-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Q8q3071d35TgLigm7QTPGnzV5l38MmnrU3futqSN9AI3rpbnXNPJC+CbmYvH1Dl/ J55ipziM2QtX9gNYUbHYuQ== 0000950144-96-002074.txt : 19960513 0000950144-96-002074.hdr.sgml : 19960513 ACCESSION NUMBER: 0000950144-96-002074 CONFORMED SUBMISSION TYPE: S-3/A PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 19960510 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: CORRECTIONS CORPORATION OF AMERICA CENTRAL INDEX KEY: 0000739404 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-FACILITIES SUPPORT MANAGEMENT SERVICES [8744] IRS NUMBER: 621156308 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-03009 FILM NUMBER: 96559823 BUSINESS ADDRESS: STREET 1: 102 WOODMONT BLVD STE 800 CITY: NASHVILLE STATE: TN ZIP: 37205 BUSINESS PHONE: 6152923100 S-3/A 1 CORRECTIONS CORPORATION OF AMERICA AMENDMENT #1 1 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 10, 1996 REGISTRATION NO. 333-03009 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------------- AMENDMENT NO. 1 TO FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 --------------------- CORRECTIONS CORPORATION OF AMERICA (Exact Name of Registrant as Specified in its Charter) DELAWARE 62-1156308 (State of Incorporation) (I.R.S. Employer Identification Number)
102 WOODMONT BOULEVARD, SUITE 800, NASHVILLE, TENNESSEE 37205 (615) 292-3100 (Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant's Principal Executive Offices) DARRELL K. MASSENGALE CHIEF FINANCIAL OFFICER 102 WOODMONT BOULEVARD, SUITE 800, NASHVILLE, TENNESSEE 37205 (615) 292-3100 (Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service) --------------------- COPIES TO: CARTER R. TODD F. MITCHELL WALKER, JR. ELIZABETH E. MOORE J. PAGE DAVIDSON STOKES & BARTHOLOMEW, P.A. BASS, BERRY & SIMS PLC SUNTRUST CENTER FIRST AMERICAN CENTER NASHVILLE, TENNESSEE 37219 NASHVILLE, TENNESSEE 37238 (615) 259-1450 (615) 742-6200
--------------------- APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after the effective date of this Registration Statement. If the only securities being registered on this form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. / / If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. / / If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / ________________ If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / ________________ If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. / / THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY DETERMINE. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. SUBJECT TO COMPLETION, DATED MAY 9, 1996 PROSPECTUS 2,500,000 SHARES [CORRECTIONS CORPORATION OF AMERICA LOGO] COMMON STOCK Of the 2,500,000 shares of Common Stock offered hereby, 1,500,000 shares are being sold by Corrections Corporation of America (the "Company") and 1,000,000 shares are being sold by certain stockholders of the Company (the "Selling Stockholders"). See "Principal and Selling Stockholders." The Company will not receive any of the proceeds from the sale of Common Stock by the Selling Stockholders. The Common Stock is traded on the New York Stock Exchange (the "NYSE") under the symbol "CXC." On May 8, 1996, the last reported sale price of the Common Stock was $64.875 per share. See "Price Range of Common Stock and Dividend Policy." SEE "RISK FACTORS" BEGINNING ON PAGE 7 OF THIS PROSPECTUS FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED HEREBY. --------------------- THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- ------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------ PROCEEDS TO PRICE TO UNDERWRITING PROCEEDS TO SELLING PUBLIC DISCOUNT(1) COMPANY(2) STOCKHOLDERS - ------------------------------------------------------------------------------------------------ Per Share............... $ $ $ $ - ------------------------------------------------------------------------------------------------ Total(3)................ $ $ $ $ - ------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------
(1) The Company and the Selling Stockholders have agreed to indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act of 1933, as amended. See "Underwriting." (2) Before deducting expenses estimated at $550,000 payable by the Company. (3) The Company has granted to the Underwriters a 30-day over-allotment option to purchase up to 375,000 additional shares of Common Stock on the same terms and conditions as set forth above. If all such shares are purchased by the Underwriters, the total Price to Public will be $ , the total Underwriting Discount will be $ and the total Proceeds to Company will be $ . See "Underwriting." --------------------- The shares of Common Stock are offered subject to receipt and acceptance by the several Underwriters, to prior sale, and to the several Underwriters' right to reject any order in whole or in part and to withdraw, cancel or modify the offer without notice. It is expected that certificates for the shares of Common Stock will be available for delivery on or about , 1996. --------------------- J.C. Bradford & Co. Stephens Inc. , 1996 3 (photo of outside view of Company's Central Arizona Detention Center Facility) CCA's state-of-the-art facilities and comprehensive training ensure the security of its communities, employees and inmate population (photo of Company (caption) corrections officers and inmates)
(photo of a Company corrections (photo of interior of a officer monitoring security systems) Company facility)
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AND THE COMPANY'S WARRANTS TO PURCHASE COMMON STOCK AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. 2 4 (Map indicating location, number of beds, first year of Company operation, ACA accreditation and ownership of the Company's operations under contract) 5 PROSPECTUS SUMMARY The following summary is qualified in its entirety by the more detailed information appearing elsewhere or incorporated by reference in this Prospectus. Unless the context otherwise indicates, (i) all references to the "Company" include Corrections Corporation of America and its subsidiaries, (ii) the information contained in this Prospectus assumes no exercise of the Underwriters' over-allotment option and (iii) the information contained in this Prospectus has been adjusted to reflect a two-for-one split of the Common Stock effected in the form of a 100% stock dividend on October 31, 1995. THE COMPANY Corrections Corporation of America (the "Company") is the largest developer and manager of privatized correctional and detention facilities worldwide. The Company's facilities are located in 11 states of the United States, Puerto Rico, Australia and the United Kingdom. As of May 9, 1996, the Company had contracts to manage 47 correctional and detention facilities with an aggregate design capacity of 31,253 beds of which 37 facilities representing 20,994 beds are in operation. The Company is currently developing ten facilities and expanding four facilities representing an aggregate of 10,259 beds. The Company expects that all of the beds under development and expansion will be in operation by the end of 1997. The Company owns 12 of the 37 facilities it currently operates and leases the remaining 25 facilities from governmental agencies and non-profit corporations. Throughout the world, there is a growing trend toward privatization of government services and functions, including corrections and detention, as governments of all types face continuing pressure to control costs and improve the quality of services. According to the Private Adult Correctional Facility Census, prepared by Private Corrections Project Center for Studies in Criminology and Law, University of Florida ("1995 Census"), the design capacity of privately managed adult correctional and detention facilities worldwide has increased dramatically since the first privatized facility was opened by the Company in 1984. The majority of this growth has occurred since 1989 as the number of privately managed adult correctional and detention facilities worldwide increased from 26 facilities with a design capacity of 10,973 beds in 1989 to 104 facilities with a design capacity of 63,595 beds in 1995. As of December 31, 1995, based on the 1995 Census, the Company was the largest private prison management company with a United States market share of 51% and a global market share of 48%. See "Business -- The Market for the Company's Services." The services provided by the Company to governmental agencies include the integrated design, construction and management of new correctional and detention facilities and the redesign, renovation and management of older facilities. In addition to providing the fundamental residential services relating to adult and juvenile inmates, the Company's facilities offer a large variety of rehabilitation and education programs including basic education, life skills and employment training and substance abuse treatment. The Company also provides health care (including medical, dental and psychiatric services), institutional food services, transportation requirements, and work and recreational programs. By providing a secure, clean facility, with reasonable occupancy levels and the opportunity for inmates to participate in educational and rehabilitational programs, the Company believes that there will be fewer disturbances among the prison population. Management believes that this atmosphere results in less stress for members of the work force, fewer workers' compensation claims, fewer sick days, reduced overtime costs and lower overall operating costs. The Company believes that its quality of personnel, efficient application of financial resources and adherence to proven policies and procedures enable it to design, develop and manage correctional and detention facilities at costs lower than governmental agencies that are responsible for performing such services. See "Business -- Business Strategy." The Company's operating philosophy is to provide quality corrections, at less cost to taxpayers, in partnership with government agencies. The Company's growth strategy is to develop and operate secure institutions with an emphasis on medium and maximum security operations. As of May 9, 1996, the Company was pursuing 28 facility prospects for a total of approximately 17,500 beds. See "Business -- Business Proposals." 3 6 In the last two years, the Company has expanded its service capabilities and broadened its geographic presence in the United States through a series of strategic acquisitions that complement the Company's development activities. In December 1994, the Company acquired TransCor America, Inc. ("TransCor"), a nationwide provider of inmate transportation services. In April 1995, the Company acquired Concept Incorporated ("Concept"), a prison management company with eight facilities and 4,400 beds under contract at the time of acquisition. In August 1995, the Company acquired Corrections Partners, Inc. ("CPI"), a prison management company with seven facilities and 2,900 beds under contract at the time of acquisition. The Company intends to consider additional strategic acquisitions of prison management and related companies in the future. In addition to its domestic operations, the Company has obtained and is pursuing development and management contracts for correctional and detention facilities outside the United States. The Company presently contracts to operate one facility in the United Kingdom, two facilities in Australia, and also has contracts to provide inmate transportation services in Australia. In June 1994, the Company entered into an international strategic alliance with Sodexho S.A. ("Sodexho"), a French conglomerate, for the purpose of pursuing prison management business outside the United States and the United Kingdom. In connection with the alliance, Sodexho purchased a significant ownership interest in the Company and entered into certain agreements with the Company relating to future financings by the Company and corporate governance and control matters. See "Principal and Selling Stockholders" and "Description of Securities -- Relationship with Sodexho." RECENT DEVELOPMENTS 1996 First Quarter Results The Company recently announced its preliminary results for the quarter ended March 31, 1996. For the first quarter of 1996, revenues were $63.3 million, a 43.3% increase over revenues of $44.1 million in the first quarter of 1995. Net income was $5.7 million in the first quarter of 1996, a 138% increase over net income of $2.4 million in the first quarter of 1995. Net income per fully diluted share was $0.14 in the first quarter of 1996 compared to $0.06 in the first quarter of 1995. These increases were due to the 44.4% increase in compensated mandays reflective of the new facilities opened and expansions of existing facilities in 1995 and the first quarter of 1996. Recently Announced Development Projects Taylor, Texas. In April 1996, the Company entered into an agreement with the Taylor Correctional Development Authority pursuant to which the Company will design, construct and manage a 512-bed, medium security prison in Taylor, Texas to house inmates for the State of Oregon and other governmental agencies. This facility is currently under construction and scheduled for completion by January 1997. This contract is an expansion of the Company's relationship with the State of Oregon which includes a contract for the housing of more than 500 Oregon inmates at the Company's Central Arizona Detention Center in Florence, Arizona. Cushing, Oklahoma. In April 1996, the Company reached an agreement with the Cushing Municipal Authority pursuant to which the Company will design, construct and manage a 960-bed, medium security prison in Cushing, Oklahoma to house inmates for the State of Oklahoma. This facility is currently under construction and scheduled for completion by July 1997. Washington, D.C. In April 1996, the Company entered into negotiations to purchase an 868-bed, medium security correctional treatment facility from the District of Columbia and to contract with the District to manage the facility for locally convicted inmates. 4 7 THE OFFERING Common Stock offered by the Company.............. 1,500,000 shares Common Stock offered by the Selling Stockholders................................... 1,000,000 shares Common Stock to be outstanding after the offering....................................... 36,560,932 shares(1) Use of proceeds by the Company................... To finance capital investments in the development, acquisition or expansion of prison facilities. See "Use of Proceeds." NYSE Common Stock symbol......................... CXC
- --------------- (1) Excludes (a) 2,200,317 shares of Common Stock reserved for issuance upon grants of deferred shares or exercise of options granted pursuant to the Company's existing stock incentive plans; (b) 4,227,256 shares of Common Stock issuable upon the exercise of outstanding warrants; and (c) 4,062,391 shares of Common Stock reserved for issuance upon the conversion of outstanding convertible notes, and assumes that Sodexho does not exercise its preemptive right to purchase shares of Common Stock as a result of this offering. See "Description of Securities." 5 8 SUMMARY CONSOLIDATED FINANCIAL DATA (IN THOUSANDS, EXCEPT PER SHARE AND OPERATING DATA) The summary consolidated financial data set forth below for the three years ended December 31, 1995 have been derived from the Company's audited financial statements and include financial data reflecting the acquisitions of TransCor in December 1994, Concept in April 1995 and CPI in August 1995, all of which were accounted for as pooling-of-interests.
YEARS ENDED DECEMBER 31, ---------------------------------------- 1993 1994 1995 ---------- ---------- ---------- STATEMENTS OF OPERATIONS DATA: Revenues............................................. $ 132,534 $ 152,375 $ 207,241 Expenses: Operating......................................... 108,026 123,540 158,814 General and administrative........................ 7,885 9,413 14,288 Depreciation and amortization..................... 5,759 5,753 6,524 ---------- ---------- ---------- 121,670 138,706 179,626 ---------- ---------- ---------- Contribution from operations......................... 10,864 13,669 27,615 Interest expense, net................................ 4,424 3,439 3,952 ---------- ---------- ---------- Income before income taxes........................... 6,440 10,230 23,663 Provision for income taxes........................... 832 2,312 9,330 ---------- ---------- ---------- Net income........................................... 5,608 7,918 14,333 Preferred stock dividends............................ 425 204 -- ---------- ---------- ---------- Net income allocable to common stockholders.......... $ 5,183 $ 7,714 $ 14,333 ========== ========== ========== Net income per common share: Primary........................................... $ 0.20 $ 0.25 $ 0.38 Fully diluted..................................... $ 0.20 $ 0.25 $ 0.36 Weighted average common shares outstanding........... 25,881 30,954 37,555 OPERATING DATA: Beds under contract (year end)....................... 12,254 19,735 28,607 Beds in operation (year end)......................... 10,368 13,404 20,252 Average occupancy.................................... 92.0% 93.9% 93.5% Compensated mandays.................................. 3,338,411 3,768,095 4,799,562
AS OF DECEMBER 31, 1995 ------------------------------ PRO FORMA ACTUAL AS ADJUSTED(1)(2) -------- ----------------- BALANCE SHEET DATA: Working capital................................................ $ 11,093 $ 127,251 Property and equipment, net.................................... 137,019 137,019 Total assets................................................... 213,478 328,276 Total debt..................................................... 85,885 108,805 Stockholders' equity........................................... 96,704 188,582
- --------------- (1) Gives effect to (a) the issuance in 1996 of $50 million of 7.5% convertible subordinated notes (the "1996 Convertible Notes") and (b) the repayment with a portion of the proceeds therefrom of the outstanding principal balances under the Company's bank loan and line of credit ($12,580,000 and $14,500,000, respectively, at December 31, 1995). See "Description of Securities -- Convertible Notes." (2) Adjusted to reflect the sale by the Company of 1,500,000 shares of Common Stock offered hereby at an assumed offering price of $64.875 per share and the proposed application of the estimated net proceeds therefrom. See "Use of Proceeds." 6 9 RISK FACTORS In addition to the other information contained or incorporated by reference in this Prospectus, the following risk factors should be considered carefully in evaluating an investment in the Common Stock offered hereby. Revenue and Profit Growth Dependent on Expansion. The Company's growth is dependent upon its ability to obtain contracts to manage new correctional and detention facilities and to retain existing management contracts. The rate of construction of new facilities and the Company's potential for growth will depend on a number of factors, including crime rates and sentencing patterns in the United States and other countries in which the Company operates, governmental and public acceptance of the concept of privatization, the number of facilities available for privatization, and the Company's ability to obtain awards for contracts and to integrate new facilities into its management structure on a profitable basis. In addition, certain jurisdictions have recently required the successful bidder to make a significant capital investment in connection with the financing of a particular project. The Company's ability to secure awards under such circumstances will therefore also depend on the Company having significant capital resources. There can be no assurance that the Company will be able to obtain additional contracts to develop or manage new facilities on favorable terms. Risks Associated with Acquisitions. The Company intends to grow internally through the opening of additional facilities, as well as through strategic acquisitions. There can be no assurance that the Company will be able to identify, acquire or profitably manage acquired companies or successfully integrate such operations into the Company without substantial costs, delays or other problems. In addition, there can be no assurance that companies acquired in the future will be profitable at the time of their acquisition or will achieve levels of profitability that justify the investment therein. Acquisitions may involve a number of special risks, including adverse short-term effects on the Company's reported operating results, diversion of management's attention, dependence on retaining, hiring and training key personnel, and risks associated with unanticipated problems or legal liabilities, some or all of which could have a material adverse effect on the Company's financial condition and results of operation. Acceptance of Privatized Correctional and Detention Facilities. Management of correctional and detention facilities by private entities is a relatively new concept and has not achieved complete acceptance by either governments or the public. Some sectors of the federal government and some state and local governments are legally unable to delegate their traditional management responsibilities for correctional and detention facilities to private companies. The operation of correctional and detention facilities by private entities is not widely understood by the public and the industry has encountered resistance from certain groups, such as labor unions, local sheriff's departments, and groups that believe that correctional and detention facility operations should only be conducted by governmental agencies. Such resistance may cause a change in public and government acceptance of privatized correctional facilities. In addition, changes in dominant political parties in any of the markets in which the Company operates could result in significant changes to previously established views of privatization in such market. Opposition to Facility Location and Adverse Publicity. The Company's success in obtaining new awards and contracts may depend, in part, upon its ability to locate land that can be leased or acquired, on favorable terms, by the Company or other entities working with the Company in conjunction with the Company's proposal to develop and/or manage a facility. Some locations may be in or near populous areas and, therefore, may generate legal action or other forms of opposition from residents in areas surrounding a proposed site. The Company's business also is subject to public scrutiny. In addition to possible negative publicity about privatization in general, an escape, riot or other disturbance at a Company-managed facility or another privately managed facility may result in publicity adverse to the Company and the industry in which it operates. 7 10 Dependence on Governmental Agencies. The Company's cash flow is subject to the receipt of sufficient funding and timely payment by applicable governmental entities. If the appropriate governmental agency does not receive sufficient appropriations to cover its contractual obligations, a contract may be terminated or the management fee may be deferred or reduced. Any delays in payment could have an adverse effect on the Company's cash flow. In addition, the Company is dependent on government agencies supplying Company facilities with a sufficient number of inmates to meet the facilities design capacities. A failure to do so may have a material adverse effect on the Company's financial condition and results of operation. Economic Risks Associated with Development Activities. When the Company is engaged to perform construction and design services for a facility, the Company typically acts as the primary contractor and subcontracts with other parties who act as the general contractors. As primary contractor, the Company is subject to the various risks of construction including, without limitation, shortages of labor and materials, work stoppages, labor disputes and weather interference. The Company also is subject to the risk that the general contractor will be unable to complete construction at the budgeted costs or be unable to fund any excess construction costs. Under such contracts, the Company is ultimately liable for all late delivery penalties and cost overruns. Contract Duration. The Company's facility management contracts typically have terms ranging from one to five years, with one or more renewal options which may be exercised only by the contracting governmental agencies. No assurance can be given that any agency will exercise a renewal option in the future. Additionally, the contracting governmental agency typically may terminate a facility contract without cause by giving the Company written notice. See "Business -- Facility Management Contracts." Potential Legal Liability. The Company's management of correctional and detention facilities exposes it to potential third-party claims or litigation by prisoners or other persons for personal injury or other damages resulting from contact with Company-managed facilities, programs, personnel or prisoners, including damages arising from a prisoner's escape or from a disturbance or riot at a Company-managed facility. In addition, the Company's management contracts generally require the Company to indemnify the governmental agency against any damages to which the governmental agency may be subject in connection with such claims or litigation. The Company maintains an insurance program that provides coverage for certain liability risks faced by the Company, including personal injury, bodily injury, death or property damage to a third party where the Company is found to be negligent. There can be no assurance, however, that the Company's insurance will be adequate to cover potential third-party claims. See "Business -- Insurance." Regulations. The industry in which the Company operates is subject to national, federal, state and local regulations which are administered by various regulatory authorities. Prospective providers of correctional and detention services must comply with a variety of applicable state and local regulations including education, health care and safety regulations. The Company's contracts typically include extensive reporting requirements and require supervision and on-site monitoring by representatives of contracting governmental agencies. State law also typically requires corrections officers to meet certain training standards. Certain states such as Florida and Texas deem prison guards to be peace officers and require Company personnel to be licensed and may make them subject to background investigation. In addition, many state and local governments are required to enter into a competitive bidding procedure before awarding contracts for products or services. The laws of certain jurisdictions may also require the Company to award subcontracts on a competitive basis or to subcontract with businesses owned by members of minority groups. The failure to comply with any applicable laws, rules or regulations and the loss of any required license could have a material adverse effect on the Company's financial condition and results of operation. Furthermore, the current and future operations of the Company may be subject to additional regulations as a result of, among other factors, new statutes and regulations and changes in the manner in which existing statutes and regulations are or may be interpreted or applied. Any such additional regulations could have a material adverse effect on the Company's financial condition and results of operation. 8 11 Competition. The Company competes primarily on the basis of the quality and range of services offered, its experience in managing facilities, the reputation of its personnel and its ability to design, finance and construct new facilities. The business in which the Company engages is one that other entities may easily enter without substantial capital investment or experience in management of correctional or detention facilities. Some of the Company's competitors may have greater resources than the Company. The Company also competes in some markets with smaller local companies that may have a better understanding of the local conditions and may be better able to gain political and public acceptance. In addition, the Company competes with governmental agencies that are responsible for correctional facilities. Dependence on Senior Management. The success of the Company's operations has been and will continue to be highly dependent upon the continued services of its senior management. The loss of one or more of the Company's senior management could have a material adverse effect on the Company's business. The Company's loan agreement provides that Doctor R. Crants, the Company's Chairman of the Board and Chief Executive Officer, or a successor reasonably acceptable to the Company's lenders must be employed as Chief Executive Officer. See "Management." Relationship with Sodexho. Following completion of this offering, Sodexho will beneficially own 16.8% of the Common Stock (16.7% assuming exercise of the Underwriters' over-allotment option). See "Principal and Selling Stockholders." Accordingly, Sodexho may have significant influence over the affairs of the Company. Sodexho has agreed to limit its ownership interest in the Company to 25% (or 30% in certain limited circumstances) through June 23, 1999, subject to earlier termination upon the occurrence of certain events, and has agreed to certain restrictions on the voting of its Common Stock. Sodexho has a preemptive right to purchase additional shares of Common Stock or securities convertible or exchangeable for Common Stock in any issuance of securities by the Company in an amount necessary to enable Sodexho to maintain a percentage ownership in the Company equal to 20% of the Common Stock on a fully diluted basis. See "Description of Securities -- Relationship with Sodexho." Volatility of Market Price. From time to time after this offering, there may be significant volatility in the market price of the Common Stock. The Company believes that the current market price of the Common Stock reflects expectations that the Company will be able to continue to operate its facilities profitably and to develop new facilities at a significant rate and operate them profitably. If the Company is unable to operate its facilities profitably or develop facilities at a pace that reflects the expectations of the market, investors could sell shares of the Common Stock at or after the time that it becomes apparent that such expectations may not be realized, resulting in a decrease in the market price of the Common Stock. In addition to the operating results of the Company, changes in earnings estimated by analysts, changes in general conditions in the economy or the financial markets or other developments affecting the Company or the private corrections industry could cause the market price of the Common Stock to fluctuate substantially. In recent years, the stock market has experienced extreme price and volume fluctuations. This volatility has had a significant effect on the market prices of securities issued by many companies for reasons unrelated to their operating performance. 9 12 USE OF PROCEEDS The net proceeds to the Company from the sale of the Common Stock offered hereby are estimated to be approximately $91.9 million ($115.0 million if the Underwriters' over-allotment option is exercised in full), after deduction of the underwriting discount and the estimated offering expenses payable by the Company and based on an assumed offering price of $64.875 per share. The Company will not receive any proceeds from the sale of Common Stock by the Selling Stockholders. Set forth below is a discussion of the Company's anticipated capital needs as well as a discussion of the Company's sources of funds (including the net proceeds of this offering) to meet those needs. Until utilized for the purposes described herein, the Company intends to invest the net proceeds of this offering in high quality, short-term, interest-bearing securities. ANTICIPATED CAPITAL NEEDS The Company's principal anticipated capital needs arise in connection with the development, acquisition or expansion of correctional and detention facilities. Set forth below are currently identifiable capital needs for specific projects the Company expects to complete by the end of 1997:
ANTICIPATED PROJECT EXPENDITURE - -------------------------------------------------------------------------- ---------------------- (DOLLARS IN THOUSANDS) 512-bed expansion of the Central Arizona Detention Center................. $ 15,000 500-bed expansion of the Eloy Detention Center............................ 15,000 Construction costs for the 752-bed Huerfano County Correctional Facility................................................................ 27,000 Construction costs for the 1,504-bed Hardeman County Correctional Center(1)............................................................... 47,000 160-bed expansion of the West Tennessee Detention Facility................ 5,500 Acquisition and/or renovation costs for other projects anticipated to be completed by the end of 1997............................................ 50,000 -------- Total........................................................... $159,500 ========
- --------------- (1) The Company will provide financing for the construction costs of the Hardeman County Correctional Center. It is anticipated that following completion of construction of the facility, a local governmental authority will issue tax-exempt bonds to fund the permanent financing for the facility and the Company's loan to finance construction of the facility will be repaid. The local governmental authority will be the obligor on the permanent financing. ANTICIPATED SOURCES OF FUNDING FOR CAPITAL EXPENDITURES In addition to the anticipated net proceeds of this offering, the Company's principal sources of funding for its anticipated capital expenditures will include cash flow from operations, borrowings under the Company's bank lines of credit and proceeds from the sale of the 1996 Convertible Notes. The currently estimated sources of funds are as follows:
SOURCES OF FUNDING ANTICIPATED AMOUNT - --------------------------------------------------------------------------- ---------------------- (DOLLARS IN THOUSANDS) Net proceeds of this offering.............................................. $ 91,900 Cash flow from operations and borrowings under the Company's bank lines of credit................................................................ 47,600 Proceeds from sale of 1996 Convertible Notes, after debt repayment......... 20,000 -------- Total............................................................ $159,500 ========
The Company currently has a $25 million working capital revolving credit facility (the "Credit Facility"). As of May 9, 1996, there was $21.3 million available to be borrowed under the Credit Facility. The Company has received a proposal from its primary bank lender for an increase in the Credit Facility to $125 million. There can be no assurance that the Company will enter into an agreement for an increased Credit Facility. 10 13 CAPITALIZATION The following table sets forth the current indebtedness and capitalization of the Company as of December 31, 1995, and on a pro forma and as adjusted basis giving effect to the issuance of the 1996 Convertible Notes, the sale by the Company of the 1,500,000 shares of Common Stock offered hereby at an assumed offering price of $64.875 per share and the proposed application of the estimated net proceeds received by the Company therefrom as described under "Use of Proceeds."
PRO FORMA ACTUAL AS ADJUSTED -------- ----------- (DOLLARS IN THOUSANDS) Current portion of long-term debt..................................... $ 11,020 $ 9,660 ======== ======== Long-term debt, net of current portion: Bank loan and credit facilities..................................... 25,916 196 Other long term debt................................................ 34,449 34,449 Convertible subordinated notes(1)................................... 14,500 64,500 -------- -------- Total long-term debt, net of current portion................ 74,865 99,145 -------- -------- Stockholders' equity: Preferred Stock, $1.00 par value, 1,000,000 shares authorized, no shares outstanding............................................... -- -- Common Stock, $1.00 par value, 50,000,000 shares authorized, 32,270,000 shares issued and outstanding; 150,000,000 shares authorized, 33,770,000 shares issued and outstanding, pro forma as adjusted(2)(3)................................................ 32,270 33,770 Additional paid-in capital.......................................... 48,830 139,208 Retained earnings................................................... 15,641 15,641 Treasury stock, at cost............................................. (37) (37) -------- -------- Total stockholders' equity.................................. 96,704 188,582 -------- -------- Total capitalization................................... $171,569 $ 287,727 ======== ========
- --------------- (1) The Company currently has outstanding an aggregate of $64,500,000 principal amount of convertible subordinated notes (the "Convertible Notes") which is comprised of $7,500,000 of 8.5% convertible subordinated notes due September 30, 1998 (the "1992 Convertible Notes"), $7,000,000 of 8.5% convertible subordinated notes due November 7, 1999 (the "1994 Convertible Notes") and the 1996 Convertible Notes. See "Description of Securities -- Convertible Notes." (2) Upon receipt of stockholder approval at the Company's annual meeting of stockholders to be held May 14, 1996 (the "Annual Meeting"), the Company will amend its Certificate of Incorporation to increase the number of authorized shares of Common Stock to 150,000,000. (3) Excludes (a) 2,200,317 shares of Common Stock reserved for issuance upon grants of deferred shares or exercise of options granted pursuant to the Company's existing stock incentive plans; (b) 4,227,256 shares of Common Stock reserved for issuance upon the exercise of outstanding warrants; and (c) 4,062,391 shares of Common Stock reserved for issuance upon the conversion of the Convertible Notes. See "Description of Securities." 11 14 PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY The Common Stock is traded on the NYSE under the symbol "CXC." Until December 30, 1994, the Common Stock was quoted on the Nasdaq National Market under the symbol "CCAX." The following table sets forth, for the periods indicated, the high and low closing sales prices for each of the quarters indicated as reported on (i) the Nasdaq National Market through December 29, 1994 and (ii) the NYSE composite tape from December 30, 1994.
1994 HIGH LOW ------------------------------------------------------------------- ------ ------ First Quarter...................................................... $ 8.19 $ 4.63 Second Quarter..................................................... 8.38 6.25 Third Quarter...................................................... 8.75 7.69 Fourth Quarter..................................................... 8.75 6.44 1995 First Quarter...................................................... $15.31 $ 8.25 Second Quarter..................................................... 18.81 14.69 Third Quarter...................................................... 24.31 17.69 Fourth Quarter..................................................... 38.38 23.44 1996 First Quarter...................................................... $57.00 $34.75 Second Quarter (through May 8, 1996)............................... 66.25 53.63
The Company also has warrants to purchase Common Stock at an exercise price of $8.50 per share (the "Warrants"), which are listed for trading on the NYSE under the symbol "CXCWS." See "Description of Securities -- Warrants." On May 8, 1996, the last sale prices of the Common Stock and the Warrants on the NYSE composite tape were $64.875 and $123.125, respectively. As of May 8, 1996, there were 931 and 353 record holders of the Common Stock and the Warrants, respectively. The Company has never declared or paid a cash dividend on its Common Stock. It is the present policy of the Company's Board of Directors to retain all earnings to support operations; therefore, the Company does not anticipate declaring or paying cash dividends on its Common Stock for the foreseeable future. The declaration and payment of cash dividends in the future will be determined based on a number of factors, including the Company's earnings, financial condition, liquidity requirements, restrictions on financing agreements and other factors deemed relevant by the Board of Directors. Certain of the Company's credit agreements prohibit the Company from paying any cash dividends on its Common Stock without the lender's consent. 12 15 BUSINESS The Company is the largest developer and manager of privatized correctional and detention facilities worldwide. The Company's facilities are located in 11 states of the United States, Puerto Rico, Australia and the United Kingdom. As of May 9, 1996, the Company had contracts to manage 47 correctional and detention facilities with an aggregate design capacity of 31,253 beds of which 37 facilities representing 20,994 beds are in operation. The Company is currently developing ten facilities and expanding four facilities representing an aggregate of 10,259 beds. The Company expects that all of the beds under development and expansion will be in operation by the end of 1997. The Company owns 12 of the 37 facilities it currently operates and leases the remaining 25 facilities from governmental agencies and non-profit corporations. THE MARKET FOR THE COMPANY'S SERVICES Throughout the world, there is a growing trend toward privatization of government services and functions, including corrections and detention, as governments of all types face continuing pressure to control costs and improve the quality of services. As a result of increased costs, some governments have been forced to limit public services and to seek more cost-effective means of providing the remaining services. Since correctional and detention facilities are viewed as an essential service, fiscal pressures have caused governments to seek to deliver these services more cost effectively. Further, as a result of the number of crimes committed each year and the corresponding number of arrests, incarceration costs generally grow faster than any other part of a government's budget. In an attempt to address these pressures, governmental agencies responsible for correctional and detention facilities are increasingly privatizing facilities. According to the 1995 Census, the design capacity of privately managed adult correctional and detention facilities worldwide has increased dramatically since the first privatized facility was opened by the Company in 1984. The majority of this growth has occurred since 1989 as the number of privately managed adult correctional and detention facilities worldwide increased from 26 facilities with a design capacity of 10,973 beds in 1989 to 104 facilities with a design capacity of 63,595 beds in 1995. To date, numerous counties, 22 states, Puerto Rico and the federal government have incorporated the private sector into their criminal justice systems and 15 states are currently considering privatization. Notwithstanding such growth, less than four percent of all adult prison beds in the United States are privately managed. Management believes that the increase in the demand for privatized correctional and detention facilities also is a result, in large part, of the general shortage of beds available in United States correctional and detention facilities. According to reports issued by the United States Department of Justice, Bureau of Justice Statistics ("BJS"), the number of inmates housed in United States federal and state prison facilities increased from 487,593 at December 31, 1985 to 1,104,074 at December 31, 1995, an increase of more than 126%. Local jail populations in the United States increased from 254,986 inmates at December 31, 1985 to 490,442 at December 31, 1994, an increase of 92%. At December 31, 1994, the BJS reports that the federal prison system in the United States was operating at approximately 125% of its rated capacity. Industry reports also indicate that inmates convicted of violent crimes generally serve only one-third of their sentence, with the majority of them being repeat offenders. Accordingly, there is a perceived public demand for, among other things, longer prison sentences, as well as prison terms for juvenile offenders, resulting in even more overcrowding in United States correctional and detention facilities. Finally, numerous courts and other governmental entities in the United States have mandated that additional services offered to inmates be expanded and living conditions be improved. Many governments do not have the readily-available resources to make the changes necessary to meet such mandates. At December 31, 1995, the Company managed 38 of the 91 privatized United States adult facilities and 27,960 of the 56,109 private United States adult beds. These facilities include (i) Immigration and Naturalization Service detention facilities and United States Marshals Service detention facilities privatized by federal agencies, (ii) state prisons, community corrections facilities, intermediate sanction facilities, pre-release centers, work program facilities and state jail facilities privatized by state agencies and (iii) city jail facilities and transfer facilities privatized by local agencies. There are also numerous privatized juvenile 13 16 offender facilities of which the Company currently has contracts to operate facilities with an aggregate design capacity of 647 beds. The demand for privately managed correctional and detention centers is also increasing internationally. Management believes that many countries are faced with the same fiscal pressures as the United States and, as a result, are seeking more cost-effective means of providing prison management services. At December 31, 1995, there were a total of 11 privatized facilities in the United Kingdom and Australia, with an aggregate design capacity of 6,302 beds. The Company, through joint ventures, had contracts to manage three of these facilities with an aggregate design capacity of 1,479 beds. For similar economic reasons, the demand for privatized prisoner transport services is also increasing domestically and internationally. The Company believes that more and more government agencies will look for more cost-effective means of providing these and other ancillary services. BUSINESS STRATEGY The Company intends to enhance its position as the largest developer and manager of privatized correctional and detention facilities worldwide through the following business strategies. Efficient Development and Management of Facilities. The Company will continue to provide low cost, high quality management of its facilities. The Company believes that its quality of personnel, efficient application of financial resources and adherence to proven policies and procedures enables it to design, develop and manage correctional and detention facilities at costs lower than governmental agencies that are responsible for performing such services. The Company believes that its reputation as an innovative and effective manager of facilities enhances its ability to market its services and capitalize on a larger scope of opportunities with a variety of governmental agencies. The Company also recognizes the importance of the facility administrator and the facility's management team in the successful financial performance of its facilities. Management believes that the Company's reputation as the largest developer and manager of privatized correctional and detention facilities enables it to attract highly-qualified facility administrators. Each facility management team operates in accordance with a Company-wide policy and procedure regimen, derived from industry standards, designed to ensure the delivery of consistent, high quality services in each of its facilities. See " -- Operating Procedures." The Company seeks to minimize operating expenses by designing its facilities to optimize correctional officer staffing consistent with facility security requirements. The Company further controls operating expenses through the use of electronic surveillance systems and other technologies. Development of Domestic Business Opportunities. As a result of the growth in the demand for privatized correctional and detention facilities, the Company is selective in the projects it pursues. The Company pursues projects based on probability of success, geographic location, size, potential profitability, and political and community acceptability. This approach allows the Company to enhance its market share and optimize resource allocation, profitability and financial return. The Company intends to continue its focus on institutions with an emphasis on medium to maximum security that are 500 to 1,000 beds or larger. Management believes that the Company's experience and reputation in managing large secure facilities will enable it to maintain its industry position and capitalize on the trend of governments to privatize larger facilities. Strategic Acquisitions. The Company believes that its recent acquisitions have significantly enhanced its position as the largest developer and manager of privatized correctional and detention facilities, while increasing operating efficiencies. Accordingly, the Company intends to continue to pursue strategic acquisitions of other managers of privatized correctional and detention facilities. Expanded Scope of Services. The Company intends to continue to implement a wide variety of specialized services that address the unique needs of various segments of the inmate population. Because the facilities operated by the Company differ with respect to security levels, ages, genders and cultures of inmates, the Company focuses on the particular needs of an inmate population and tailors its services based on local conditions and the Company's ability to provide such services on a cost-effective basis. In addition to core 14 17 residential services, the Company offers rehabilitative and education services such as counseling, basic education, job skill training and life skills/transition planning services, all aimed at reducing recidivism. Further, because management believes alcohol and drug abuse are directly or indirectly responsible for the majority of criminal offenses in the United States, the Company has created and offers to its inmates its Lifeline program, a comprehensive long-term substance abuse treatment program. The Company believes that its success in delivering these specialized services will enable it to address the changing needs of its customers. By offering a broad range of specialized services, the Company seeks to provide a solution to reduce recidivism and ultimately the cost of crime. Expansion into International Markets. The Company believes the majority of its new business will come from within the United States. However, the Company and its international strategic partner, Sodexho, believe that interest in private-sector corrections is developing in other nations. While management will not detract from its domestic business to pursue international activities, the Company will participate in selected international projects it finds attractive. The Company also believes that in order to compete effectively in international markets it must enter into alliances with strategic local partners with access to local opportunities and familiarity with local business practices. In June 1994, the Company entered into an international strategic alliance with Sodexho. Among other business ventures, Sodexho provides contract services to French prisons and has business operations in 60 countries. Pursuant to the terms of the joint venture agreement between the Company and Sodexho, only the Company will develop and manage prison management business in the United States and its territories. In the rest of the world, except in the United Kingdom, the Company and Sodexho will pursue prison management business opportunities through local joint venture entities to be established, generally on a 50/50 basis. Management believes that, with the formation of the Sodexho alliance, the Company is well positioned to participate in international markets. See "Description of Securities -- Relationship with Sodexho." Cost Reduction Programs. An important component of the Company's strategy is to position itself as a low cost, high quality provider of prison management services in all of its markets. As cost containment pressures increase, the Company will continue to focus on improving operating performance and efficiency through the following key operating initiatives: (i) standardization of supply and service purchasing practices and usage; (ii) improvement of inmate management, resource consumption and reporting procedures; and (iii) improvement in salary and wage expenses by reducing overtime, monitoring staff levels and developing productivity standards. The Company intends to continue to apply these operating cost initiatives throughout its existing facilities and in new facilities. FACILITY MANAGEMENT CONTRACTS The Company is compensated on the basis of the number of inmates held in each of its facilities. Contracts may vary to provide fixed per diem rates or monthly fixed rates. Of the Company's 37 facilities in operation, 34 of the Company's facility management contracts provide that the Company will be compensated at an inmate per diem rate based upon actual or minimum guaranteed occupancy levels and three of the management contracts are based on monthly fixed rates. In either case, the compensation is invoiced in accordance with applicable law and is paid on a monthly basis. Occupancy rates for a particular facility will be low when first opened or when expansions are first available. However, after a facility gets beyond the start-up period, typically ranging from 30 to 90 days, the occupancy rate tends to stabilize. For 1995, the average occupancy, based on rated capacity, was 93.5% for all facilities operated by the Company. In addition, the Company's contracts generally require the Company to operate each facility in accordance with all applicable laws and regulations. The Company is required by its contracts to maintain certain levels of insurance coverage for general liability, workers' compensation, vehicle liability and property loss or damage. The Company also is required to indemnify the contracting agencies for claims and costs arising out of the Company's operations and, in certain cases, to maintain performance bonds. The Company's facility contracts are short term in nature. Terms of federal contracts generally range from one to five years, and contain multiple renewal options. The terms of local and state contracts may be for 15 18 longer periods with additional renewal options. Most facility contracts also generally contain clauses which allow the governmental agency to terminate a contract without cause. The Company's facility contracts are generally subject to annual or bi-annual legislative appropriation of funds. A failure by a governmental agency to receive appropriations could result in termination of the contract by such agency or a reduction in the management fee payable to the Company. To date, none of the Company's contracts have been terminated by a governmental agency and all renewal options under the Company's management contracts have been exercised by the governmental agencies. No assurance can be given that a governmental agency will not terminate or fail to renew a contract with the Company in the future. For 1995, contracts for facilities with the United States Marshals Service accounted for 11% of the Company's revenues and contracts with the State of Texas accounted for 18% of the Company's revenues. OPERATING PROCEDURES Pursuant to the terms of its management contracts, the Company is responsible for the overall operation of its facilities, including staff recruitment, general administration of the facilities, security and supervision of the offenders and facility maintenance. The Company also provides a variety of rehabilitative and educational programs at its facilities. Inmates at most facilities managed by the Company may receive basic education through academic programs designed to improve inmate literary levels and the opportunity to acquire General Education Development certificates. The Company also offers vocational training to inmates who lack marketable job skills. In addition, the Company offers life skills transition planning programs that provide inmates job search training and employment skills, health education, financial responsibility training, parenting and other skills associated with becoming productive citizens. At several of its facilities, the Company also offers counseling, education and/or treatment to inmates with alcohol and drug abuse problems through its Lifeline program. The Company operates each facility in accordance with the Company-wide policies and procedures and the standards and guidelines established by the American Correctional Association ("ACA") Commission on Accreditation. The ACA is an independent organization comprised of professionals in the corrections industry which establishes guidelines and standards by which a correctional institution may gain accreditation. The ACA standards, which the ACA believes safeguard the life, health and safety of offenders and personnel, are the basis of the accreditation process and define policies and procedures for operating programs. The ACA standards, which are the industry's most widely accepted correctional standards, describe specific objectives to be accomplished and cover such areas as administration, personnel and staff training, security, medical and health care, food service, inmate supervision and physical plant requirements. The Company has sought and received ACA accreditation for 16 of the facilities it currently manages, and intends to apply for ACA accreditation for all of its facilities once they are eligible. The accreditation process is usually completed in 18 to 24 months after a facility is opened. FACILITY DESIGN, CONSTRUCTION AND FINANCE In addition to its facility management services, the Company also provides consultation to various governmental agencies with respect to the design and construction of new correctional and detention facilities, and the redesign and renovation of older facilities. Since its inception in January 1983, the Company has designed and constructed 21 of its 37 operating corrections facilities for various federal, state, and local governmental agencies. The Company manages all of the facilities it has designed and constructed or redesigned and renovated. Pursuant to the Company's design, build and manage contracts, the Company is responsible for overall project development and completion. Typically, the Company develops the conceptual design for a project, then hires architects, engineers and construction companies to complete the development. When designing a particular facility, the Company utilizes, with appropriate modifications, prototype designs the Company has used in developing other projects. Management of the Company believes that the use of such prototype designs allows it to reduce cost overruns and construction delays. The Company's facilities are designed to maximize staffing efficiencies by increasing the area of vision under surveillance by corrections officers and utilizing additional electronic surveillance systems. 16 19 Various methods of construction financing may be used by a contracting governmental agency, including, but not limited to the following: (i) one-time general revenue appropriation by the government agency for the cost of the new facility; (ii) general obligation bonds that are secured by either a limited or unlimited tax levied by the issuing governmental entity; or (iii) lease revenue bonds or certificates of participation secured by an annual lease payment that is subject to annual or bi-annual legislative appropriation of funds. When the project is financed using direct governmental appropriations or proceeds from the sale of bonds or other obligations issued prior to the award of the project, or by the Company directly, the financing is in place when the construction or renovation contract is executed. If the project is financed using project-specific tax-exempt bonds or other obligations, the construction contract is generally subject to the sale of such bonds or obligations. Substantial expenditures for construction will not be made on such a project until the tax-exempt bonds or other obligations are sold. If such bonds or obligations are not sold, construction and management of the facility may either be delayed until alternate financing is procured or development of the project will be entirely suspended. When the Company is awarded a facility management contract, appropriations for the first annual or bi-annual period of the contract's term have generally already been approved, and the contract is subject to governmental appropriations for subsequent annual or bi-annual periods. Of the domestic facilities currently managed by the Company, 25 were funded by the government using one of the above-described financing vehicles. MARKETING The Company engages in extensive marketing efforts. The Company believes that it is the industry leader in promoting the benefits of privatization of prisons and other correctional and detention facilities. Marketing efforts are conducted and coordinated by the Company's business development department and senior management with the aid, where appropriate, of certain independent consultants. The Company views governmental agencies responsible for federal, state and local correctional facilities in the United States and governmental agencies responsible for correctional facilities in Puerto Rico, the United Kingdom and Australia as its primary target markets. The Company generally receives inquiries from or on behalf of governmental agencies that are considering privatization of certain facilities or that have already decided to contract with private enterprise. When it receives such an inquiry, the Company determines whether there is an existing need for the Company's services and whether the legal and political climate in which the inquiring party operates is conducive to serious consideration of privatization and then conducts an initial cost analysis to further determine project feasibility. The Company pursues its domestic business opportunities on two primary courses. In the first course, the Company follows the traditional competitive route where a Request for Proposals ("RFP") or Request for Qualification ("RFQ") is issued by a government agency and a number of companies respond. Management believes that this competitive approach will produce the majority of new contract awards to the Company. The second course involves the development of new facilities in locations where there is a clearly defined, long-term need for beds, but where a competitive bidding procedure is not required. Generally, governmental agencies responsible for correctional and detention services procure goods and services through RFPs or RFQs. Most of the Company's activities in the area of securing new business are in the form of responding to RFPs. As part of the Company's process of responding to RFPs, management meets with appropriate personnel from the agency making the request to best determine the agency's distinct needs. If the project fits within the Company's strategy, the Company will then submit a written response to the RFP. A typical RFP requires bidders to provide detailed information, including, but not limited to, the service to be provided by the bidder, its experience and qualification, and the price at which the bidder is willing to provide the services (which services may include the renovation, improvement or expansion of an existing facility or the planning, design and construction of a new facility). The Company has and intends to in the future, engage independent consultants to assist it in responding to RFPs. Based on the proposals received in response to an RFP, the agency will award a contract to the successful bidder. In addition to issuing formal RFPs, local jurisdictions may issue an RFQ. In the RFQ process, the requesting agency selects a firm believed to be most 17 20 qualified to provide the requested services and then negotiates the terms of the contract with that firm, including the price at which its services are to be provided. The marketing process for facility management consists of several critical events. These include issuance of an RFP or RFQ by a governmental agency, submission of a response to the RFP or RFQ by the Company, the award of the contract by a governmental agency and the commencement of construction or management of the facility. The Company's experience has been that a substantial period of time may elapse from the initial inquiry to receipt of a new contract. As the concept of privatization has gained wider acceptance, however, the length of time from inquiry to the award of a contract has shortened. The length of time required to award a contract is also affected, in some cases, by the need to introduce enabling legislation. Generally, if the facility for which an award has been made must be constructed, the Company's experience has been that management of a newly-constructed facility typically commences between 12 and 24 months after the governmental agency's award. While the Company focuses primarily on the traditional competitive marketing approach described above, it also pursues the development of new facilities in those areas where a competitive bid process is not required. Management believes this approach, which has proven successful to the Company to date, is effective because of the Company's strong client relationships and reputation for quality corrections. In addition to marketing its services to federal, state and local authorities, the Company markets its services internationally, primarily through the international strategic alliance formed with Sodexho. The Company is currently marketing its management services in Australia, Germany, Hungary, Canada, Panama, and Mexico. The marketing efforts of TransCor for inmate transportation services vary from those of the rest of the Company. TransCor's marketing approach generally consists of mass mailings, phone calls, and personal visits to hundreds of state and local governmental agencies as well as attendance at local, state and national trade shows. BUSINESS PROPOSALS As of May 9, 1996, the Company was pursuing nine prospects with a total of approximately 7,700 beds for which written responses to RFPs have been submitted. The Company is also pursuing 19 prospects with a total of approximately 9,800 beds for which it has not submitted proposals. The domestic projects that the Company is pursuing are located in 10 states, including nine states in which the Company is not currently operating. Additionally, the Company is pursuing business in Australia and Great Britain through joint ventures in those countries. The Company is also pursuing other foreign facility prospects through its alliance with Sodexho. When a contract requires construction of a new facility, the Company's success depends, in part, upon its ability to acquire real property for its facilities on desirable terms and at satisfactory locations. Management expects that many such locations will be in or near populous areas and therefore anticipates legal action and other forms of opposition from residents in areas surrounding each proposal site. The Company may incur significant expenses in responding to such opposition and there can be no assurance of success. EMPLOYEES At April 19, 1996, the Company employed 5,653 full-time employees and 138 part-time employees. Of the full-time employees, 97 were employed at the Company's headquarters and 5,566 were employed at the Company's facilities and TransCor. The Company employs personnel in the following areas: clerical and administrative, including facility administrators/wardens, security, food service, medical, transportation and scheduling, maintenance, teachers, counselors and other support services. Each of the Company's facilities is managed as a separate operational facility by the facility administrator or warden. All facilities follow a standardized code of policies and procedures. The Company has never experienced a strike or work stoppage. Beginning in 1992, six facilities were approached by one particular 18 21 union to organize the work force. The union was defeated or withdrew in five facilities. In March 1993, the Company reached an agreement with the union to represent 73 correctional officers at the Silverdale facility and this contract was decertified in March 1994. In January 1996, the Company reached an agreement with a union to represent 38 non-security personnel at its Shelby Training Center. In the opinion of management, employee relations are good. EMPLOYEE TRAINING Under the laws applicable to the Company's operations, as well as the Company's internal training policy, the Company's corrections officers are required to complete a minimum amount of training prior to independent assignment. In most cases, officers must undergo at least 160 hours of training by the Company before being allowed to work alone in a position that will bring them in contact with inmates or detainees. Additional training is required in certain jurisdictions where necessary to comply with applicable law in order to enable such officers to work in positions that will bring them into contact with inmates. All non-security staff receive 80 hours of initial training. Accordingly, the Company's training programs meet or exceed all applicable requirements. The Company's training is comprised of approximately 40 hours of instruction concerning the Company's policies, operational procedures and management philosophy. An additional 120 hours concerning legal issues, rights of inmates and detainees, techniques of communication and supervision, improvement of interpersonal skills and job training relating to the particular position to be filled are provided. Employees of facilities acquired or taken over by the Company who are offered continued employment undergo at least 40 hours of training by the Company before reporting to work for the Company. Each of the Company's employees who has contact with inmates receives a minimum of 40 hours of additional training each year, and each facility management employee of the Company receives at least 40 hours of training each year. TransCor also has training requirements for its employees. Each new employee must undergo 40 hours of training, prior to job performance, including driver training and safety, correctional training and policy and procedures guidelines. Each employee then performs four weeks of on-the-job training with an experienced transportation agent. TransCor maintains continuing training for all employees of 16 to 32 hours per year. INSURANCE The Company maintains a $30,000,000 general liability insurance policy for all of its operations. To date, no payments have been made under the Company's general liability insurance policies because of any action brought as a result of the operation of any of its facilities. The Company also maintains insurance in amounts it deems adequate to cover property and casualty risks, workers' compensation and directors and officers liability. There can be no assurance that the aggregate amount and kinds of the Company's insurance are adequate to cover all risks it may incur or that insurance will be available in the future. Each of the Company's facility management contracts and the statutes of certain states require the maintenance of insurance by the Company. The Company's contracts provide that in the event that the Company does not maintain such insurance, the contracting agency may terminate its agreement with the Company. The Company believes it is in compliance in all material respects with respect to these requirements. LITIGATION The Company is currently, and from time to time, subject to claims and suits arising in the ordinary course of business, including claims for damages for personal injuries or for wrongful restriction of, or interference with, inmate privileges. In the opinion of management, the outcome of the proceedings to which it is currently a party will not have a material adverse effect upon its operations or financial condition. 19 22 MANAGEMENT The following table sets forth certain information concerning the directors and executive officers of the Company as of the date of this Prospectus.
NAME AGE POSITION - ----------------------------- --- ----------------------------------------------------------------- Doctor R. Crants............. 51 Chairman of the Board; Chief Executive Officer; Director Thomas W. Beasley............ 53 Director; Chairman Emeritus T. Don Hutto(1).............. 60 Director; Vice Chairman; Senior Managing Director of International Operations William F. Andrews........... 64 Director Samuel W. Bartholomew, Jr.... 51 Director Jean-Pierre Cuny............. 41 Director Richard H. Fulton(1)......... 69 Director Joseph F. Johnson(1)......... 45 Director Nominee R. Clayton McWhorter(1)...... 62 Director Nominee David L. Myers............... 52 President Darrell K. Massengale........ 35 Chief Financial Officer; Secretary and Treasurer; Vice President, Finance Dennis E. Bradby............. 46 Vice President, Education Services Robert G. Britton............ 55 Vice President, Operations Linda G. Cooper.............. 45 Vice President, Legal Affairs Peggy W. Lawrence............ 40 Vice President, Investor Relations John D. Rees................. 49 Vice President, Business Development Linda A. Staley.............. 51 Vice President, Project Development Gay E. Vick, III............. 48 Vice President and Managing Director of International Operations
- --------------- (1) Messrs. Hutto and Fulton are currently directors of the Company but are not standing for re-election at the Annual Meeting. The Board of Directors has nominated the other five existing directors and Messrs. McWhorter and Johnson for election as directors at the Annual Meeting. Doctor R. Crants, a founder of the Company, was elected Chief Executive Officer and Chairman of the Board of the Company in June 1994. From June 1987 to June 1994, he served as President, Chief Executive Officer and Vice Chairman of the Board of Directors of the Company. He has served as a director of the Company since 1983. Thomas W. Beasley, a founder of the Company, was elected Chairman Emeritus of the Board of Directors of the Company in June 1994. From June 1987 to June 1994, he served as Chairman of the Board. Mr. Beasley served as President of the Company from January 1983 to June 1987. He has served as a director of the Company since 1983. T. Don Hutto, a founder of the Company, was elected Vice Chairman of the Board of Directors and Senior Managing Director of International Operations of the Company in June 1994. He will no longer serve as a director following the Annual Meeting. From July 1988 to June 1994, he was engaged by the Company as International Projects Manager. Mr. Hutto served as Commissioner, Department of Corrections of Virginia, from 1976 through December 1981 and Commissioner of Corrections of Arkansas from 1971 to 1976, and is a past president of the ACA. William F. Andrews has served as a director of the Company since 1986. Mr. Andrews currently serves as the Chairman of Schrader, Inc., a manufacturing company, and Chairman of Scovill Fasteners. From January 1992 through December 1994 he was Chairman, President and Chief Executive Officer of Amdura Corporation, a manufacturing company, and Chairman of Utica Corp., also a manufacturing company. Mr. Andrews serves as a director of Navistar International Corporation, Southern New England Telephone Company, Johnson Control Corporation, Harley Davidson Company, Katy Industries, Northwestern Steel and Wire Company, Black Box Corporation and Process Technology Holdings. 20 23 Samuel W. Bartholomew, Jr. has served as a director of the Company since June 1991. Mr. Bartholomew is a founder and Chairman of the Nashville law firm of Stokes & Bartholomew, P.A., which serves as general counsel to the Company. Jean-Pierre Cuny has served as a director of the Company since July 1994. Mr. Cuny serves as Senior Vice President of The Sodexho Group, a leading supplier of catering and related services to institutions based in Paris, France. Mr. Cuny was elected to the Board of Directors in connection with the international strategic alliance with Sodexho. See "Description of Securities -- Relationship with Sodexho." Richard H. Fulton has served as a director of the Company since 1988. He will no longer serve as a director following the Annual Meeting. Mr. Fulton presently serves as Chairman Emeritus of the Board of The Bank of Nashville, and as Chairman of The Fulton Group, Inc., a consulting firm. Mr. Fulton previously served as Mayor of Nashville, Tennessee. Joseph F. Johnson is a director nominee for election at the Annual Meeting. He serves as Chairman and CEO of The Johnson Companies, a group of closely held companies involved in government relations and corrections. In 1994, Mr. Johnson founded National Corrections & Rehabilitation Corporation, a correctional services company which specializes in providing education, vocational training, substance abuse treatment and medical care programs to inmates. R. Clayton McWhorter is a director nominee for election at the Annual Meeting. Mr. McWhorter became the Chairman of Columbia/HCA Healthcare Corporation effective April 1995. He will resign from this position on May 9, 1996, but will remain a director of Columbia/HCA. Prior to such time, Mr. McWhorter participated in the formation of HealthTrust, Inc. and served as its Chairman, President and Chief Executive Officer until its merger with Columbia/HCA in April 1995. David L. Myers became President of the Company in June 1994. From December 1986 to June 1994, he served as Vice President, Facility Operations of the Company. Darrell K. Massengale joined the Company in February 1986 and in March 1991 became its Vice President, Finance, Secretary, and Treasurer. In June 1994, he was also elected Chief Financial Officer of the Company. Mr. Massengale is a certified public accountant. Dennis E. Bradby has served as Vice President, Education Services for the Company since June 1991. From April 1986 through June 1991, Mr. Bradby served as the Company's Vice President, Operational Support Systems. Robert G. Britton was elected Vice President, Operations for the Company in June 1994. From January 1986 to June 1994, he served as Vice President, Business Development for the Company. Linda G. Cooper joined the Company in April 1987 as Senior Legal Counsel. In May 1988, she was elected Assistant Secretary for the Company and in January 1989 became its Vice President, Legal Affairs. Peggy W. Lawrence became Vice President, Investor Relations in January 1995. From June 1985 to January 1995, she served as Vice President, Communications for the Company. John D. Rees was elected Vice President, Business Development for the Company in June 1994. From 1967 until 1986 when he joined the Company, Mr. Rees served as warden of the Kentucky State Reformatory. Linda A. Staley was elected Vice President, Project Development for the Company in June 1994. She joined the Company in 1985 as Director, Project Development. Gay E. Vick, III was elected Vice President and Managing Director for the Company's International Operations in June 1994. From January 1987 to June 1994, he served as Vice President, Project Development for the Company. 21 24 PRINCIPAL AND SELLING STOCKHOLDERS The table below sets forth certain information regarding the beneficial ownership of Common Stock, as of May 9, 1996, and as adjusted to reflect the sale of the Common Stock offered hereby of (i) each person who is known by the Company to be the beneficial owner of more than 5% of the Common Stock, (ii) each director of the Company, (iii) the Company's Chief Executive Officer and the four other most highly compensated executive officers, (iv) all directors and executive officers as a group and (v) the Selling Stockholders.
SHARES BENEFICIALLY SHARES BENEFICIALLY OWNED PRIOR TO THE SHARES TO OWNED AFTER THE OFFERING(1) BE SOLD IN OFFERING(1) ------------------- THE ------------------- NUMBER PERCENT OFFERING NUMBER PERCENT ---------- ------- ---------- ---------- ------- DIRECTORS, EXECUTIVE OFFICERS AND 5% STOCKHOLDERS: Sodexho, S.A.(2).............................. 6,992,406 17.4% -- 6,992,406 16.8% Thomas W. Beasley(3).......................... 1,889,217 5.3% 223,384 1,665,833 4.5% Doctor R. Crants(4)........................... 999,586 2.8% -- 999,586 2.7% T. Don Hutto(5)............................... 251,519 * -- 251,519 * William F. Andrews(6)......................... 139,666 * -- 139,666 * Samuel W. Bartholomew, Jr.(7)................. 126,300 * -- 126,300 * Jean-Pierre Cuny(8)........................... 30,000 * -- 30,000 * Richard H. Fulton(9).......................... 77,950 * -- 77,950 * David L. Myers(10)............................ 106,082 * -- 106,082 * Darrell K. Massengale(11)..................... 83,569 * -- 83,569 * All directors and executive officers as a group (16 persons)(12)........................... 4,115,637 11.3% 223,384 3,892,253 10.2% FORMER TRANSCOR STOCKHOLDERS: Thomas Loventhal.............................. 515,252 1.5% 75,000 440,252 1.2% American Corrections Transport, Inc........... 444,312 1.3% 44,430 399,882 1.1% Ted Feldman................................... 6,924 * 1,000 5,924 * Louis Ratchford............................... 2,886 * 1,500 1,386 * Scott L. Moskovitz............................ 11,274 * 1,000 10,274 * Alma Wells.................................... 2,886 * 1,500 1,386 * Elizabeth Smith............................... 2,886 * 1,500 1,386 * FORMER CONCEPT STOCKHOLDERS: D. Paul and Joyce Alagia...................... 695,741 2.0% 12,200 683,541 1.9% Harold S. Nelson.............................. 193,002 * 171,562 21,440 * Ben F. Morgan, Jr............................. 155,853 * 30,000 125,853 * A. W. Sandbach................................ 140,120 * 40,000 100,120 * William H. Cull............................... 363,968 1.0% 35,000 328,968 * Thomas F. Buetow.............................. 216,816 * 74,000 142,816 * Dorothy Watkins............................... 106,930 * 2,500 104,430 * David Watkins................................. 22,184 * 2,000 20,184 * John Watkins, Jr.............................. 22,314 * 2,000 20,314 * John L. Smith................................. 80,526 * 21,000 59,526 * Patrick H. Molloy............................. 90,434 * 2,500 87,934 * Charles O. Hundley............................ 17,748 * 15,974 1,774 * Starletta Schirmer............................ 750 * 750 0 * FORMER CPI STOCKHOLDERS: Michael D. Shmerling.......................... 309,200 * 38,400 270,800 * Lisa A. Shmerling............................. 74,800 * 74,800 0 * Alan Wernick.................................. 30,000 * 8,000 22,000 * David Obolensky............................... 32,000 * 10,000 22,000 * Cindie Unger.................................. 280,000 * 110,000 170,000 *
- --------------- * Represents beneficial ownership of less than 1% of the Common Stock 22 25 (1) The persons named in the table, to the Company's knowledge, have sole voting and investment power with respect to all shares of Common Stock shown as beneficially owned by them, except as otherwise indicated. Shares of Common Stock underlying options and warrants to purchase Common Stock are deemed to be outstanding for the purpose of computing the outstanding Common Stock owned by the particular person and by the group, but are not deemed outstanding for any other purpose. (2) Sodexho's address is 3 avenue Newton, 78180 Montigny-le-Bretonneux, France. Includes 1,352,205 shares of Common Stock issuable upon conversion of certain Convertible Notes; 2,200,000 shares issuable upon conversion of certain warrants, 30,000 shares issuable upon the exercise of certain options issued to Mr. Cuny and approximately 1,465,200 shares issuable upon conversion of certain convertible subordinated notes which Sodexho will purchase pursuant to a forward contract with the Company. Information contained herein is based solely on the Schedule 13D filed with the Securities and Exchange Commission (the "Commission") in April 1996. See "Description of Securities -- Relationship with Sodexho." (3) Mr. Beasley's address is Route 2, Box 305, Burns, Tennessee 37029. Includes 30,000 shares issuable upon the exercise of options, 2,000 shares owned by Mr. Beasley's wife, 14,649 shares held in the Company's Amended and Restated Employee Stock Ownership Plan (the "ESOP"), 358,770 shares issuable upon the exercise of Warrants and 200 shares issuable upon the exercise of Warrants owned by Mr. Beasley's wife. Such information is derived in part from the Schedule 13G, dated February 12, 1996, filed by Mr. Beasley. (4) Includes 200,000 shares issuable upon the exercise of options, 24,175 shares held in the Company's ESOP and 99,940 shares issuable upon the exercise of Warrants (does not include 3,200 shares held in trust for Mr. Crants' children and 6,640 shares issuable upon the exercise of Warrants held in trust for Mr. Crants' children beneficial ownership of which is disclaimed). (5) Includes 45,000 shares issuable upon the exercise of options, 8,589 shares held in the ESOP and 64,666 shares owned by Mr. Hutto's wife. (6) Includes 89,000 shares issuable upon exercise of options and 4,000 shares owned of record by minor children of Mr. Andrews. (7) Includes 86,500 shares issuable upon the exercise of options, 6,000 shares owned by minor children of Mr. Bartholomew, 800 shares issuable upon the exercise of Warrants and 800 shares issuable upon the exercise of Warrants owned by minor children of Mr. Bartholomew. (8) Mr. Cuny serves as the Senior Vice President of The Sodexho Group, an affiliate of Sodexho, and was elected to the Board of Directors in connection with the international strategic alliance between the Company and Sodexho. As an outside director, Mr. Cuny has received options to purchase 30,000 shares of Common Stock. Mr. Cuny disclaims beneficial ownership of all shares held by Sodexho. (9) Includes 45,000 shares issuable upon the exercise of options and 3,400 shares issuable upon the exercise of Warrants. (10) Includes 96,200 shares issuable upon the exercise of options, 400 shares owned by children of Mr. Myers, 40 shares issuable upon the exercise of Warrants, 80 shares issuable upon the exercise of Warrants owned by children of Mr. Myers and 9,162 shares held in the ESOP. (11) Includes 70,800 shares issuable upon the exercise of options, 700 shares owned jointly by Mr. Massengale and his wife, 140 shares issuable upon the exercise of Warrants owned jointly by Mr. Massengale and his wife and 7,129 shares held in the ESOP. (12) Includes an aggregate of 1,418,398 shares issuable upon exercise of options and warrants and 114,788 shares held in the ESOP. 23 26 DESCRIPTION OF SECURITIES As of May 9, 1996, the Company's authorized capital stock consists of (i) 50,000,000 shares of Common Stock, $1.00 par value per share, and (ii) 1,000,000 shares of Preferred Stock, $1.00 par value per share ("Preferred Stock"). Upon receipt of stockholder approval at the Annual Meeting, the Company will amend its Certificate of Incorporation to increase the number of authorized shares of Common Stock to 150,000,000. Upon the completion of this offering, 36,560,932 shares of Common Stock and no shares of Preferred Stock will be outstanding. The following summary description is qualified in its entirety by reference to the Company's Certificate of Incorporation and By-laws and the other contracts, agreements and documents describing the terms of the Company's securities. COMMON STOCK The holders of Common Stock are entitled to one vote per share on all matters submitted to a vote of the stockholders. Cumulative voting of shares of Common Stock is prohibited. The holders of Common Stock are entitled to receive ratably such dividends, if any, as may be declared from time to time by the Board of Directors out of funds legally available therefor, subject to the payment of any preferential dividends with respect to any Preferred Stock that from time to time may be outstanding. In the event of the liquidation, dissolution or winding up of the Company, the holders of Common Stock are entitled to share ratably in all assets remaining after payment of liabilities, subject to prior distribution rights of the holders of any outstanding Preferred Stock. Other than the contractual rights granted to Sodexho described below, the holders of Common Stock have no preemptive or conversion rights or other subscription rights, and there are no redemption or sinking fund provisions applicable to the Common Stock. All of the outstanding shares of Common Stock are fully paid and nonassessable, and all of the shares of Common Stock offered hereby, when issued and paid for, will be fully paid and nonassessable. PREFERRED STOCK The Board of Directors, without further action by the stockholders, is authorized to issue up to 1,000,000 shares of Preferred Stock in one or more series and to fix and determine as to any such series any and all of the relative rights and preferences of shares in such series, including, without limitation, preferences, limitations or relative rights with respect to redemption rights, conversion rights, voting rights, dividend rights and preferences on liquidation. The Company has no present intention to issue any Preferred Stock, but may determine to do so in the future. CONVERTIBLE NOTES The Company currently has outstanding an aggregate of $64,500,000 principal amount of convertible subordinated notes. The Convertible Notes, which are currently convertible into an aggregate of 4,062,391 shares of Common Stock, are comprised of the 1992 Convertible Notes, 1994 Convertible Notes and the 1996 Convertible Notes. The 1992 Convertible Notes were issued in three tranches, with the first tranche ($2,500,000 aggregate principal amount) having a current conversion price of $3.388 and the remaining two tranches ($5,000,000 aggregate principal amount) having a conversion price of $3.548. The 1994 Convertible Notes and the 1996 Convertible Notes are convertible into Common Stock at $7.165 and $53.30, respectively. These conversion prices are subject to adjustments, including in the event of the issuance of equity securities at a price which is less than the current conversion price. The Company may prepay the 1992 Convertible Notes at any time on or after July 1, 1997, and may force conversion of the 1992 Convertible Notes beginning on July 1, 1997, if the Common Stock price remains above $5.32. The Company may prepay the 1994 Convertible Notes at any time on or after June 23, 1997, and may force conversion of the 1994 Convertible Notes beginning on June 23, 1997, if the Common Stock price remains above $10.75. The Company may force conversion of the 1996 Convertible Notes beginning in the year 2000 in the event that the Common Stock has traded for at least 45 consecutive trading days in the public market at a price above 150% of the conversion price of such 1996 Convertible Notes. All of the 1994 Convertible Notes and $20,000,000 of the 1996 Convertible Notes are owned by Sodexho. See " -- Relationship with Sodexho." 24 27 WARRANTS In September 1992, the Company issued a warrant dividend to holders of Common Stock by distributing one Warrant for every five outstanding shares of Common Stock. The Warrants expire on September 14, 1997, and are convertible into two shares of Common Stock at an exercise price of $8.50. An aggregate of 2,027,256 shares of Common Stock currently are issuable upon exercise of the Warrants. OPTIONS AND DEFERRED SHARES As of May 9, 1996, options to purchase a total of 2,031,805 shares of Common Stock were outstanding pursuant to the Company's various stock option plans for employees and directors, and an additional 1,568,720 shares of Common Stock are available for future grants under such plans. In 1995, the Company awarded an aggregate of 168,512 shares of deferred stock to certain key employees pursuant to the Company's Stock Bonus Plan (the "Stock Bonus Plan"). Deferred shares granted under the Stock Bonus Plan do not vest until ten years from the date of the grant and carry no voting rights or dividend rights until such time as the stock is actually issued. As of May 9, 1996, no other deferred shares are outstanding and an additional 31,488 shares are available for issuance pursuant to the Stock Bonus Plan. RELATIONSHIP WITH SODEXHO In connection with the 1994 formation of the strategic alliance between the Company and Sodexho, Sodexho purchased the 1994 Convertible Notes and 1,400,000 shares of Common Stock. In consideration of Sodexho's agreement to enter into the international strategic alliance with the Company, the Company, among other things, (i) entered into a forward contract pursuant to which Sodexho will purchase at any time on or before December 31, 1997, up to $20,000,000 aggregate principal amount of the Company's floating rate convertible subordinated notes with a conversion price, as adjusted, of $13.65 per share, and (ii) granted Sodexho a presently exercisable warrant expiring on December 31, 1998, covering 2,200,000 shares of Common Stock with an exercise price, as adjusted, of $7.90 per share. Sodexho also agreed to limit its ownership interest in the Company to 25% (or 30% in certain limited circumstances) through June 23, 1999, subject to earlier termination upon the occurrence of a change in control (the "Standstill Period"). A change in control is defined as: (i) a party acquiring more than 20% of the Common Stock; (ii) a 10% stockholder publicly announcing an intent to commence a tender offer for the Company; (iii) the termination of Doctor R. Crants as the Company's chief executive officer or the failure by Doctor R. Crants to own at least 2% of the Common Stock; (iv) if the Company's Board of Directors shall no longer consist of a majority of Continuing Directors; or (v) an acquirer shall publicly announce an intent to commence a tender offer and the Company's Board publicly recommending that the stockholders accept such tender offer. "Continuing Directors" means the directors of the Company as of June 23, 1994 and each other director, if such other director's nomination for election to the Board of Directors of the Company is recommended by a majority of the then Continuing Directors. During the Standstill Period, Sodexho has agreed to vote its Common Stock in the same fashion as either the Company's public stockholders or the Company's Board of Directors, at Sodexho's option, on the election of directors and certain other matters. Sodexho has also agreed that during the Standstill Period, it will not solicit proxies under any circumstances, or become a participant in any election contest, or make an offer for the acquisition of substantially all of the assets or capital stock of the Company or induce or assist any other person to make such an offer. Until Sodexho's ownership in the Company is reduced to below 400,000 shares of Common Stock, Sodexho has the right to nominate one member to the Company's Board of Directors and, without Sodexho's consent, the Company may not increase the number of directors on the Company's Board of Directors to eight or more. In addition, Sodexho has a preemptive right to purchase additional shares of Common Stock or securities convertible into or exchangeable for Common Stock in any issuance of securities by the Company in an amount necessary to enable Sodexho to maintain a percentage ownership in the Company equal to 20% of the Common Stock on a fully diluted basis. 25 28 DELAWARE ANTI-TAKEOVER LAW AND CERTAIN BYLAW PROVISIONS The Company is a Delaware corporation and consequently is subject to certain anti-takeover provisions of the Delaware General Corporation Law. The business combination provision contained in Section 203 of the Delaware General Corporation Law ("Section 203") defines an interested stockholder of a corporation as any person that (i) owns, directly or indirectly, or has the right to acquire, 15% or more of the outstanding voting stock of the corporation or (ii) is an affiliate or associate of the corporation and was the owner of 15% or more of the outstanding voting stock of the corporation at any time within the three-year period immediately prior to the date on which it is sought to be determined whether such person is an interested stockholder; and the affiliates and the associates of such person. Under Section 203, a Delaware corporation may not engage in any business combination with any interested stockholder for a period of three years following the time such stockholder became an interested stockholder, unless (i) prior to such time the board of directors of the corporation approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder, or (ii) upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced (excluding, for determining the number of shares outstanding, (a) shares owned by persons who are directors and officers and (b) employee stock plans, in certain instances), or (iii) at or subsequent to such time the business combination is approved by the board of directors and authorized at an annual or special meeting of stockholders by at least 66 2/3% of the outstanding voting stock that is not owned by the interested stockholder. The restrictions imposed by Section 203 will not apply to a corporation if (i) the corporation's original certificate of incorporation contains a provision expressly electing not to be governed by this section or (ii) the corporation, by the action of its stockholders holding a majority of outstanding stock, adopts an amendment to its certificate of incorporation or by-laws expressly electing not to be governed by Section 203 (such amendment will not be effective until 12 months after adoption and shall not apply to any business combination between such corporation and any person who became an interested stockholder of such corporation on or prior to such adoption). The Company has not elected out of Section 203, and the restrictions imposed by Section 203 apply to transactions between the Company and interested stockholders. Section 203 could, under certain circumstances, make it more difficult for a third party to gain control of the Company. The Company's By-Laws include several provisions which may deter an unsolicited acquisition of control of the Company. These provisions require: (a) special meetings of stockholders to be called by the Chairman of the Board or the Board of Directors; and (b) approval of By-Law amendments by the Board of Directors or a majority vote of the stockholders. REGISTRATION RIGHTS Beneficial holders of an aggregate of 12,146,212 shares of Common Stock have contractual rights with respect to the registration of shares of Common Stock ("Registrable Shares") under the Securities Act. The Company has granted two demand registration rights which may be exercised by Sodexho with respect to securities acquired in June 1994 and by the holders of the 1992 Convertible Notes. Sodexho and the other holder of the 1996 Convertible Notes also have three demand shelf registration rights which may be exercised beginning June 22, 1997. In addition, Sodexho, the other holders of Convertible Notes and certain other holders of Registrable Shares have incidental registration rights which provide that, in the event that the Company proposes to register any of its securities under the Securities Act for is own account, holders of Registrable Shares may require the Company to include all or a portion of the Registrable Shares in the registration, provided, among other conditions, that the managing underwriter (if any) of any such offering has the right, subject to certain conditions, to limit the number of Registrable Shares included in the registration. In general, all fees, costs and expenses of such registrations (other than underwriting commissions, dealers' fees, brokers' fees and concessions applicable to Common Stock) will be borne by the Company. TRANSFER AGENT AND REGISTRAR The transfer agent and registrar for the Common Stock and Warrants is First Union National Bank of North Carolina. 26 29 UNDERWRITING Pursuant to the Underwriting Agreement and subject to the terms and conditions thereof, the Underwriters named below, acting through J.C. Bradford & Co. and Stephens Inc. as representatives of the several Underwriters (the "Representatives"), have agreed, severally, to purchase from the Company and the Selling Stockholders the number of shares of Common Stock set forth below opposite their respective names:
NUMBER OF NAME OF UNDERWRITER SHARES -------------------------------------------------------------------------- --------- J.C. Bradford & Co. ...................................................... Stephens Inc. ............................................................ --------- Total........................................................... 2,500,000 =========
In the Underwriting Agreement, the Underwriters have agreed, subject to the terms and conditions therein set forth, to purchase all shares of Common Stock offered hereby if any of such shares are purchased. The Company and the Selling Stockholders have been advised by the Representatives that the Underwriters propose initially to offer the shares of Common Stock to the public at the public offering price set forth on the cover page of this Prospectus and to certain dealers at such price less a concession not in excess of $ per share. The Underwriters may allow, and such dealers may reallow, a concession not in excess of $ per share to certain other dealers. After the initial public offering, the public offering price and such concessions may be changed. The offering of the shares of Common Stock is made for delivery when, as and if accepted by the Underwriters and subject to prior sale and to withdrawal, cancellation or modification of the offer without notice. The Underwriters reserve the right to reject any order for the purchase of the shares. The Company has granted to the Underwriters an option, exercisable not later than 30 days after the date of the effectiveness of the Offering, to purchase up to 375,000 shares of Common Stock to cover over-allotments, if any. To the extent the Underwriters exercise this option, each of the Underwriters will have a firm commitment to purchase approximately the same percentage thereof which the number of shares of Common Stock to be purchased by it shown in the table above bears to the total number of shares in such table, and the Company will be obligated, pursuant to the option, to sell such shares to the Underwriters. The Underwriters may exercise such option only to cover over-allotments made in connection with the sale of the shares of Common Stock offered hereby. If purchased, the Underwriters may sell these additional shares on the same terms as those on which the 2,500,000 shares are being offered. The Company, its directors and executive officers and the Selling Stockholders have agreed not to offer, sell, or otherwise dispose of any shares of the Common Stock owned by them prior to the expiration of 120 days from the date of this Prospectus without the prior written consent of the Representatives. The Underwriting Agreement provides that the Company and the Selling Stockholders will indemnify the Underwriters and controlling persons, if any, against certain liabilities, including liabilities under the Securities Act, or will contribute to payments that the Underwriters or any such controlling persons may be required to make in respect thereof. 27 30 EXPERTS The audited consolidated financial statements of the Company incorporated by reference herein and elsewhere in the Registration Statement, to the extent and for the periods indicated in their report, have been audited by Arthur Andersen LLP, independent public accountants, and are incorporated herein, in reliance upon the authority of such firm as experts in giving said report. LEGAL MATTERS The validity of the Common Stock offered hereby will be passed upon for the Company by Stokes & Bartholomew, P.A., Nashville, Tennessee. Certain legal matters related to this offering hereby will be passed upon for the Underwriters by Bass, Berry & Sims PLC, Nashville, Tennessee. Samuel W. Bartholomew, Jr., a shareholder of Stokes & Bartholomew, P.A., is a director of the Company. AVAILABLE INFORMATION The Company has filed with the Commission a Registration Statement on Form S-3 (together, with all amendments and exhibits thereto, the "Registration Statement") under the Securities Act with respect to the Common Stock offered hereby. This Prospectus constitutes a part of the Registration Statement and does not contain all of the information set forth in the Registration Statement and the exhibits and schedules thereto, certain portions of which have been omitted in accordance with the rules and regulations of the Commission. Statements contained in the Prospectus as to any contracts, agreements or other documents filed as an exhibit to or incorporated by reference in the Registration Statement are qualified in all respects to the copy of such contract, agreement or other document filed as an exhibit to the Registration Statement. Each statement is qualified in its entirety by such reference. For further information with respect to the Company and the Common Stock offered hereby, reference is made to the Registration Statement, including the exhibits and schedules thereto. The Company is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance therewith files reports, proxy statements and other information with the Commission. Copies of the Registration Statement (with exhibits), as well as such reports, proxy statements and other information filed by the Company with the Commission, may be inspected and copied at public reference facilities maintained by the Commission at Judiciary Plaza, Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the following regional offices of the Commission: 500 West Madison Street, Suite 1400, Chicago, Illinois 60661; and Seven World Trade Center, New York, New York 10048. Copies of such material may be obtained at prescribed rates from the Public Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. The Common Stock and the Warrants are listed on the NYSE and the aforementioned material concerning the Company also may be inspected at the offices of the NYSE, 20 Broad Street, New York, New York 10005. The Company's principal offices are located at 102 Woodmont Blvd., Suite 800, Nashville, Tennessee 37205, and its telephone number is (615) 292-3100. 28 31 INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents previously filed by the Company with the Commission pursuant to the Exchange Act are incorporated and made a part of this Prospectus by reference, except as superseded or modified herein: (1) The Company's Annual Report on Form 10-K for the year ended December 31, 1995; and (2) The description of the Common Stock and the Warrants contained in the Registration Statement on Form 8-A dated December 15, 1994; and All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to the termination of the offering contemplated hereby shall be deemed to be incorporated by reference into this Prospectus and to be a part hereof from the date of filing of such documents. Any statement contained herein or in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein or in any subsequently filed documents which also is or is deemed to be incorporated by reference herein modifies or supersedes such earlier statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. The Company undertakes to provide without charge to each person, including any beneficial owner, to whom a copy of this Prospectus has been delivered, on the written or oral request of any such person, a copy of any or all of the documents referred to above which have been or may be incorporated by reference in the Prospectus, other than exhibits to such documents (unless such exhibits are specifically incorporated by reference in such documents). Requests for such copies should be directed to Darrell K. Massengale, Corrections Corporation of America, 102 Woodmont Boulevard, Suite 800, Nashville, Tennessee 37205, telephone number (615) 292-3100. 29 32 [THIS PAGE INTENTIONALLY LEFT BLANK] 33 (photo of Company (photo of Company counselor and inmate) counselor and inmate) Education, life skills training and substance abuse counseling are integral components of CCA facility programs (caption) Company ownership by employees is a benefit and an incentive (photo of several to keep quality and efficiency Company corrections officers) in CCA's operations (caption) (photo of outside view of a Company facility) 34 ------------------------------------------------------ ------------------------------------------------------ NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH THE OFFER CONTAINED HEREIN, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, THE SELLING STOCKHOLDERS OR ANY UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY THE SHARES OF COMMON STOCK OFFERED HEREBY BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH SOLICITATION OR OFFER. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF. ------------------------ TABLE OF CONTENTS
PAGE ---- Prospectus Summary.................... 3 Risk Factors.......................... 7 Use of Proceeds....................... 10 Capitalization........................ 11 Price Range of Common Stock and Dividend Policy..................... 12 Business.............................. 13 Management............................ 20 Principal and Selling Stockholders.... 22 Description of Securities............. 24 Underwriting.......................... 27 Experts............................... 28 Legal Matters......................... 28 Available Information................. 28 Incorporation of Certain Documents by Reference........................... 29
------------------------------------------------------ ------------------------------------------------------ ------------------------------------------------------ ------------------------------------------------------ 2,500,000 SHARES [CORRECTIONS CORPORATION OF AMERICA LOGO] COMMON STOCK -------------------- PROSPECTUS -------------------- J.C. Bradford & Co. Stephens Inc. , 1996 ------------------------------------------------------ ------------------------------------------------------ 35 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. SEC Registration Fee...................................................... $ 58,120 NASD Fee.................................................................. 17,355 NYSE Listing Fee.......................................................... 6,563 Accounting Fees and Expenses.............................................. 50,000* Legal Fees and Expenses................................................... 175,000* Printing and Engraving Expenses........................................... 200,000* Blue Sky Fees and Expenses................................................ 10,000* Miscellaneous Expenses.................................................... 32,962* ---------- -- Total........................................................... $550,000* ============
- --------------- * Estimated. ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Under Section 145 of the Delaware General Corporation Law, a corporation may indemnify any of its directors and officers against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with a threatened, pending or completed action, suit or proceeding brought against him by reason of the fact that he is or was a director or officer (i) if any such person acted in good faith and in a manner reasonably believed to be in or not opposed to the best interests of the corporation and (ii) in connection with any criminal action or proceeding if such person had no reasonable cause to believe such conduct was unlawful. In actions brought by or in the right of the corporation, however, Section 145 provides that no indemnification may be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable for negligence or misconduct in the performance of such person's duty to the corporation unless, and only to the extent that, the Court of Chancery of the State of Delaware or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in review of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper. Article VIII of the Company's Certificate of Incorporation relieves its directors from monetary damages to the Company or to stockholders for breach of any such director's fiduciary duty as a director to the fullest extent permitted by the Delaware General Corporation Law. Under Section 102(b)(7) of the Delaware General Corporation Law, a corporation may relieve its directors from personal liability to such corporation or its stockholders for monetary damages for any breach of their fiduciary duty as directors except (i) for a breach of the duty of loyalty, (ii) for failure to act in good faith, (iii) for intentional misconduct or knowing violation of law, (iv) for willful or negligent violations of certain provisions of the Delaware General Corporation Law imposing certain requirements with respect to stock repurchases, redemptions and dividends or (v) for any transaction from which the director derived an improper personal benefit. Reference is also made to Section 9 of the Underwriting Agreement contained in Exhibit 1 hereto, which provides for indemnification of the Company and officers, directors and certain controlling persons of the Company by the Underwriters against certain liabilities. The Company currently has in effect an executive liability insurance policy which provides coverage for its directors and officers in amounts of $10 million per claim and $10 million for annual aggregate claims. The policy covers any error, misstatement, act or omission, or breach of duty committed by a director or officer, subject to certain specified exclusions. II-1 36 ITEM 16. EXHIBITS. The following exhibits are filed as part of the Registration Statement:
EXHIBIT NUMBER DESCRIPTION - ------ ------------------------------------------------------------------------------------ 1 Form of Underwriting Agreement. 4.1 Certificate of Incorporation of Registrant (incorporated by reference to Exhibit 3.1 to the Registration Statement on Form S-1 (Registration No. 33-8052)). 4.2 Amendment to Certificate of Incorporation dated May 26, 1995 (incorporated by reference to Exhibit 3(d) to the Company's Annual Report on Form 10-K with respect to the year ended December 31, 1995). 4.3 Amended and Restated Bylaws of Registrant (incorporated by reference to Exhibit 3.2 to the Registration Statement on Form S-8 (Registration No. 33-12503)). 4.4 Specimen Common Stock certificate (incorporated by reference to Exhibit 4.1 to the Registration Statement on Form S-1 (Registration No. 33-8052)). 5 Opinion of Stokes & Bartholomew, P.A.* 23.1 Consent of Arthur Andersen LLP.* 23.2 Consent of Counsel (included in opinion filed as Exhibit 5). 24 Power of Attorney (included on page II-3). 99.1 Consent of R. Clayton McWhorter, Director Nominee.* 99.2 Consent of Joseph F. Johnson, Director Nominee.*
- --------------- * Previously Filed ITEM 17. UNDERTAKINGS. The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act, each filing of the Registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference in the Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the provisions described under Item 15 above, or otherwise, the Registrant has been advised that in the opinion of the Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered hereunder, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. The undersigned Registrant hereby undertakes that: (1) For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this Registration Statement in reliance upon Rule 430A and contained in a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4), or 497(h) under the Securities Act shall be deemed to be part of this Registration Statement as of the time it was declared effective. (2) For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. II-2 37 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements of filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Nashville, Tennessee on May 9, 1996. CORRECTIONS CORPORATION OF AMERICA By: /s/ DOCTOR R. CRANTS ------------------------------------ Doctor R. Crants Chairman of the Board and Chief Executive Officer Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE - ------------------------------------------ ----------------------------------- --------------- /s/ DOCTOR R. CRANTS Chairman of the Board and Chief May 9, 1996 - ------------------------------------------ Executive Officer, Director Doctor R. Crants (Principal Executive Officer) /s/ DARRELL K. MASSENGALE Vice President, Finance, Chief May 9, 1996 - ------------------------------------------ Financial Officer, Secretary and Darrell K. Massengale Treasurer (Principal Financial and Accounting Officer) * Chairman Emeritus and Director May 9, 1996 - ------------------------------------------ Thomas W. Beasley * Vice-Chairman of the Board and May 9, 1996 - ------------------------------------------ Director T. Don Hutto * Director May 9, 1996 - ------------------------------------------ William F. Andrews * Director May 9, 1996 - ------------------------------------------ Richard H. Fulton * Director May 9, 1996 - ------------------------------------------ Samuel W. Bartholomew, Jr. * Director May 9, 1996 - ------------------------------------------ Jean-Pierre Cuny *By: /s/ DARRELL K. MASSENGALE - ------------------------------------------ Darrell K. Massengale Attorney-in-fact
II-3 38 INDEX TO EXHIBITS
EXHIBIT NUMBER DESCRIPTION - ------ ------------------------------------------------------------------------------------ 1 Form of Underwriting Agreement. 4.1 Certificate of Incorporation of Registrant (incorporated by reference to Exhibit 3.1 to the Registration Statement on Form S-1 (Registration No. 33-8052)). 4.2 Amendment to Certificate of Incorporation dated May 26, 1995 (incorporated by reference to Exhibit 3(d) to the Company's Annual Report on Form 10-K with respect to the year ended December 31, 1995). 4.3 Amended and Restated Bylaws of Registrant (incorporated by reference to Exhibit 3.2 to the Registration Statement on Form S-8 (Registration No. 33-12503)). 4.4 Specimen Common Stock certificate (incorporated by reference to Exhibit 4.1 to the Registration Statement on Form S-1 (Registration No. 33-8052)). 5 Opinion of Stokes & Bartholomew, P.A.* 23.1 Consent of Arthur Andersen LLP.* 23.2 Consent of Counsel (included in opinion filed as Exhibit 5). 24 Power of Attorney (included on page II-3). 99.1 Consent of R. Clayton McWhorter, Director Nominee.* 99.2 Consent of Joseph F. Johnson, Director Nominee.*
- --------------- * Previously Filed EX-1 2 FORM OF UNDERWRITING AGREEMENT 1 CORRECTIONS CORPORATION OF AMERICA 2,500,000 SHARES OF COMMON STOCK UNDERWRITING AGREEMENT __________________, 1996 J.C. BRADFORD & CO. STEPHENS INC. As Representatives of the Several Underwriters c/o J.C. Bradford & Co. J.C. Bradford Financial Center 330 Commerce Street Nashville, Tennessee 37201 Ladies and Gentlemen: Corrections Corporation of America, a Delaware corporation (the "Company"), and certain stockholders of the Company as set forth on Schedule II hereto (the "Selling Stockholders") propose to sell to the underwriters named in Schedule I hereto (the "Underwriters") for whom you are acting as the representatives (the "Representatives") 1,500,000 and 1,000,000 shares, respectively (collectively the "Firm Shares"), of common stock, $1.00 par value (the "Common Stock"), of the Company. Such shares of Common Stock are to be sold to the Underwriters, acting severally and not jointly, in such amounts as are set forth in Schedule I hereto opposite the name of such Underwriter. The Company proposes to grant to the Underwriters an option to purchase up to 375,000 additional shares of Common Stock as provided for in Section 3 of this Agreement for the purpose of covering over-allotments (the "Option Shares"). The Firm Shares and the Option Shares purchased pursuant to this Agreement are herein called the "Shares." 1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents and warrants to, and agrees with, each of the Underwriters that: (a) The Company meets the requirements for use of, and has filed with the Securities and Exchange Commission (the "Commission") under the Securities Act of 2 1933, as amended (the "Securities Act"), a registration statement on Form S-3 (Registration No. 333-______), including the related preliminary prospectus relating to the Shares, and has filed one or more amendments thereto. Copies of such registration statement and any amendments, including any post-effective amendments, and all forms of the related prospectuses contained therein and any supplements thereto, have been delivered to you. Such registration statement, including the prospectus, Part II, the information incorporated by reference, all financial schedules and exhibits thereto, and all information deemed to be a part of such Registration Statement pursuant to Rule 430A under the Securities Act, as amended at the time when it shall become effective, is herein referred to as the "Registration Statement," and the prospectus included as part of the Registration Statement on file with the Commission that discloses all the information that was omitted from the prospectus on the effective date pursuant to Rule 430A of the Rules and Regulations (as defined below) and in the form filed pursuant to Rule 424(b) under the Securities Act is herein referred to as the "Final Prospectus." The prospectus included as part of the Registration Statement on the date when the Registration Statement became effective is referred to herein as the "Effective Prospectus." Any prospectus included in the Registration Statement and in any amendment thereto prior to the effective date of the Registration Statement is referred to herein as a "Preliminary Prospectus." For purposes of this Agreement, "Rules and Regulations" mean the rules and regulations promulgated by the Commission under either the Securities Act or the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as applicable. (b) The Commission has not issued any order preventing or suspending the use of any Preliminary Prospectus, and each Preliminary Prospectus, at the time of filing thereof, complied with the requirements of the Securities Act and the Rules and Regulations, and did not include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; except that the foregoing does not apply to statements or omissions made in reliance upon and in conformity with written information furnished to the Company by any Underwriter specifically for use therein (it being understood that the only information so provided is the information included in the last paragraph on the cover page and in the first and third paragraphs under the caption "Underwriting" in the Preliminary, Effective and Final Prospectus). When the Registration Statement becomes effective and at all times subsequent thereto up to and including the First Closing Date (as hereinafter defined), (i) the Registration Statement, the Effective Prospectus and Final Prospectus and any amendments or supplements thereto will contain all statements which are required to be stated therein in accordance with the Securities Act and the Rules and Regulations and will comply with the requirements of the Securities Act and the Rules and Regulations, and (ii) neither the Registration Statement, the Effective Prospectus nor the Final Prospectus nor any amendment or supplement thereto will include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they are made, not misleading; 2 3 except that the foregoing does not apply to statements or omissions made in reliance upon and in conformity with written information furnished to the Company by any Underwriter specifically for use therein (it being understood that the only information so provided is the information included in the last paragraph on the cover page and in the first and third paragraphs under the caption "Underwriting" in the Final Prospectus). (c) The documents which are incorporated by reference in any Preliminary, Effective and Final Prospectus or from which information is so incorporated by reference, when they become effective or were filed with the Commission, as the case may be, complied in all material respects with the requirements of the Securities Act or the Exchange Act, as applicable, and the Rules and Regulations, and any documents so filed prior to the termination of this offering and incorporated by reference subsequent to the effective date of the Registration Statement shall, when they are filed with the Commission, conform in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable, and the Rules and Regulations. (d) Each of the Company and each subsidiary of the Company (as used herein, the term "subsidiary" includes any corporation, joint venture or partnership in which the Company or any subsidiary of the Company has a direct or indirect ownership interest) is duly incorporated and validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization with full power and authority to own its properties and conduct business as now conducted and is duly qualified or authorized to do business and is in good standing in all jurisdictions wherein the nature of its business or the character of property owned or leased may require it to be qualified or authorized to do business. Each of the Company and its subsidiaries hold all licenses, consents and approvals, and has satisfied all eligibility and other similar requirements imposed by federal and state regulatory bodies, administrative agencies or other governmental bodies, agencies or officials, in each case as required for the conduct of the business in which it is engaged and is contemplated to be engaged in the Effective Prospectus and the Final Prospectus. (e) The outstanding capital stock of each of the Company's corporate subsidiaries has been duly authorized and validly issued and is fully paid and nonassessable. Except as set forth on Exhibit 1(e) hereto, (i) the Company owns all of the outstanding shares of capital stock of the Company's corporate subsidiaries, free and clear of all liens, claims, encumbrances, security interests, restrictions, stockholder agreements, voting trusts or other claims of third parties, (ii) the Company has no other subsidiaries and is not a partner or joint venturer in any partnership or joint venture, (iii) the Company's subsidiaries do not have outstanding any option to purchase, or any rights or warrants to subscribe for, or any securities or obligations convertible into, or any contracts or commitments to issue or sell any shares of capital stock or an ownership interest of such subsidiary, and (iv) there are no preemptive rights or other rights to subscribe for or 3 4 purchase any shares of the capital stock or an ownership interest of the Company's subsidiaries. (f) The capitalization of the Company as of December 31, 1995 is as set forth under the caption "Capitalization" in the Effective Prospectus and the Final Prospectus, and the Company's capital stock conforms to the description thereof contained under the caption "Description of Securities" in the Effective Prospectus and the Final Prospectus. All the issued shares of capital stock of the Company have been duly authorized and validly issued, are fully paid and nonassessable. None of the issued shares of capital stock of the Company have been issued in violation of any preemptive or similar rights. The Shares to be sold by the Company hereunder have been duly and validly authorized and, upon issuance and delivery and payment therefor in the manner herein described, will be validly issued, fully paid and nonassessable. Except as set forth in the Effective Prospectus and the Final Prospectus, (i) the Company does not have outstanding any options to purchase, or any rights or warrants to subscribe for, or any securities or obligations convertible into, or any contracts or commitments to issue or sell, any shares of Common Stock and (ii) there are no preemptive rights or other rights to subscribe for or to purchase, or any restriction upon the transfer of, any shares of Common Stock pursuant to the Company's certificate of incorporation, bylaws or any agreement or other instrument to which the Company is a party or by which it may be bound. Neither the filing of the Registration Statement nor the offer or sale of the Shares as contemplated by this Agreement gives rise to any rights, other than those which have been waived or satisfied, for or relating to the registration of any shares of Common Stock or any other securities of the Company. The Underwriters will receive good and marketable title to the Shares to be issued and delivered hereunder, free and clear of all liens, encumbrances, claims, security interests, restrictions, stockholders' agreements and voting trusts whatsoever. (g) All offers and sales by the Company of the Company's securities prior to the date hereof were at all relevant times duly registered or the subject of an available exemption from the registration requirements of the Securities Act, and were duly registered or the subject of an available exemption from the registration requirements of the applicable state securities or Blue Sky laws. (h) The Company has full legal right, power and authority to enter into this Agreement and to sell and deliver the Shares to be sold by it to the Underwriters as provided herein, and this Agreement has been duly authorized, executed and delivered by the Company and constitutes a valid and binding agreement of the Company enforceable against the Company in accordance with its terms. No consent, approval, authorization or order of any court or governmental agency or body or third party is required for the performance of this Agreement by the Company or the consummation by the Company of the transactions contemplated hereby, except such as have been obtained and such as may be required by the National Association of Securities Dealers, Inc. ("NASD") or under the 4 5 Securities Act or state securities or Blue Sky laws in connection with the purchase and distribution of the Shares by the Underwriters. The issue and sale of the Shares by the Company, the Company's performance of this Agreement and the consummation of the transactions contemplated hereby will not result in a breach or violation of, or conflict with, any of the terms and provisions of, or constitute a default by the Company or any of its subsidiaries under, any indenture, mortgage, deed of trust, loan agreement, lease or other agreement or instrument to which the Company or any of its subsidiaries is a party or to which the Company or any of its subsidiaries or any of their respective properties is subject, the certificate of incorporation, bylaws or other governing instruments of the Company or any of its subsidiaries or any statute or any judgment, decree, order, rule or regulation of any court or governmental agency or body applicable to the Company or any of its subsidiaries or any of their respective properties. Neither the Company nor any of its subsidiaries is in violation of its certificate of incorporation, bylaws or other governing instruments or any law, administrative rule or regulation or arbitrators' or administrative or court decree, judgment or order or in violation or default (there being no existing state of facts which with notice or lapse of time or both would constitute a default) in the performance or observance of any material obligation, agreement, covenant or condition contained in any contract, indenture, deed of trust, mortgage, loan agreement, note, lease, agreement or other instrument or permit to which it is a party or by which it or any of its properties is or may be bound. (i) The consolidated financial statements and the related notes of the Company, included or incorporated by reference in the Registration Statement, the Effective Prospectus and the Final Prospectus present fairly the financial position, results of operations and changes in financial position and cash flow of the Company at the dates and for the periods to which they relate and have been prepared in accordance with generally accepted accounting principles applied on a consistent basis throughout the periods indicated, except as otherwise set forth in such financial statements or the related notes. The other financial statements and schedules included or incorporated by reference in the Registration Statement conform to the requirements of the Securities Act and the Rules and Regulations and present fairly the information presented therein for the periods shown. The financial and statistical data set forth in the Effective Prospectus and the Final Prospectus under the captions "Prospectus Summary," "Use of Proceeds," "Capitalization," "Business" and "Principal and Selling Stockholders" fairly presents the information set forth therein on the basis stated in the Effective Prospectus and the Final Prospectus. Arthur Andersen LLP, whose reports are incorporated by reference in the Effective Prospectus and the Final Prospectus, are independent accountants as required by the Securities Act and the Rules and Regulations. (j) Subsequent to December 31, 1995, neither the Company nor any of its subsidiaries has sustained any material loss or interference with its business or properties from fire, flood, hurricane, accident or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, 5 6 which is not disclosed in the Effective Prospectus and the Final Prospectus; and subsequent to the respective dates as of which information is given in the Registration Statement, the Effective Prospectus and the Final Prospectus, (i) neither the Company nor any of its subsidiaries has incurred any material liabilities or obligations, direct or contingent, or entered into any transactions not in the ordinary course of business, and (ii) there has not been any change in the capital stock, long-term debt, obligations under capital leases or short-term borrowings of the Company and its subsidiaries, or any issuance of options, warrants or rights to purchase interests or the capital stock of the Company or its subsidiaries, or any adverse change, or any development involving a prospective adverse change, in the general affairs, management, business, prospects, financial position, net worth or results of operations of the Company or any of its subsidiaries, except in each case as described in the Effective Prospectus and the Final Prospectus. (k) Except as described in the Effective Prospectus and the Final Prospectus, there is not pending, or to the knowledge of the Company threatened, any legal or governmental action, suit, proceeding, inquiry or investigation, to which the Company, any of its subsidiaries or any of their officers or directors is a party, or to which the property of the Company or any of its subsidiaries is subject, before or brought by any court or governmental agency or body, wherein an unfavorable decision, ruling or finding could prevent or materially hinder the consummation of this Agreement or result in a material adverse change in the business condition (financial or other), prospects, financial position, net worth or results of operations of the Company or any of its subsidiaries. (l) There are no contracts or other documents required by the Securities Act or by the Rules and Regulations to be described in the Registration Statement, the Effective Prospectus or the Final Prospectus or to be filed as exhibits to the Registration Statement which have not been described, incorporated by reference or filed as required. All such contracts to which the Company or any of its subsidiaries is a party have been duly authorized, executed and delivered by the Company or such subsidiary, constitute valid and binding agreements of the Company or such subsidiary and are enforceable against the Company or such subsidiary in accordance with the terms thereof. The Company or such subsidiary has performed all its obligations required to be performed by it, and is neither in default nor has it received notice of any default or dispute under, any such contract or other material instrument to which it is a party or by which its property is bound or affected. To the best knowledge of the Company, no other party under any such contract or other material instrument to which it is a party is in default in any material respect thereunder. (m) Except as described in the Effective Prospectus and the Final Prospectus, the Company and each of its subsidiaries has good and marketable title to all real and material personal property owned by it, free and clear of all liens, charges, encumbrances or defects, except those reflected in the financial statements hereinabove described. The real and personal property and buildings referred to in the Effective Prospectus and the 6 7 Final Prospectus which are leased from others by the Company or its subsidiaries are held under valid, subsisting enforceable leases. The Company or its subsidiaries owns or leases all such properties as are necessary to their respective operations as now conducted. (n) The Company's system of internal accounting controls is sufficient to meet the broad objectives of internal accounting control insofar as those objectives pertain to the prevention or detection of errors or irregularities in amounts that would be material in relation to the Company's financial statements. (o) The Company and each of its subsidiaries has filed all foreign, federal, state and local income and franchise tax returns required to be filed through the date hereof and has paid all taxes shown as due therefrom to the extent such taxes have become due and are not being contested in good faith; and there is no tax deficiency that has been, nor does the Company have knowledge of any tax deficiency which is likely to be, asserted against the Company or any of its subsidiaries, which if determined adversely could materially and adversely affect the earnings, assets, affairs, business prospects or condition (financial or other) of the Company or any of its subsidiaries. (p) The Company and each of its subsidiaries operates its business in conformity with all applicable statutes, common laws, ordinances, decrees, orders, rules and regulations of governmental bodies. The Company and each of its subsidiaries has all licenses, approvals or consents to operate its businesses in all locations in which such businesses are currently being operated, and the Company is not aware of any existing or imminent matter which may materially adversely impact its or any of its subsidiaries' operations or business prospects other than as specifically disclosed in the Effective Prospectus and the Final Prospectus. (q) Neither the Company nor any of its subsidiaries has failed to file with the applicable regulatory authorities any statements, reports, information or forms required by all applicable laws, regulations or orders; all such filings or submissions were in compliance with applicable laws when filed, and no deficiencies have been asserted by any regulatory commission, agency or authority with respect to such filings or submissions. Neither the Company nor any of its subsidiaries has failed to maintain in full force and effect any licenses, registrations or permits necessary or proper for the conduct of its respective businesses, or received any notification that any revocation or limitation thereof is threatened or pending, and there is not to the knowledge of the Company pending any change under any law, regulation, license or permit which could materially adversely affect the business, operations, property or business prospects of the Company. Neither the Company nor any of its subsidiaries has received any notice of violation of or been threatened with a charge of violating and is not under investigation with respect to a possible violation of any provision of any law, regulation or order. 7 8 (r) No labor dispute exists or is imminent with any of the employees of the Company or any of its subsidiaries or otherwise which could materially adversely affect the Company or any of its subsidiaries. The Company is not aware of any existing or imminent labor disturbance by employees of the Company or any of its subsidiaries which could be expected to materially adversely effect the condition (financial or otherwise), results of operations, properties, affairs, management, business affairs or business prospects of the Company or any of its subsidiaries. (s) The Company and each of its subsidiaries owns the licenses, copyrights, trademarks, service marks and trade names presently employed by it in connection with the businesses now operated by it, and neither the Company nor any of its subsidiaries has received any notice of infringement of or conflict with asserted rights of others with respect to any of the foregoing which, alone or in the aggregate, if the subject of an unfavorable decision, ruling or finding, could result in any material adverse change in the condition, financial or otherwise, or in the earnings, business affairs or business prospects of the Company or any of its subsidiaries. (t) The Company and each of its subsidiaries is insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary in the businesses in which it is engaged; and neither the Company nor any of its subsidiaries has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a comparable cost. (u) Neither the Company nor any of its subsidiaries is in violation of any federal, state, local or foreign law or regulation relating to occupational safety and health or to the storage, handling or transportation of hazardous or toxic materials and the Company and each of its subsidiaries has received all permits, licenses or other approvals required of it under applicable federal, state and foreign occupational safety and health and environmental laws and regulations to conduct its respective businesses, and the Company and each of its subsidiaries is in compliance with all terms and conditions of any such permit, license or approval, except any such violation of law or regulation, failure to receive required permits, licenses or other approvals or failure to comply with the terms and conditions of such permits, licenses or approvals which would not result in a material adverse change in the condition, financial or otherwise, or in the earnings, business affairs or prospects of the Company or any of its subsidiaries. (v) Neither the Company or any of its subsidiaries nor, to the knowledge of the Company, any director, officer, agent, employee or other person acting on behalf of the Company or any of its subsidiaries has (i) used, or authorized the use of, any corporate or other funds for unlawful payments, contributions, gifts or entertainment (ii) made unlawful expenditures relating to political activity to government officials or others, or (iii) 8 9 established or maintained any unlawful or unrecorded funds in violation of any federal, state, local or foreign law or regulation, including Section 30A of the Exchange Act. Neither the Company or any of its subsidiaries nor, to the knowledge of the Company, any director, officer, agent, employee or other person acting on behalf of the Company or any of its subsidiaries has accepted or received any unlawful contributions, payments, gifts or expenditures. (w) Except where such failures to comply or violations would not in the aggregate have a material adverse effect on the Company or any of its subsidiaries, the Company and each of its subsidiaries has complied with the Immigration Reform and Control Act of 1986 and all regulations promulgated thereunder ("IRCA") with respect to (i) the completion and maintenance of Forms 1-9, Employment Eligibility Verification Forms, for all of its current employees and reverification of the employment status of any and all employees whose employment authorization documents indicated a limited period of employment authorization; (ii) with respect to all former employees who left the Company's or any of its subsidiaries' employment within three years prior to the date hereof, the Company and each of its subsidiaries has complied with IRCA with respect to the maintenance of Forms 1-9 for at least three years or for one year beyond the date of termination, whichever is later; (iii) the Company and each of its subsidiaries has had no immigration violations and has employed only individuals authorized to work in the United States and has never been the subject of any inspection or investigation relating to its compliance with or violation of IRCA; and (iv) it has not been warned, fined or otherwise penalized by reason or any failure to comply with IRCA, and no such proceeding is pending or threatened. (x) The Company is not, will not become as a result of the transactions contemplated hereby, and does not intend to conduct its business in a manner that would cause it or any of its subsidiaries to become, an "investment company" or a company "controlled" by an "investment company" within the meaning of the Investment Company Act of 1940. (y) Neither the Company or any of its subsidiaries nor any of the directors, officers, employees or agents of the Company or any of its subsidiaries have taken and will not take, directly or indirectly, any action designed to cause or result in, or which has constituted or which might be expected to constitute, stabilization or manipulation of the price of the Common Stock. (z) The Shares have been approved for listing on the New York Stock Exchange (the "NYSE") upon notice of issuance. 2. REPRESENTATIONS AND WARRANTIES OF THE SELLING STOCKHOLDERS. Each of the Selling Stockholders, severally and not jointly, represents and warrants to, and agrees with, each of the Underwriters that: 9 10 (a) Such Selling Stockholder at the First Closing Date or at the Option Closing Date (as defined herein), as the case may be, will have valid and marketable title to the Shares set forth in Schedule II to be sold by such Selling Stockholder, free and clear of any liens, encumbrances, equities and claims (other than as imposed by the Securities Act or this Agreement), and full right, power and authority to effect the sale and delivery of such Shares; and upon the delivery of and payment for the Shares to be sold by such Selling Stockholder pursuant to this Agreement, valid and marketable title thereto, free and clear of any liens, encumbrances, equities and claims, will be transferred to the Underwriters. (b) Such Selling Stockholder has duly executed and delivered the Custody Agreement and Power of Attorney in the form previously delivered to the Representatives, appointing the persons named therein, and each of them as each Selling Stockholder's attorney-in-fact (the "Attorney-in-Fact") and as custodian (the "Custodian"). The Attorney-in-Fact is authorized to execute, deliver and perform this Agreement on behalf of such Selling Stockholder, to deliver the Shares to be sold by such Selling Stockholder hereunder, to accept payment therefor and otherwise to act on behalf of such Selling Stockholder in connection with this Agreement. Certificates, in suitable form for transfer by delivery or accompanied by duly executed instruments of transfer or assignment in blank, representing the Shares to be sold by such Selling Stockholder hereunder have been deposited with the Custodian pursuant to the Custody Agreement and Power of Attorney for the purpose of delivery pursuant to this Agreement. Such Selling Stockholder agrees that the shares of Common Stock represented by the certificates on deposit with the Custodian are subject to the interest of the Underwriters hereunder, that the arrangements made for such custody and the appointment of the Attorney-in-Fact are to that extent irrevocable, and that the obligations of such Selling Stockholder hereunder shall not be terminated except as provided in this Agreement and the Custody Agreement. If such Selling Stockholder should die or become incapacitated or if any other event should occur, before the delivery of the Shares of such Selling Stockholder hereunder, the certificates for such Shares deposited with the Custodian shall be delivered by the Custodian in accordance with the terms and conditions of this Agreement as if such death, incapacity or other event had not occurred, regardless of whether or not the Custodian or the Attorney-in-Fact shall have received notice thereof. (c) Such Selling Stockholder, acting through his duly authorized Attorney-in-Fact, has duly executed and delivered this Agreement and the Custody Agreement and Power of Attorney; this Agreement constitutes a legal, valid and binding obligation of such Selling Stockholder, all authorizations and consents necessary for the execution and delivery of this Agreement and the Custody Agreement and Power of Attorney on behalf of such Selling Stockholder and for the sale and delivery of the Shares to be sold by such Selling Stockholder hereunder has been given, except as may be required by the Securities Act or state securities laws; and such Selling Stockholder has the legal capacity and full right, power and authority to execute this Agreement and the Custody Agreement and Power of Attorney. 10 11 (d) The performance of this Agreement and the Custody Agreement and Power of Attorney and the consummation of the transactions contemplated hereby and thereby by each of the Selling Stockholders will not result in a breach or violation of, or conflict with, any of the terms or provisions of, or constitute a default by such Selling Stockholder under, any indenture, mortgage, deed of trust, trust (constructive or other), loan agreement, lease, franchise, license or other agreement or instrument to which such Selling Stockholder or any of his or its properties is bound, any statute, or any judgment, decree, order, rule or regulation or any court or governmental agency or body applicable to such Selling Stockholder or any of his or its properties. (e) Such Selling Stockholder has not distributed nor will distribute any prospectus or other offering material in connection with the offer and sale of the Shares other than any Preliminary Prospectus filed with the Commission or the Final Prospectus or other material permitted by the Securities Act. (f) To the knowledge of such Selling Stockholder, the representations and warranties of the Company contained in Section 1 of this Agreement are true and correct; such Selling Stockholder has reviewed and is familiar with the Registration Statement as originally filed with the Commission and the Preliminary Prospectus contained therein. To the knowledge of such Selling Stockholder, the Preliminary Prospectus does not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; such Selling Stockholder is not prompted to sell the Shares to be sold by such Selling Stockholder by any information concerning the Company that is not set forth in the Preliminary Prospectus, the Effective Prospectus or the Final Prospectus. (g) At the time the Registration Statement becomes effective (i) such parts of the Registration Statement and any amendments and supplements thereto as specifically refer to such Selling Stockholder will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading and (ii) such parts of the Effective Prospectus and Final Prospectus as specifically refer to such Selling Stockholder will not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. (h) No approval, consent, order, authorization, designation, declaration or filing by or with any regulatory body, administrative or other governmental body is necessary in connection with the execution and delivery of this Agreement by such Selling Stockholder, and the consummation by him of the transactions herein contemplated (other than as required by the Securities Act, state securities laws and the NASD). 11 12 (i) Any certificates signed by or on behalf of such Selling Stockholder as such and delivered to the Representatives or to counsel for the Representatives shall be deemed a representation and warranty by such Selling Stockholder to each Underwriter as to the matters covered thereby. (j) In order to document the Underwriters' compliance with the reporting and withholding provisions of the Tax Equity and Fiscal Responsibility Act of 1982 with respect to the transactions herein contemplated, such Selling Stockholder agrees to deliver to you prior to or at the First Closing Date (as hereinafter defined) a properly completed and executed United States Treasury Department Form W-9 (or other applicable form or statement specified by Treasury Department regulations in lieu thereof). (k) Such Selling Stockholder has not taken, and will not take, directly or indirectly, any action designed to cause or result in, or which might constitute or be expected to constitute, stabilization or manipulation of the price of the Common Stock. 3. PURCHASE, SALE AND DELIVERY OF THE SHARES. (a) On the basis of the representations, warranties, agreements and covenants herein contained and subject to the terms and conditions herein set forth, the Company and the Selling Stockholders, as set forth on Schedule II hereto, agree to sell to the several Underwriters, and each of the Underwriters, severally and not jointly, agrees to purchase at a purchase price of $______ per share, the number of Firm Shares set forth opposite such Underwriter's name in Schedule I hereto. (b) The Company hereby grants to the Underwriters an option to purchase 375,000 additional shares of Common Stock, solely for the purpose of covering over-allotments in the sale of Firm Shares, all or any portion of the Option Shares at the purchase price per share set forth above. The option granted hereby may be exercised as to all or any part of the Option Shares at any time within 30 days after the date of the Final Prospectus. The Underwriters shall not be under any obligation to purchase any Option Shares prior to the exercise of such option. The option granted hereby may be exercised by the Underwriters by J.C. Bradford & Co. ("Bradford") giving written notice to the Company setting forth the number of Option Shares to be purchased and the date and time for delivery of and payment for such Option Shares and stating that the Option Shares referred to therein are to be used for the purpose of covering over-allotments in connection with the distribution and sale of the Firm Shares. If such notice is given prior to the First Closing Date (as defined herein), the date set forth therein for such delivery and payment shall not be earlier than two full business days thereafter or the First Closing Date, whichever occurs later. If such notice is given on or after the First Closing Date, the date set forth therein for such delivery and payment shall not be earlier than three full business days thereafter. In either event, the date so set forth shall not be more than four full business days after the date of such notice. The date and time set forth in such notice is herein called the "Option 12 13 Closing Date." Upon exercise of the option, the Company shall become obligated to sell to the Underwriters, and, subject to the terms and conditions herein set forth, the Underwriters shall become obligated to purchase, for the account of each Underwriter, from the Company, severally and not jointly, the number of Option Shares specified in such notice. Option Shares shall be purchased for the accounts of the Underwriters in proportion to the number of Firm Shares set forth opposite such Underwriter's name in Schedule I hereto, except that the respective purchase obligations of each Underwriter shall be adjusted so that no Underwriter shall be obligated to purchase fractional Option Shares. (c) Certificates in definitive form for the Firm Shares which each Underwriter has agreed to purchase hereunder shall be delivered by or on behalf of the Company and the Selling Stockholders to the Underwriters for the account of such Underwriter against payment by such Underwriter or on its behalf of the purchase price therefor by certified or official bank check or checks in next day funds to the order of the Company and the custodian for the Selling Stockholders, at the offices of Bradford, 330 Commerce Street, Nashville, Tennessee 37201, or at such other place as may be agreed upon by Bradford and the Company, at 10:00 A.M., Nashville time, on the third full business day after this Agreement becomes effective, or, at the election of the Representatives, on the fourth full business day after this Agreement becomes effective, if it becomes effective after 4:30 P.M. Eastern time, or at such other time not later than the seventh full business day thereafter as the Representatives and the Company may determine, such time of delivery against payment being herein referred to as the "First Closing Date." The First Closing Date and the Option Closing Date are herein individually referred to as the "Closing Date" and collectively referred to as the "Closing Dates." Certificates in definitive form for the Option Shares which each Underwriter shall have agreed to purchase hereunder shall be similarly delivered by or on behalf of the Company on the Option Closing Date. The certificates in definitive form for the Shares to be delivered will be in good delivery form and in such denominations and registered in such names as Bradford may request not less than 48 hours prior to the First Closing Date or the Option Closing Date, as the case may be. Such certificates will be made available for checking and packaging at a location in New York, New York as may be designated by Bradford, at least 24 hours prior to the First Closing Date or the Option Closing Date, as the case may be. It is understood that Bradford may (but shall not be obligated to) make payment on behalf of any Underwriter or Underwriters for the Shares to be purchased by such Underwriter or Underwriters. No such payment shall relieve such Underwriter or Underwriters from any of its or their obligations hereunder. 4. OFFERING BY THE UNDERWRITERS. After the Registration Statement becomes effective, the several Underwriters propose to offer for sale to the public the Firm Shares and any Option Shares which may be sold at the price and upon the terms set forth in the Final Prospectus. 5. COVENANTS OF THE COMPANY AND THE SELLING STOCKHOLDERS. 13 14 (a) The Company covenants and agrees with each of the Underwriters that: (i) The Company shall comply with the provisions of and make all requisite filings with the Commission pursuant to Rules 424 and 430A of the Rules and Regulations and shall notify the Representatives promptly (in writing, if requested) of all such filings. The Company shall notify the Representatives promptly of any request by the Commission for any amendment of or supplement to the Registration Statement, the Effective Prospectus or the Final Prospectus or for additional information; the Company shall prepare and file with the Commission, promptly upon the Representatives' request, any amendments of or supplements to the Registration Statement, the Effective Prospectus or the Final Prospectus which, in the Representatives' opinion, may be necessary or advisable in connection with the distribution of the Shares; and the Company shall not file any amendment of or supplement to the Registration Statement, the Effective Prospectus or the Final Prospectus which is not approved by the Representatives after reasonable notice thereof. The Company shall advise the Representatives promptly of the issuance by the Commission or any jurisdiction or other regulatory body of any stop order or other order suspending the effectiveness of the Registration Statement, suspending or preventing the use of any Preliminary Prospectus, the Effective Prospectus or the Final Prospectus or suspending the qualification of the Shares for offering or sale in any jurisdiction, or of the institution of any proceedings for any such purpose; and the Company shall use its best efforts to prevent the issuance of any stop order or other such order and, should a stop order or other such order be issued, to obtain as soon as possible the lifting thereof. (ii) The Company will take or cause to be taken all necessary action and furnish to whomever the Representatives direct such information as may be reasonably required in qualifying the Shares for offer and sale under the securities or Blue Sky laws of such jurisdictions as the Underwriters may designate and will continue such qualifications in effect for as long as may be reasonably necessary to complete the distribution of the Shares. (iii) Within the time during which a Final Prospectus relating to the Shares is required to be delivered under the Securities Act, the Company shall comply with all requirements imposed upon it by the Securities Act, as now and hereafter amended, and by the Rules and Regulations, as from time to time in force, so far as is necessary to permit the continuance of sales of or dealings in the Shares as contemplated by the provisions hereof and the Final Prospectus. If during such period any event occurs as a result of which the Final Prospectus as then amended or supplemented would include an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances then existing, not misleading, or if during such period it is necessary to amend the Registration Statement or supplement the Final Prospectus to comply with the Securities Act, the Company shall promptly notify the Representatives and shall amend the Registration Statement or supplement the Final 14 15 Prospectus (at the expense of the Company) so as to correct such statement or omission or effect such compliance. (iv) The Company will furnish without charge to the Representatives and make available to the Underwriters copies of the Registration Statement (four of which shall be signed and shall be accompanied by all exhibits, including any which are incorporated by reference, which have not previously been furnished), each Preliminary Prospectus, the Effective Prospectus and the Final Prospectus, and all amendments and supplements thereto, including any prospectus or supplement prepared after the effective date of the Registration Statement, in each case as soon as available and in such quantities as the Underwriters may reasonably request. (v) The Company will (A) deliver to the Representatives at such office or offices as the Representatives may designate as many copies of the Preliminary Prospectus and Final Prospectus as the Representatives may reasonably request, and (B) for a period of not more than nine months after the Registration Statement becomes effective, send to the Underwriters as many additional copies of the Final Prospectus and any supplement thereto as the Representatives may reasonably request. (vi) The Company shall make generally available to its security holders, in the manner contemplated by Rule 158(b) under the Securities Act as promptly as practicable and in any event no later than 45 days after the end of its fiscal quarter in which the first anniversary of the effective date of the Registration Statement occurs, an earnings statement satisfying the provisions of Section 11(a) of the Securities Act covering a period of at least 12 consecutive months beginning after the effective date of the Registration Statement. (vii) The Company will apply the net proceeds from the sale of the Shares to be sold by it as set forth under the caption "Use of Proceeds" in the Final Prospectus. (viii) During a period of five years from the effective date of the Registration Statement or such longer period as the Representatives may reasonably request, the Company will furnish to the Representatives copies of all reports and other communications (financial or other) furnished by the Company to its stockholders and, as soon as available, copies of any reports or financial statements furnished or filed by the Company to or with the Commission or any national securities exchange on which any class of securities of the Company may be listed. (ix) The Company will, from time to time, after the effective date of the Registration Statement file with the Commission such reports as are required by the Securities Act, the Exchange Act and the Rules and Regulations, and shall also file with foreign, state and other governmental securities commissions in jurisdictions where the 15 16 Shares have been sold by the Underwriters (as the Representatives shall have advised the Company in writing) such reports as are required to be filed by the securities acts and the regulations of those states. (x) Except pursuant to this Agreement or with the Representatives' written consent, for a period of 120 days from the effective date of the Registration Statement, the Company will not, and the Company has provided agreements executed by each of its executive officers, directors and the Selling Stockholders providing that for a period of 120 days from the effective date of the Registration Statement, such person or entity will not, offer for sale, sell (other than the issuance by the Company of Common Stock pursuant to the exercise of options granted pursuant to existing employee benefit plans and agreements, other existing compensation agreements and existing stock options or outstanding warrants or securities convertible into Common Stock), grant any options (other than pursuant to existing employee benefit plans and agreements), rights or warrants with respect to any shares of Common Stock, securities convertible into Common Stock or any other capital stock of the Company, or otherwise dispose of, directly or indirectly, any shares of Common Stock or such other securities or capital stock. (xi) Neither the Company or any of its subsidiaries nor any of their officers, directors or affiliates will take, directly or indirectly, any action designed to cause or result in, or which might constitute or be expected to constitute, stabilization or manipulation of the price of the Common Stock. (xii) The Company and each of its subsidiaries will either conduct its business and operations as described in the Final Prospectus or, if the Company or any of its subsidiaries makes any material change to its business or operations as so conducted, promptly disclose such change generally to the Company's securityholders. (b) Each of the Selling Stockholders, severally and not jointly, covenants and agrees with the Underwriters that: (i) Such Selling Stockholder will not take, directly or indirectly, any action designed to cause or result in, or which might constitute or be expected to constitute, stabilization or manipulation of the price of the Common Stock. 6. EXPENSES. The Company and each of the Selling Stockholders agree with the Underwriters that (a) whether or not the transactions contemplated by this Agreement are consummated or this agreement becomes effective or is terminated, the Company will pay all fees and expenses incident to the performance of the obligations of the Company and the Selling Stockholders hereunder, including, but not limited to, (i) the Commission's registration fee, (ii) the expenses of pringing (or reproduction) and distributing the Registration Statement (including the Financial statements therein and all amendments and exhibits thereto), each Preliminary Prospectus, the Effective Prospectus, the Final Prospectus, any amendments or supplements 16 17 thereto, any Marketing Marerials (as defined herein) and this Agreement and other underwriting documents, including Underwriter's Questionnaires, Underwriter's Powers of Attorney, Blue Sky Memoranda, Agreements Among Underwriters and Selected Dealer Agreements, (iii) fees and expenses of accountants and counsel for the Company, (iv) expenses of registration or qualification of the Shares under state Blue Sky and securities laws, including the fees and disbursements of counsel to the Underwrtiers in connection therewith, (v) filing fees paid or incurred by the Underwriters in connection with filings with the NASD, (vi) expenses of listing the Shares on the NYSE, (vii) all travel, lodging and reasonable living expenses incurred by the Company in connection with marketing, dealer and other meedings attended by the Company and the Underwriters in marketing the Shares, (viii) the costs and charges of the Company's transfer agent and resigtrar and the cost of preparing the certificates for the Shares, and (ix) all other costs and expenses incident to the performance of theri obligations hereunder not otherwise provided for in this section; and (b) all out-of-pocket expenses, incluidng counsel fees, disbursements and expenses, incurred by the Underwriters in conneciton with investigating, preparing to market and marketing the Shares and proposing to purchase and purchasing the Shares under this agreement, will be borne and paid by the Company if the sale of the Shares provided for herein is not consummated (i) by reason of the termination of this Agreement by the Company pursuant to Section 14(a)(i) or (ii) by reason of the termination of this Agreement by the Representatives pursuant to Section 14(b)(ii), (iii), (iv) or (v) of this Agreement. The provisions of this section shall not affect any agreement that the Company and the Selling Stockholders may have for the sharing of such costs and expenses; provided, however, the Underwriters may deem the Company to be the primary obligor with respect to all costs, fees, and expenses to be paid by the Company and the Selling Stockholders. 7. CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS. The respective obligations of the Underwriters to purchase and pay for the Firm Shares shall be subject, in their discretion, to the accuracy of the representations and warranties of the Company and the Selling Stockholders herein as of the date hereof and as of the Closing Date as if made on and as of the Closing Date, to the accuracy of the statements of the Company's Officers made pursuant to the provisions hereof, to the performance by the Company and the Selling Stockholders of all of their covenants and agreements hereunder and to the following additional conditions: (a) The Registration Statement and all post-effective amendments thereto shall have become effective not later than 5:30 P.M., Washington, D.C. time, on the day following the date of this Agreement, or such later time and date as shall have been consented to by the Representatives and all filings required by Rule 424 and Rule 430A of the Rules and Regulations shall have been made; no stop order suspending the effectiveness of the Registration Statement shall have been issued and no proceedings for that purpose shall have been instituted or threatened or, to the knowledge of the Company or the Underwriters, shall be contemplated by the Commission; any request of the Commission for additional information (to be included in the Registration Statement or the Final Prospectus or otherwise) shall have been complied with to the Representative's 17 18 satisfaction; and the NASD, upon review of the terms of the public offering of the Shares, shall not have objected to such offering, such terms or the Underwriters' participation in the same. (b) No Underwriter shall have advised the Company that the Registration Statement, Preliminary Prospectus, the Effective Prospectus or Final Prospectus, or any amendment or any supplement thereto, contains an untrue statement of fact which, in the Representatives' reasonable judgment, is material, or omits to state a fact which, in the Representatives' reasonable judgment, is material and is required to be stated therein or necessary to make the statements therein not misleading and the Company shall not have cured such untrue statement of fact or stated a statement of fact required to be stated therein. (c) The Representatives shall have received an opinion, dated the Closing Date, from Stokes & Bartholomew, P.A., counsel for the Company, to the effect that: (i) The Company has been duly incorporated and is validly existing as a corporation under the laws of the State of Delaware, with corporate power and authority to own its properties and conduct its business as now conducted, and is duly qualified to do business as a foreign corporation in good standing in all other jurisdictions where the failure to so qualify would have a material adverse effect upon the Company and its subsidiaries. The Company holds all licenses, certificates, permits, franchises and authorizations from governmental authorities necessary for the conduct of its business. (ii) Each of the Company's subsidiaries is validly existing and in good standing under the laws of the state or jurisdiction of its incorporation or organization, as the case may be, with power and authority to own its properties and conduct it business as now conducted, and is duly qualified or authorized to do business and is in good standing in all other jurisdictions where the failure to so qualify would have a material adverse effect upon the business of the Company and its subsidiaries. The outstanding stock of each of the Company's corporate subsidiaries is duly authorized, validly issued, fully paid and nonassessable. Except as set forth in Exhibit 1(e) hereto, the Company owns all of the outstanding stock of each of the Company's corporate subsidiaries, free and clear of all liens, encumbrances, equities and claims. The partnership and joint venture interests of each of the partnerships and joint ventures in which the Company or any subsidiary is a partner or joint venturer are duly authorized, validly issued, fully paid and nonassessable and the partnership and joint venture interests owned by the Company or a subsidiary thereof are owned clear of any lien, encumbrance, pledge, equity or claim of any kind. Except as set forth on Exhibit 1(e) hereto, the Company's subsidiaries do not have outstanding any options to purchase, or any rights or warrants to subscribe for, or any securities or obligations convertible into, 18 19 or any contracts or commitments to issue or sell any shares of capital stock or an ownership interest of such subsidiary and there are no preemptive rights or other rights to subscribe for or purchase any shares of the capital stock or any ownership interest of the Company's subsidiaries. Each of the Company's subsidiaries holds all licenses, certificates, permits, franchises and authorizations from governmental authorities necessary for the conduct of its business. (iii) As of the dates specified therein, the Company had authorized and issued capital stock as set forth under the caption "Capitalization" in the Final Prospectus. All of the outstanding shares of Common Stock (including the shares to be sold by the Selling Stockholders) have been duly authorized and are validly issued, fully paid and nonassessable, and the Shares to be sold by the Company have been duly authorized, and upon issuance thereof and payment therefor as provided herein, will be validly issued, fully paid and nonassessable; none of the issued shares have been issued in violation of or subject to any preemptive rights provided for by law, agreement or the Company's certificate of incorporation. The Company does not have outstanding any options to purchase, or any rights or warrants to subscribe for, or any securities or obligations convertible into, or any contracts or commitments to issue or sell any shares of capital stock, and there are no preemptive rights or other rights to subscribe for or purchase any shares of the capital stock of the Company, or any restriction upon the transfer of, the Shares pursuant to the Company's certificate of incorporation or bylaws or any agreement or other instrument to which the Company is a party or by which it may be bound, except as described in the Effective Prospectus and Final Prospectus. Neither the filing of the Registration Statement nor the offer or sale of the Shares as contemplated by this Agreement gives rise to any rights, other than those which have been waived or satisfied, for or relating to the registration of any shares of Common Stock or any other securities of the Company. The Underwriters will receive good and marketable title to the Shares to be issued and delivered by the Company pursuant to this Agreement, free and clear of all liens, encumbrances, claims, security interests, restrictions, stockholders agreements and voting trusts whatsoever. The capital stock of the Company and the Shares conform to the description thereof contained in the Final Prospectus. All offers and sales of the Company's interests and securities prior to the date hereof were at all relevant times duly registered or exempt from the registration requirements of the Securities Act and were duly registered or the subject of an exemption from the registration requirements of applicable state securities or Blue Sky laws. (iv) No consent, approval, authorization or order of any court or governmental agency or body or third party is required for the performance of this Agreement by the Company or the consummation by the Company of the transactions contemplated hereby, except such as have been obtained under the Securities Act and such as may be required by the NASD and under state securities 19 20 or Blue Sky laws in connection with the purchase and distribution of the Shares by the several Underwriters, as to which such counsel need not express an opinion. The performance of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby will not conflict with or result in a breach or violation by the Company of any of the terms or provisions of, or constitute a default by the Company under, any material indenture, mortgage, deed of trust, loan agreement, lease or other agreement or instrument known to such counsel to which the Company or any of its subsidiaries is a party or to which the Company or any of its subsidiaries or their properties is subject, the certificate of incorporation or bylaws of the Company or any of its subsidiaries, any statute, or any judgment, decree, order, rule or regulation of any court or governmental agency or body known to such counsel to be applicable to the Company or any of their subsidiaries or their properties. (v) The Company has full legal right, power and authority to enter into this Agreement and to issue, sell and deliver the Shares to be sold by it to the Underwriters as provided herein, and this Agreement has been duly authorized, executed and delivered by the Company and constitutes the valid and legally binding obligation of the Company enforceable against the Company in accordance with its terms. (vi) Except as described in the Final Prospectus, there is not pending or, to the best knowledge of such counsel, threatened any action, suit, proceeding, inquiry or investigation, to which the Company or any of its subsidiaries is a party, or to which the property of the Company or any of its subsidiaries is subject, before or brought by any court or governmental agency or body, which, if determined adversely to the Company or any of its subsidiaries, could result in any material adverse change in the business, financial position, net worth or results of operations, or could materially adversely affect the properties or assets, of the Company or any of its subsidiaries. (vii) No default exists, and no event has occurred which with notice or after the lapse of time to cure or both, would constitute a default, in the due performance and observance of any term, covenant or condition of any material indenture, mortgage, deed of trust, loan agreement, lease or other agreement or instrument known to such counsel to which the Company or any of its subsidiaries is a party or to which its properties are subject, or of the certificate of incorporation or bylaws of the Company or any of its subsidiaries. (viii) Neither the Company nor any of its subsidiaries is in violation of any law, ordinance, administrative or governmental rule or regulation applicable to the Company or any decree of any court or governmental agency or body having 20 21 jurisdiction over the Company or any of its subsidiaries which would have a material adverse effect on the Company or any of its subsidiaries. (ix) The Registration Statement and all post-effective amendments thereto have become effective under the Securities Act, and, to the knowledge of such counsel, no stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for that purpose have been instituted or are threatened, pending or contemplated by the Commission. All filings required by Rule 424 and Rule 430A of the Rules and Regulations have been made; the Registration Statement, the Effective Prospectus and Final Prospectus, and any amendments or supplements thereto, as of their respective effective or issue dates, complied as to form in all material respects with the requirements of the Securities Act and the Rules and Regulations; the descriptions in the Registration Statement, the Effective Prospectus and the Final Prospectus of statutes, regulations, legal and governmental proceedings, and contracts and other documents are accurate in all material respects and present fairly in all material respects the information required to be stated; and such counsel does not know of any pending or threatened legal or governmental proceedings, statutes or regulations required to be described in the Final Prospectus which are not described as required nor of any contracts or documents of a character required to be described in the Registration Statement or the Final Prospectus or to be filed as exhibits to the Registration Statement which are not described and filed as required. In addition to the matters set forth above, such opinion shall also include a statement to the effect that nothing has come to the attention of such counsel which leads them to believe that the Registration Statement, the Effective Prospectus and the Final Prospectus or any amendment or supplement thereto contains an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances under which they were made (except that such counsel need express no view as to financial statements, schedules and other financial or statistical information included, or incorporated by reference therein). (d) The Representatives shall have received an opinion, dated the Closing Date, of counsel for the Selling Stockholders, reasonably acceptable to the Representatives, to the effect that: (i) This Agreement and the Custody Agreement and Power of Attorney have been duly executed and delivered by or on behalf of each of the Selling Stockholders and constitute valid and binding agreements of such Selling Stockholders in accordance with their terms. 21 22 (ii) The sale of the Shares to be sold by each Selling Stockholder hereunder and the compliance by such Selling Stockholder with all of the provisions of this Agreement, the Custody Agreement and the Power of Attorney and the consummation of the transactions herein and therein contemplated will not conflict with or result in a breach or violation of any terms or provisions of, or constitute a default under any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which such Selling Stockholder is a party or by which such Selling Stockholder is bound or to which any of the property or assets of such Selling Stockholder is subject, or any statute, order, rule or regulation of any court or governmental agency or body applicable to such Selling Stockholder or the property of such Selling Stockholder. (iii) No consent, approval, authorization or order of any court or governmental agency or body is required for the consummation of the transactions contemplated by this Agreement in connection with the Shares to be sold by each Selling Stockholder hereunder, except which have been duly obtained and in full force and effect, such as have been obtained under the Securities Act and such as may be required under state securities or Blue Sky laws in connection with the purchase and distribution of such Shares by the Underwriters, as to which such counsel need express no opinion. (iv) Each of the Selling Stockholders has full right, power and authority to sell, transfer and deliver such Shares pursuant to this Agreement. By delivery of a certificate or certificates therefor, the Selling Stockholders will transfer to the Underwriters valid and marketable title to such shares, free and clear of any pledge, lien, security interest, charge, claim, equity, or encumbrance of any kind. The opinions to be rendered pursuant to paragraphs (c) and (d) may be limited to federal law, and as to foreign and state law matters, to the laws of the states or jurisdictions in which such counsel is admitted to practice. Such counsel may rely upon opinions of other counsel in rendering such opinions provided that such counsel shall state that they believe that both the Representatives and they are justified in relying upon such opinions and that such counsel is reasonably satisfactory to you. (e) The Underwriters shall have received an opinion or opinions, dated the Closing Date, of Bass, Berry & Sims PLC, counsel for the Underwriters, with respect to the Registration Statement and the Final Prospectus, and such other related matters as the Underwriters may require, and the Company shall have furnished to such counsel such documents as they may reasonably request for the purpose of enabling them to pass upon such matters. 22 23 (f) The Representatives shall have received from Arthur Andersen LLP, a letter dated the date hereof and, at the Closing Date, a second letter dated the Closing Date, in form and substance satisfactory to the Representatives, stating that they are independent public accountants with respect to the Company within the meaning of the Securities Act and the applicable Rules and Regulations, and to the effect that: (i) In their opinion, the consolidated financial statements and schedules examined by them and included or incorporated by reference in the Registration Statement comply as to form in all material respects with the applicable accounting requirements of the Securities Act and the published Rules and Regulations and are presented in accordance with generally accepted accounting principles; and they have made a review in accordance with standards established by the American Institute of Certified Public Accountants of the interim consolidated financial statements, selected financial data and/or condensed financial statements derived from audited financial statements of the Company; (ii) The unaudited selected consolidated financial information included in the Preliminary Prospectus and the Final Prospectus under the caption "PROSPECTUS SUMMARY" for the three years ended December 31, 1995, agrees with the corresponding amounts in the audited consolidated financial statements included or incorporated by reference in the Final Prospectus or previously reported on by them; (iii) On the basis of a reading of the latest available interim financial statements (unaudited) of the Company and its subsidiaries, a reading of the minute books of the Company and its subsidiaries, inquiries of officials of the Company and its subsidiaries responsible for financial and accounting matters and other specified procedures, all of which have been agreed to by the Representatives, nothing came to their attention that caused them to believe that: (A) The amounts included in the Preliminary Prospectus and the Final Prospectus under the caption "PROSPECTUS SUMMARY" for the three years ended December 31, 1995 do not agree with the corresponding amounts in the audited consolidated financial statements included or incorporated by reference in the Final Prospectus or previously reported on by them; (B) The unaudited consolidated financial statements included or incorporated by reference in the Registration Statement, including the amounts included under the caption "PROSPECTUS SUMMARY -- RECENT DEVELOPMENTS," do not comply as to form in all material respects with the accounting requirements of the federal securities laws and the related published rules and regulations thereunder or are not in 23 24 conformity with generally accepted accounting principles applied on a basis substantially consistent with the basis for the audited financial statements contained or incorporated by reference in the Registration Statement; (C) Any other unaudited consolidated financial statement data included in the Final Prospectus do not agree with the corresponding items in the audited consolidated financial statements from which data was derived and any such unaudited data were not determined on a basis substantially consistent with the basis for the corresponding amounts in the audited financial statements contained or incorporated by reference in the Final Prospectus; (D) at a specified date not more than five days prior to the date of delivery of such respective letter, there was any change in the capital stock, decline in total assets or stockholders' equity or increase in long-term debt of the Company and its subsidiaries, in each case as compared with amounts shown in the latest balance sheets included in the Final Prospectus, except in each case for changes, decreases or increases which are described in such letters; and (E) for the period from the closing date of the latest statements of earnings included in the Effective Prospectus and the Final Prospectus to a specified date not more than five days prior to the date of delivery of such respective letter, there were any decreases in revenues, net income and net income per share of the Company, in each case as compared with the corresponding period of the preceding year, except in each case for decreases which are described in such letter. (iv) They have carried out certain specified procedures, not constituting an audit, with respect to certain amounts, percentages and financial information specified by you which are derived from the general accounting records of the Company and its subsidiaries, which appear in the Effective Prospectus and the Final Prospectus and have compared and agreed such amounts, percentages and financial information with the accounting records of the Company and its subsidiaries or to analyses and schedules prepared by the Company and its subsidiaries from its detailed accounting records. In the event that the letters to be delivered referred to above set forth any such changes, decreases or increases, it shall be a further condition to the obligations of the Underwriters that the Underwriters shall have determined, after discussions with officers of the Company responsible for financial and accounting matters and with Arthur Andersen LLP, that such changes, decreases or increases as are set forth in such letters do not reflect a material adverse change in the total assets, stockholders' equity or long-term debt of the 24 25 Company as compared with the amounts shown in the latest balance sheets of the Company included in the Final Prospectus, or a material adverse change in revenues or net income of the Company, in each case as compared with the corresponding period of the prior year. (g) There shall have been furnished to the Representatives a certificate, dated the Closing Date and addressed to you, signed by the Chief Executive Officer and by the Chief Financial Officer of the Company to the effect that: (i) the representations and warranties of the Company in Section 1 of this Agreement are true and correct, as if made at and as of the Closing Date, and the Company has complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied at or prior to the Closing Date; (ii) no stop order suspending the effectiveness of the Registration Statement has been issued, and no proceedings for that purpose have been initiated or are pending, or to their knowledge, threatened under the Securities Act; (iii) all filings required by Rule 424 and Rule 430A of the Rules and Regulations have been made; (iv) they have carefully examined the Registration Statement, the Effective Prospectus and the Final Prospectus, and any amendments or supplements thereto, and such documents do not include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances under which they were made; and (v) since the effective date of the Registration Statement, there has occurred no event required to be set forth in an amendment or supplement to the Registration Statement, the Effective Prospectus or the Final Prospectus which has not been so set forth. (h) The representations and warranties of each Selling Stockholder shall be true and correct as of the Closing Date, and each such Selling Stockholder shall deliver to the Representatives a certificate to that effect, dated the Closing Date, signed by each such Selling Stockholder or his duly appointed Attorney-in-Fact. (i) Subsequent to the respective dates as of which information is given in the Registration Statement and the Final Prospectus, and except as stated therein, the Company has not sustained any material loss or interference with its business or properties from fire, flood, hurricane, accident or other calamity, whether or not covered by insurance, or from any labor dispute or any court or governmental action, order or decree, or become a party to or the subject of any litigation which is material to the Company, nor shall there have 25 26 been any material adverse change, or any development involving a prospective material adverse change, in the business, properties, key personnel, capitalization, prospects, net worth, results of operations or condition (financial or other) of the Company, which loss, interference, litigation or change, in the Representatives' reasonable judgment shall render it unadvisable to commence or continue the offering of the Shares at the offering price to the public set forth on the cover page of the Prospectus or to proceed with the delivery of the Shares. (j) The shares shall be listed on the NYSE. All such opinions, certificates, letters and documents delivered pursuant to this Agreement will comply with the provisions hereof only if they are reasonably satisfactory to the Representatives and their counsel. The Company shall furnish to the Representatives such conformed copies of such opinions, certificates, letters and documents in such quantities as the Representatives shall reasonably request. The respective obligations of the Underwriters to purchase and pay for the Option Shares shall be subject, in their discretion, to each of the foregoing conditions to purchase the Firm Shares, except that all references to the "Closing Date" shall be deemed to refer to the Option Closing Date, if it shall be a date other than the Closing Date. 8. CONDITION OF THE COMPANY'S AND THE SELLING STOCKHOLDERS' OBLIGATIONS. The obligations hereunder of the Company and the Selling Stockholders are subject to the condition set forth in Section 7(a) hereof. 9. INDEMNIFICATION AND CONTRIBUTION. (a) The Company and the Selling Stockholders, jointly and severally, agree to indemnify and hold harmless each Underwriter, and each person, if any, who controls any Underwriter within the meaning of the Securities Act, against any losses, claims, damages or liabilities to which such Underwriter or controlling person may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based in whole or in part upon: (i) any inaccuracy in the representations and warranties of the Company or the Selling Stockholders contained herein; (ii) any failure of the Company or the Selling Stockholders to perform their obligations hereunder or under law; (iii) any untrue statement or alleged untrue statement of any material fact contained in (A) the Registration Statement, any Preliminary Prospectus, the Effective Prospectus or Final Prospectus, or any amendment or supplement thereto, (B) any audio or visual materials supplied by the Company expressly for use in connection with the marketing of the Shares, including without limitation, slides, videos, films and tape recordings (the "Marketing Materials") or (C) in any Blue Sky application or other written information furnished by the Company or the Selling Stockholders filed in any state or other jurisdiction in order to qualify any or all 26 27 of the Shares under the securities laws thereof (a "Blue Sky Application"); or (iv) the omission or alleged omission to state in the Registration Statement, any Preliminary Prospectus, the Effective Prospectus or Final Prospectus or any amendment or supplement thereto, any Marketing Materials or Blue Sky Application a material fact required to be stated therein or necessary to make the statements therein not misleading; and will reimburse each Underwriter and each such controlling person for any legal or other expenses reasonably incurred by such Underwriter or such controlling person in connection with investigating or defending any such loss, claim, damage, liability or action as such expenses are incurred; provided, however, that neither the Company nor the Selling Stockholders will be liable in any such case to the extent that any such loss, claim, damage, or liability arises out of or is based upon any untrue statement or alleged untrue statement or omission or alleged omission made in the Registration Statement, the Preliminary Prospectus, the Effective Prospectus or Final Prospectus, or any amendment or supplement thereto, or any Marketing Materials or Blue Sky Application in reliance upon and in conformity with written information furnished to the Company by any Underwriter specifically for use therein (it being understood that the only information so provided is the information included in the last paragraph on the cover page and in the first and third paragraphs under the caption "Underwriting" in any Preliminary Prospectus and the Final Prospectus and the Effective Prospectus). Notwithstanding the foregoing provisions of this Section 9, the parties agree that the indemnification obligations of each Selling Stockholder under this Section 9, with respect to any matter that such Selling Stockholder and the Company are both required to indemnify the Underwriters hereunder, shall be subject to the determination by the Representatives, on behalf of the Underwriters, that, in the Representatives' reasonable commercial judgment, the Company is or may be unable to discharge fully its obligations to the Underwriters hereunder; provided, however, that such Selling Stockholder shall be liable in any such case only to the extent of the total net proceeds (before deducting expenses) received from the Underwriters by such Selling Stockholder in connection with the sale of the Shares hereunder. To the extent the Company is or may be able, in the Representatives' reasonable commercial judgment, to discharge the Company's obligations to the Underwriters with respect to any matter that the Company is required to indemnify the Underwriters hereunder, the Underwriters shall to such extent, first seek indemnification from the Company. (b) Each Underwriter will indemnify and hold harmless the Selling Stockholders and the Company, each of its directors, each of its officers who signed the Registration Statement and each person, if any, who controls the Company within the meaning of the Securities Act against any losses, claims, damages or liabilities to which the Company or any such director, officer or controlling person may become subject, under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement, any Preliminary Prospectus, the Effective Prospectus or Final Prospectus, or any amendment or supplement thereto, any Marketing Materials or any Blue Sky Application, or arise out 27 28 of or are based upon the omission or the alleged omission to state in the Registration Statement, any Preliminary Prospectus, the Effective Prospectus or Final Prospectus, or any amendment or supplement thereto, any Marketing Materials or any Blue Sky Application a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to the Company by any Underwriter specifically for use therein (it being understood that the only information so provided is the information included in the last paragraph on the cover page and in the first and third paragraphs under the caption "Underwriting" in any Preliminary Prospectus and in the Effective Prospectus and the Final Prospectus); (c) Promptly after receipt by an indemnified party under this Section 9 of notice of the commencement of any action, including governmental proceedings, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under this Section 9 notify the indemnifying party of the commencement thereof; but the omission so to notify the indemnifying party will not relieve it from any liability which it may have to any indemnified party otherwise than under this Section 9. In case any such action is brought against any indemnified party, and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein, and to the extent that it may wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party; and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party will not be liable to such indemnified party under this Section 9 for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation except that the indemnified party shall have the right to employ separate counsel if, in the indemnified party's reasonable judgment, it is advisable for the indemnified party to be represented by separate counsel, and in that event the fees and expenses of separate counsel shall be paid by the indemnifying party. (d) In order to provide for just and equitable contribution in circumstances in which the indemnity agreement provided for in the preceding part of this Section 9 is for any reason held to be unavailable to the Underwriters, the Company or the Selling Stockholders or is insufficient to hold harmless an indemnified party, then the Company and the Selling Stockholders shall contribute to the damages paid by the Underwriters, and the Underwriters shall contribute to the damages paid by the Company and the Selling Stockholders; provided, however, that no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. In determining the amount of contribution to which the respective parties are entitled, there shall be considered the relative benefits received by each party from the offering of the Shares (taking into account the portion of the proceeds of the offering realized by each), the 28 29 parties' relative knowledge and access to information concerning the matter with respect to which the claim was asserted, the opportunity to correct and prevent any statement or omission, and any other equitable considerations appropriate under the circumstances. The Company, the Selling Stockholders and the Underwriters agree that it would not be equitable if the amount of such contribution were determined by pro rata or per capita allocation (even if the Underwriters were treated as one entity for such purpose). No Underwriter or person controlling such Underwriter shall be obligated to make contribution hereunder which in the aggregate exceeds the underwriting discount applicable to the Shares purchased by such Underwriter under this Agreement, less the aggregate amount of any damages which such Underwriter and its controlling persons have otherwise been required to pay in respect of the same or any similar claim. The Underwriters' obligations to contribute hereunder are several in proportion to their respective underwriting obligations and not joint. For purposes of this Section, each person, if any, who controls an Underwriter within the meaning of Section 15 of the Securities Act shall have the same rights to contribution as such Underwriter, and each director of the Company, each officer of the Company who signed the Registration Statement, and each person, if any, who controls the Company within the meaning of Section 15 of the Securities Act, shall have the same rights to contribution as the Company. (e) No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened action, suit or proceeding in respect of which any indemnified party is a party or is (or would be, if a claim were to be made against such indemnified party) entitled to indemnity hereunder, unless such settlement includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such action, suit or proceeding. 10. DEFAULT OF UNDERWRITERS. If any underwriter defaults in its obligation to purchase Shares hereunder and if the total number of Shares which such defaulting Underwriter agreed but failed to purchase is ten percent or less of the total number of Shares to be sold hereunder, the non-defaulting Underwriters shall be obligated severally to purchase (in the respective proportions which the number of Shares set forth opposite the name of each non-defaulting Underwriter in Schedule I hereto bears to the total number of Shares set forth opposite the names of all the non-defaulting Underwriters), the Shares which such defaulting Underwriter or Underwriters agreed but failed to purchase. If any Underwriter so defaults and the total number of Shares with respect to which such default or defaults occur is more than ten percent of the total number of Shares to be sold hereunder, and arrangements satisfactory to the other Underwriters, the Company and the Selling Stockholders for the purchase of such Shares by other persons (who may include the non-defaulting Underwriters) are not made within 36 hours after such default, this agreement, insofar as it relates to the sale of the Shares, will terminate without liability on the part of the non-defaulting Underwriters or the Company except for (i) the provisions of Section 9 hereof, and (ii) the expenses to be paid or reimbursed by the Company and the Selling Stockholders pursuant to Section 6. As used in this Agreement, the term "Underwriter" includes any person substituted 29 30 for an Underwriter under this Section 10. Nothing herein shall relieve a defaulting Underwriter from liability for its default. 11. DEFAULT BY THE SELLING STOCKHOLDERS. if the selling stockholders shall fail to sell and deliver the number of firm shares that the selling stockholders are obligated to sell, the representatives may, at their option, by notice to the company, either (a) require the company to sell and deliver such number of shares of common stock as to which the selling stockholders have defaulted, or (b) elect to purchase the firm shares and the option shares that the company and the non-defaulting selling stockholders have agreed to sell pursuant to this agreement. In the event of a default under this Section that does not result in the termination of this Agreement, either the Representatives or the Company shall have the right to postpone the First Closing Date or Option Closing Date for a period not exceeding seven days in order to effect any required changes in the Registration Statement or Prospectus or in any other documents or arrangements. No action taken pursuant to this Section shall relieve the Company or the Selling Stockholder so defaulting from liability, if any, in respect of such default. 12. SURVIVAL CLAUSE. The respective representations, warranties, agreements, covenants, indemnities and other statements of the Selling Stockholders, the Company, its officers and the Underwriters set forth in this Agreement or made by or on behalf of them, respectively, pursuant to this Agreement shall remain in full force and effect, regardless of (a) any investigation made by or on behalf of the Company, any of its officers or directors, any Underwriter or any controlling person, (b) any termination of this Agreement and (c) delivery of and payment for the Shares. 13. EFFECTIVE DATE. This agreement shall become effective at whichever of the following times shall first occur: (i) at 11:30 A.M., Washington, D.C. time, on the next full business day following the date on which the Registration Statement becomes effective or (ii) at such time after the Registration Statement has become effective as the Representatives shall release the Firm Shares for sale to the public; provided, however, that the provisions of Sections 6, 9, 12 and 13 hereof shall at all times be effective. For purposes of this Section 13, the Firm Shares shall be deemed to have been so released upon the release by the Representatives for publication, at any time after the Registration Statement has become effective, of any newspaper advertisement relating to the Firm Shares or upon the release by the Representatives of telegrams offering the Firm Shares for sale to securities dealers, whichever may occur first. 14. TERMINATION. (a) The Company's obligations under this Agreement may be terminated by the Company by notice to the Representatives (i) at any time before it becomes effective in accordance with Section 13 hereof, or (ii) in the event that the condition set forth in Section 8 shall not have been satisfied at or prior to the First Closing Date. 30 31 (b) This Agreement may be terminated by the Representatives by notice to the Company (i) at any time before it becomes effective in accordance with Section 13 hereof; (ii) in the event that at or prior to the First Closing Date the Company or any Selling Stockholder shall have failed, refused or been unable to perform any agreement on the part of the Company or such Selling Stockholder to be performed hereunder or any other condition to the obligations of the Underwriters hereunder is not fulfilled; (iii) if at or prior to the Closing Date trading in securities on the NYSE, the American Stock Exchange or the over-the-counter market shall have been suspended or materially limited or minimum or maximum prices shall have been established on either of such exchanges or such market, or a banking moratorium shall have been declared by Federal or state authorities; (iv) if at or prior to the Closing Date trading in securities of the Company shall have been suspended; or (v) if there shall have been such a material adverse change in general economic, political or financial conditions or if the effect of international conditions on the financial markets in the United States shall be such as, in your reasonable judgment, makes it inadvisable to commence or continue the offering of the Shares at the offering price to the public set forth on the cover page of the Prospectus or to proceed with the delivery of the Shares. (c) Termination of this Agreement pursuant to this Section 14 shall be without liability of any party to any other party other than as provided in Sections 6 and 9 hereof. 15. NOTICES. All communications hereunder shall be in writing and, if sent to any of the Underwriters, shall be mailed or delivered or telegraphed and confirmed in writing to the Representatives in care of J. C. Bradford & Co., J. C. Bradford Financial Center, 330 Commerce Street, Nashville, Tennessee 37201, Attention: Catherine Gemmato-Smith, or if sent to the Company shall be mailed, delivered or telegraphed and confirmed in writing to the Company at 102 Woodmont Boulevard, Suite 800, Nashville, Tennessee 37205, Attention: Doctor R. Crants. 16. MISCELLANEOUS. This Agreement shall inure to the benefit of and be binding upon the several Underwriters, the Company and the Selling Stockholders and their respective successors and legal representatives. Nothing expressed or mentioned in this Agreement is intended or shall be construed to give any other person any legal or equitable right, remedy or claim under or in respect of this Agreement. This Agreement and all conditions and provisions hereof are intended to be for the sole and exclusive benefit of the Company and the Selling Stockholders and the several Underwriters and for the benefit of no other person except that (a) the representations and warranties of the Company and the Selling Stockholders contained in this Agreement shall also be for the benefit of any person or persons who control any Underwriter within the meaning of Section 15 of the Securities Act, and (b) the indemnities by the Underwriters shall also be for the benefit of the directors of the Company, officers of the Company who have signed the Registration Statement and any person or persons who control the Company within the meaning of Section 15 of the Securities Act. No purchaser of Shares from any Underwriter will be deemed a successor because of such purchase. The validity and interpretation of this Agreement shall be governed by the laws of the State of Tennessee. This 31 32 Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. The Representatives hereby represent and warrant to the Company that the Representatives have authority to act hereunder on behalf of the several Underwriters, and any action hereunder taken by the Representatives will be binding upon all the Underwriters. If the foregoing is in accordance with your understanding of our agreement, please indicate your acceptance thereof in the space provided below for that purpose, whereupon this letter shall constitute a binding agreement among the Company, the Selling Stockholders and each of the several Underwriters. Very truly yours, CORRECTIONS CORPORATION OF AMERICA By: ------------------------------------ Title: --------------------------------- Confirmed and accepted as of the date first above written. J.C. BRADFORD & CO. STEPHENS INC. For themselves and as Representatives of the Several Underwriters By: ---------------------------- Partner SELLING STOCKHOLDERS By: ------------------------------------ Attorney-in-Fact for each of the Selling Stockholders listed in Schedule II hereto. 32 33 SCHEDULE I UNDERWRITERS
Number of Firm Shares to Underwriter Be Purchased - ----------- -------------- J.C. Bradford & Co. . . . . . . . Stephens Inc. . . . . . . . . . . -------------- TOTAL 2,500,000 ==============
33 34 SCHEDULE II SELLING STOCKHOLDERS
Number of Firm Shares Name To Be Sold - ---- ----------- Thomas W. Beasley . . . . . . . . . . . . . . . . . . . . . 223,384 Thomas Loventhal. . . . . . . . . . . . . . . . . . . . . . 75,000 American Corrections Transport, Inc.. . . . . . . . . . . . 44,430 Ted Feldman . . . . . . . . . . . . . . . . . . . . . . . . 1,000 Louis Ratchford . . . . . . . . . . . . . . . . . . . . . . 1,500 Scott L. Moskovitz . . . . . . . . . . . . . . . . . . . . 1,000 Alma Wells. . . . . . . . . . . . . . . . . . . . . . . . . 1,500 Elizabeth Smith . . . . . . . . . . . . . . . . . . . . . . 1,500 D. Paul Alagia. . . . . . . . . . . . . . . . . . . . . . . 12,200 Harold S. Nelson. . . . . . . . . . . . . . . . . . . . . . 171,562 Ben F. Morgan, Jr. . . . . . . . . . . . . . . . . . . . . 30,000 A. W. Sandbach. . . . . . . . . . . . . . . . . . . . . . . 40,000 William H. Cull . . . . . . . . . . . . . . . . . . . . . . 35,000 Thomas F. Buetow. . . . . . . . . . . . . . . . . . . . . . 74,000 Dorothy Watkins . . . . . . . . . . . . . . . . . . . . . . 2,500 David Watkins . . . . . . . . . . . . . . . . . . . . . . . 2,000 John Watkins, Jr. . . . . . . . . . . . . . . . . . . . . . 2,000 John L. Smith . . . . . . . . . . . . . . . . . . . . . . . 21,000 Patrick H. Molloy . . . . . . . . . . . . . . . . . . . . . 2,500 Charles O. Hundley. . . . . . . . . . . . . . . . . . . . . 15,974 Starletta Schirmer. . . . . . . . . . . . . . . . . . . . . 750 Michael D. Shmerling. . . . . . . . . . . . . . . . . . . . 38,400 Lisa A. Shmerling . . . . . . . . . . . . . . . . . . . . . 74,800 Alan Wernick. . . . . . . . . . . . . . . . . . . . . . . . 8,000 David Obolensky . . . . . . . . . . . . . . . . . . . . . . 10,000 Cindie Unger. . . . . . . . . . . . . . . . . . . . . . . . 110,000 --------- Total . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000,000 =========
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