim, damage, liability or action as such expenses are
incurred; provided, however, that the Company shall not be liable in
any such case to the extent that any such loss, claim, damage,
liability or action arises out of, or is based upon, any untrue
statement or alleged untrue statement or omission or alleged omission
made in any Preliminary Prospectus, the Registration Statement or the
Prospectus, or in any such amendment or supplement, or in any Blue Sky
Application, in reliance upon and in conformity with written
information concerning Lehman Brothers furnished to the Company by or
on behalf of Lehman Brothers specifically for inclusion therein and
described in Paragraph 8(e); and provided further that as to any
Preliminary Prospectus this indemnity agreement shall not inure to the
benefit of Lehman Brothers, its officers or employees or any person
controlling Lehman Brothers on account of any loss, claim, damage,
liability or action arising from the sale of Notes to any person by
Lehman Brothers if Lehman Brothers failed to send or give a copy of
the Prospectus, as the same may be amended or supplemented, to that
person within the time required by the Securities Act, and the untrue
statement or alleged untrue statement of any material fact or omission
or alleged omission to state a material fact in such Preliminary
Prospectus was corrected in the Prospectus, unless such failure
resulted from non-compliance by the Company with Section 5(c). For
purposes of the last proviso to the immediately preceding sentence,
the term "Prospectus" shall not be deemed to include the documents
incorporated therein by reference, and Lehman Brothers shall not be
obligated to send or give any supplement or amendment to any document
incorporated by reference in any Preliminary Prospectus or the
Prospectus to any person other than a person to whom Lehman Brothers
had delivered such incorporated document or documents in response to a
written request therefor. The foregoing indemnity agreement is in
addition to any liability which the Company may otherwise have to
Lehman Brothers or to any officer, employee or controlling person of
Lehman Brothers.
(b) Lehman Brothers shall indemnify and hold harmless the
Company, its officers and employees, each of its directors, and each
person, if any, who controls the Company within the meaning of the
Securities Act, from and against any loss, claim, damage or liability,
joint or several, or any action in respect thereof, to which the
Company or any such director, officer or controlling person may become
subject, under the Securities Act or otherwise, insofar as such loss,
claim, damage, liability or action arises out of, or is based upon,
(i) any untrue statement or alleged untrue statement of a material
fact contained (A) in any Preliminary Prospectus, the Registration
Statement or the Prospectus or in any
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amendment or supplement thereto, or (B) in any Blue Sky Application or
(ii) the omission or alleged omission to state in any Preliminary
Prospectus, the Registration Statement or the Prospectus, or in any
amendment or supplement thereto, or in any Blue Sky Application any
material fact required to be stated therein or necessary to make the
statements therein not misleading, but in each case only to the extent
that the untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with
written information concerning Lehman Brothers furnished to the
Company by or on behalf of Lehman Brothers specifically for inclusion
therein, and shall reimburse the Company and any such director,
officer or controlling person for any legal or other expenses
reasonably incurred by the Company or any such director, officer or
controlling person in connection with investigating or defending or
preparing to defend against any such loss, claim, damage, liability or
action as such expenses are incurred. The foregoing indemnity
agreement is in addition to any liability which Lehman Brothers may
otherwise have to the Company or any such director, officer, employee
or controlling person.
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of any claim or the commencement of any action,
the indemnified party shall, if a claim in respect thereof is to be
made against the indemnifying party under this Section 8, notify the
indemnifying party in writing of the claim or the commencement of that
action; provided, however, that the failure to notify the indemnifying
party shall not relieve it from any liability which it may have under
this Section 8 except to the extent it has been materially prejudiced
by such failure and, provided further, that the failure to notify the
indemnifying party shall not relieve it from any liability which it
may have to an indemnified party otherwise than under this Section 8.
If any such claim or action shall be brought against an indemnified
party, and it shall notify the indemnifying party thereof, the
indemnifying party shall be entitled to participate therein and, to
the extent that it wishes, jointly with any other similarly notified
indemnifying party, to assume the defense thereof with counsel
reasonably satisfactory to the indemnified party. After notice from
the indemnifying party to the indemnified party of its election to
assume the defense of such claim or action, the indemnifying party
shall not be liable to the indemnified party under this Section 8 for
any legal or other expenses subsequently incurred by the indemnified
party in connection with the defense thereof other than reasonable
costs of investigation; provided however, that any indemnified party
shall have the right to employ separate counsel in any such action and
to participate in the defense thereof but the fees and expenses of
such counsel shall be at the expense of such indemnified party unless
(i) the employment thereof has been specifically authorized by the
indemnifying party in writing, (ii) such indemnified party shall have
been advised by such counsel that there may be one or more legal
defenses available to it which are different from or additional to
those available to the indemnifying party and in the reasonable
judgment of such counsel it is advisable for such indemnified party to
employ separate counsel or (iii) the indemnifying party has failed to
assume the defense of
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such action and employ counsel reasonably satisfactory to the
indemnified party, in which case, if such indemnified party notifies
the indemnifying party in writing that it elects to employ separate
counsel at the expense of the indemnifying party, the indemnifying
party shall not have the right to assume the defense of such action on
behalf of such indemnified party, it being understood, however, that
the indemnifying party shall not, in connection with any one such
action or separate but substantially similar or related actions in the
same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more
than one separate firm of attorneys at any time for all such
indemnified parties, which firm shall be designated in writing by
Lehman Brothers, if the indemnified parties under this Section 8
consist of Lehman Brothers or any of their respective officers,
employees or controlling persons, or by the Company, if the
indemnified parties under this Section consist of the Company or any
of the Company's directors, officers, employees or controlling
persons. No indemnifying party shall (i) without the prior written
consent of the indemnified parties (which consent shall not be
unreasonably withheld), settle or compromise or consent to the entry
of any judgment with respect to any pending or threatened claim,
action, suit or proceeding in respect of which indemnification or
contribution may be sought hereunder (whether or not the indemnified
parties are actual or potential parties to such claim or action)
unless such settlement, compromise or consent includes an
unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding, or (ii) be
liable for any settlement of any such action effected without its
written consent (which consent shall not be unreasonably withheld),
but if settled with the consent of the indemnifying party or if there
be a final judgment of the plaintiff in any such action, the
indemnifying party agrees to indemnify and hold harmless any
indemnified party from and against any loss or liability by reason of
such settlement or judgment.
(d) If the indemnification provided for in this Section 8 shall
for any reason be unavailable to or insufficient to hold harmless an
indemnified party under Section 8(a) or 8(b) in respect of any loss,
claim, damage or liability, or any action in respect thereof, referred
to therein, then each indemnifying party shall, in lieu of
indemnifying such indemnified party, contribute to the amount paid or
payable by such indemnified party as a result of such loss, claim,
damage or liability, or action in respect thereof, (i) in such
proportion as shall be appropriate to reflect the relative benefits
received by the Company on the one hand and Lehman Brothers on the
other from the offering of the Notes or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault
of the Company, on the one hand and Lehman Brothers on the other with
respect to the statements or omissions which resulted in such loss,
claim, damage or liability, or action in respect thereof, as well as
any other relevant equitable considerations. The relative benefits
received by the Company, on the one hand and Lehman Brothers on the
other with respect
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to such offering shall be deemed to be in the same proportion as the
total net proceeds from the offering of the Notes purchased under this
Agreement (before deducting expenses) received by the Company, on the
one hand, and the total underwriting discounts and commissions
received by Lehman Brothers with respect to the Notes purchased under
this Agreement, on the other hand, bear to the total gross proceeds
from the offering of the Notes under this Agreement, in each case as
set forth in the table on the cover page of the Prospectus. The
relative fault shall be determined by reference to whether the untrue
or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact relates to information supplied by
the Company or Lehman Brothers, the intent of the parties and their
relative knowledge, access to information and opportunity to correct
or prevent such statement or omission. The Company and Lehman Brothers
agree that it would not be just and equitable if contributions
pursuant to this Section were to be determined by pro rata allocation
(even if Lehman Brothers were treated as one entity for such purpose)
or by any other method of allocation which does not take into account
the equitable considerations referred to herein. The amount paid or
payable by an indemnified party as a result of the loss, claim, damage
or liability, or action in respect thereof, referred to above in this
Section shall be deemed to include, for purposes of this Section 8(d),
any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or
claim. Notwithstanding the provisions of this Section 8(d), Lehman
Brothers shall not be required to contribute any amount in excess of
the amount by which the total price at which the Notes underwritten by
it and distributed to the public was offered to the public exceeds the
amount of any damages which Lehman Brothers has otherwise paid or
become liable to pay by reason of any untrue or alleged untrue
statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
(e) Lehman Brothers confirms and the Company acknowledges that
the statements with respect to the public offering of the Notes by
Lehman Brothers set forth as the fifth paragraph, the first sentence
of the eighth paragraph, and the ninth paragraph under the caption
"Underwriting" in the Prospectus are correct and constitute the only
information concerning Lehman Brothers furnished in writing to the
Company by or on behalf of Lehman Brothers specifically for inclusion
in the Registration Statement and the Prospectus.
9. Termination. The obligations of Lehman Brothers hereunder may be
terminated by Lehman Brothers by notice given to and received by the Company
prior to delivery of and payment for the Notes if, prior to that time, any of
the events described in Sections 7(k), 7(l) or 7(m), shall have occurred or if
Lehman Brothers shall decline to purchase the Notes for any reason permitted
under this Agreement.
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10. Reimbursement of Lehman Brothers' Expenses. If (a) the Company
shall fail to tender the Notes for delivery to Lehman Brothers by reason of any
failure, refusal or inability on the part of the Company to perform any
agreement on its part to be performed, or because any other condition of the
obligations hereunder required to be fulfilled by the Company is not fulfilled,
the Company will reimburse Lehman Brothers for all reasonable out-of-pocket
expenses (including fees and disbursements of counsel) incurred by Lehman
Brothers in connection with this Agreement and the proposed purchase of the
Notes, and upon demand the Company shall pay the full amount thereof to Lehman
Brothers. If this Agreement is terminated pursuant to Section 9 by reason of the
default of Lehman Brothers, the Company shall not be obligated to reimburse
Lehman Brothers on account of those expenses.
11. Notices, etc. All statements, requests, notices and agreements
hereunder shall be in writing, and:
(a) if to Lehman Brothers, shall be delivered or sent by mail,
telex or facsimile transmission to Lehman Brothers Inc., Three World
Financial Center, New York, New York 10285, Attention: Syndicate
Department (Fax: 212-526-6588), with a copy, in the case of any notice
pursuant to Section 8(c), to the Director of Litigation, Office of the
General Counsel, Lehman Brothers Inc., 3 World Financial Center, 10th
Floor, New York, NY 10285;
(b) if to the Company, shall be delivered or sent by mail, telex
or facsimile transmission to the address of the Company set forth in
the Registration Statement or Prospectus, Attention: Michael W. Devlin
(Fax: 615-263-0212), with a copy to Elizabeth E. Moore, Esq., Stokes &
Bartholomew, P.A., 424 Church Street, Suite 2800, Nashville, Tennessee
37219;
provided however, that any notice to Lehman Brothers pursuant to
Section 8(c) shall be delivered or sent by mail, telex or facsimile transmission
to Lehman Brothers at its address set forth in its acceptance telex to Lehman
Brothers, which address will be supplied to any other party hereto by Lehman
Brothers upon request. Any such statements, requests, notices or agreements
shall take effect at the time of receipt thereof. The Company shall be entitled
to act and rely upon any request, consent, notice or agreement given or made by
Lehman Brothers Inc.
12. Persons Entitled to Benefit of Agreement. This Agreement shall
inure to the benefit of and be binding upon Lehman Brothers, the Company and
their respective successors. This Agreement and the terms and provisions hereof
are for the sole benefit of only those persons, except that (A) the
representations, warranties, indemnities and agreements of the Company contained
in this Agreement shall also be deemed to be for the benefit of the person or
persons, if any, who control Lehman Brothers within the meaning of Section 15 of
the Securities Act and (B) the indemnity agreement of Lehman Brothers contained
in Section 8(c) of this Agreement shall be deemed to be for the benefit of
directors of the Company, officers of the Company who have signed the
Registration Statement and any person controlling the Company within the meaning
of Section 15 of the Securities Act. Nothing in this Agreement is intended or
shall be construed to give any person, other than the persons referred to in
this Section 12, any
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legal or equitable right, remedy or claim under or in respect of this Agreement
or any provision contained herein.
13. Survival. The respective indemnities, representations, warranties
and agreements of the Company and Lehman Brothers contained in this Agreement or
made by or on behalf on them, respectively, pursuant to this Agreement, shall
survive the delivery of and payment for the Notes and shall remain in full force
and effect, regardless of any investigation made by or on behalf of any of them
or any person controlling any of them.
14. Definition of the Terms "Business Day" and "Subsidiary." For
purposes of this Agreement, (a) "business day" means any day on which the New
York Stock Exchange, Inc. is open for trading and (b) "subsidiary" has the
meaning set forth in Rule 405 of the Rules and Regulations.
15. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF NEW YORK.
16. Counterparts. This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.
17. Headings. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
[Signature page follows]
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If the foregoing correctly sets forth the agreement among the Company and Lehman
Brothers, please indicate your acceptance in the space provided for that purpose
below.
Very Truly Yours,
PRISON REALTY TRUST, INC.
By /s/ Michael W. Devlin
---------------------------------
Name: Michael W. Devlin
Title: Chief Operating Officer
Accepted:
LEHMAN BROTHERS INC.
By /s/ Edward B. McGeough
------------------------------
Authorized Representative
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