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EXHIBIT 10.4
SERVICE XXXX AND TRADE NAME USE AGREEMENT
This SERVICE XXXX AND TRADE NAME USE AGREEMENT (the "Agreement"), dated
as of this 31st day of December, 1998, is by and between Corrections Corporation
of America, a Tennessee corporation (the "Grantor"), and Correctional Management
Services Corporation, a Tennessee corporation (the "Grantee").
W I T N E S S E T H:
WHEREAS, Grantor is the owner of the sole and exclusive service xxxx
and trade name "Corrections Corporation of America", its abbreviation "CCA", and
the logo and/or designs incorporating the same and included on Exhibit A
attached hereto (collectively, the "Service Xxxx and Trade Name"); and
WHEREAS, in connection with the transfer of all right, title and
interest to and in certain contracts and assets relating to the management and
operation of correction and detention facilities by the Grantor (the "Management
Contracts") to the Grantee, and certain other transactions relating to the
merger of the Grantor and CCA Prison Realty Trust, a Maryland real estate
investment trust ("Prison Realty"), into a newly formed entity, Prison Realty
Corporation (the "Merger"), Grantor desires to grant, and Grantee desires to
obtain, the non-exclusive, non-transferable right to use the Service Xxxx and
Trade Name pursuant to the terms and condition of this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
promises and undertakings contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto hereby agree as follows:
1. Grant of Use of Service Xxxx and Trade Name. Grantor grants to
Grantee the non-exclusive right to use the Service Xxxx and Trade Name in the
United States in connection with its business as a manager and operator of
correction and detention facilities.
2. Term. This Agreement shall commence on the date above written and
terminate on the earlier of (i) the date on which Grantee ceases to manage and
operate any correction or detention facility, and (ii) a date which is ten (10)
years from the date of this Agreement (the "Term"). This Agreement may be
renewed thereafter upon the agreement of the parties under such terms and
conditions as they may agree; provided, however, that no renewal of this
Agreement shall be valid unless in writing and signed by both parties.
3. Consideration for Grant. As consideration for the right to use the
Service Xxxx and Trade Name, Grantee will pay Grantor a fee equal to (i) 2.75%
of gross revenues of Grantee for the first three (3) years of this Agreement,
(ii) 3.25% of Grantee's gross revenues for the following two (2) years of this
Agreement, and (iii) 3.625% of Grantee's gross revenues for the remaining term
of this Agreement, provided that after completion of the Merger the amount of
such fee may not exceed (x) 2.75% of the gross revenues of Prison Realty
Corporation for the first three (3) years of this
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Agreement, (y) 3.5% of the gross revenues of Prison Realty Corporation for the
following two (2) years of this Agreement, and (z) 3.875% of the gross revenues
of Prison Realty Corporation for the remaining term of this Agreement. The fee
due hereunder shall be paid to Grantor by Grantee on a quarterly basis in
arrears, such payments to be made on or before the 30th calendar day of the
calendar quarter following the quarter for which such payment is due, with the
first such payment being due on or before January 30, 1999 for the partial
quarterly period ending December 31, 1998. The limitations described in clauses
(x), (y) and (z) of the first sentence of this section 3 shall be applied on a
quarterly basis, so that the amount of the quarterly fee payable hereunder shall
equal the applicable percentage of Grantee's gross revenues for the preceding
quarter as limited by the applicable percentage of Grantor's gross revenues for
the preceding quarter. For purposes hereof, gross revenues means gross income as
determined under Sections 856(c)(2) and (3) of the Internal Revenue Code of
1986, as amended. The parties agree to provide to each other upon request such
financial and other information as may be reasonably required to determine or
confirm the amount of the fee to be paid hereunder.
4. Termination.
4.1 This Agreement may be terminated upon ten (10) days' written
notice from Grantor to Grantee upon occurrence of any of the following events:
(a) A change in control of Grantee;
(b) The liquidation or bankruptcy of Grantee or Grantee has a
receiver or trustee appointed to administer either its property or affairs, or
makes a general assignment of its property for the benefit of creditors or in
any other manner takes advantage of the laws of bankruptcy or insolvency or the
like;
(c) Any failure of the Grantee to pay the consideration due Grantor
under Section 3. herein or to comply with the quality control provisions of
Section 6. herein; or
(d) The discovery of any breach of the representations and
warranties made by Grantee under Section 11. herein.
4.2 This Agreement may be terminated upon ten (10) days' written
notice from Grantee to Grantor upon the discovery of any breach of the
representations and warranties made by Grantor under Section 11. herein.
4.3 For purposes of this Section 4 hereof, the term "change in
control" shall mean:
(i) the acquisition by an individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) of
beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 50% or more of the
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combined voting power of the then outstanding voting securities
of the Grantee entitled to vote generally in the election of
directors;
(ii) approval by the stockholders of the Grantee of a
reorganization, merger or consolidation, in each case, with
respect to which all or substantially all the individuals and
entities who were the beneficial owners of the voting
securities of the Grantee immediately prior to such
reorganization, merger or consolidation do not, following
such reorganization, merger or consolidation beneficially own,
directly or indirectly, more than 50% of the combined voting
power of the then outstanding voting securities entitled to
vote generally in the election of directors of the Grantee
resulting from such reorganization, merger or consolidation; or
(iii) the sale or other disposal of all or substantially all the
assets or property of the Grantee in one transaction or series
of related transactions.
5. Reservation of Rights. Except for the limited rights herein
expressly granted to Grantee, all rights in the Service Xxxx and Trade Name are
reserved to Grantor for the sale and exclusive use or other by Grantor at any
time, and from time to time, without any obligation to Grantee.
6. Maintenance of Quality Standards. Grantee agrees that the nature and
quality of all services rendered by Grantee hereunder, all goods sold by Grantee
hereunder, and all related advertising, promotional, and other related uses of
the Service Xxxx and Trade Name by Grantee shall conform to standards reasonably
set by Grantor. Grantee agrees to cooperate with Grantor in facilitating
Grantor's control of such nature and quality, and to supply Grantor with
specimens of all uses of the Service Xxxx and Trade Name upon request. Grantee
represents, warrants, covenants, and agrees that it will conduct its business in
a manner designed to protect and enhance the reputation and integrity of the
Service Xxxx and Trade Name, and the goodwill associated therewith, and Grantor
reserves all rights of approval which are necessary to achieve this result.
7. Transfer Prohibited. The rights in the Service Xxxx and Trade Name
granted hereunder shall not be assigned, sublicensed, or otherwise transferred
without the prior written consent of Grantor; provided, however, that Grantor
expressly consents to the sublicense by Grantee of the rights hereunder to
Prison Management Services, LLC, a Delaware limited liability company, and
Juvenile and Jail Facility Management Services, LLC, a Delaware limited
liability company (collectively, the "Sublicensees"). In the event of a
prohibited transfer, Grantor shall have the right to terminate this Agreement
forthwith by written notice to Grantee.
8. Rights Upon Termination. Upon the termination (by expiration or
otherwise) of this Agreement, for any reason, all rights granted to Grantee
hereunder shall automatically revert to Grantor for its use or disposition. Upon
termination, Grantee shall promptly cease use of the Service Xxxx and Trade
Name, and shall promptly deliver to Grantor all materials previously supplied by
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Grantor to Grantee and all copies thereof, in whole or in part, relating to or
containing the Service Xxxx and Trade Name. At Grantor's option, Grantor may, in
lieu of return, require that Grantee destroy said materials and copies and
provide to Grantor satisfactory evidence of destruction. Grantor shall not be
liable to Grantee for damages of any kind on account of the termination or
expiration of this Agreement. Without limiting the foregoing, upon termination
or expiration of this Agreement for any reason, Grantor shall have no liability
for reimbursement or for damages for loss of goodwill, or on account of any
expenditures, investments, leases, or other commitments made by Grantee. Grantee
acknowledges and agrees that Grantee has no expectation and has received no
assurances that its business relationship with Grantor will continue beyond the
stated term of this Agreement or its earlier termination, that any investment by
Grantee will be recovered or recouped, or that Grantee shall obtain any
anticipated amount of profits by virtue of this Agreement.
9. No Franchise or Joint Venture. The parties expressly acknowledge
that this Agreement shall not be deemed to create an agency, partnership,
franchise, employment, or joint venture relationship between Grantor and
Grantee. Nothing in this Agreement shall be construed as a grant of authority to
Grantee to waive any right, incur any obligation or liability, enter into any
agreement, grant any release or otherwise purport to act in the name of Grantor.
10. Indemnification.
10.1 Grantee shall indemnify and hold harmless Grantor, its
affiliates, directors, officers, employees, representatives, agents, successors
and assigns from and against any and all losses, damages, costs and expenses,
including attorney's fees, resulting from or arising out of Grantee's breach of
the promises, covenants, representations and warranties made by it herein or
Grantee's unpermitted use of the Service Xxxx and Trade Name hereunder.
10.2 Grantor shall indemnify and hold harmless Grantee, its
affiliates, directors, officers, employees, representatives, agents, successors
and assigns from and against any and all losses, damages, costs and expenses,
including attorney's fees, resulting from or arising out of Grantor's breach of
the promises, covenants, representations and warranties made by it herein or
Grantee's permitted use of the Service Xxxx and Trade Name hereunder.
11. Representations and Warranties.
11.1 Grantee hereby represents and warrants that: (a) it is a
corporation duly organized and validly existing under the laws of the State of
Tennessee; (b) the execution and delivery by the Grantee of this Agreement, the
performance by Grantee of all the terms and conditions thereof to be performed
by it and the consummation of the transactions contemplated hereby have been
duly authorized by all necessary action, and no other act or approval of any
person or entity is required to authorize such execution, delivery, and
performance; (c) the Agreement constitutes a valid and binding obligation of
Grantee, enforceable in accordance with its terms; (d) this Agreement and the
execution and delivery thereof by Grantee, does not, and the fulfillment and
compliance with the terms and conditions hereof and the consummation of the
transactions
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contemplated hereby will not, (i) conflict with any of, or require the consent
of any person or entity under, the terms, conditions or provisions of the
organizational documents of Grantee, (ii) violate any provision of, or require
any consent, authorization or approval under, any law or administrative
regulation or any judicial, administrative or arbitration order, award,
judgment, writ, injunction or decree applicable to Grantee, or (iii) conflict
with, result in a breach of, or constitute a default under, any material
agreement or obligation to which Grantee is a party.
11.2 Grantor hereby represents and warrants that (a) it is a
corporation duly organized and validly existing under the laws of the State of
Tennessee; (b) the execution and delivery by the Grantor of this Agreement, the
performance by Grantor of all the terms and conditions thereof to be performed
by it and the consummation of the transactions contemplated hereby have been
duly authorized by all necessary action, and no other act or approval of any
person or entity is required to authorize such execution, delivery, and
performance; (c) the Agreement constitutes a valid and binding obligation of
Grantor, enforceable in accordance with its terms; (d) this Agreement and the
execution and delivery thereof by Grantor, does not, and the fulfillment and
compliance with the terms and conditions hereof and the consummation of the
transactions contemplated hereby will not, (i) conflict with any of, or require
the consent of any person or entity under, the terms, conditions or provisions
of the organizational documents of Grantor, (ii) violate any provision of, or
require any consent, authorization or approval under, any law or administrative
regulation or any judicial, administrative or arbitration order, award,
judgment, writ, injunction or decree applicable to Grantor, or (iii) conflict
with, result in a breach of, or constitute a default under, any material
agreement or obligation to which Grantor is a party; (e) Grantor, it is the
owner of and has exclusive rights to the use of the Service Xxxx and Trade Name
and has the right to grant the right to use the Service Xxxx and Trade Name to
Grantee under the terms of this Agreement; and (f) has not been subject to any
third party claims for infringement due to the use of the Service Xxxx and Trade
Name.
12. Ownership; Form of Use. Grantee acknowledges that Grantor owns all
right, title, and interest in and to the Service Xxxx and Trade Name and agrees
that it will do nothing inconsistent with such ownership. Any and all use of the
Service Xxxx and Trade Name by Grantee, and the goodwill arising therefrom,
shall inure to the benefit of Grantor. Grantee agrees that nothing in this
Agreement shall give Grantee any right, title, or interest in the Service Xxxx
and Trade Name other than the right to use it in accordance with this Agreement,
and Grantee agrees that it will not attack the title of Grantor to the Service
Xxxx and Trade Name or attack the validity of this Agreement. Grantee agrees to
use the Service Xxxx and Trade Name only in the form and manner as prescribed
from time to time by Grantor and to so limit any party to whom it assigns,
sublicenses or otherwise transfers the right to the use of the Service Xxxx and
Trade Name and agrees to use such designations as may be requested by Grantor to
indicate Grantor's exclusive rights to the Service Xxxx and Trade Name. Grantee
agrees that it shall not adopt or use for any purpose any variation of the
Service Xxxx and Trade Name likely to be confused with the Service Xxxx and
Trade Name.
13. Protection of Grantor's Proprietary Rights. Grantee agrees to
assist Grantor in the registration, renewal, and enforcement of Grantor's rights
in and to the Service Xxxx and Trade
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Name, including, but not limited to, the prosecution of any pending or future
applications for trade and/or service xxxx registration with the United States
Patent and Trademark Office or other domestic or international government
authority.
14. Confidentiality. Grantee agrees to keep strictly confidential all
information relating to Grantor that may be obtained by Grantee as the result of
the relationship between Grantor and Grantee under this Agreement other than
information which is publicly available or made known to Grantee by a third
party authorized to disclose such information.
15. Disclaimer of Warranties. EXCEPT AS MAY BE EXPRESSLY PROVIDED IN
THIS AGREEMENT, GRANTOR MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED,
IN RESPECT OF THE SERVICE XXXX AND TRADE NAME.
16. Negation of Consequential Damages. IN NO EVENT SHALL GRANTOR BE
LIABLE FOR ANY CONSEQUENTIAL OR INCIDENTAL DAMAGES WHATSOEVER HEREUNDER,
REGARDLESS OF WHETHER GRANTOR HAS BEEN INFORMED OF THE POSSIBILITY OF SUCH
DAMAGES.
17. Governmental Licenses, Permits and Approvals. Grantee, at its
expense, shall be responsible for obtaining and maintaining all licenses,
permits, approvals, authorizations, and clearances which are required by
governmental authorities with respect to this Agreement and for compliance with
any requirements of governmental authorities for the registration or recordation
of this Agreement and for making any payments required in connection therewith.
Grantee shall furnish to Grantor, promptly upon Grantor's request, written
evidence from such governmental authorities of the due issuance and continuing
validity of any such licenses, permits, clearances, authorizations, approvals,
registration or recordation.
18. Notices.
18.1 Notices and other communications required or permitted to
be given under this Agreement shall be in writing and delivered by hand or
overnight delivery, or placed in certified or registered mail, return receipt
requested, at the addresses specified below or such other address as either
party may, by notice to the other, designate:
If to Grantor: Corrections Corporation of America
00 Xxxxxx Xxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attn: Doctor X. Xxxxxx, Chief Executive Officer
with a copy to: Xxxxxxxxx X. Xxxxx, Esq.
Xxxxxx & Xxxxxxxxxxx, P.A.
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxxx 00000
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If to Grantee: Correctional Management Services Corporation
00 Xxxxxx Xxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxxxxx, Chief
Financial Officer
18.2 Notices and other communications shall be deemed given when
delivered by hand or overnight delivery to the proper address or the date of
the return receipt, as provided above.
19. Governing Laws. This Agreement shall be construed in accordance
with the laws of Tennessee, excluding the choice of law provisions thereof. The
parties hereby submit to the jurisdiction of the courts of Tennessee in respect
to all disputes arising out of or in connection with this Agreement.
20. Enforcement. It is expressly understood, acknowledged and agreed by
Grantee that: (a) the restrictions contained in this Agreement represent a
reasonable and necessary protection of the legitimate interests of Grantor and
its affiliates, and that Grantee's failure to observe and comply with the
covenants and agreements in this Agreement will cause irreparable harm to
Grantor and its affiliates; (b) it is and will continue to be difficult to
ascertain the nature, scope and extent of the harm; and (c) a remedy at law for
such failure by Grantee will be inadequate. Accordingly, it is the intention of
the parties that, in addition to any other rights and remedies which Grantor and
its affiliates may have in the event of any breach or threatened breach of the
Agreement, Grantor and its affiliates shall be entitled, and are expressly and
irrevocably authorized by Grantee, to demand and obtain specific performance,
including, without limitation, temporary and permanent injunctive relief and all
other appropriate equitable relief against Grantee in order to enforce against
Grantee the covenants and agreements contained in this Agreement. Such right to
obtain injunctive relief may be exercised concurrently with, prior to, after, or
in lieu of, any other rights resulting from any such breach or threatened
breach. Grantee shall account for and pay over to Grantor all compensation,
profits, and other benefits, after taxes, enuring to Grantee's benefit, which
are derived or received by Grantee or any person or business entity controlled
by Grantee resulting from any action or transaction constituting breach of the
Agreement.
21. Successors. This Agreement shall be binding upon each of the
parties and shall also be binding upon their respective successors and assigns,
including a transferee of all or substantially all of its assets.
22. Waiver; Modification. No waiver or modification of any of the terms
of this Agreement shall be valid unless in writing. No waiver by either party of
a breach hereof or a default hereunder shall be deemed a waiver by such party of
a subsequent breach or default of like or similar nature.
23. Severability. If any provision in this Agreement contravenes or is
otherwise invalid under the law of any jurisdiction, then such provision shall
be deemed eliminated from this Agreement and the Agreement shall, as so
modified, remain valid and binding on the parties hereto and in full force and
effect.
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24. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original.
25. Entire Agreement. This Agreement contains the entire understanding
of the parties. There are no representations, warranties, promises, covenants or
undertakings other than those contained herein.
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IN WITNESS WHEREOF, the parties hereto have caused these presents to be
signed by their duly authorized officers on the date set forth above.
GRANTOR:
CORRECTIONS CORPORATION OF AMERICA,
a Tennessee corporation
By: /s/ Doctor X. Xxxxxx
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Its: Chief Executive Officer
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GRANTEE:
CORRECTIONAL MANAGEMENT SERVICES
CORPORATION, a Tennessee corporation
By: /s/ Xxxxxxx X. Xxxxxxxxxx
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Its: Chief Financial Officer
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EXHIBIT A
[CCA LOGOS]
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