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EXHIBIT 4.20
THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO THE
PROVISIONS OF A SECURITIES PURCHASE AGREEMENT DATED AS OF JUNE
23, 1994 AS SUBSEQUENTLY AMENDED ON JULY 11, 1995, DECEMBER
31, 1996, MAY 12, 1997, DECEMBER 31, 1997 AND DECEMBER 30,
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇, A TENNESSEE
CORPORATION AND PREDECESSOR IN INTEREST BY MERGER TO THE
CORPORATION ("CCA") AND SODEXHO S.A., A FRENCH CORPORATION AND
PREDECESSOR IN INTEREST TO THE HOLDER ("SODEXHO S.A."), A
REGISTRATION RIGHTS AGREEMENT DATED AS OF JUNE 23, 1994
BETWEEN CCA AND SODEXHO S.A., AND A STOCKHOLDERS AGREEMENT
DATED AS OF JUNE 23, 1994 AMONG CCA, SODEXHO S.A. AND CERTAIN
STOCKHOLDERS OF CCA, COPIES OF WHICH ARE ON FILE AT THE
OFFICES OF THE CORPORATION.
THE SECURITIES REPRESENTED HEREBY 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 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.
PRISON REALTY CORPORATION
FLOATING RATE CONVERTIBLE SUBORDINATED NOTE
DUE MARCH 8, 2004
NO. 01 $20,000,000
PRISON REALTY CORPORATION, a corporation duly organized and existing
under the laws of the State of Maryland (herein called the "Corporation"), for
value received, hereby promises to pay to SODEXHO ALLIANCE, S.A., a French
societe' anonyme, or registered assigns (hereinafter referred to as the
"Holder"), the principal sum of Twenty Million Dollars ($20,000,000) on March 8,
2004, and to pay interest thereon from the date hereof semi-annually on June 30
and December 31 of each year (each, an "Interest Payment Date"), commencing June
30, 1998, at the Floating Rate, as defined herein, until the principal hereof is
paid or made available for payment. The interest payable will be paid to the
person in whose name this Note is registered at the close of business on the
Business Day immediately preceding the date such payment is due. Payment of the
principal of and interest on this Note will be made at the office of the
Corporation in Nashville, Tennessee, in such coin or currency of the United
States of America as at the time of payment is legal tender for payment of
public and private debts or, at the option of the Holder, payments of principal
or interest may be made by check mailed to the address of the person entitled
thereto as such address shall appear in the records of the Corporation;
provided, however, that at the option of the Corporation payments of principal
or interest may be made by wire transfer to the account of the person entitled
thereto as designated in writing to the Corporation. Anything herein to the
contrary notwithstanding, if the Holder elects to receive payments of principal
or interest by mail, such
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payments will be deemed made when deposited in the United States mail, postage
prepaid, addressed as set forth in the preceding sentence.
1. Definitions.
As used herein, the following terms will be deemed to have the meanings
set forth below:
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in the city of
Nashville, Tennessee, are authorized or obligated by law or executive order to
close.
"Closing Price" means, with respect to the Common Stock on any day, (i)
the last reported sales price regular way or, in case no such reported sale
takes place on such day, the average of the reported closing bid and asked
prices regular way, in either case on the New York Stock Exchange or the
American Stock Exchange, or (ii) if the Common Stock is not listed or admitted
to trading on such exchanges, the last reported sales price regular way, or in
case no such reported sale takes place on such day, the average of the reported
closing bid and asked prices regular way, on the principal national securities
exchange on which the Common Stock is listed or admitted to trading, or (iii) if
the Common Stock is not listed or admitted to trading on any national securities
exchange, the last reported sales price regular way in the National Market of
the National Association of Securities Dealers, Inc., or (iv) if the Common
Stock is not listed or admitted to trading on any national securities exchange
or the National Market, the average of the closing bid and asked price on such
day in the over-the-counter market as reported by Nasdaq, or (v) if none of the
above are applicable, the average of the bid and asked prices for such day as
furnished by any New York Stock Exchange member firm regularly making a market
in the Common Stock selected for such purpose by the Board of Directors of the
Corporation or a committee thereof.
"Common Stock" means the Corporation's Common Stock, $0.01 par value
per share.
"Event of Default" means any one of the following events (whatever the
reason for such Event of Default or whether it be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree, or order of
any court or any order, rule, or regulation of any administrative or
governmental body):
(1) default in the payment of any interest upon this Note when
it becomes due and payable, and continuance of such default for a
period of thirty (30) days; or
(2) default in the payment of the principal of this Note at
its maturity; or
(3) default under any bond, debenture, note or other evidence
of indebtedness for money borrowed in excess of $100,000 by the
Corporation, 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
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prior to the date on which it would otherwise have become due and
payable, without such acceleration having been rescinded or annulled,
or (B) such indebtedness having been discharged within a period of ten
(10) days after there shall have been given, by registered or certified
mail, to the Corporation by any holder of such indebtedness a written
notice specifying such default and requiring the Corporation to cause
such acceleration to be rescinded or annulled or cause such
indebtedness to be discharged; or
(4) the entry of a decree or order by a court having
jurisdiction in the premises adjudging the Corporation 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 of the
Corporation 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
(5) the institution by the Corporation of proceedings to be
adjudicated a bankrupt 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 of such petition or to
the appointment of a receiver, liquidator, assignee, trustee,
sequestrator, or similar official of the Corporation 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 in furtherance of such action.
"Floating Rate" means the six (6) month London Interbank Offered Rate
(LIBOR) as reported each day in The Wall Street Journal plus 135 basis points or
1.35%, calculated on a daily basis. The Note shall bear interest at the Floating
Rate from the date such Note is issued to the date the principal hereof is paid
or made available for payment or upon conversion of such principal portion of
the Note in accordance with Section 2 hereof. Interest on the Note shall be
computed on the daily principal balance at the Floating Rate. The Floating Rate
shall be calculated upon the issuance of the Note (the "Issue Date") and shall
be recalculated upon each Interest Payment Date for the following six-month
period. In computing interest on the Note, the date of issuance of the Note
shall be included and the date of payment shall be excluded; provided that if
the Note is repaid on the same day on which it is issued, one day's interest
shall be paid on the Note.
"Mandatory Conversion Date" means the Business Day specified by the
Corporation as the date upon which the principal amount of this Note will be
converted into shares of Common Stock pursuant to the Corporation's right to
compel such conversion.
"Mandatory Prepayment Dates" means respectively: (i) March 8, 2002 and
March 8, 2003, upon which dates, at the election of the Holder, by written
notice given to the Corporation at least thirty (30) days before each such date,
the Corporation shall pay to the Holder one-third (1/3) of the
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original principal amount of this Note and one-third (1/3) of all accrued and
unpaid interest on this Note, or such lesser principal amount and all accrued
and unpaid interest thereon if requested by the Holder in such notice; and (ii)
March 8, 2004 upon which the Corporation shall pay to the Holder all or any
remaining portion of the outstanding principal amount and all accrued but unpaid
interest on this Note, as provided hereafter.
"Senior Indebtedness" means the principal of and premium, if any, and
unpaid interest on (a) indebtedness (other than the Notes) of the Corporation,
whether or not secured and whether heretofore or hereafter (i) incurred for
borrowed money, or (ii) evidenced by a note or similar instrument given in
connection with the acquisition by the Corporation of any business, properties
or assets, including securities (but not including any account payable or other
obligation created or assumed by the Corporation in the ordinary course of
business in connection with the obtaining of materials or services), (b) any
refundings, renewals, extensions or deferrals of any such indebtedness, and (c)
obligations under capital leases, in each case for the payment of which the
Corporation is liable directly or indirectly by guarantee, letter of credit,
obligation to purchase or acquire, or otherwise, unless the terms of the
instrument evidencing such indebtedness or capital lease or pursuant to which
such indebtedness or capital lease is outstanding specifically provide that such
indebtedness or capital lease is not superior in right of payment to the Notes.
2. Conversion of Note.
(a) Subject to and upon compliance with the provisions of this Note,
and Sections 2.1 and 8 of that certain Securities Purchase Agreement by and
among the Holder and the Corporation dated as of June 23, 1994 as amended (the
"Securities Agreement"), the Holder is entitled, at its option, at any time on
or before the close of business on March 4, 2004, or in case this Note or a
portion hereof is called for conversion by the Corporation, or the Holder
requests prepaying in accordance with the terms hereof, then in respect of this
Note or such portion hereof until and including, but not after, the close of
business on the third Business Day prior to the Mandatory Repayment Date, to
convert this Note into fully paid and nonassessable shares of Common Stock;
provided, however, that: (i) the Corporation shall not be entitled to call all
or any portion of this Note and the Holder shall not be entitled to convert all
or a portion of this Note into fully paid and nonassessable shares of Common
Stock unless and until the Merger is consummated; and (ii) the Holder shall not
be entitled to convert all or a portion of this Note into fully paid and
nonassessable shares of New Prison Realty Common Stock if such conversion would
result in the Holder beneficially (through the application of Section 544 of the
Internal Revenue Code of 1986, as amended (the "Code"), as modified by Section
856(h)(1)(B) of the Code) or constructively (through the application of Section
318 of the Code, as modified by Section 856(d)(5) of the Code) owning, directly
or indirectly, shares of New Prison Realty Common Stock in excess of the New
Prison Realty Ownership Limit.
(b) This Note or any portion of the principal amount hereof which is
One Thousand Dollars ($1,000), an integral multiple of One Thousand Dollars
($1,000), or the remaining principal balance of this Note may be converted at
the principal amount thereof, or of such portion thereof, into fully paid and
nonassessable shares of Common Stock, at the Conversion Price, determined as
hereinafter provided, in effect at the time of conversion.
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(c) The price at which shares of Common Stock shall be delivered upon
conversion (herein called the "Conversion Price") shall be $7.80 per share. The
Conversion Price shall be adjusted in certain instances as provided in Section 4
herein.
(d) To exercise the conversion privilege, the Holder must surrender
this Note, duly endorsed or assigned to the Corporation or in blank, at the
offices of the Corporation in Nashville, Tennessee, accompanied by written
notice to the Corporation at such office as the Holder elects to convert this
Note or, if less than the entire principal amount thereof is to be converted,
the portion thereof to be converted. Such notice shall be in substantially the
form attached hereto as Exhibit A and incorporated herein by reference. No
payment or adjustment shall be made upon any conversion of this Note on account
of any dividends payable on the Common Stock issued upon conversion; provided,
however, that the Holder shall be entitled to receive the full amount of any
dividends declared with respect to the Common Stock with a record date on or
after the effective date of such conversion. All accrued but unpaid interest
through the Business Day immediately preceding the date of such conversion with
respect to the principal amount of this Note being converted shall be payable
upon conversion.
(e) All Notes delivered for conversion shall be delivered to the
Corporation to be cancelled.
3. Adjustments of Conversion Price.
(a) In case the Corporation shall pay or make a dividend or other
distribution on any class of capital stock of the Corporation in shares of
Common Stock, the Conversion Price in effect at the opening of business on the
day following the date fixed for the determination of stockholders entitled to
receive such dividend or other distribution shall be reduced by multiplying such
Conversion Price by a fraction of which the numerator shall be the number of
shares of Common Stock outstanding at the close of business on the date fixed
for such determination and the denominator shall be the sum of such number of
shares and the total number of shares constituting such dividend or other
distribution, such reduction to become effective immediately after the opening
of business on the day following the date fixed for such determination.
(b) In case the outstanding shares of Common Stock shall be subdivided
into a greater number of shares (including by means of a stock dividend), the
Conversion Price in effect at the opening of business on the day following the
day upon which such subdivision becomes effective shall be proportionately
reduced, and, conversely, in case outstanding shares of Common Stock shall each
be combined into a smaller number of shares, the Conversion Price in effect at
the opening of business on the day following the day upon which such combination
becomes effective shall be proportionately increased, such reduction or
increase, as the case may be, to become effective immediately after the opening
of business on the day following the day upon which such subdivision or
combination becomes effective.
(c) In case the Corporation shall, by dividend or otherwise, distribute
to all holders of shares of Common Stock evidences of indebtedness or assets
(including securities, but excluding any rights or warrants referred to in
Section 4(f) below and any dividend or distribution paid in cash out of the
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retained earnings of the Corporation or paid in shares of Common Stock), the
Conversion Price shall be adjusted so that the same shall equal the price
determined by multiplying the Conversion Price in effect immediately prior to
the close of business on the date fixed for the determination of stockholders
entitled to receive such distribution by a fraction, of which the numerator
shall be an amount per share equal to the average Closing Price for the fifteen
(15) trading days prior to (but not including) the date fixed for such
determination of the portion of the assets or evidences of indebtedness so
distributed allocable to one share of Common Stock and the denominator shall be
such current market price per share of the Common Stock, such adjustment to
become effective immediately prior to the opening of business on the day
following the date fixed for the determination of stockholders entitled to
receive such distribution.
(d) In case the Common Stock shall be changed into the same or a
different number of shares of any class or classes of stock, whether by capital
reorganization, reclassification, or otherwise (other than a subdivision or
combination of shares or a stock dividend described in Section 4(b) above, or a
consolidation, merger or sale of assets described in Section 8 below), then and
in each such event the Holder shall have the right thereafter to convert this
Note into the kind and amount of shares of stock and other securities and
property receivable upon such reorganization, reclassification, or other change,
by holders of the number of shares of Common Stock into which this Note might
have been converted immediately prior to such reorganization, reclassification,
or exchange.
(e) Except as provided in this Note, if and whenever the Corporation
shall issue or sell, or, pursuant to the terms of this Note, is deemed to have
issued or sold, any shares of its Common Stock for a consideration per share
less than the Conversion Price in effect immediately prior to the time of such
issuance and sale, then, forthwith upon such issuance or sale, the Conversion
Price shall be reduced to the price determined by dividing (i) an amount equal
to the sum of (a) the number of shares of Common Stock outstanding immediately
prior to such issuance and sale multiplied by the then existing Conversion
Price, and (b) the consideration, if any, received by the Corporation upon such
issuance or sale, by (ii) the total number of shares of Common Stock outstanding
immediately after such issuance and sale.
(f) Anything herein to the contrary notwithstanding, the issuance or
sale of the following shares of Common Stock or options, warrants or other
rights to purchase Common Stock shall be excluded from any calculation of, and
shall not be deemed issued or sold for purposes of calculating, any reduction,
adjustment or readjustment of the Conversion Price hereunder: (i) shares of
Common Stock issued upon conversion of this Note; (ii) shares of Common Stock or
options, warrants or other rights to purchase Common Stock issuable, reserved
for issuance or issued pursuant to a stock option plan, employee stock ownership
plan or other compensatory benefit plan of the Corporation, duly adopted by its
Board of Directors; and (iii) shares of Common Stock, issuable, reserved for
issuance or issued pursuant to any presently outstanding warrants or options, or
any options, warrants or other rights issuable, reserved for issuance or issued
to officers of the Corporation in the future for compensatory purposes, if duly
authorized by its Board of Directors.
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(g) If the Corporation shall issue (whether directly or by assumption
in a merger or otherwise) any rights to subscribe for or to purchase, or any
options for the purchase of, (i) Common Stock or (ii) Convertible Securities, as
defined in Section 4(h) below (such rights or options being herein called
"Options"), whether or not such Options are immediately exercisable, and if the
price per share for which Common Stock is issuable upon the exercise of such
Options or upon the conversion or exchange of such Convertible Securities
(determined by dividing (i) the total amount, if any, received or receivable by
the Corporation as consideration for the granting of such Options, plus the
aggregate amount of additional consideration payable to the Corporation upon the
exercise of all such Options, plus, in the case of such Options which relate to
Convertible Securities, the aggregate amount of additional consideration, if
any, payable upon the issuance or sale of such Convertible Securities and upon
the conversion or exchange thereof, by (ii) the maximum number of shares of
Common Stock issuable upon the exercise of such Options or upon the conversion
or exchange of all such Convertible Securities issuable upon the exercise of
such Options) shall be less than the Conversion Price in effect immediately
prior to the issuance of such Options, then the maximum number of shares of
Common Stock issuable upon the exercise of such Options, or upon the conversion
or exchange of the maximum amount of such Convertible Securities issuable upon
the exercise of such Options, shall be deemed to have been issued for such price
per share as of the date of issuance of such Options and thereafter shall be
deemed to be outstanding. Except as otherwise provided below, no adjustment of
the Conversion Price shall be made upon the actual issuance of such Common Stock
or of such Convertible Securities upon exercise of such Options or upon the
actual issue of such Common Stock upon conversion or exchange of such
Convertible Securities.
(h) If the Corporation shall issue (whether directly or by assumption
in a merger or otherwise) or sell any stock or securities convertible into or
exchangeable for Common Stock (such stock or securities being herein called
"Convertible Securities"), whether or not the rights to exchange or convert any
such Convertible Securities are immediately exercisable, and if the price per
share for which Common Stock is issuable upon such conversion or exchange
(determined by dividing (i) the total amount received or receivable by the
Corporation as consideration for the issuance or sale of such Convertible
Securities, plus the aggregate amount of additional consideration, if any,
payable to the Corporation upon the conversion or exchange thereof, by (ii) the
maximum number of shares of Common Stock issuable upon the conversion or
exchange of all such Convertible Securities) shall be less than the Conversion
Price in effect immediately prior to such issuance or sale, then the maximum
number of shares of Common Stock issuable upon conversion or exchange of all
such Convertible Securities shall be deemed to have been issued for such price
per share as of the date of the issuance or sale of such Convertible Securities
and thereafter shall be deemed to be outstanding, provided that (a) except as
otherwise provided below, no adjustment of the Conversion Price shall be made
upon the actual issuance of such Common Stock upon conversion or exchange of
such Convertible Securities, and (b) if any such issuance or sale of such
Convertible Securities is made upon any exercise of any Option to purchase any
such Convertible Securities for which adjustment of the Conversion Price have
been or are to be made pursuant to other provisions of this Note, no further
adjustment of the Conversion Price shall be made by reason of such issuance or
sale of Convertible Securities.
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(i) Upon the happening of any of the following events, namely, (i) if
the purchase price provided for in any Option referred to above, (ii) the
additional consideration, if any, payable upon the conversion or exchange of any
Convertible Securities referred to above, or (iii) the rate at which any
Convertible Securities referred to above are convertible into or exchangeable
for Common Stock shall change at any time (other than under or by reason of
provisions designed to protect against dilution), the Conversion Price in effect
at the time of such event shall forthwith be readjusted to the Conversion Price
which would have been in effect at such time had such Options or Convertible
Securities still outstanding provided for such changed purchase price,
additional consideration, or conversion rate, as the case may be, at the time
initially granted, issued, or sold. If the purchase price provided for in any
such Option referred to above or the rate at which any Convertible Securities
referred to above are convertible into or exchangeable for Common Stock shall be
reduced at any time other than under or by reason of provisions with respect
thereto designed to protect against dilution, then the Conversion Price shall
forthwith be adjusted as provided herein.
(j) If any shares of Common Stock, Options, or Convertible Securities
shall be issued or sold for cash, the consideration received therefor shall be
deemed to be the amount received by the Corporation therefor, without deduction
therefrom of any expenses incurred or any underwriting commissions paid by the
Corporation in connection therewith. In case any shares of Common Stock,
Options, or Convertible Securities shall be issued or sold for a consideration
other than cash, the amount of the consideration other than cash received by the
Corporation shall be deemed to be the fair value of such consideration as
determined in good faith by the Board of Directors of the Corporation, without
deduction of any expenses incurred or any underwriting commissions paid by the
Corporation in connection therewith. In case any Options shall be issued in
connection with the issuance and sale of other securities of the Corporation,
together comprising one integral transaction in which no specific consideration
is allocated to such Options by the parties thereto, such Options shall be
deemed to have been issued without consideration.
(k) For the purposes of the adjustments to the Conversion Price
provided for in this Note, (a) if any Options or the conversion privilege
represented by any Convertible Securities shall expire without having been
exercised, the Conversion Price as adjusted upon the issuance of such Options or
Convertible Securities shall be readjusted to the Conversion Price that would
have been in effect had an adjustment been made on the basis (i) that the number
of shares of Common Stock deemed outstanding upon the exercise of such Options
or the conversion of such Convertible Securities shall be the number of shares
of Common Stock actually issued upon the exercise of such Options, plus the
number of shares of Common Stock actually issued upon the conversion of such
Convertible Securities, and (ii) such shares of Common Stock were issued for the
consideration actually received by the Corporation upon such exercise, plus the
consideration actually received by the Corporation for the granting of all such
Options, whether or not exercised, plus the consideration received for issuing
the Convertible Securities actually converted, plus the consideration actually
received by the Corporation upon the conversion of such Convertible Securities,
and (b) if any Options or the conversion privilege represented by any such
Convertible Securities shall not have been exercised upon receipt by the
Corporation of the Holder's written notice of its election to convert in the
case of the exercise of the Holder's conversion privilege, the Conversion Price
shall be readjusted by the Corporation in accordance with the provisions of
clause (a) above with respect to the portion of this
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Note actually converted, with such readjustment to become effective as of the
close of business on the day fixed for such conversion in the case of the
exercise of the Holder's conversion privilege.
(l) No adjustment or readjustment in the Conversion Price shall be
required unless such adjustment or readjustment (plus any adjustments or
readjustments not previously made by reason of this Section 4(l)) would require
an increase or decrease of at least one percent (1%) in such price; provided,
however, that any adjustments which by reason of this Section 4(l) are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Section 4(l) shall be made to
the nearest cent.
(m) Notwithstanding the foregoing paragraphs (a) through (l) above, no
adjustment or readjustment in the Conversion Price shall be required as a result
of issuances of securities by the Company to the Holder in accordance with the
terms and provisions of the Securities Purchase Agreement by and among CCA and
Sodexho S.A. dated as of June 23, 1994.
4. Notice of Adjustment in Conversion Price.
(a) Whenever the Conversion Price is required to be adjusted or
readjusted as herein provided, the Corporation shall compute the adjusted or
readjusted Conversion Price and shall prepare an Officer's Certificate setting
forth the adjusted or readjusted Conversion Price and showing in reasonable
detail the facts upon which such adjustment or readjustment is based and the
computation thereof, and such certificate shall forthwith be forwarded to the
Holder in accordance with the provisions contained herein, any such adjustment
or readjustment shall be deemed to be effective immediately upon the occurrence
of the event giving rise thereto.
(b) In case:
(i) the Corporation shall declare a dividend (or any other
distribution) on its shares of Common Stock payable otherwise than in
cash out of its earned surplus; or
(ii) the Corporation shall authorize the granting to the
holders of its shares of Common Stock of rights or warrants entitling
them to subscribe for or purchase any shares of capital stock of any
class or of any other rights; or
(iii) of any reclassification of the shares of Common Stock
(other than a subdivision or combination of its outstanding shares of
Common Stock, including by a stock dividend), or of any consolidation
or merger to which the Corporation is a party and for which approval of
any stockholders of the Corporation is required, or of the sale or
transfer of all or substantially all of the assets of the Corporation;
or
(iv) of the voluntary or involuntary dissolution, liquidation
or winding up of the Corporation;
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then the Corporation shall cause to be mailed to the Holder at such Holder's
last address as it shall appear in the records of the Corporation, at least
twenty (20) days (or ten (10) days in any case specified in clause (a) or (b)
above) prior to the applicable record date hereinafter specified, a notice
stating (x) the date on which a record is to be taken for the purpose of such
dividend, distribution, rights, or warrants, or, if a record is not to be taken,
the date as of which the holders of Common Stock of record to be entitled to
such dividend, distribution, rights, or warrants are to be determined, or (y)
the date on which such reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation, or winding up is expected to become effective and the
date as of which it is expected that holders of Common Stock of record shall be
entitled to exchange their shares of Common Stock for securities, cash, or other
property deliverable upon such reclassification, consolidation, merger, sale,
transfer, dissolution, liquidation, or winding up. Such notice shall also state
whether such transaction will result in any adjustment in the Conversion Price
applicable to this Note and, if so, shall state what the adjusted Conversion
Price will be and when it will become effective. Neither the failure to give the
notice required by this paragraph, nor any defect therein, to any holder of
Notes shall affect the sufficiency of the notice required to be given by the
Corporation to the holders of the Common Stock by the General Corporation Law of
the State of Delaware or the legality or validity of any such dividend,
distribution, right, warrant, reclassification, consolidation, merger, sale,
transfer, liquidation, dissolution, or winding-up, or the vote on any action
authorizing such with respect to the other holders.
5. Reservation of Common Stock. The Corporation shall at all times reserve and
keep available, free from preemptive rights, out of its authorized shares of
Common Stock, for the purpose of effecting the conversion of the Notes, the full
number of shares of Common Stock then issuable upon the conversion of all
outstanding Notes and shall take all action necessary so that shares of Common
Stock so issued will be validly issued, fully paid, and nonassessable.
6. Payment of Expenses. The Corporation will pay any and all stamp or similar
taxes that may be payable in respect of the issue or delivery of shares of
Common Stock on conversion of this Note. The Corporation shall not, however, be
required to pay any tax which may be payable in respect of any transfer involved
in the issue and delivery of shares of Common Stock in a name other than that of
the Holder, and no such issue or delivery shall be made unless and until the
person requesting such issue has paid to the Corporation the amount of any such
tax, or has established to the satisfaction of the Corporation that such tax has
been paid.
7. Certain Business Transactions. The Corporation agrees that in case of any
consolidation of the Corporation with, or merger of the Corporation into, any
other corporation, or in case of any merger of another corporation into the
Corporation (other than a merger which does not result in any reclassification,
conversion, exchange, or cancellation of outstanding shares of Common Stock of
the Corporation or other material change to the capitalization of the
Corporation), or in case of any sale or transfer of all or substantially all of
the assets of the Corporation, the Corporation shall require the corporation
formed by such consolidation or resulting from such merger or which acquires
such assets, as the case may be, to execute and deliver to the Holder an
agreement providing that the Holder shall have the right thereafter, during the
period this Note shall be convertible, to convert this Note into the kind and
amount of securities, cash, and other property receivable upon
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such consolidation, merger, sale, or transfer by a holder of the number of
shares of Common Stock of the Corporation into which this Note might have been
converted immediately prior to such consolidation, merger, sale, or transfer.
Such agreement shall provide for adjustments to protect against dilution for
events subsequent to the effective date of such consolidation, merger, sale, or
transfer which shall be as nearly equivalent as may be practicable to the
adjustments provided for herein. The above provisions of this Note shall
similarly apply to successive consolidations, mergers, sales, or transfers.
8. Mandatory Conversion.
(a) On or after June 23, 1999, at such time as the Closing Price of the
Common Stock has equaled or exceeded one hundred sixty percent (160%) of the
Conversion Price (as it may from time to time be adjusted) for ten (10) trading
days out of a twenty (20) consecutive trading day period, the Corporation may
require the Holder to convert all or a portion of the principal amount of this
Note into shares of Common Stock. To exercise such right, the Corporation must
deliver written notice of the exercise of such right to the Holder at least ten
(10) Business Days prior to the Mandatory Conversion Date, specifying the
Mandatory Conversion Date and the portion of the principal amount of this Note
to be converted into Common Stock. Such notice shall be in substantially the
form attached hereto as Exhibit B and incorporated herein by reference (the
"Mandatory Conversion Notice"). The Mandatory Conversion Notice shall be given
in accordance with the notice provisions provided hereafter.
(b) All conversions effected pursuant to the preceding paragraph will
be made effective as of the close of business on the Mandatory Conversion Date
at the Conversion Price in effect on the Mandatory Conversion Date; provided
that the Closing Price on the Mandatory Conversion Date has equaled or exceeded
one hundred sixty percent (160%) of the greater of (x) 20% over the Closing
Price on the Business Day preceding the Issue Date; and (y) the Conversion Price
for ten (10) trading days out of the twenty (20) trading day period prior to the
Mandatory Conversion Date. If the Closing Price on the Mandatory Conversion Date
has not equaled or exceeded one hundred sixty percent (160%) of the greater of
(x) 20% over the Closing Price on the Business Day preceding the Issue Date; and
(y) the Conversion Price for such ten (10) trading days, the Corporation's
election to require conversion will be deemed void and no conversion will be
effected pursuant to such notice. However, such event will not be deemed to
alter or restrict the Corporation's right to again require conversions at such
time as the Closing Price equals or exceeds one hundred sixty percent (160%) of
the greater of (x) 20% over the Closing Price on the Business Day preceding the
Issue Date; and (y) the then current Conversion Price for ten (10) trading days
out of the twenty (20) trading day period prior to such time. Upon conversion
required by the Corporation pursuant to this paragraph and the immediately
preceding paragraph, all accrued but unpaid interest with respect to the
principal amount of Notes being converted shall be payable in accordance with
the provisions of 8(c) below.
(c) Conversions of this Note effected by the exercise of the
Corporation's right to require conversion will be deemed effective as of the
close of business on the Mandatory Conversion Date without any action by the
Holder and the Holder will, as of such time, be a stockholder of the
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Corporation with respect to the number of shares of Common Stock into which the
principal balance of this Note (or such portion of the principal balance of this
Note as the Corporation shall have specified) shall have been converted. The
Holder agrees promptly to surrender this Note for cancellation following
mandatory conversion. Certificates representing the shares of Common Stock
issuable by the Corporation as a result of the mandatory conversion of all or a
portion of the principal balance of this Note and all dividends and other
distributions payable with respect to such shares and all accrued but unpaid
interest payable pursuant to the immediately preceding paragraph will be
retained by the Corporation pending surrender of this Note for cancellation.
Upon surrender of this Note, such certificates will be delivered to the Holder
and such dividends and other distributions, and all retained interest with
respect to the principal amount of this Note which is converted, will be paid to
the Holder, but in each case without interest thereon.
9. Partial Conversion. If this Note is converted in part only, upon such
conversion the Corporation shall execute and deliver to the Holder (upon
surrender of this Note for cancellation), at the expense of the Corporation, a
new Note or Notes of authorized denominations in aggregate principal amount
equal to the unconverted portion of the principal amount of this Note and in all
other respects identical to this Note.
10. Fractional Shares. No fractional shares of Common Stock shall be issued upon
conversion of this Note. If more than one Note shall be surrendered for
conversion at one time by the same Holder, the number of full shares which shall
be issuable upon conversion thereof shall be computed on the basis of the
aggregate principal amount of the Notes (or specified portions thereof) so
surrendered. Any fractional shares of Common Stock which would otherwise be
issuable upon conversion of this Note (or specified portions thereof) will be
disregarded.
11. Mandatory Prepayment.
(a) The Holder may require the Corporation to prepay all or a portion of the
then outstanding principal amount of this Note together with all accrued but
unpaid interest as of any Mandatory Prepayment Date. To exercise such right of
prepayment, the Holder must provide the Corporation with at least thirty (30)
days prior written notice of the Mandatory Prepayment Date and the portion of
the principal amount of this Note (which must be in integral multiples of One
Thousand Dollars ($1,000)) to be prepaid. Such notice shall be in substantially
the form attached hereto as Exhibit C, which is incorporated herein by
reference. On the Mandatory Prepayment Date specified, the Corporation shall
prepay one-third (1/3) of the original principal amount of this Note on each
Mandatory Prepayment Date or such lesser other principal amount as the Holder
requires the Corporation to prepay, and in either case all accrued but unpaid
interest thereon. Any prepayment will be made at the offices of the Corporation
in Nashville, Tennessee or by mail or wire transfer, as provided herein.
Notwithstanding the foregoing, each holder of Notes may submit one (1), but not
more than one (1), request for prepayment hereunder during a single calendar
year.
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12. Priority of Senior Indebtedness.
(a) The Corporation covenants and agrees, and the Holder likewise
covenants and agrees, that no payment shall be made by the Corporation on
account of principal of or interest on this Note, or otherwise, if there shall
have occurred and be continuing a default with respect to any Senior
Indebtedness (i) permitting the acceleration thereof and such default is the
subject of a judicial proceeding, or (ii) the Corporation receives notice of
such a default from the holders of an aggregate principal amount of Senior
Indebtedness entitling such holders to compel the acceleration thereof
(provided, however, that in the case of Senior Indebtedness issued pursuant to
an indenture, such notice may be validly given only by the trustee under such
indenture), unless and until such default or Event of Default shall have been
cured or waived or shall have ceased to exist or such notice is withdrawn or
found by a court of competent jurisdiction to be invalid.
(b) Upon any acceleration of the principal of this Note or any payment
of the Corporation or distribution of assets of the Corporation of any kind or
character, whether in cash, property, or securities, to creditors of the
Corporation upon any dissolution or winding up or liquidation or reorganization
of the Corporation, whether voluntary or involuntary, or in bankruptcy,
insolvency, receivership, or other similar proceedings, all amounts due or to
become due upon all Senior Indebtedness shall first be paid in full in money or
money's worth, or payment thereof provided for, before any payment is made on
account of the principal of or interest on this Note and upon such dissolution
or winding up or liquidation or reorganization, any payment by the Corporation,
or distribution of assets of the Corporation of any kind or character, whether
in cash, property, or securities, to which the Holder would be entitled except
for the provisions hereof, shall be paid by the Corporation or by any receiver,
trustee in bankruptcy, liquidating trustee, agent, or other person making such
payment or distribution directly to the holders of Senior Indebtedness or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing any Senior Indebtedness
may have been issued, as their respective interests may appear, to the extent
necessary to pay all Senior Indebtedness in full in money or money's worth,
after giving effect to any concurrent payment or distribution to or for the
holders of Senior Indebtedness, before any payment or distribution is made to
the Holder.
(c) Notwithstanding the foregoing, in the event that any payment of or
distribution of assets of the Corporation of any kind or character, whether in
cash, property or securities, prohibited by the foregoing, shall be received by
the Holder before all Senior Indebtedness is paid in full in money or money's
worth, or provision is made for such payment, then and in such event such
payment or distribution shall be paid over or delivered to the holders of Senior
Indebtedness or their representative or representatives, or to the trustee or
trustees under any indenture pursuant to which any instruments evidencing any
Senior Indebtedness may have been issued, as their respective interests may
appear, for application to the payment of all Senior Indebtedness remaining
unpaid to the extent necessary to pay all Senior Indebtedness in full in money
or money's worth, after giving effect to any concurrent payment or distribution
to or for the holders of such Senior Indebtedness (but subject to the power of a
court of competent jurisdiction to make other equitable provision, which shall
have been determined by such court to give effect to the rights conferred herein
upon
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the Senior Indebtedness and the holders thereof with respect to this Note or the
Holder hereof by a lawful plan or reorganization or readjustment under
applicable bankruptcy law).
13. Ability to Alter Senior Indebtedness. The holders of Senior Indebtedness
may, at any time and from time to time, without the consent of or notice to the
Holder, without incurring responsibility to the Holder and without impairing or
releasing the obligations of the Holder to the holders of Senior Indebtedness:
(i) change the manner, place or terms of payment or change or extend the time of
payment of, or renew or alter Senior Indebtedness, or otherwise amend in any
manner Senior Indebtedness or any instrument evidencing the same or any
agreement under which such Senior Indebtedness is outstanding; (ii) sell,
exchange, release or otherwise deal with any property pledged, mortgaged or
otherwise securing Senior Indebtedness; (iii) release any person liable in any
manner for the collection of Senior Indebtedness; and (iv) exercise or refrain
from exercising any rights against the Corporation and any other person.
14. Subrogation to Senior Indebtedness. Subject to the payment in full of all
amounts then due (whether by acceleration of the maturity thereof or otherwise)
on account of the principal of, premium, if any, and interest on all Senior
Indebtedness at the time outstanding, the Holder shall be subrogated to the
rights of the holders of Senior Indebtedness to receive payments or
distributions of cash, property or securities of the Corporation applicable to
the Senior Indebtedness until the principal of and interest on this Note shall
be paid in full; and, for the purposes of such subrogation, no payments or
distributions by the Corporation to the holders of Senior Indebtedness of any
cash, property or securities to which the Holder would be entitled except for
the provisions hereof, and no payments over pursuant to the provisions hereof to
the holders of Senior Indebtedness by the Holder, shall, as between the
Corporation, its creditors other than holders of Senior Indebtedness, and the
Holder, be deemed to be a payment by the Corporation to or on account of the
Senior Indebtedness. It is understood that the foregoing provisions of this Note
are, and are solely intended for the purpose of defining the relative rights of
the Holder on the one hand and the holders of Senior Indebtedness on the other
hand.
15. No Impairment of Rights under the Note. Nothing contained in this Note is
intended to or shall impair, as among the Corporation, its creditors other than
the holders of Senior Indebtedness, and the Holder, the obligation of the
Corporation, which is absolute and unconditional, to pay to the Holder the
principal of and interest on this Note as and when the same shall become due and
payable in accordance with its terms, or is intended to or shall affect the
relative rights of the Holder and creditors of the Corporation other than the
holders of Senior Indebtedness, nor shall anything herein prevent the Holder
from exercising all remedies otherwise permitted by applicable law upon default
under this Note.
16. Distribution of Assets. Upon any payment or distribution of assets of the
Corporation referred to herein, the Holder shall be entitled to rely upon any
order or decree made by any court of competent jurisdiction in which such
dissolution, winding up, liquidation or reorganization proceedings are pending,
or certificate of the receiver, trustee in bankruptcy, liquidating trustee,
agent or other person making such payment or distribution, delivered to the
Holder, for the purpose of ascertaining the persons entitled to participate in
such distribution, the holders of Senior
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Indebtedness and other indebtedness of the Corporation, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto.
17. Notice of Nonpayment. The Corporation shall give prompt written notice to
the Holder of any fact known to the Corporation which would prohibit the making
of any payment of moneys to or by the Corporation in respect of this Note.
18. Event of Default. If an Event of Default occurs and is continuing, then and
in every such case the Holder may declare the principal of this Note and all
accrued but unpaid interest to be due and payable immediately, by a notice in
writing to the Corporation, and upon any such declaration such principal and all
accrued but unpaid interest shall become immediately due and payable.
19. Notice. Any notice required by the provisions of this Note to be given to
the Holder or the Corporation shall be (i) delivered personally, or (ii) mailed,
certified mail, return receipt requested, or (iii) delivered by overnight
courier service to the Holder at its address appearing on the books of the
Corporation or to the Corporation at its principal executive offices, or (iv)
transmitted by telex or facsimile transmission to the respective numbers of the
Holder or the Corporation furnished in writing to the other party, and confirmed
by certified mail, return receipt requested. Any such notice shall be deemed to
have been given upon delivery, if delivered personally; three (3) days after
mailing, if mailed; and one Business Day after delivery to the courier or after
transmission, if delivered by overnight courier or transmitted by telex or
facsimile transmission.
20. Transfer or Exchange of Note.
(a) The transfer of this Note is registrable on the books of the Corporation
upon surrender of this Note for registration of transfer at the offices of the
Corporation in Nashville, Tennessee, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Corporation duly
executed by, the Holder or its attorney duly authorized in writing, and
thereupon one or more new Notes of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or
transferees.
(b) New Notes are issuable only in registered form without coupons in
denominations of One Thousand Dollars ($1,000) and any integral multiple
thereof. This Note is exchangeable for a like aggregate principal amount of
Notes of a different authorized denomination, as requested by the Holder. No
service charge shall be made for any such registration of transfer or exchange,
but the Corporation may require payment of a sum sufficient to cover any tax or
other governmental charge payable in connection therewith.
(c) In the event of prepayment or conversion of this Note in part only, a
new Note or Notes for the unpaid or unconverted portion hereof will be issued in
the name or names requested by the Holder upon the cancellation hereof.
(d) Prior to the due presentment of this Note for registration of transfer,
the Corporation and any agent of the Corporation may treat the person in whose
name this Note is registered as the owner
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hereof for all purposes, whether or not this Note be overdue, and neither the
Corporation nor any such agent shall be affected by notice to the contrary.
21. Governing Law. This Note will be governed by and construed under the
internal laws of the State of New York. Any disputes under this Note shall be
resolved by litigation in the United States District Court for the Southern
District of New York. The Holder and the Corporation each hereby irrevocably
submit to the jurisdiction of said Court and agree that neither will ▇▇▇ in
connection with any matter covered under this Note in any other court. The
English language version of all documents related to the transactions
contemplated hereby shall govern.
[Signature page to follow]
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IN WITNESS WHEREOF, the undersigned has executed this Note effective as
of the date first above written.
PRISON REALTY CORPORATION
By: /s/ Doctor ▇. ▇▇▇▇▇▇
---------------------------------
Doctor ▇. ▇▇▇▇▇▇, Chief
Executive Officer
ATTEST:
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Secretary
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Exhibit A
[FORM OF CONVERSION NOTICE]
TO PRISON REALTY CORPORATION
The undersigned owner of the attached Note hereby irrevocably exercises
the option to convert such Note, or portion hereof (which is $1,000 or an
integral multiple thereof) below designated, into shares of Common Stock of
Prison Realty Corporation in accordance with the terms of such Note, and directs
that the shares issuable and deliverable upon the conversion, and any Notes
representing any unconverted principal amount thereof, be issued and delivered
to the registered holder of such Note unless a different name has been indicated
below. If shares or a new Note representing unconverted principal are to be
issued in the name of a person other than the undersigned, the undersigned will
pay all transfer taxes payable with respect thereto.
[Name of Holder]
Dated:_______________ By:______________________________
Name:____________________________
Title:___________________________
Principal Amount to be converted (in an integral
multiple of $1,000, if less than all);
$_______
Fill in for registration of
shares of Common Stock and
Note if to be issued
otherwise than to
the registered Holder.
------------------------------
Name
------------------------------
Address
------------------------------
Please print name and address
(including zip code number)
SOCIAL SECURITY OR OTHER
TAXPAYER IDENTIFYING NUMBER
------------------------------
19
Exhibit B
[FORM OF MANDATORY CONVERSION NOTICE]
-------------------------
-------------------------
-------------------------
Notice is hereby given that Prison Realty Corporation elects to require
conversion of the Floating Rate Convertible Subordinated Note, issued by it (the
"Note"). The Note to be converted and the principal amount thereof to be
converted are as follows:
Principal Number of
Outstanding Amount to be Shares to
Note Number Principal Amount Converted Be Converted
The Mandatory Conversion Date will be _______________.
PRISON REALTY CORPORATION
By:______________________________
Name:_________________________
Title:________________________
20
Exhibit C
[FORM OF MANDATORY PREPAYMENT NOTICE]
TO PRISON REALTY CORPORATION
The undersigned owner of the attached Note hereby irrevocably exercises
the right to require prepayment of such Note or portion thereof (which is $1,000
or an integral multiple thereof) and all accrued but unpaid interest with
respect to such Note. The Mandatory Prepayment Date shall be __________ __,
19__. The principal amount to be prepaid shall be $________.
[Name of Holder]
Dated:____________________ By:______________________________
Name:____________________________
Title:___________________________