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EXHIBIT 10.146
AMENDED AND RESTATED LOAN AGREEMENT
DATED AS OF JULY 13, ▇▇▇▇
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▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇
AND
FIRST UNION NATIONAL BANK OF TENNESSEE
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AMENDED AND RESTATED LOAN AGREEMENT
Dated as of July 13, 1995
THIS AMENDED AND RESTATED LOAN AGREEMENT (the
"Agreement") is entered into by and between CORRECTIONS CORPORATION OF
AMERICA, a Delaware corporation with its principal offices at ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the
"Borrower"), TRANSCOR AMERICA, INC., a Tennessee corporation, TECHNICAL
& BUSINESS INSTITUTE OF AMERICA, INC., a Michigan corporation, and
CONCEPT, INCORPORATED, a Delaware corporation (individually a "Guarantor"
and collectively, the "Guarantors"), and FIRST UNION NATIONAL BANK OF
TENNESSEE, a national banking association with offices located at ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Lender").
BACKGROUND
Borrower and Lender are currently parties to a certain
Amended and Restated Loan Agreement dated as of December 22, 1992,
between the Borrower and the Lender, as amended from time to time
(the "Loan Agreement"). The Loan Agreement provides for a line of
credit in favor of Borrower in an amount not to exceed $15,000,000
to be used for working capital and to provide for the issuance of
standby letters of credit. In addition, Lender has, from time to
time, entered into other agreements with the Borrower with respect to
specific loans from Lender to Borrower, including without limitation,
the Construction Loan and Security Agreement dated as of February 23,
1994, between Borrower and Lender related to the correctional facility
located in Florence, Pinal County, Arizona (the "Construction Loan
Agreement").
It is the intention of Lender and Borrower hereunder
to amend and restate the Loan Agreement to provide for an increase
in the working capital line of credit facility to $25,000,000 to
provide working capital for the Borrower and the Guarantors, to
adopt, eliminate, expand or otherwise modify various other provisions
contained in the Loan Agreement, and to provide such other terms and
conditions as are set forth herein. It is the intent of Borrower
and Lender that this Agreement shall supersede and replace, in all
respects, the Loan Agreement and the Construction Loan Agreement, and,
upon execution of this Agreement, the Loan Agreement and the
Construction Loan Agreement shall be of no further force and effect.
The funds available under the line of credit will
directly benefit the Guarantors, and, consequently, the Guarantors have
agreed to guarantee the repayment of the obligations of the Borrower
under this Agreement.
A G R E E M E N T
In consideration of the premises, and for other good
and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, Borrower and Lender hereby amend and restate the
Loan Agreement as follows:
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ARTICLE 1
DEFINITIONS
Section 1.1. Definitions. For the purposes of this
Agreement:
"Affiliate" means, with respect to a person, any other
person (a) that directly or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common
control with, such given person, (b) that directly or indirectly
beneficially owns or holds ten percent (10%) or more of any class of
voting stock of such person, or (c) ten percent (10%) or more of
the voting stock of which is directly or indirectly beneficially owned
or held by such person. The term "control" means the possession,
directly or indirectly, of the power to direct or cause the
direction of the management and policies of a person, whether through
ownership of voting securities, by contract or otherwise.
"Agreement" means this Amended and Restated Loan
Agreement and all amendments, modifications and supplements thereto.
"Applicable Law" means all applicable provisions of
constitutions, statutes, rules, regulations and orders of all
governmental bodies and all orders and decrees of all courts,
agencies and arbitrators.
"Business Day" means any day other than a Saturday,
Sunday, or day on which banks in Nashville, Tennessee, are authorized
to close.
"Cash Flow" means the sum of net income after taxes,
plus depreciation, plus amortization, plus interest expense, measured on
a rolling four (4) quarter basis.
"Collateral" means and includes all of the Borrower's
and each Guarantor's right, title and interest in and to the
following, wherever located in the United States of America, and
whether now or hereafter existing or now owned or hereafter acquired
or arising:
(a) all accounts receivable, contract rights, general
intangibles, equity participations, or other rights
or interests of Borrower and/or the Subsidiaries
arising from the operations of all of the
Facilities, excluding only:
(1) Laredo Processing Center, Laredo,
TX;
(2) Houston Processing Center, Houston,
TX;
(3) Shelby Training Center, Memphis,
TN;
(4) Leavenworth Detention Facility,
Leavenworth, KS; and
(5) ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇, ▇▇.
(b) all equipment, including, without limitation, all
of Borrower's and the Guarantors' furniture,
fixtures, machinery, parts, accessories,
improvements, replacements and substitutions with
respect thereto, which are owned by
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Borrower and/or the Guarantors, both presently
existing and acquired in the future, excluding
facilities which are managed by the Borrower or
an Affiliate, but which are not owned by the
Borrower or a Guarantor.
(c) all real and personal property and improvements
comprising the Bay County, Florida Annex Facility
(the "Bay County Facility"), together with title
insurance, in form and substance acceptable to
the Lender and such other documents or
instruments as are customary for commercial real
estate loans of the magnitude and question.
Notwithstanding the foregoing, the deed of trust
and other security interests required hereunder
with respect to the Bay County Facility shall
not be required to be delivered so long as
prohibited by (1) that certain Loan Agreement
dated as of November 1, 1986 between Bay County,
Florida and the Borrower or (2) that certain Bay
County, Florida Detention Facilities contract
dated September 3, 1985, between Bay County and
the Borrower, as supplemented;
(d) Deeds of Trust of record in Book 3, page 6797,
Clerk's Office for Cibola County, New Mexico,
encumbering the real property and improvements
comprising the New Mexico Women's Correctional
Facility located in Grants, New Mexico (the
"Grants Deed of Trust");
(e) Deed of Trust of record in Book 265, page
3922, Clerk's Office for ▇▇▇▇▇▇▇▇ County, New
Mexico, encumbering the real property and
improvements comprising the ▇▇▇▇▇▇▇▇ County
Detention Center located in Estancia, New Mexico
(the "Estancia Deed of Trust");
(f) Deeds of Trust of record in Book 1987, page
67, Clerk's Office for Pinal County, Arizona,
encumbering the real property and improvements
comprising the correctional facility located in
Florence, Arizona (the "Florence Arizona Deed of
Trust");
(g) all of the Borrower's equipment, furniture,
fixtures, machinery, parts, accessories,
improvements, and replacements and substitutions
with respect thereto, which are located at the
Borrower's corporate headquarters in Nashville,
Tennessee;
(h) an assignment of the Borrower's right to receive
payment from ▇▇▇▇▇▇▇▇ County, Tennessee (the
"County") of the agreed-upon value of the
capital improvements with respect to the Work
House Facility in Chattanooga, ▇▇▇▇▇▇▇▇ County,
Tennessee, pursuant to that certain Corrections
Facilities Agreement by and among the Borrower,
the County and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, County Executive
of the County, dated September 20, 1984; and
(i) all collateral securing the obligations of
Borrower to Lender, as described or referred to
in the Loan Agreement dated as of June 21,
1990, by and between Lender and Borrower,
covering the West Tennessee Detention Center
located in ▇▇▇▇▇, Tennessee.
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"Current Maturing Long Term Debt" means all
indebtedness of the Borrower, including capitalized lease obligations,
which shall become due within 365 days from the date on which it
is measured.
"Debt Service Coverage Ratio" means Cash Flow divided
by the sum of Current Maturing Long Term Debt plus interest expense,
measured quarterly on a rolling four (4) quarter basis.
"Default" means any of the events or occurrences
specified in Section 11.1 hereof provided that any requirement for
notice or lapse of time or any other condition has been satisfied.
"Effective Date" means the later of:
(a) the date of this Agreement; or
(b) the date on which all of the conditions set
forth in Article 4 shall have been first fulfilled.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as from time to time amended and in effect.
"Eurodollar Interest Period" means, with respect to a
Eurodollar Loan, a period of 1, 2 or 3 months commencing on a
Business Day selected by Borrower, pursuant to this Agreement. Such
Eurodollar Interest Period shall end on the day in the last calendar
month of such period chosen by Borrower which corresponds numerically
to the beginning day of such Eurodollar Interest Period, provided,
however, that if there is no such numerically corresponding day in
such month, such Eurodollar Interest Period shall end on the last
Business Day of such month. If the Eurodollar Interest Period would
otherwise end on a day which is not a Business Day, such Eurodollar
Interest Period shall end on the next succeeding Business Day,
provided, however, that if said next succeeding Business Day falls in
a new month, such Eurodollar Interest Period shall end on the
immediately preceding Business Day. Borrower may not elect any
Eurodollar Interest Period that ends later than the Loan Termination
Date. Interest shall accrue from and including the first day of a
Eurodollar Interest Period to, but excluding the last day of such
Eurodollar Interest Period.
"Eurodollar Loan" means any Loan which bears interest
based on the LIBOR Rate.
"Facilities" means the correctional facilities operated
by the Borrower and/or the Subsidiaries in the United States and
listed on Schedule 1 attached hereto, together with any additional
facilities acquired by Borrower or any Subsidiary during the term of
this Agreement.
"Financing Statements" mean the Uniform Commercial Code
financing statements executed and delivered by the Borrower to the
Lender, naming the Lender as secured party and the Borrower, or the
Guarantors, as debtor, in connection with this Agreement.
"Floating Rate Loan" means any Loan which bears
interest based on the Prime Rate.
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"Governmental Approvals" mean all authorizations,
consents, approvals, licenses and exemptions of, registrations and
filings with, and reports to, all governmental bodies, whether
federal, state or local, and all agencies thereof.
"Guaranty", "Guaranteed" or to "Guarantee" shall mean
and include
(a) a Guaranty (other than by endorsement of
negotiable instruments for collection in the
ordinary course of business), directly or
indirectly, in any manner, of any part or all
of an obligation; and
(b) an agreement, direct or indirect, contingent or
otherwise, and whether or not constituting a
guaranty, the practical effect of which is to
assure the payment or performance (or payment of
damages in the event of nonperformance) of any
part or all of an obligation of another person
whether by
(1) the purchase of securities or obligations;
(2) the purchase, sale or lease (as lessee or
lessor) of property or the purchase or
sale of services primarily for the purpose
of enabling the obligor with respect to
such obligation to make any payment or
performance (or payment of damages in the
event of nonperformance) of or on account
of any part or all of such obligation, or
to assure the owner of such obligation
against loss;
(3) the supplying of funds to or in any
other manner investing in the obligor with
respect to such obligation, or indemnifying
or holding harmless, in any way, the
obligor against any part or all of such
obligation; or
(4) repayment of amounts drawn down by
beneficiaries of standby letters of credit.
"Guaranty Agreements" means the Guaranty and Suretyship
Agreements of even date herewith executed by the Guarantors in favor
of the Lender.
"Guaranty and Reimbursement Agreement" means the
Guaranty and Reimbursement Agreement of even date herewith executed by
the Borrower in favor of First Union National Bank of North
Carolina, an Affiliate of the Lender ("FUNBNC").
"Indebtedness" means
(a) all items (except items of capital stock,
Preferred Stock, additional paid-in capital or
retained earnings) which in accordance with
generally accepted accounting principles would be
included in determining total liabilities as
shown on the liability side of a balance sheet
at the date as of which Indebtedness is to be
determined;
(b) capitalized lease obligations;
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(c) all obligations which have been Guaranteed,
including, but not limited to, all obligations
consisting of recourse liability with respect to
accounts receivable sold or otherwise disposed of;
and
(d) the Loan.
"Internal Revenue Code" means the Internal Revenue Code
of 1986, as amended.
"LIBOR Rate" means, with respect to any Eurodollar
Loan, the interest rate per annum (rounded upward, if necessary, to
the next higher 1/100 of 1%), for deposits in United States dollars
approximately equal in the principal amount to such Eurodollar Loan
and with a maturity comparable to the Eurodollar Interest Period
chosen by Borrower (30, 60 or 90 day), which appears on the
Telerate Page 3750 at approximately 11:00 a.m., London time, two (2)
London business days prior to the date of commencement of such
Eurodollar Interest Period, as determined by Lender, as such rate is
adjusted in accordance with Lender's standard practice for reserves and
other requirements.
"Lien" means:
(a) any mortgage, deed to secure debt, deed of
trust, lien, pledge, charge, lease constituting a
capitalized lease obligation, conditional sale or
other title retention agreement, or other security
interest, security title or encumbrance of any
kind in respect of any property of the Borrower,
or upon the income or profits therefrom;
(b) any arrangement, express or implied, under which
any property of the Borrower is transferred,
sequestered or otherwise identified for the
purpose of subjecting the same to the payment of
Indebtedness or performance of any other
obligation in priority to the payment of the
general, unsecured creditors of the Borrower;
(c) any Indebtedness which is unpaid more than 30
days after the same shall have become due and
payable and which, if unpaid, might by law
(including but not limited to bankruptcy and
insolvency laws), or otherwise, be given any
priority whatsoever over general unsecured
creditors of the Borrower; and
(d) the filing of, or any agreement to give, any
financing statement under the Uniform Commercial
Code or its equivalent in any jurisdiction.
"Loan" or "Loans" means all amounts due the Lender
under the Working Capital Facility.
"Materially Adverse Effect" means a materially adverse
effect upon a person's business, assets, liabilities, financial
condition, results of operations or business prospects.
"Note" means the amended and restated promissory note
of the Borrower, substantially in the form of Exhibit A hereto,
payable to the order of the Lender and evidencing the Loan, as
amended and supplemented from time to time, and any replacement
thereof or substitution therefor.
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"PBGC" means the Pension Benefit Guaranty Corporation
and any successor agency.
"Permitted Liens" means:
(a) Liens securing taxes, assessments and other
governmental charges or levies (excluding any Lien
imposed pursuant to any of the provisions of
ERISA) or the claims of materialmen, mechanics,
carriers, warehousemen or landlords for labor,
materials, supplies or rentals incurred in the
ordinary course of business, but in the case of
warehousemen or landlords, only if such Liens
are junior to the Security Interest in any of
the Collateral;
(b) Liens consisting of deposits or pledges made in
the ordinary course of business in connection
with, or to secure payment of, obligations under
workmen's compensation, unemployment insurance or
similar legislation;
(c) Liens constituting encumbrances in the nature of
zoning restrictions, easements, and rights or
restrictions of record on the use of real
property of the Borrower, which in the sole
judgment of the Lender does not materially
detract from the value of such real property or
impair the use of the Borrower's real property
in the business of the Borrower;
(d) Purchase Money Liens on property other than
Inventory and liens created in connection with
the leasing of personal property by the
Borrower;
(e) Liens in favor of the Lender; and
(f) Liens listed on Schedule 5.1(g) attached hereto.
"Plan" means employee benefit plan maintained for
employees of the Borrower that is covered by Title IV of ERISA,
including such plans as may be established after the Agreement Date.
"Preceding Event" means an event which with the
giving of notice or lapse of time or both would constitute a Default
under the provisions of Section 11.1 hereof.
"Prime Rate" means at any time the rate of interest
publicly announced from time to time by the Lender as Lender's
"prime" rate as in effect at such time, and is not necessarily the
lowest or best rate charged by Lender.
"Prior Loan Documents" means the Loan Agreement and
all documents and instruments executed and delivered in connection with
the Loan Agreement, and all amendments to the foregoing prior to the
date of this Agreement.
"Purchase Money Lien" means a Lien securing
(a) Indebtedness created to secure the payment of
all or any part of the purchase price of any
property other than inventory;
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(b) any Indebtedness incurred at the time of or
within 10 days prior to or after the acquisition
of any property other than inventory for the
purpose of financing all or any part of the
purchase price thereof; and
(c) any renewals, extensions or refinancings thereof,
but not any increases in the principal amounts
thereof outstanding at the time; but only if
such Lien shall be incurred after the date of
this Agreement and shall at all times be
confined solely to the property the purchase
price of which was financed through the
incurrence of such Indebtedness.
"Reimbursement Agreements" means agreements entered into
between the Borrower and the Lender governing the Borrower's
obligations to repay the Lender for draws on standby letters of
credit, if any.
"Reportable Event" has the meaning set forth in
Section 4043(b) of ERISA.
"Secured Obligations" mean, in each case whether now
in existence or hereafter arising,
(a) the principal of, and interest on, the Loan;
(b) all of the Borrower's obligations to the Lender
under Reimbursement Agreements;
(c) all indebtedness, liabilities, obligations,
covenants and duties of the Borrower to the
Lender (or to an Affiliate of Lender which
issues letters of credit or otherwise extends
credit to Borrower), of every kind, nature and
description, direct or indirect, absolute or
contingent, now or hereafter existing, due or
not due, contractual or tortious, liquidated or
unliquidated, and whether or not evidenced by any
note, and whether or not for the payment of
money under or in respect of this Agreement, the
Note, a letter of credit or any of the
Security Documents, and shall specifically include,
without limitation, the obligations described in
Schedule 2 attached hereto; and
(d) all of the Guarantor's obligations to the Lender
under the Guaranty Agreements.
"Security Documents" means each of the following:
(a) the Financing Statements;
(b) The Guaranty Agreements;
(c) each other writing executed and delivered by the
Borrower securing the Secured Obligations; and
(d) any Reimbursement Agreement.
"Security Interest" means the Liens of the Lender on
and in the Collateral.
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"Senior Debt" means senior funded obligations,
including, without limitation, obligations evidenced by outstanding
letters of credit issued by Lender under the terms of this
Agreement.
"Subordinated Debt" means (i) the existing Indebtedness
described in Schedule 3 attached hereto, which, pursuant to its terms,
is subordinated to the Secured Obligations, and (ii) additional
Indebtedness incurred by Borrower after the date hereof with the
consent of the Lender, which pursuant to its terms, is subordinated
to the Secured Obligations.
"Subsidiary" or "Subsidiaries" means the subsidiaries of
Borrower listed in Schedule 4 attached hereto, and all other
subsidiaries formed or acquired hereafter with the consent of the
Lender, if any.
"Termination Date" means
(a) May 31, 1997, and is the date upon which the
Loan shall be payable in full without demand, or
(b) the date of the occurrence of any Default;
provided, however, that this Agreement and the obligations hereunder
may be renewed for additional one- year periods only if such renewal
shall be granted by the Lender, in its sole and absolute discretion,
on or before May 31 of the year immediately preceding the
Termination Date or any extension of the Termination Date as provided
herein, unless this Agreement is otherwise terminated by the
occurrence of a Default.
"Termination Event" means
(a) a Reportable Event; or
(b) the filing of a notice of intent to terminate
a Plan or the treatment of a Plan amendment as
a termination under Section 4041 of ERISA; or
(c) the institution of proceedings to terminate a
Plan by the PBGC under Section 4042 of ERISA,
or the appointment of a trustee to administer
any Plan.
"Unfunded Vested Accrued Benefits" means, with respect
to any Plan at any time, the amount (if any) by which
(a) the present value of all vested nonforfeitable
benefits under such Plan exceeds
(b) the fair market value of all Plan assets
allocable to such benefits;
all determined as of the then most recent valuation date for such
Plan.
"Working Capital Facility" means the loan facility
described in Section 2.1 hereof.
Section 1.2. General. All terms of an accounting
nature not specifically defined herein shall have the meaning ascribed
thereto by generally accepted accounting principles.
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Except as otherwise defined herein, the terms accounts, chattel paper,
contract rights, documents, equipment, instruments, general intangibles
and inventory, shall have the meanings given those terms in the
Uniform Commercial Code. Unless otherwise specified, a reference in
this Agreement to a particular section or subsection is a reference
to that section or subsection of this Agreement. Wherever from the
context it appears appropriate, each term stated in either the
singular and plural shall include the singular and plural, and
pronouns stated in the masculine, feminine or neuter gender shall
include the masculine, the feminine and the neuter.
ARTICLE 2
THE FACILITY
Section 2.1. Working Capital Facility. Upon the
terms and subject to the conditions of this Agreement, and in
reliance upon the representations and warranties made herein, the
Lender agrees to make advances to the Borrower from time to time, as
requested by the Borrower in accordance with the terms and conditions
hereof, up to the aggregate principal amount of $25,000,000. The
purpose of the Working Capital Facility and all advances made
hereunder shall be to (a) provide for the on-going working capital
requirements of the Borrower and the Subsidiaries and for other
general corporate purposes, and (b) permit the issuance of letters of
credit on behalf of the Borrower and the Subsidiaries. It is
expressly understood and agreed that the Lender shall make advances
hereunder only if no Default exists or is continuing under this
Agreement. During such time that a Preceding Event exists and is
continuing, the Lender shall continue to make advances pursuant to
such conditions or limitations as the Lender, in its sole discretion,
shall determine. The principal amount of any advance which is repaid
may be reborrowed by the Borrower in accordance with the terms
hereof.
Section 2.2. Manner of Borrowing. Advances under
the Working Capital Facility shall be made in increments of $100,000
upon written notice to the Lender not less than three (3) Business
Days prior to the intended disbursement date.
(a) The Borrower shall give the Lender irrevocable
notice (a "Borrowing Notice") not later than 1:00
p.m. Nashville time three (3) Business Days
prior to any requested disbursement. Each
Borrowing Notice shall be written and may be
made by telecopier, telex or cable in addition
to the means set forth for giving notice in
Section 12.1(b). Each Borrowing Notice shall
specify the requested date of such requested
disbursement, the aggregate amount of such
disbursement, the type of Loan (Floating Rate
Loan or Eurodollar Loan), and if a Eurodollar
Loan, the designated Eurodollar Interest Period.
Disbursement of the proceeds of each advance
hereunder shall be made by credit to an account
of the Borrower maintained with the Lender or by
wire transfer, bank check, or other instrument
to such other account or person as may be
agreed upon by the Borrower and the Lender from
time to time.
(b) The Borrower shall have the right at any time,
on prior irrevocable written or telefaxed notice
to the Lender, not later than 10:00 a.m.,
Nashville time, to convert any Floating Rate Loan
into a Eurodollar Loan, to convert a Eurodollar
Loan into a Floating Rate Loan, or to continue
any Eurodollar Loan for a subsequent Eurodollar
Interest Period (specifying in each case the
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Eurodollar Interest Period to be applicable
thereto), subject in each case to the following:
(1) No Eurodollar Loan shall be converted or
prepaid at any time other than at the end
of the Eurodollar Interest Period
applicable thereto;
(2) Each conversion shall be effected by
applying the proceeds of the new Eurodollar
or Floating Rate Loan, as the case may
be, to the Loan (or portion thereof) being
converted;
(3) The number of Eurodollar Loans outstanding
at any one time shall not exceed five
(5).
Each notice pursuant to this subparagraph shall be
irrevocable and shall refer to this Agreement and specify (i) the
identity and principal amount of the particular Loan that the
Borrower requests to be converted or continued, (ii) if such notice
requests conversion, the date of conversion (which shall be a Business
Day), and (iii) if a Loan is to be converted to a Eurodollar Loan,
or a Eurodollar Loan is to be continued, the Eurodollar Interest
Period with respect thereto. In the event that the Borrower shall
not give notice to continue any Eurodollar Loan for a subsequent
period, such Loan (unless repaid) shall automatically be converted into
a Floating Rate Loan. If the Borrower shall fail to specify in the
Borrowing Notice the type of borrowing, or, in the case of a
Eurodollar Loan, the applicable Eurodollar Interest Period, the Borrower
will be deemed to have requested a Floating Rate Loan. If Lender
reasonably believes that any failure by Borrower to specify the type
of borrowing or the applicable Eurodollar Interest Period shall have
resulted from failure of communications equipment or clerical error,
then prior to funding any such borrowing, the Lender shall use
reasonable efforts to obtain confirmation from Borrower of the contents
of such Borrowing Notice; however, in the absence of confirmation by
Borrower, which specifies the type of borrowing and the applicable
Eurodollar Interest Period, the Borrower will be deemed to have
requested a Floating Rate Loan. Notwithstanding anything to the
contrary contained above, if an Event of Default shall have occurred
and be continuing, no Eurodollar Loan may be continued, and no
Floating Rate Loan may be converted into a Eurodollar Loan.
Section 2.3. Repayment of Working Capital Facility.
The Working Capital Facility shall be immediately due and payable and
shall be repaid in lawful money of the United States of America in
immediately available funds as follows:
(a) Upon the Termination Date; or
(b) In accordance with the provisions of Section
11.2 hereof.
Section 2.4. Note. The obligation of the Borrower
to repay the Loan under the Working Capital Facility shall be
evidenced by, and be repayable in accordance with the terms of the
Note payable to the order of the Lender. The Note shall be dated
the Effective Date and be duly and validly executed and delivered by
the Borrower.
Section 2.5. Standby Letters of Credit. As part of
the Working Capital Facility and upon the terms and subject to the
conditions of this Agreement, and in reliance upon the representations
and warranties made herein, the Lender agrees to issue from time to
time, prior to the Termination Date, standby letters of credit
pursuant to the Bank's standard letter of credit
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application agreement and Reimbursement Agreement, a copy of which is
attached hereto as Exhibit B; provided, however, that (1) the
aggregate face amount of all such letters of credit shall not exceed
$12,500,000; (2) the duration of any such letter of credit shall not
exceed one (1) year and in no event shall extend beyond the
Termination Date; (3) there shall exist no Event of Default
hereunder; (4) the Lender may assign to an Affiliate of Bank its
obligation to issue letters of credit hereunder without the Borrower's
consent; (5) standby letters of credit shall be secured by the
Collateral and shall otherwise be subject to this Agreement and the
Security Documents; and (6) the aggregate face amount of all such
letters of credit, together with the aggregate amount outstanding
under the Loan, shall not exceed 25,000,000. Upon the issuance of a
standby letter of credit hereunder, the face amount thereof shall
immediately reduce availability for advances under the Working Capital
Facility by the amount thereof. In the event any standby letter of
credit issued pursuant hereto is drawn upon, the amount of all sums
advanced by the Lender, together with all fees, costs and expenses
in connection therewith, shall become an obligation under the Working
Capital Facility and shall be evidenced by the Note.
Section 2.6. Reimbursement Obligation. The Borrower
hereby unconditionally agrees to reimburse the Lender for the total
amount of the sums paid by the Lender in connection with the
issuance of any standby letters of credit or any additional or
further liability that may accrue against the Lender in connection
with the same, whether as a result of a draft or demand for
payment submitted thereunder, or otherwise. Any such amounts which
are not reimbursed to the Lender on demand may, at the Lender's
option and in the Lender's sole discretion, be debited at any time
against the Loan under this Agreement and shall be treated for all
purposes and shall have the same force and effect as if the same
has been cash advanced by the Lender to the Borrower pursuant to
Section 2.1 of this Agreement, subject to all the terms and
conditions of this Agreement. Notwithstanding the foregoing, the
Lender may, in its sole discretion, require the Borrower to enter
into a Reimbursement Agreement with respect to one or more standby
letters of credit.
Section 2.7. Letter of Credit Fee. As consideration
for issuing each letter of credit hereunder, the Borrower shall pay
to the Lender a fee in the amount of one percent (1%) per annum
of the face amount of each letter of credit. Payment of the letter
of credit fee shall be a condition precedent to the Lender's
obligation to issue the letter of credit.
Section 2.8. Unused Balance Fee. As consideration
for the cost of reserving and making available the Working Capital
Facility, the Borrower shall pay to the Lender a fee in the amount
of one-quarter of one percent (.25%) per annum on the average unused
balance of the Working Capital Facility. Such fee shall be due and
payable quarterly, in arrears, on the first day of each calendar
quarter, commencing originally on October 1, 1995.
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ARTICLE 3
GENERAL LOAN PROVISIONS
Section 3.1. Interest.
(a) The Borrower shall pay interest quarterly in
arrears on the first day of each quarter
commencing originally on October 1, 1995,
provided, however, that interest due on a
Eurodollar Loan shall be due and payable at the
end of each Eurodollar Interest Period. Interest
shall be calculated on the unpaid principal
amount of the Loan for each day from the day
the Loan was made until the Loan is due
(whether at the stated maturity date, by reason
of acceleration or otherwise) at a floating rate
per annum equal to:
(1) For a Floating Rate Loan, at an annual
rate equal to the Prime Rate, said rate
to change contemporaneously with any change
in the Prime Rate.
(2) For a Eurodollar Loan, at a rate equal
to the applicable LIBOR Rate plus 200
basis points (2%) per annum.
The interest for Floating Rate Loans and Eurodollar
Loans shall be computed on the basis of a 360-day
year, counting the actual number of days elapsed.
(b) If the Borrower shall fail to pay when due
(whether at the stated maturity date, by reason
of acceleration or otherwise) all or any portion
of the unpaid principal amount of the Loan, the
interest rate on each such unpaid amount for
each day from the date it was so due until
paid in full shall be equal to the Prime Rate
plus five percent (5%) per annum, until the
Loan or portion thereof, as appropriate, is paid
in full.
(c) Nothing contained in this Agreement or the Note
shall be deemed to establish or require the
payment of a rate of interest in excess of the
maximum rate permitted by any Applicable Law.
In the event that any rate of interest required
under this Agreement or the Note exceeds the
maximum rate permitted by any such Applicable
Law, such rate shall automatically be reduced to
the maximum rate permitted by such law and any
excess amount collected shall be refunded or
credited to principal.
Section 3.2. Manner of Payment.
Each payment (including prepayments) by the Borrower of
the principal of or interest on the Loan or of any other amounts
payable to the Lender under this Agreement or the Note, shall be
paid in immediately available funds and the Lender shall credit such
payment on the date of receipt by the Lender in Nashville, Tennessee.
Any payments by the Borrower shall be made without application of any
setoff, counterclaim or deduction whatsoever.
Section 3.3. Prepayment. The Borrower may, at its
option, prepay the principal amount of the Loan outstanding hereunder
at any time, in whole or in part (but all partial
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prepayments shall be in a principal amount not less than $100,000 or
an integral multiple thereof), upon giving the Lender at least three
(3) Business Days' prior notice of the aggregate principal amount to
be prepaid. In the event of a partial prepayment of principal,
accrued interest to the date of prepayment of the amount so prepaid
shall continue to be payable as provided in the Note, notwithstanding
such prepayment of principal. All accrued interest shall be paid
immediately in the event that the prepayment discharges the principal
obligation under the Note. Notwithstanding the foregoing, a Eurodollar
Loan may be prepaid only at the end of a Eurodollar Interest
Period.
Section 3.4. General. If any payment under this
Agreement or the Note shall be specified to be made upon a day
which is not a Business Day, it shall be made on the next
succeeding day which is a Business Day and such extension of time
shall in such case be included in computing interest, if any, in
accordance with such payment.
Section 3.5. Alternate Rate of Interest. In the
event, and on such occasion, that on the date of commencement of any
Eurodollar Interest Period for a Eurodollar Loan, Lender shall have
reasonably determined:
(a) That dollar deposits in the amount of the
requested principal amount of such Eurodollar Loan
are not generally available to Lender in the
London Interbank Market;
(b) That the rate at which such dollar deposits are
being offered will not adequately and fairly
reflect the cost to Lender of making or
maintaining such Eurodollar Loan during such
Eurodollar Interest Period; or
(c) That reasonable means do not exist for
ascertaining the LIBOR Rate generally, Lender
shall, as soon as practicable thereafter, given
written or telephonic notice of such determination
to the Borrower. In the event of any such
determination, any request by the Borrower for a
Eurodollar Loan shall, until the circumstances
giving rise to such notice no longer exist, be
deemed to be a request for a Floating Rate
Loan. Each determination by the Lender hereunder
shall be conclusive absent manifest error.
ARTICLE 4
CONDITIONS PRECEDENT
Section 4.1. Conditions Precedent. Notwithstanding
any other provision of this Agreement, advances under the Working
Capital Facility shall not be made until the fulfillment of each of
the following conditions:
(a) The Lender shall have received each of the
following documents, all of which shall be
satisfactory in form and substance to the Lender
and its counsel:
(1) certified copies of the certificate of
incorporation, and by-laws of the Borrower
and the Subsidiaries as in effect on the
Effective Date;
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(2) certified copies of all corporate action,
including stockholder approval, if necessary,
taken by the Borrower and the Guarantors
to authorize the execution, delivery and
performance of this Agreement, the Note
and the Security Documents, and a
certificate of incumbency with respect to
the officers of the Borrower and the
Guarantors;
(3) a certificate evidencing the good standing
of the Borrower and the Subsidiaries in
each jurisdiction in which the same is
required, such certificates to be dated no
earlier than thirty (30) days prior to
the Effective Date;
(4) a signed opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇▇,
counsel for the Borrower, opining as to
such matters in connection with this
Agreement as the Lender may reasonably
request, and such other opinions of other
counsel as Lender or its counsel may
reasonably request;
(5) Financing Statements, or amendments thereto,
naming the Borrower and/or the Guarantors
as debtor and the Lender as secured party
duly executed and delivered by the Borrower
and evidence satisfactory to the Lender as
to the filing of such statements in each
jurisdiction and each filing office where
such filing may be necessary or
appropriate to perfect the Security
Interest;
(6) to the extent deemed necessary by Lender,
amendments to the Estancia Deed of Trust,
the Grants Deed of Trust, and the Central
Arizona Deed of Trust, reflecting the terms
of this Agreement, together with an
opinion of counsel acceptable to the Lender
with respect to the validity, binding
effect and enforceability of said Amended
Real Property Deed of Trust;
(7) a certified copy of the Borrower's
casualty insurance policy or policies
certifying that such insurance is in full
force and effect and will not be
terminated without ten (10) days advance
written notice to the Lender, together with
a loss payee endorsement on each such
policy naming Lender as loss payee on such
form as the Lender shall approve in
advance;
(8) a certificate of compliance by the Chief
Executive Officer of the Borrower stating
that, to the best of his knowledge and
based on an examination sufficient to
enable him to make an informed statement:
(i) all of the representations and
warranties made or deemed to be made
under this Agreement are true and
correct as of the Effective Date;
(ii) no Default or Preceding Event exists;
(9) all Schedules required pursuant to Section
5.1 hereof; and
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(10) such other certificates, documents and
instruments as the Lender may reasonably
request, including, without limitation,
evidence reasonably satisfactory to the
Lender that all of the conditions of this
Article 4 have been satisfied.
(b) No Event of Default shall have occurred and be
continuing under the Prior Loan Documents.
(c) This Agreement, the Note and the Security
Documents shall have been duly executed and
delivered.
(d) No action, proceeding, investigation, regulation
or legislation shall have been instituted,
threatened or proposed before any court,
governmental agency or legislative body to enjoin,
restrain, or prohibit, or to obtain substantial
damages in respect of, or which is related to
or arises out of this Agreement or the
consummation of the transactions contemplated
hereby, or which, in the Lender's sole
discretion, would make it inadvisable to
consummate the transactions contemplated by this
Agreement.
(e) There shall have been no material adverse change
in the financial condition, business operations or
business affairs of the Borrower.
Section 4.2. Subsequent Advances. At the time of
the making of each advance or issuing each standby letter of credit
under the Working Capital Facility:
(a) the Borrower shall be deemed to represent and
warrant to the Lender that the Borrower is at
such time in full compliance with the covenants
and agreements herein, and no Default or
Preceding Event exists at such time;
(b) the corporate actions of the Borrower referred
to in Section 4.1(a)(2) shall remain in full
force and effect; and
(c) the Lender may, without waiving either condition,
consider the conditions specified in Section
4.2(a) and (b) fulfilled and a representation by
the Borrower to such effect made, if no written
notice to the contrary is received by the
Lender prior to the making of the advance or
issuing of the standby letter of credit.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BORROWER
Section 5.1. Representations and Warranties. The
Borrower and the Guarantors represent and warrant to the Lender that
as of the Effective Date and giving effect to the transactions
contemplated herein:
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(a) Organization; Power; Qualification.
(1) The Borrower is a corporation, duly
organized, validly existing and in good
standing under the laws of its
jurisdiction of incorporation, has the
power and authority to own its properties
and to carry on its business as now being
and thereafter proposed to be conducted
and is duly qualified and authorized to do
business as a foreign corporation in
Tennessee and in each other jurisdiction in
which the character of its properties or
the nature of its business requires such
qualification or authorization except (i)
Transcor America, Inc. is in the process
of qualifying to transact business in
certain states as necessary, which process
will be completed within 120 days from
the date hereof, and (ii) where the
failure of the Borrower to qualify would
not have a Materially Adverse Effect on
the Borrower.
(2) Each of the Subsidiaries is a corporation,
duly organized, validly existing and in
good standing under the laws of the
jurisdiction of its incorporation, has the
power and authority to own its properties
and to carry on its business as now being
and thereafter proposed to be conducted
and is duly qualified and authorized to do
business as a foreign corporation in
Tennessee and in each other jurisdiction in
which the character of its properties or
the nature of its business requires such
qualification or authorization except where
the failure of the Borrower to qualify
would not have a Materially Adverse Effect
on the Borrower.
(b) Subsidiaries and Capital Structure. Other than
the Subsidiaries, the Borrower has no
subsidiaries. The outstanding capital stock of
the Borrower has been duly and validly issued,
is fully paid and nonassessable.
(c) Authorization of Agreement, Note, Security
Documents. The Borrower, and each of the
Subsidiaries, has the right and power, and has
taken all necessary action to authorize, to
execute, deliver and perform this Agreement, the
Note, and the Security Documents in accordance
with their respective terms. This Agreement,
the Note and each of the Security Documents,
when executed and delivered in accordance with
this Agreement, will be legal, valid and binding
obligations of the Borrower, all enforceable in
accordance with their terms.
(d) Compliance of Agreement, Notes, Security Documents
with Laws, etc. The execution, delivery and
performance of this Agreement, the Note, and the
Security Documents in accordance with their
respective terms and the advances hereunder do
not and will not, by the passage of time, the
giving of notice or otherwise,
(1) require any Government Approval or violate
any Applicable Law relating to the
Borrower;
(2) conflict with, result in a breach of or
constitute a default under the certificate
of incorporation or bylaws of the
Borrower, any indenture, agreement or other
instrument to which the Borrower is a
party or by
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which it or any of its property may be
bound or any Governmental Approval relating
to the Borrower, or
(3) result in or require the creation or
imposition of any Lien upon or with
respect to any property now owned or
hereafter acquired by the Borrower other
than the Security Interest.
(e) Business. Neither the Borrower nor any
Subsidiary owns or presently intends to acquire,
or is engaged in the business of extending
credit for the purpose of purchasing or carrying,
any "margin security" or "margin stock" as
defined in the rules and regulations of the
Board of Governors of the Federal Reserve System
(herein called "Margin Stock"). None of the
proceeds of the Loan hereunder will be used,
directly or indirectly, for the purpose of
purchasing or carrying any Margin Stock or for
the purpose of reducing or retiring any
indebtedness that was originally incurred to
purchase or carry Margin Stock or for any other
purpose that might constitute this transaction a
"purpose credit" within the meaning of the rules
and regulations. Neither the Borrower nor any
subsidiary has taken or will take any action
that might cause this Agreement or the Note to
violate any rule or regulation of the Board of
Governors of the Federal Reserve System or to
violate the Securities and Exchange Act of 1934,
nor will any proceeds of the Loan be used to
acquire any security in any transaction with is
subject to Section 13 or 14 of the Securities
Exchange Act of 1934.
(f) Compliance with Law; Governmental Approvals. The
Borrower and each of the Subsidiaries have all
Governmental Approvals required by any Applicable
Law that are material to the conduct of its
business, each of which is in full force and
effect, is final and not subject to review on
appeal and is not the subject of any pending
or, to the best of Borrower's knowledge,
threatened attack by direct or collateral
proceeding. The Borrower and each of the
Subsidiaries are in compliance with each
Governmental Approval, if any, and in compliance
with all other Applicable Laws relating to it,
including, without limitation, all federal and
state securities laws, except for noncompliances
which would not, singly or in the aggregate,
cause a Default or Preceding Event or have a
Materially Adverse Effect on the Borrower and in
respect of which adequate reserves have been
established on the books of the Borrower;
(g) Titles to Properties. Except as set forth in
Schedule 5.1(g) the Borrower and/or the
Subsidiaries have good, marketable and legal
title to, or a valid leasehold interest in, its
real properties and valid and legal title to
all personal property and assets; all its such
personal property and assets are in good
condition, fit for their intended purposes.
(h) Liens. Except for tangible personal property
used in connection with the ▇▇▇▇ Correctional
Center and the Metropolitan Nashville and
Davidson County Facility,none of the Collateral
is, as of the Effective Date, subject to any
Lien, except Permitted Liens, that is superior to
the Security Interest created herein. Except
with respect to Permitted Liens, no financing
statement under the Uniform Commercial Code which
names the Borrower
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or a Subsidiary as debtor and which lists the
Collateral as collateral (other than the Financing
Statements) and which has not been terminated
has been filed in any State or other
jurisdiction, and neither the Borrower nor any
Subsidiary has signed any such financing statement
or any security agreement authorizing any secured
party thereunder to file any such financing
statement.
(i) Indebtedness . The Borrower, and each of the
Subsidiaries, have performed and is in compliance
with all of the terms of all Indebtedness and
all instruments and agreements (including
Guaranties) relating thereto, and no default or
event which with the giving of notice or lapse
of time or both would constitute a default,
exists as of the Agreement Date with respect to
any such Indebtedness.
(j) Litigation. There are no actions, suits or
proceedings pending (nor, to the knowledge of the
Borrower or the Subsidiaries, are there any
actions, suits or proceedings threatened, nor is
there any basis therefor) against or in any
other way relating adversely to or affecting the
Borrower or the Subsidiaries, or any of its
property or by any governmental body except
actions, suits or proceedings of the character
normally incident to the kind of business
conducted by the Borrower or the Subsidiaries,
which if adversely determined would not singly
or in the aggregate have a Materially Adverse
Effect on the Borrower or the Subsidiaries, and
there are no strikes or walkouts in progress
relating to any labor contracts to which the
Borrower or the Subsidiaries is a party.
(k) Patents; Trademarks. The Borrower, and/or the
Subsidiaries, own or possess all patents, patent
rights or licenses, patent applications,
trademarks, trademark rights, trade styles, trade
names, trade name rights, service marks, service
▇▇▇▇ rights, copyrights and rights with respect
to the foregoing which are required to conduct
its business as now and presently planned to be
conducted without conflict with the rights of
others. Except as set forth on Schedule
5.1(k), the Borrower possesses good and
indefeasible title to and ownership of all
trademarks, trade systems, trade names, service
marks, licenses, patents, patent applications, and
copyrights as set forth on Schedule 5.1(k) which
are currently used and intended to be used in
normal business operations, and none of the
foregoing assets is the subject of any pending
or threatened claim or challenge.
(l) Tax Returns and Payments. All federal, state
and other tax returns of the Borrower required
by law to be filed have been duly filed, and
all federal, state and other taxes, assessments
and other governmental charges or levies upon
the Borrower and its property, income, profits
and assets which are due and payable have been
paid, except any such nonpayment which is at
the time permitted under Section 8.5. The
charges, accruals and reserves on the books of
the Borrower in respect of federal and state
taxes for all fiscal years and portions thereof
since its organization are, in the judgment of
the Borrower, adequate, and the Borrower knows of
no reason to anticipate any additional
assessments for any of such years which, singly
or in the aggregate, might have a Materially
Adverse Effect on the Borrower.
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(m) Financial Statements. The Borrower has furnished
to the Lender copies of the (i) audited
consolidated statements of income and cash flows
of the Borrower for the 12-month period ended
December 31, 1994, and unaudited consolidated
statements of income and cash flow for the month
ending March 31, 1995. Each such financial
statement is complete and correct, and presents
fairly in accordance with generally accepted
accounting principles the Borrower's financial
condition as of the date of the statement or
for the period covered (except that the
unaudited financial statement shall be subject to
the normal year-end audit adjustments). Except
as disclosed or reflected in such financial
statements as at the Effective Date, and except
as disclosed in writing to the Lender prior to
the Effective Date, neither the Borrower nor any
of its Subsidiaries had any material liabilities,
contingent or otherwise, and neither the Borrower
nor any of its Subsidiaries had any material
unrealized or anticipated losses.
(n) Liabilities. Except for liabilities incurred in
the ordinary course of business or otherwise
described in the financial statements disclosed
to the Lender, neither the Borrower nor any
Subsidiary, individually or in the aggregate, has
any material liabilities, claims or assessments,
direct or indirect, absolute or contingent.
(o) Leases. Schedule 5.1(o) contains a complete and
correct listing of all (i) capitalized lease
obligations and (ii) operating leases in
effect as of the Agreement Date which call for
total annual lease payments in excess of
$100,000. The Borrower and/or the Subsidiaries
have performed and is in compliance with all the
terms of such capitalized lease obligations and
operating leases and no default or event which
with the giving of notice or lapse of time or
both would constitute a default exists as of the
Agreement Date with respect to any such
capitalized lease obligation or operating lease.
(p) ERISA. Except as set forth on Schedule 5.1(p),
neither the Borrower nor any Subsidiaries has any
Plans. Each Plan is in compliance with ERISA
in all material respects. No material liability
to the PBGC or to a Multiemployer Plan has
been, or is expected by the Borrower to be,
incurred by the Borrower or any of its
Subsidiaries.
(q) Absence of Defaults. Neither the Borrower nor
any Subsidiary is in default under its
certificate of incorporation or by-laws and no
event has occurred which has not been remedied,
cured or waived,
(1) which constitutes a Default or Preceding
Event; or
(2) which constitutes, or which with the
passage of time or giving of notice or
both would constitute, a default by the
Borrower or any Subsidiary
under any agreement (other than this Agreement)
or judgment, decree or order to which the
Borrower or any Subsidiary is a party or by
which the Borrower or any Subsidiary or any of
the respective properties of the
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Borrower or a Subsidiary may be bound, and
which event would have a Materially Adverse
Effect upon the Borrower or any Subsidiary.
(r) Accuracy and Completeness of Information. All
written information, reports and other papers and
data produced by or on behalf of the Borrower
and the Subsidiaries and furnished to the Lender
were, at the time the same were so furnished,
complete and correct in all material respects, to
the extent necessary to give the recipient a
true and accurate knowledge of the subject
matter. No fact is known to the Borrower nor
to a Subsidiary which has had, or may in the
future have (so far as the Borrower can
foresee), a Materially Adverse Effect upon the
Borrower or the Subsidiaries which has not been
set forth in such information, reports or other
papers or data, or otherwise disclosed in
writing to the Lender prior to the date of this
Agreement. No document furnished or written
statement made to the Lender in connection with
the negotiation, preparation or execution of this
Agreement, the Note or any of the Security
Documents contains or will contain any untrue
statement of a fact material to the
creditworthiness of the Borrower or omits or
will omit to state a material fact necessary in
order to make the statement contained therein not
misleading.
(s) Solvency. In each case after giving effect to
the Indebtedness represented by the Loan and the
standby letters of credit, and the transactions
contemplated by this Agreement, the Borrower and
each of the Subsidiaries is solvent, having
assets of a fair salable value which exceeds the
amount required to pay its debts. The Borrower
and each of the Subsidiaries is able to and
anticipates that it will be able to meet its
debts as they mature and has adequate capital
to conduct the business in which it is or
proposes to be engaged.
(t) Casualties; Loss, etc.. Neither the business
nor the assets of Borrower or any Subsidiary has
been materially and adversely affected as a
result of any fire, explosion, earthquake, flood,
drought, windstorm, accident, strike, or other
labor disturbance, embargo, requisition or taking
of property or cancellation of contracts, permits
or concessions by any domestic or foreign
government or any agency thereof, riot, activities
of armed forces, or acts of God, or of any
public enemy.
(u) Environmental Laws, Etc. Neither Borrower nor
any Subsidiary is in violation of any federal,
state or local environmental laws, rules or
regulations, nor has the Borrower become aware of
any facts or circumstances that would cause it
to believe that any of the facilities managed by
it have violated or are violating any federal,
state or local environmental laws, rules or
regulations.
(v) Investment Company. Neither the Borrower nor
any Subsidiary in an "investment company" or a
company controlled by an "investment company"
within the meaning of the Investment Company Act
of 1940, as amended.
Section 5.2. Survival of Representations and
Warranties, etc. All representations and warranties set forth in this
Article 5, and all representations, warranties and statements
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contained elsewhere in this Agreement or in any certificate, financial
statement, or other instrument, delivered by or on behalf of the
Borrower or the Subsidiaries pursuant to or in connection with this
Agreement, the Note or any of the Security Documents (including but
not limited to any such made in or in connection with any amendment
thereto) shall constitute representations and warranties made under
this Agreement and shall survive the execution hereof and the making
of any Loan or issuance of any standby letter of credit hereunder.
ARTICLE 6
SECURITY INTEREST
Section 6.1. Security Interest.
(a) To secure the payment, observance and performance
of the Secured Obligations, the Borrower, and
each of the Guarantors, hereby mortgages, pledges
and assigns all of the Collateral to the Lender
and grants to the Lender a continuing Security
Interest in, and a continuing Lien upon, all of
the Collateral. The Borrower and the Guarantors
acknowledge that the security interest and liens
in the Collateral are held by the Lender for
the benefit of the Lender and any Affiliate of
Lender which issues letters of credit or
otherwise extends credit to the Borrower under
the terms of this Agreement, including, without
limitation, First Union National Bank of North
Carolina, and upon the occurrence of an Event
of Default, to the extent proceeds are realized
from the disposition of the Collateral in
accordance with the terms of this Agreement, the
proceeds shall be applied by Lender to the
Secured Obligations, including, without limitation,
the obligations of the Borrower to FUNBNC under
the Guaranty and Reimbursement Agreement, in
accordance with the terms of this Agreement.
(b) As additional security for all of the Secured
Obligations, the Borrower and each of the
Guarantors, grants to the Lender a Security
Interest in, and assigns to the Lender all of
the Borrower's and each of the Guarantors'
right, title and interest in and to, any
deposits or other sums at any time credited by
or due from the Lender or the Lender's
Affiliates to the Borrower or the Guarantors
with the same rights therein as if the deposits
or other sums were credited by or due from the
Lender. The Borrower, and each of the
Guarantors, hereby authorizes the Lender's
Affiliates to pay or deliver to Lender, without
necessity on the Lender's part to resort to
other security or sources of reimbursement for
the Secured Obligations, at any time upon the
occurrence of any Default and without further
notice to the Borrower or the Guarantors (such
notice being expressly waived), any of the
aforesaid deposits (general or special, time or
demand, provisional or final) or other sums for
application of any Secured Obligation,
irrespective of whether any demand has been made
or whether such Secured Obligation is mature,
and the rights given the Lender hereunder are
cumulative with the Lender's other rights and
remedies, including other rights of set-off.
The Lender will promptly notify the Borrower of
its receipt of any such funds for application
to the Secured Obligations, but failure to do so
will not affect the validity or enforceability
thereof. The Lender may give notice of
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the above grant of a Security Interest in and
assignment of the aforesaid deposits and other
sums, and authorization, to, and make any
suitable arrangements with, any such Affiliate of
the Lender for effectuation thereof, and the
Borrower hereby irrevocably appoints the Lender as
its attorney-in-fact to collect any and all such
deposits or other sums to the extent any such
payment is not made to the Lender by such
Affiliate or participant.
Section 6.2. Continued Priority of Security Interest.
(a) The Security Interest granted in Section 6.1
hereof shall at all times be valid, perfected
and enforceable against the Borrower, and each
of the Guarantors, and all third parties in
accordance with the terms of this Agreement, as
security for the Secured Obligations, and the
Collateral shall not at any time be subject to
any Liens that are prior to, on a parity with,
or junior to the Security Interest, other than
Permitted Liens.
(b) The Borrower shall, at its sole cost and
expense, take all action that may be necessary
or desirable, or that the Lender may request,
so as at all times to maintain the validity,
perfection, enforceability and rank of the
Security Interest in the Collateral in conformity
with the requirements of Section 6.2(a), or to
enable the Lender to exercise or enforce its
rights hereunder, including but not limited to:
(1) paying all taxes, assessments and other
claims lawfully levied or assessed on any
of the Collateral, except to the extent
that such taxes, assessments and other
claims constitute Permitted Liens;
(2) obtaining, after the date of this
Agreement, landlords', mortgagees' or
mechanics' releases, subordinations or
waivers; provided, that the failure to
obtain any of the foregoing shall not be
deemed a breach of this covenant so long
as the Lender is satisfied that the
Borrower utilized its best efforts in
connection therewith;
(3) executing and delivering financing
statements, pledges, designations, mortgages,
deeds to secure debt, deeds of trust,
security agreements, hypothecations, notices
and assignments in each case in form and
substance satisfactory to the Lender
relating to the creation, validity,
perfection, maintenance or continuation of
the Security Interest under the Uniform
Commercial Code or other Applicable Law.
(c) The Lender is hereby authorized to file one or
more financing or continuation statements or
amendments thereto without the signature of or
in the name of the Borrower and each of the
Guarantors for such purpose. The Lender will
give the Borrower notice of the filing of any
such statements or amendments, which notice shall
specify the locations where such statements or
amendments were filed. A carbon, photographic,
xerographic or other reproduction of this
Agreement or of any of the Security Documents or
of any financing statement filed in connection
with this Agreement is sufficient as a financing
statement.
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ARTICLE 7
COLLATERAL COVENANTS
Until all the Secured Obligations have been paid in
full, unless the Lender shall otherwise consent in writing thereto:
Section 7.1. Ownership and Defense of Title.
(a) Except for Permitted Liens, the Borrower and the
Guarantors shall at all times be the sole owner
of each and every item of Collateral and shall
not create any lien on, or sell, lease,
exchange, assign, transfer, pledge, hypothecate,
grant a security interest or security title in
or otherwise dispose of, any of the Collateral
or any interest therein. The inclusion of
"proceeds" of the Collateral under the Security
Interest shall not be deemed a consent by the
Lender to any other sale or other disposition of
any part or all of the Collateral.
(b) The Borrower and each of the Guarantors shall
defend its title in and to, and the Security
Interest in, the Collateral against the claims
and demands of all persons.
Section 7.2. Insurance.
(a) The Borrower shall at all times cause insurance
to be maintained on the Collateral and on all
other buildings, property, and equipment against
loss or damage by fire, theft, burglary,
pilferage, loss in transit and such other
hazards as the Lender shall reasonably specify,
in amounts and under policies issued by the
Borrower's present insurers or other insurers
acceptable to the Lender. All premiums on such
insurance shall be paid (or caused to be paid)
by the Borrower and, unless heretofore delivered,
copies of the policies shall be delivered to
the Lender. The Borrower will not use or
permit the Collateral, or other buildings,
property, or equipment to be used unlawfully or
in such a way that the use causes the
Collateral, or other buildings, property, or
equipment to be excluded from coverage.
(b) All insurance policies required under Section 7.2
shall contain clauses in the form submitted to
the Borrower by the Lender or in other form
and substance satisfactory to the Lender, naming
the Lender, as loss payee and providing
(1) that all proceeds thereunder shall be
payable to the Lender;
(2) that no such insurance shall be affected
by any act or neglect of the insured or
owner of the property described in such
policy; and
(3) that such policy and any loss payee
clause may not be cancelled, amended or
terminated unless at least ten days' prior
written notice is given to the Lender.
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Section 7.3. Location of Offices; Records. The
Borrower will not change the location of its chief executive office
or its books and records relating to the Collateral or change its
name, its identity or corporate structure without giving the Lender 30
days' prior written notice thereof. The Borrower will at all times
keep complete and accurate records of all Collateral.
ARTICLE 8
AFFIRMATIVE COVENANTS
Until all the Secured Obligations have been paid in
full, unless the Lender shall otherwise consent in writing thereto,
the Borrower will:
Section 8.1. Preservation of Corporate Existence and
Similar Matters. Preserve and maintain its corporate existence,
rights, franchises, licenses and privileges in the jurisdiction of its
incorporation and qualify and remain qualified as a foreign
corporation and authorized to do business in each jurisdiction in
which the character of its properties or the nature of its business
requires such qualification or authorization.
Section 8.2. Compliance with Applicable Law, Etc.
(a) Comply with all Applicable Laws relating to the
Borrower.
(b) Maintain all Government Approvals material to the
conduct of the Borrower's and/or the Subsidiaries'
business.
(c) Upon request by Bank, Borrower shall provide to
Bank copies of any Governmental Approval required
to be obtained by Borrower by Applicable Law.
Section 8.3. Maintenance of Property. In addition
to, and not in derogation of, the requirements of Section 7.1 and of
any of the Security Documents:
(a) protect and preserve all properties material to
the normal operation of its business, including
copyrights, patents, trade names and trademarks,
and maintain in good repair, working order and
condition all tangible properties material to the
normal operation of its business;
(b) maintain all physical property material to normal
operation in good and workable condition in all
material respects, with reasonable allowance for
wear and tear, and exercise proper custody over
all such property; and
(c) from time to time make or cause to be made
all needed and appropriate repairs, renewals,
replacements and additions to such properties
material to the normal operation of its business,
so that the business carried on in connection
therewith may be properly and advantageously
conducted at all times.
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Section 8.4. Insurance. Maintain, in addition to
that required by Section 7.2 or any of the Security Documents,
insurance with responsible insurance companies against such risks and
in such amounts as is customarily maintained by similar businesses or
as may be required by Applicable Law, including, without limitation,
workers' compensation, business interruption and fire and casualty
insurance and, in addition to the foregoing, general liability
(including, if appropriate, errors and omissions) insurance in an
amount not less than $15,000,000, and from time to time deliver to
the Lender upon its request a detailed list of all insurance then in
effect, stating the names of the insurance companies, the amounts and
rates of the insurance, the dates of the expiration thereof and the
properties and risks covered thereby.
Section 8.5. Filing of Returns and Payment of Taxes and Claims.
(a) File all tax returns when due and pay or
discharge when due all taxes, assessments and
governmental charges or levies imposed upon it
or upon its income or profits or upon any
properties belonging to it; and
(b) Pay or discharge when due all lawful claims of
materialmen, mechanics, carriers, warehousemen and
landlords for labor, materials, supplies and
rentals which, if unpaid, might become a Lien on
any properties of the Borrower; except that this
Section 8.5 shall not require the payment or
discharge of any such tax, assessment, charge,
levy or claim which is being contested in good
faith by appropriate proceedings and for which
adequate reserves have been established on the
appropriate books.
Section 8.6. Accounting Methods and Financial Records.
Maintain a system of accounting, and keep such books, records and
accounts (which shall be true and complete), as may be required or
as may be necessary to permit the preparation of financial statements
in accordance with generally accepted accounting principles consistently
applied.
Section 8.7. Visits and Inspections. During normal
business hours of the Borrower, permit representatives, agents, officers
or employees of the Lender at any time to
(a) visit and inspect the Collateral and properties
of the Borrower and the Subsidiaries;
(b) inspect, review, audit and make extracts from
its relevant books, files, correspondence, computer
information and records including but not limited
to management letters prepared by independent
accountants; and
(c) discuss with its principal officers, and, upon
one (1) day prior notice to the Borrower, its
independent accountants, its business, assets,
liabilities, financial condition, results of
operations and business prospects. The Borrower
will deliver to the Lender any instrument
necessary for it to obtain records from any
service bureau maintaining records on behalf of
the Borrower or the Subsidiaries.
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Section 8.8. Use of Proceeds.
(a) Use the proceeds of all advances made hereunder
only for working capital and general business
purposes, and for issuance of letters of credit
in accordance with the terms of this Agreement;
and
(b) Not use any part of the proceeds to purchase
or carry, or to reduce or retire or refinance
any credit incurred to purchase or carry, any
margin stock (within the meaning of Regulation G
of the Board of Governors of the Federal
Reserve System) or for any other purpose which
would involve a violation of such Regulation G
or Regulation U or X of such Board of
Governors, or for any other purpose prohibited by
law or by the terms and conditions of this
Agreement.
Section 8.9. Further Assurances. Promptly cure any
defects in this Agreement, the Note or the Security Documents at its
expense if resulting from any act or failure to act by the
Borrower, the Subsidiaries or any employee or officer thereof
including, without limitation, the perfection of any Liens in favor of
the Lender. The Borrower, at its expense, will promptly execute and
deliver to the Lender all such other and further documents, agreements
and instrument in compliance with or accomplishment of the covenants
and agreements of the Borrower set forth herein, in the Note or in
the Security Documents, and will take such other actions necessary to
further evidence or more fully describe any Collateral, or to correct
any omissions or to state more fully the obligations set forth in
any of the foregoing, or to perfect, protect or preserve any Liens
created pursuant to the foregoing, or to make such other recordings
or filings or to obtain such consents as may be necessary or
appropriate in connection with this Agreement, the Note or the
Security Documents.
Section 8.10. Management Employment Contracts. Enter
into and/or maintain an employment agreement with Doctor ▇. ▇▇▇▇▇▇ as
shall be reasonably satisfactory to the Lender.
ARTICLE 9
INFORMATION
Until all the Secured Obligations have been paid in
full, unless the Lender shall otherwise consent in writing thereto,
the Borrower shall furnish to the Lender:
Section 9.1. Quarterly Financial Statements. As soon
as available and in any event, within 45 days following the end of
each fiscal quarter, the consolidated and consolidating balance sheet
of the Borrower as at the end of such quarter, the related
statement of income of the Borrower for such quarter, and a statement
of cash flow for such quarter, all setting forth in comparative form
the figures for the corresponding periods of the previous fiscal year,
all of which shall be certified by the president or chief financial
officer of the Borrower to be, in his opinion, complete and correct
and to present fairly, in accordance with generally accepted
accounting principles for the presentation of interim financial
statements consistently applied throughout the period involved, subject
to audit and year-end adjustments, the financial position of the
Borrower as at its date and the operations of the Borrower for the
period then ended.
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Section 9.2. Audited Year-End Statements. As soon
as available, and in any event within 90 days after the end of each
fiscal year of the Borrower, the consolidated (together with internally
prepared consolidating statements) and consolidating balance sheet of
the Borrower as at the end of such fiscal year and the related
statements of income, retained earnings and changes in financial
position of the Borrower for such fiscal year, and in each case
setting forth in comparative form the figures as at the end of and
for the previous fiscal year, certified by independent certified
public accountants acceptable to the Lender and whose certificates
shall be in scope and substance satisfactory to the Lender and who
shall have authorized the Borrower to deliver such financial
statements and certifications thereof to the Lender pursuant to this
Agreement.
Section 9.3. Quarterly Reports. As soon as
available, and in any event within forty- five (45) days following
the end of each fiscal quarter,
(a) an accounts receivable aging report, in form and
substance acceptable to Lender;
(b) a quarterly occupancy report setting forth the
occupancy levels for the Facilities, in form and
substance acceptable to Lender.
Section 9.4. Officer Certificate. At the time the
financial statements are furnished pursuant to Sections 9.1 and 9.2, a
certificate of the Borrower's president or chief financial officer
(a) stating that a review of the activities of the
Borrower has been made under his supervision with
a view toward determining whether the Borrower,
and each of the Guarantors, have fulfilled all
of its obligations under this Agreement, the
Note, and the Security Documents;
(b) stating that the Borrower, and each of the
Guarantors, have fulfilled their obligations under
this Agreement, the Note and the Security
Documents, and that all representations made in
this Agreement continue to be true and correct,
and that no Default or Preceding Event exists,
or, if the foregoing is not the case,
specifying the nature of any change or specifying
such Default or Preceding Event and its nature,
when it occurred, whether it is continuing, and
the steps being taken by the Borrower with
respect to such event or failure;
(c) having attached the calculations, prepared by the
Borrower, required to establish whether or not
the Borrower is in compliance with the covenants
contained in Sections 10.1 and 10.2, as at the
date of such certificate;
(d) to the extent requested from time to time by
the Lender, specifically affirming compliance by
the Borrower, and each of the Guarantors, with
any of its representations or obligations under
this Agreement, the Note, and the Security
Documents; and
(e) containing or accompanied by such financial or
other details, information and material as the
Lender may reasonably request to evidence such
compliance.
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Section 9.5. Audit Reports. Upon the receipt of
any report submitted to the Borrower or any Subsidiary by independent
certified public accountants in connection with any annual, interim or
special audit made by them of the books of the Borrower or any
Subsidiary, the Borrower shall furnish a copy of any such report to
the Lender.
Section 9.6. Copies of Other Reports.
(a) Upon request of Bank, copies of all independent
public accountant management letters and reports
to the Audit Committee of the Borrower.
(b) As soon as practicable, copies of all financial
statements and reports as the Borrower shall send
to its stockholders and of all registration
statements and all regular or periodic reports
which the Borrower shall file, with the
Securities and Exchange Commission or any
successor commission.
(c) Copies of any amendments reflecting any changes
in Governmental Approvals which may have a
Materially Adverse Effect on the Borrower or the
Subsidiaries.
(d) From time to time and promptly upon each
request, such data, certificates, reports,
statements, documents or further information
regarding the business, assets, liabilities,
financial condition, results of operations or
business prospects of the Borrower as the Lender
may request and that the Borrower has or
without unreasonable expense can obtain. The
rights of the Lender under this Section 9.6(d)
are in addition to and not in derogation of
its rights under any other provision of this
Agreement or any of the Security Documents.
(e) Upon request by the Lender, following Lender's
receipt of evidence of a violation or potential
violation of applicable environment laws, evidence
of continuing compliance with all federal, state
and local environmental laws applying to the
properties or operations of the Borrower and the
Subsidiaries.
Section 9.7. Notice of Litigation, Default and Other
Matters. Prompt notice of:
(a) to the extent the Borrower is aware of the
same, the commencement of all proceedings and
investigations by or before any governmental or
nongovernmental body and all actions and
proceedings in any court or before any
arbitrator against or in any other way relating
adversely to, or adversely affecting, the
Borrower, a Subsidiary or any of the property,
assets or businesses of the Borrower or the
Subsidiaries, which might singly or in the
aggregate, have a Materially Adverse Effect on
the Borrower or the Subsidiaries;
(b) any amendment of the certificate of incorporation
or by-laws of the Borrower or any Subsidiary;
(c) any change in the business, assets, liabilities,
financial condition, results of operations or
business prospects of the Borrower or any
Subsidiary which has had or may have any
Materially Adverse Effect on the Borrower or any
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Subsidiary and any change in the officers or
board of directors of the Borrower; and
(d) any Default or Preceding Event.
Section 9.8. Notice of Issuance of Stock. Upon the
issuance of additional shares of stock in the Borrower, the Borrower
shall promptly disclose to the Lender in writing the number of shares
issued, the price therefor, and such other information as the Lender
may from time to time request.
Section 9.9. Sources and Uses of Funds. Upon
request of Lender, Borrower shall provide Lender, on a semi-annual
basis, with a sources and uses of funds statement, in form and
substance acceptable to Lender.
Section 9.10. Accuracy of Information. All written
information, reports, statements and other papers and data furnished to
the Lender, whether pursuant to this Article 9 or any other provision
of this Agreement, or any of the Security Documents, shall be, at
the time the same is so furnished, complete and correct in all
material respects to the extent necessary to give the Lender true and
accurate knowledge of the subject matter.
ARTICLE 10
NEGATIVE COVENANTS
Until all the Secured Obligations have been paid in
full, unless the Lender shall otherwise consent in writing thereto,
neither the Borrower nor any Subsidiary shall directly or indirectly:
Section 10.1. Financial Ratios. Permit:
(a) the Borrower's Debt Service Coverage Ratio to be
less than 1.75 to 1, measured quarterly on a
rolling four (4) quarters basis;
(b) the ratio of Senior Debt to Cash Flow to be
greater than 2.75 to 1, measured quarterly.
Section 10.2. Debts, Guaranties and Other Obligations.
Incur, create, assume or in any manner be or become liable in
respect of any Indebtedness (including obligations for the payment of
rent); Guarantee or otherwise in any way become or be responsible
for obligations of any other person, direct or contingent, whether by
agreement to purchase the indebtedness of any other person, agreement
for the furnishing of funds to any other person through the purchase
or lease of goods, supplies or services, or by way of stock
purchase, capital contribution, advance or loan, for the purpose of
paying or discharging the indebtedness of any other person, or
otherwise, except that the foregoing restrictions shall not apply to:
(a) the Secured Obligations to the Lender pursuant
to this Agreement;
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(b) liabilities, direct or contingent, of the
Borrower existing on the date of this Agreement
and set forth in Schedule 10.2(b) attached
hereto, and including and all renewals and
extensions thereof (but not increases thereof);
(c) liabilities in relation to leases and lease
agreements to the extent permitted by Section
10.8 hereof;
(d) endorsements of negotiable or similar instruments
for collection or deposit in the ordinary court
of business;
(e) trade payables or similar obligations from time
to time incurred in the ordinary course of
business, other than for borrowed money; and
(f) taxes, assessments or other governmental charges
that are not yet due or are being contested in
good faith by appropriate action initiated in a
timely fashion and diligently conducted and, with
respect to such charges exceeding $100,000, if
adequate reserves shall have been made therefor.
Section 10.3. Liens. Create, incur, assume or
permit to exist any Lien on any of its properties or assets (now
owned or hereafter acquired), except:
(a) Liens securing the payment of any Indebtedness
to the Lender;
(b) Liens for taxes, assessments, or other
governmental charges not yet due or which are
being contested in good faith by appropriate
action promptly initiated, diligently conducted and
adequately bonded;
(c) Liens of landlords, vendors, carriers,
warehousemen, mechanics, laborers and materialmen
arising by law in the ordinary course of
business for sums not yet due or being contested
in good faith by appropriate action promptly
initiated and diligently pursued;
(d) Liens existing on property owned by Borrower or
a Subsidiary and described in Schedule 5.1(g)
attached hereto, and including all renewals and
extensions thereof (but not increases thereof);
(e) pledges or deposits made in the ordinary court
of business in connection with workers'
compensation, unemployment insurance, social
security and other like laws; and
(f) inchoate Liens arising under ERISA to secure the
contingent liability of Borrower.
Section 10.4. Investments, Loans and Advances. Make
or permit to remain outstanding any loans or advances to or
investments in any person, except that:
(a) the Borrower may acquire and own stock,
obligations or securities received in settlement
of debts owing to the Borrower, if the debts
in question were created in the ordinary course
of business;
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(b) the Borrower may endorse negotiable instruments
for collection in the ordinary course of
business;
(c) except for the existing investments described in
Schedule 10.4(c) attached hereto, the Borrower may
invest, loan or otherwise contribute singly or
in the aggregate and for the term of this
Agreement not more than One Million Dollars
($1,000,000) in, to, or on behalf of its
Subsidiaries on or after the date hereof; and
(d) the Borrower may continue to make available to
Doctor ▇. ▇▇▇▇▇▇ a line of credit in a
principal amount not to exceed $300,000.
Section 10.5. Dividends, Distributions and Redemptions.
Declare or pay any dividend, purchase, redeem or otherwise acquire for
value any of its stock now or hereafter outstanding, or the stock of
a Subsidiary, as the case may be, return any capital to its
stockholders, or make any distribution of its assets to its
stockholders as such. Notwithstanding the foregoing, the Borrower may
purchase or acquire its capital stock in connection with Borrower's
(i) "Flexible Stock Option Plan," adopted May 26, 1988," (ii) "Stock
Option Plan," dated January 23, 1985, (iii) "Non Qualified Stock
Option Plan," dated January 16, 1986, (iv) "1991 Flexible Stock
Option Plan," dated April 12, 1991, or (v) "1995 Stock Incentive
Plan" dated May 26, 1995.
Section 10.6. Sales and Leasebacks. Enter into any
arrangement, directly or indirectly, with any person whereby the
Borrower or any Subsidiary shall sell or transfer any property,
whether now owned or hereafter acquired, and whereby the Borrower or
any Subsidiary shall then or thereafter rent or lease as lessees such
property or any part thereof or other property which the Borrower or
any Subsidiary intends to use for substantially the same purpose or
purposes as the property sold or transferred.
Section 10.7. Nature of Business. Permit any
material change to be made in the scope or character of its business
as carried on at the date hereof or alter or change the corporate
name of the Borrower or any Guarantor.
Section 10.8. Limitation of Leases. Create, incur,
assume or suffer to exist any obligation for the payment of rent or
hire of property of any kind whatsoever, whether real or personal,
under leases or lease agreements that would cause the aggregate
amount of all additional payments made by Borrower pursuant to such
new leases or lease agreements to exceed $250,000 per year.
Section 10.9. Mergers, Etc.. Divest itself of a
controlling interest in any person or merge or consolidate with or
sell, assign, lease or otherwise, dispose of all or substantially all
of its properties whether now owned or hereafter acquired (whether in
one transaction or in a series of transactions) to, any person, or
permit any person to do so; transfer, sell, assign, pledge or
hypothecate, directly or indirectly, any of the capital stock of any
Subsidiary or more than twenty-five percent (25%) of the currently
issued and outstanding capital stock of Borrower, or issue or sell
any capital stock for less than fair market value or issue from
authorized but unissued stock or treasury stock an amount which would
cause the total number of shares then outstanding to be more than
one hundred twenty-five percent (125%) of such amount as of the date
hereof.
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Section 10.10. Use of Working Capital Facility.
Permit the proceeds of the Working Capital Facility to be used for
any purpose other than those specified herein.
Section 10.11. Sale or Discount of Receivables.
Except to minimize losses on bona fide debts previously contracted,
discount, or sell with recourse, or sell for less than the greater
of the face or market value thereof, any of its notes receivable or
accounts receivable.
Section 10.12. Prepayments of Other Indebtedness.
Prepay any Indebtedness (excluding trade payables) to any person,
except that the foregoing restriction shall not apply to the Note or
other Indebtedness to the Lender.
Section 10.13. Certain Transactions. Except as set
forth in Schedule 10.13 attached hereto, enter into, directly or
indirectly, any lease, contract, agreement or other transaction with
any Affiliate on terms that are less favorable than those that might
be obtained at the time in question from persons who are not
Affiliates, or enter into, directly or indirectly, any contract,
agreement, or other transaction with any director or officer of the
Borrower or any Subsidiary, or any relative or Affiliates thereof,
other than on fair and reasonable terms.
Section 10.14. Subsidiaries. Allow the creation or
existence of any subsidiaries other than the Subsidiaries, or allow
all or any part of the capital stock of any Subsidiary to be
transferred, sold, pledged or hypothecated in part or in whole, or
to become subject to any Lien.
Section 10.15. Foreign Involvement. Become materially
involved in any non-United States of America situated activity except
for the current activities described in Schedule 10.15 attached hereto.
Section 10.16. Operate Without Qualification.
Undertake to own, operate or conclude any agreement to own or operate
a correctional facility in any state until it shall have qualified
as a foreign corporation to do business in such state.
Section 10.17. Management Agreement. Enter into
agreements with third parties to perform the functions of senior
management.
Section 10.18. Change in Fiscal Year. Change the
fiscal year of the Borrower.
Section 10.19. Capital Expenditures. Make capital
expenditures for acquisition or construction of a new prison facility.
ARTICLE 11
DEFAULT
Section 11.1. Default. Each of the following shall
constitute a Default, whatever the reason for such event and whether
it shall be voluntary or involuntary or be effected by operation of
law or pursuant to any judgment or order of any court or any
order, rule or regulation of any governmental or nongovernmental body:
(a) Default in Payment. The Borrower shall fail to
make any payment of
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principal of, or interest on, the Note when and
as due (whether at the stated maturity date, by
reason of acceleration or otherwise).
(b) Misrepresentation. Any representation or warranty
made or deemed to be made by the Borrower or
any Guarantor under this Agreement or any
Security Document, or any amendment hereto or
thereto, shall at any time prove to have been
incorrect or misleading in any material respect
when made.
(c) Default in Performance. The Borrower or any
Guarantor shall fail to perform or observe any
term, covenant, condition or agreement contained
in this Agreement (other than one a failure in
the performance or observance of which is dealt
with specifically elsewhere in this Section 11.1)
and such failure shall continue for a period of
ten (10) business days after (i) written notice
thereof has been given to the Borrower by the
Lender, or (ii) the date such failure otherwise
becomes known to the Borrower.
(d) Security Documents. Any default under the
Security Documents or any Reimbursement Agreement
shall occur or the Borrower or any Guarantor
shall default in the performance or observance of
any term, covenant, condition or agreement
contained in, or the payment of any other sum
covenanted to be paid by the Borrower or any
Guarantor under, any Security Document or
Reimbursement Agreement.
(e) Cross-Defaults. The Borrower shall have
defaulted in the payment when due, or in the
performance or observance, of any obligation or
condition of any note, contract, lease or other
agreement or undertaking (other than one of the
Security Documents) with any person.
(f) Voluntary Bankruptcy Proceeding. The Borrower or
any Guarantor shall
(1) commence a voluntary case under the
federal bankruptcy laws (as now or
hereafter in effect);
(2) file a petition seeking to take advantage
of any other laws, domestic or foreign,
relating to bankruptcy, insolvency,
reorganization, winding up or composition
for adjustment of debts;
(3) consent to or fail to contest in a
timely and appropriate manner any petition
filed against it in an involuntary case
under such bankruptcy laws or other laws;
(4) apply for or consent to, or fail to
contest in a timely and appropriate manner,
the appointment of, or the taking of
possession by, a receiver, custodian,
trustee, or liquidator of itself or of a
substantial part of its property, domestic
or foreign;
(5) admit in writing its inability to pay its
debts as they become due;
(6) make a general assignment for the benefit
of creditors; or
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(7) take any formal corporate action for the
purpose of effecting any of the foregoing.
(g) Involuntary Bankruptcy Proceeding. A case or
other proceeding shall be commenced against the
Borrower or any Guarantor in any court of
competent jurisdiction seeking
(1) relief under the federal bankruptcy laws
(as now or hereafter in effect) or under
any other laws, domestic or foreign,
relating to bankruptcy, insolvency,
reorganization, winding up or adjustment of
debts;
(2) the appointment of a trustee, receiver,
custodian, liquidator or the like of the
Borrower or any Guarantor or of all or
any substantial part of the assets,
domestic or foreign, of the Borrower or
any Guarantor; and such case or proceeding
shall continue undismissed or unstayed for
a period of 60 consecutive calendar days,
or an order granting the relief requested
in such case or proceeding against the
Borrower or any Guarantor (including, but
not limited to, an order for relief under
such federal bankruptcy laws) shall be
entered.
(h) Litigation. Except for good faith disputes
regarding the interpretation of this Agreement or
any other document, instrument or certificate
delivered in connection with this Agreement, the
Borrower, a Guarantor, or any Affiliate shall
challenge or contest in any action, suit or
proceeding in any court or before any arbitrator
or governmental body the validity or
enforceability of this Agreement, the Note or
any Security Document or the perfection or
priority of the Security Interest or any Lien
granted to the Lender under any Security
Document.
(i) Judgment. A judgment or order for the payment
of money shall be entered against the Borrower
by any court which exceeds $100,000 in amount
and such judgment order shall continue
undischarged or unstayed for thirty (30) days.
(j) Breach of Other Agreements. The Borrower shall
breach any material term or condition of any
other agreement to which the Borrower is a
party and the party other than the Borrower
thereto shall resort to any remedy under such
agreement or otherwise available at law or equity
which could have a Material Adverse Affect upon
the business or financial condition of the
Borrower.
(k) ERISA.
(1) Any Termination Event with respect to a
Plan shall occur that results in an
Unfunded Vested Accrued Benefit; or
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37
(2) any Plan shall incur an "accumulated
funding deficiency" (as defined in Section
412 of the Code or Section 302 of ERISA)
for which a waiver has not been obtained
in accordance with the applicable
provisions of the Code and ERISA; or
(3) the Borrower is in "default" (as defined
in Section 4219(c)(5) of ERISA) with
respect to payments to a multi-employer
Plan resulting from the Borrower's complete
or partial withdrawal (as described in
Section 4203 or 4205 of ERISA) from such
plan.
(l) Standby Letter of Credit. Any demand or claim
shall be made for payment or honor by the
holder thereof with respect to any standby
letter of credit issued pursuant to this
Agreement and such demand or claim is not
withdrawn and all advances made pursuant thereto,
together with interest thereon, are not repaid
to the Lender within thirty (30) days of such
demand or claim.
(m) Discontinuance of Business. The Borrower shall
discontinue or otherwise materially reduce its
usual and customary business activities.
Section 11.2. Remedies.
(a) Automatic Acceleration and Termination of
Facility. Upon the occurrence of a Default
specified in Section 11.1(f), (g) or (h), (1)
the principal of and the interest on the Working
Capital Facility and the Note at the time
outstanding, and all other amounts owed to the
Lender under this Agreement, the Note, any
Reimbursement Agreements, or any of the Security
Documents, shall thereupon become due and payable
without presentment, demand, protest, or other
notice of any kind, all of which are expressly
waived, anything in this Agreement, the Note,
any Reimbursement Agreements, or any of the
Security Documents to the contrary notwithstanding;
and (2) the Working Capital Facility and the
right of the Borrower to request borrowings or
standby letters of credit hereunder shall
immediately terminate.
(b) Other Remedies. If a Default shall have
occurred, and during the continuance of any
Default, the Lender, in its sole and absolute
discretion, and without implied limitation, may do
any or all of the following:
(1) declare the principal of and interest on
the Note at the time outstanding, and all
other amounts owed to the Lender under
this Agreement, or any of the Security
Documents, to be forthwith due and
payable, whereupon the same shall
immediately become due and payable without
presentment, demand, protest or other notice
of any kind, all of which are expressly
waived, anything in this Agreement, the
Note or the Security Documents to the
contrary notwithstanding;
(2) declare all amounts that may be owed to
the Lender under any Reimbursement Agreement
to be due and payable and require such
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38
amount to be paid to Lender as security
against any draw or draws pursuant to any
standby letter of credit;
(3) terminate the Working Capital Facility and
any other right of the Borrower to request
borrowings hereunder;
(4) notify, or request the Borrower to notify,
in writing or otherwise, any account debtor
or obligor with respect to any one or
more accounts receivable to make payment to
the Lender or its agent or designee, at
such address as may be specified by the
Lender (if, notwithstanding the giving of
any notice, any account debtor or other
such obligor shall make payments to the
Borrower, the Borrower shall hold all such
payments it receives in trust for the
Lender, without commingling the same with
other funds or property of, or held by,
the Borrower, and shall deliver the same
to the Lender or its agent or designee
immediately upon receipt by the Borrower
in the identical form received, together
with any necessary endorsements);
(5) settle or adjust disputes and claims
directly with account debtors and other
obligors on accounts receivable for amounts
and on terms which the Lender considers
advisable and in all such cases only the
net amounts received by the Lender in
payment of such amounts, after deductions
of costs and attorneys' fees shall
constitute Collateral (the Borrower shall
have no further right to make any such
settlements or adjustments or to accept
any returns of goods);
(6) exercise any and all of its rights under
any and all of the Security Documents;
(7) apply any cash Collateral to the payment
of the Secured Obligations in any order in
which the Lender may elect or use such
cash in connection with the exercise of
any of its other rights hereunder or
under any of the Security Documents;
(8) exercise all of the rights and remedies
of a secured party under the Uniform
Commercial Code and under any other
Applicable Law, including, without
limitation, the right without notice except
as specified below and with or without
taking the possession thereof, to sell the
Collateral or any part thereof in one or
more parcels at public or private sale,
at any location chosen by the Lender, for
cash, on credit or for future delivery,
and at such price or prices and upon such
other terms as the Lender may deem
commercially reasonable. (The Borrower
agrees that, to the extent notice of sale
shall be required by law, at least ten
days' notice to the Borrower of the time
and place of any public sale or the time
after which any private sale is to be
made shall constitute reasonable
notification. The Lender shall not be
obligated to make any sale of Collateral
regardless of notice of sale having been
given. The Lender may adjourn any public
or private sale from time to time by
announcement at the time and place fixed
-37-
39
therefor, and such sale may, without
further notice, be made at the time and
place to which it was adjourned).
Section 11.3. Application of Proceeds. All proceeds
from each sale of, or other realization upon, all or any part of
the Collateral following a Default shall be applied or paid over as
follows:
(a) First: to the payment of all costs and
expenses incurred in connection with such sale or
other realization, including attorneys' fees;
(b) Second: to the payment of the Secured
Obligations (with the Borrower remaining liable
for any deficiency) in any order which the
Lender may elect; and
(c) Third: the balance (if any) of such proceeds
shall be paid to the Borrower, subject to any
duty imposed by law or otherwise to whomsoever
will be entitled thereto.
The Borrower shall remain liable and will pay, on demand, any
deficiency remaining in respect of the Secured Obligations, together
with interest thereon at a rate per annum equal to the highest rate
then payable hereunder on such Secured Obligations, which interest
shall constitute part of the Secured Obligations.
Section 11.4. Power of Attorney. In addition to
the authorizations granted to the Lender under any other provision of
this Agreement or any of the Security Documents, upon and after a
Default, the Borrower hereby irrevocably designates and appoints the
Lender (and all persons designated by the Lender from time to time)
as the Borrower's true and lawful attorney and agent in fact, and
the Lender, or any agent of the Lender, may, without notice to the
Borrower, and at such time or times as the Lender or any such agent
in its sole discretion may determine, in the name of the Borrower
or the Lender, exercise all of the Borrower's rights and remedies
with respect to the collection of accounts receivable, prepare, file
and sign the name of the Borrower on any notice of Lien, assignment
or satisfaction of Lien, or similar document in connection with any
of the Collateral, and endorse the name of the Borrower upon any
chattel paper, document, instrument, notice, freight ▇▇▇▇, ▇▇▇▇ of
lading or similar document or agreement relating to any other
Collateral.
Section 11.5. Miscellaneous Provisions Concerning
Remedies.
(a) Rights Cumulative. The rights and remedies of
the Lender under this Agreement, the Note, any
Reimbursement Agreement and each of the Security
Documents shall be cumulative and not exclusive
of any rights or remedies which it would
otherwise have. In exercising its rights and
remedies the Lender may be selective, and no
failure or delay by the Lender in exercising
any right shall operate as a waiver of it, nor
shall any single or partial exercise of any
power or right preclude its other or further
exercise or the exercise of any other power or
right.
(b) Waiver of Marshalling. The Borrower hereby
waives any right to require any marshalling of
assets and any similar right.
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40
ARTICLE 12
MISCELLANEOUS
Section 12.1. Notices.
(a) Method of Communication. Except as specifically
provided in this Agreement or in any of the
Security Documents, all notices and the
communications hereunder and thereunder shall be
in writing or by telephone, subsequently
confirmed in writing. Notices in writing shall
be delivered personally or sent by certified or
registered mail postage prepaid or by telegraph
or telex and shall be deemed received, in the
case of personal delivery, when delivered, in
the case of mailing, on the third day after
mailing, in the case of telegraph, on the day
after delivery to the telegraph office and in
the case of telex, upon transmittal.
(b) Addresses for Notices. Notices to any party
shall be sent to it at the following addresses,
or any other address of which all the other
parties are notified in writing:
If to the Borrower: Corrections
Corporation of America ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ Attention:
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇,
Chief Financial Officer
With a copy to: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
▇▇., Esq. ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
If to the Lender: First Union National Bank
of Tennessee ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇, Vice
President
With a copy to: ▇▇▇ ▇. ▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇ & ▇▇▇, P.L.C.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇
Section 12.2. Expenses. The Borrower will pay all
reasonable out-of-pocket expenses of the Lender in connection with the
preparation, execution and delivery of this Agreement, the Note, each
of the Security Documents, and any other documents or instruments
whenever the same shall be executed and delivered, including
appraisers' fees, search fees, recording fees, taxes, title insurance
premiums and the fees and disbursements of the law firm of ▇▇▇▇▇▇▇▇
& ▇▇▇, counsel for the Lender and of each local counsel retained by
the Lender.
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41
Section 12.3. Setoff. In addition to any rights
now or hereafter granted under Applicable Law upon and after the
occurrence of any Default, the Lender is hereby authorized by the
Borrower at any time and from time to time, without notice, to set
off and to apply any and all amounts in any and all payroll
accounts of the Borrower maintained with the Lender or any Affiliate
of the Lender, against and on account of the Secured Obligations
irrespective or whether or not
(a) the Lender shall have made any demand under
this Agreement, the Note, any Reimbursement
Agreement or any of the Security Documents; or
(b) the Lender shall have declared any or all of
the Secured Obligations to be due and payable as
permitted by Section 11.2 and although such
Secured Obligations shall be contingent or
unmatured.
Section 12.4. Accounting Matters. All financial and
accounting calculations, measurements and computations made for any
purpose relating to this Agreement, including without limitation all
computations utilized by the Borrower in complying with any covenant
contained herein, shall, unless there is an express written direction
by the Lender to the contrary, be performed in accordance with
generally accepted accounting principles consistently applied.
Section 12.5. Assignment. All the provisions of
this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns, except
that the Borrower may not assign, delegate, or otherwise transfer any
of its rights or duties under this Agreement.
Section 12.6. Amendments. Any term, covenant,
agreement or condition of this Agreement, the Note or any of the
Security Documents may be amended or waived, and any departure
therefrom may be consented to, if, but only if, such amendment,
waiver or consent is in writing and is signed by the Lender and, in
the case of any amendment, also by the Borrower, and in such event,
the failure to observe, perform or discharge any such term, covenant,
agreement or condition (whether such amendment is executed or such
waiver or consent is given before or after such failure) shall not
be construed as a breach of such term, covenant, agreement or
condition or as a Default or Preceding Event. Unless otherwise
specified in such waiver or consent, a waiver or consent given
hereunder shall be effective only in the instance and for the
specific purpose for which given.
Section 12.7. Performance of Borrower's Duties.
(a) The Borrower's obligations under this Agreement,
the Term Note, the Revolving Credit Note and
each of the Security Documents shall be
performed by the Borrower at its sole cost and
expense.
(b) If the Borrower shall fail to do any act or
thing which it has covenanted to do under this
Agreement or any of the Security Documents, the
Lender may (but shall not be obligated to) do
the same or cause it to be done either in the
name of the Lender or in the name and on
behalf of the Borrower and the Borrower hereby
irrevocably authorizes the Lender so to act.
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42
Section 12.8. Indemnification. The Borrower agrees
to indemnify and hold the Lender harmless from and against all losses
(including reasonable attorneys' fees) suffered by the Lender in
connection with:
(a) the exercise by the Lender of any right or
remedy granted to it under this Agreement, the
Note, any Reimbursement Agreement or any of the
Security Documents;
(b) any claim, and the prosecution or defense
thereof, arising out of or in any way connected
with this Agreement, the Note, any Reimbursement
Agreement or any of the Security Documents;
(c) the collection or enforcement of the Secured
Obligations; and
(d) any claim, demand, action, proceeding, liability,
penalty or assessment relating to or arising from
a violation or alleged violation of any federal,
state or local environmental law, rule, regulation
or order;
provided that the Borrower shall not be obligated to so indemnify
and hold harmless the Lender for any such loss resulting from the
willful misconduct or gross negligence of the Borrower.
Section 12.9. All Powers Coupled with Interest. All
powers of attorney and other authorizations granted to the Lender and
any persons designated by the Lender pursuant to any provisions of
this Agreement, any Reimbursement Agreement or any of the Security
Documents shall be deemed coupled with an interest and shall be
irrevocable so long as any of the Secured Obligations remain unpaid
or unsatisfied.
Section 12.10. Survival. Notwithstanding any
termination of this Agreement,
(a) until all Secured Obligations have been paid in
full or otherwise satisfied, the Lender shall
retain its Security Interest and shall retain
all rights under this Agreement, any Reimbursement
Agreement and each of the Security Documents
with respect to such Collateral as fully as
though this Agreement had not been terminated;
and
(b) the indemnities to which the Lender is entitled
under the provisions of this Article 12 and any
other provision of this Agreement, any
Reimbursement Agreement and the Security Documents
shall continue in full force and effect and
shall protect the Lender against events arising
after such termination as well as before.
Section 12.11. Titles and Captions. The Table of
Contents and the titles and captions of Articles, Sections and
subsections in this Agreement are for convenience only, and neither
limit nor amplify the provisions of this Agreement.
Section 12.12. Severability of Provisions. Any
provision of this Agreement which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective only
to the extent of such prohibition or unenforceability without
invalidating the remainder of such provision or the remaining
provisions hereof or affecting the validity or enforceability of such
provision in any other jurisdiction.
-41-
43
Section 12.13. Governing Law; Jurisdiction. This
Agreement, the Note and Security Documents shall be construed in
accordance with and governed by the law of the State of Tennessee;
except that the enforceability of any mortgage or deed of trust with
respect to real property Collateral located outside the State of
Tennessee shall be governed by the laws of the jurisdiction where
such real property is located. The Borrower agrees that this
Agreement, the Note and the Security Documents were the subject of
negotiations that occurred in Tennessee between the Borrower and the
Lender and may be enforced by an action filed in the United States
District Court for the Middle District of Tennessee, or in any court
of record in the City of Nashville, Tennessee, and the Borrower
hereby submits to the jurisdiction of the State of Tennessee for all
purposes in connection with this Agreement.
Section 12.14. Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto
in separate counterparts, each of which when so executed shall be
deemed to be an original and shall be binding upon all parties,
their successors and assigns upon execution by all parties, and all
of which taken together shall constitute one and the same agreement.
Section 12.15. Capital Adequacy Regulation. If the
Lender shall determine that any Regulation adopted or effective after
the date hereof regarding capital adequacy, or any change therein, or
any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with
the interpretation or administration thereof, or any request or
directive regarding capital adequacy (whether or not having the force
of law) of any such authority, central bank or comparable agency, has
or would have the effect of reducing the rate of return on capital
of the Lender as a consequence of the Lender's obligations under
this Agreement, to a level below that which the Lender could have
achieved but for such adoption or change (taking into consideration
its policies with respect to capital adequacy) by an amount deemed
by the Lender to be material, then from time to time, within fifteen
(15) days after demand by the Lender, the Borrower shall compensate
the Lender for such reduction, including any amount or amounts equal
to any taxes on the overall net income of the Lender payable with
respect to the amount of payments required to be made pursuant to
this subsection. The Lender will promptly notify the Borrower of
any event of which it has knowledge, occurring after the date hereof,
which will entitle the Lender to compensation pursuant to this
subsection, and the Lender will designate a different applicable
lending office if such designation will avoid the need for, or reduce
the amount of, such compensation and will not, in the judgment of
the Lender, be otherwise disadvantageous to it. If the Lender shall
claim compensation under this provision, it shall furnish a certificate
to the Borrower setting forth the additional amount or amounts to be
paid to it hereunder, which shall be conclusive in the absence of
manifest error. In determining such amount, the Lender may use any
reasonable averaging and attribution methods.
Section 12.16. Amended and Restated Loan Agreement.
This Agreement, the Note and Security Documents executed pursuant
hereto are intended to amend and restate the Loan Agreement and the
Construction Loan Agreement. The Borrower and the Lender hereby
agree that the Loan Agreement is herewith fully incorporated into this
Agreement, the Note and the Security Documents, respectively, and that
the Loan Agreement and the Construction Loan Agreement shall, from
the date hereof, be of no further independent force and effect.
-42-
44
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be executed by their duly authorized officers in
several counterparts all as of the day and year first written above.
GUARANTORS: BORROWER:
TRANSCOR AMERICA, INC. CORRECTIONS CORPORATION
OF AMERICA
BY: BY:
----------------------------------- -------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Secretary Chief Financial Officer
TECHNICAL & BUSINESS INSTITUTE
OF AMERICA, INC. LENDER:
FIRST UNION NATIONAL BANK
BY: OF TENNESSEE
-----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Secretary
CONCEPT, INCORPORATED BY:
----------------------------------
BY: ▇▇▇▇▇ ▇▇▇▇▇▇, Vice President
----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Secretary
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45
SCHEDULE 2
Secured Obligations
(a) Indebtedness evidenced by a $13,260,000.01 Amended
and Restated Construction Loan Note dated as of July 13, 1995,
executed by Corrections Corporation of America ("CCA") and payable to
First Union National Bank of Tennessee, together with all renewals,
extensions and modifications thereof.
(b) The obligations of CCA under the terms of a
Guaranty and Reimbursement Agreement dated as of July 13, 1995,
executed by CCA in favor of First Union National Bank of North
Carolina ("FUNBNC"), delivered in connection with the $34,346,301
Irrevocable Letter of Credit No. S054438 issued by FUNBNC, at the
request of CCA, in favor of Liberty Bank and Trust Company of
Oklahoma City, National Association, in connection with the Holdenville
bond issue.
46
SCHEDULE 3
Subordinated Indebtedness
(a) the Borrower's $7,000,000 aggregate principal amount
8.5% Convertible Subordinated Notes originally due
November 7, 1999,
(b) the Borrower's $7,500,000 aggregate principal amount
Convertible, Extended Subordinated Notes originally due
September 30, 1998.
47
SCHEDULE 5.1(k)
PATENTS; TRADEMARKS
None
48
SCHEDULE 5.1(o)
LEASES
Office Rental Agreement:
Approximately 21,000 square feet for two floors of office
space at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
Rental commitment is approximately $420,000 per year.
49
SCHEDULE 5.1(p)
ERISA
The Amended and Restated Corrections Corporation of
America Employee Savings and Stock Ownership Plan.
Transcor 401(k) Plan (to be terminated).
Concept 401(k) Plan (to be terminated).
50
SCHEDULE 10.4(c)
Existing Investments
(a) Borrower's investment in Corrections Corporation of
Australia Pty, Ltd.
(b) Borrower's investment in CCA (UK) Limited.
(c) Borrower's investment in UK Detention Services
Limited.
(d) Borrower's investment in United-Concept, Inc.
(anticipated to be completed post-closing).
51
SCHEDULE 10.13
Affiliate Transactions
None
52
SCHEDULE 10.15
Foreign Activities
(a) Activities of existing Subsidiaries and Affiliates
(as shown on Schedule 4 hereof);
(b) Activities in connection with Borrower's agreements
with Sodhexo, S.A.
53
FIRST AMENDMENT TO AMENDED
AND RESTATED LOAN AGREEMENT
This First Amendment dated as of September 28, 1995, by
and between Corrections Corporation of America, a Delaware corporation
(the "Borrower"), Transcor America, Inc., a Tennessee corporation,
Technical & Business Institute of America, Inc., a Michigan
corporation, and Concept, Incorporated, a Delaware corporation
(individually, a "Guarantor", and collectively, the "Guarantors"), and
First Union National Bank of Tennessee, a national banking association
(the "Lender"),
W I T N E S S E T H:
WHEREAS, pursuant to the terms of an Amended and Restated
Loan Agreement dated as of July 13, 1995, by and between the
Borrower, the Guarantors and the Lender (as amended from time to
time, the "Loan Agreement"), the Lender committed to loan to the
Borrower amounts not to exceed $25,000,000; and,
WHEREAS, Borrower has contracted to acquire the Eden
Correctional Facility located in Concho, County, Texas (the "Eden
Facility"); and,
WHEREAS, Borrower has requested that Lender advance certain
funds to the Borrower to provide bridge financing for the acquisition
of the Eden Facility, on a short-term basis, pending closing of
permanent bond financing for the Eden Facility; and,
WHEREAS, the current availability of the Borrower under the
Working Capital Facility does not provide enough funds to permit the
Borrower to fund the acquisition of the Eden Facility; and,
WHEREAS, Borrower has requested that Lender loan to the
Borrower additional funds in the amount of $3,000,000, which, when
combined with certain funds to be advanced under the Working Capital
Facility, will provide the Borrower with funds necessary to acquire
the Eden Facility; and,
WHEREAS, the Lender has agreed to advance the additional
$3,000,000 requested by the Borrower, subject to the terms and
conditions set forth herein,
NOW, THEREFORE, in consideration of the foregoing premises,
and other good and valuable consideration, the receipt and legal
sufficiency of which are hereby acknowledged, the Borrower, the
Guarantors and the Lender hereby agree to amend and modify the Loan
Agreement, as follows:
1. Definitions. Capitalized terms not otherwise defined
herein shall have the meaning ascribed to such terms in the Loan
Agreement.
2. $3,000,000 Loan. The Lender hereby agrees to loan to
the Borrower an additional $3,000,000 (the "$3,000,000 Overadvance"),
the proceeds of which are to be used by the Borrower to finance the
acquisition of the Eden Facility. The $3,000,000 Overadvance shall
be evidenced by a Promissory Note dated as of September 28, 1995, in
the original principal amount of $3,000,000, executed
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by the Borrower and payable to the Lender, such Note to be in
substantially the form attached hereto as Exhibit A (such Note,
together with any renewals, modifications and extensions thereof, being
referred to as the "$3,000,000 Note).
3. Financial Ratios. Section 10.1(b) of the Loan
Agreement is hereby deleted and replaced with the following:
(b) the ratio of Senior Debt to Cash Flow to be
greater than (i) 3 to 1 from the date hereof through
November 30, 1995, and (ii) 2.75 to 1 thereafter, such
ratio to be measured quarterly.
4. Secured Obligations. The definition of "Secured
Obligations" shall include all obligations described in the Loan
Agreement, together with the indebtedness evidenced by the $3,000,000
Note, it being the intention of the parties that the Collateral shall
secure the Secured Obligations, including, without limitation, the
indebtedness evidenced by the $3,000,000 Note.
5. Default. Failure to pay the $3,000,000 Note in
accordance with its terms shall be deemed to be a Default under the
terms of the Loan Agreement.
6. Guarantors. The Guarantors have entered into this
First Amendment for purposes of acknowledging the $3,000,000 Loan and
to confirm that the obligations of the Borrower guaranteed by the
Guarantors under the terms of the Guaranty Agreements shall include,
without limitation, all obligations of the Borrower with respect to
the $3,000,000 Loan. Accordingly, this First Amendment shall be
deemed to amend the Guaranty Agreements, as the context requires, to
confirm that the Secured Obligations (as defined in the Guaranty
Agreements) shall include, without limitation, the obligations of the
Borrower with respect to the $3,000,000 Loan.
7. Commitment Fee. As compensation to the Lender for
funding the $3,000,000 Loan, Borrower shall pay to Lender,
simultaneously with the execution of this First Amendment, a
commitment fee of $7,500. Such fee shall be deemed earned by Lender
upon execution of this First Amendment.
8. Restatement of Loan Agreement. The Borrower and the
Guarantors hereby restate and ratify all of the representations,
warranties, terms and covenants contained in the Loan Agreement, as
of the date hereof, and hereby confirm that the representations,
warranties, terms and conditions contained in the Loan Agreement, as
amended hereby, remain in full force and effect.
(Remainder of Page Intentionally Left Blank)
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IN WITNESS WHEREOF, the parties hereto have executed
this First Amendment as of the day and date first above
written.
GUARANTORS: BORROWER:
TRANSCOR AMERICA, INC. CORRECTIONS CORPORATION
OF AMERICA
BY: BY:
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Secretary Chief Financial Officer
TECHNICAL & BUSINESS INSTITUTE
OF AMERICA, INC. LENDER:
FIRST UNION NATIONAL BANK
BY: OF TENNESSEE
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Secretary
CONCEPT, INCORPORATED BY:
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TITLE:
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BY:
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Secretary
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