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Exhibit 10.14
FORM OF AGREEMENT IN PRINCIPLE
This AGREEMENT IN PRINCIPLE (the "Agreement"), dated as of __________
___, 1998, is by and between Baron Capital Group, Inc., a corporation, and its
affiliates (collectively, "Baron Capital"), Corrections Corporation of America,
a Tennessee corporation ("CCA"), CCA Prison Realty Trust, a Maryland real estate
investment trust ("Prison Realty") and Correctional Management Services
Corporation, a Tennessee corporation (the "Company").
WITNESSETH:
WHEREAS, Baron Capital, with its affiliates, currently owns in excess
of 15.0% of the issued and outstanding common shares, $0.01 par value per share,
of Prison Realty;
WHEREAS, it is contemplated that each of CCA and Prison Realty will
merge (the "Merger") with and into Prison Realty Corporation, a newly formed or
to-be-formed Maryland corporation ("Prison Realty Corporation"), which will own
the correction and detention facilities to be operated and managed by the
Company after the Merger;
WHEREAS, the Purchaser wishes to purchase, and the Company wishes to
sell to the Purchaser under certain terms and conditions, 1,600,000 shares of
the Company's voting common stock, $0.01 par value per share (the "Shares"),
representing 16.0% of the Company's capital stock on a fully-diluted basis at
the time of the Merger; and
WHEREAS, the parties now wish to confirm the transactions contemplated
and described herein and related to the purchase of the Shares, the Merger, and
certain other matters.
NOW, THEREFORE, in consideration of these premises and the mutual
promises set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, each of the parties
hereto hereby agree as follows:
1. Investment in the Company.
(a) Purchase of Shares. Baron Capital shall purchase the
Shares at a purchase price of $8,000,000, subject to adjustment as described
herein (the "Purchase Price"). The Purchase Price shall be no higher than the
purchase price to be paid by persons other than current Prison Realty or
Corrections Corporation of America, a Tennessee corporation ("CCA"), employees,
provided that the Purchase Price shall be reduced, prior to payment by Baron
Capital or thereafter by a partial refund, by the appropriate amount if any
person other than active management of the Company purchases an interest in the
Company at a lower valuation prior to 36 months after completion of the Merger.
Sodexho Alliance S.A. has agreed to make a similar investment in the Company.
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(b) Representation in Company's Board of Directors. In
connection with the purchase of the Shares by Baron Capital, Baron Capital shall
have the right to designate one member of the Board of Directors of the Company.
The Board of Directors of the Company shall recommend a Baron Capital designee
for election to the Company's Board of Directors (the "Baron Capital Designee")
and the Company shall use its best efforts to have the Baron Capital Designee
elected by the Company's shareholders at each annual meeting of such
shareholders. Baron Capital shall provide the Company with notice of the Baron
Capital Designee at the same time the shareholders' proposals are due each year
for the annual meeting. In the absence of timely designation from Baron Capital,
the Baron Capital Designee then serving shall be re-nominated if still eligible
to serve as provide herein. Baron Capital shall be entitled to fill any vacancy
on the Board of Directors created by the resignation, removal, incapacity or
death of the Baron Capital Designee. The Board of Directors shall vote to fill
such vacancy with the new Baron Capital Designee (to the extent it can fill such
vacancy). Any such vacancy shall not be filled in the absence of the new
designation by Baron Capital.
(c) Restrictions on Transfers, Tag-A-Long Rights. The parties
agree that the Charter of the Company shall provide that the Company shall not
be merged with or sold to another entity without the prior consent of the
holders of 80.0% of the capital stock of the Company. In addition, the parties
agree that the shares issued to current Prison Realty or CCA management
employees or Company employees will be restricted to provide that such shares
may not be transferred to a third party without the consent of the Company Board
of Directors. In the event of a transfer or series of transfers, however
occurring, by any shareholders of the Company other than Baron Capital to a
third party (including a transfer of shares owned by any then current or former
employee of CCA, Prison Realty or the Company), which, in the aggregate,
constitute more than the majority of the outstanding capital stock of the
Company, Baron Capital shall have "tag-a-long" rights with respect to the sale
of stock of the Company owned by Baron Capital in connection with such
transfers; provided, however, that this right shall not apply to a transfer by a
Company employee to a trust for the benefit of all the Company's employees
provided the trust agrees to be bound by these provisions with respect with to
any subsequent transfers.
(d) Preemptive Rights. Baron Capital shall have the right to
purchase additional shares of the Company's common stock or securities
convertible into or exchangeable for common stock (including without limitation,
warrants, options or convertible stock or debt) in any issuance of securities by
the Company in a pro-rata amount and on the same terms and conditions as are
called for by each future issuance (or as nearly as may be practicable in the
event that Baron Capital cannot comply with such terms and conditions). The
intent of this provision is that Baron Capital may maintain an ownership
interest of not less than 16% of the Company's capital stock.
2. Agreement to Vote in Favor of the Proposed Merger. In consideration
of the agreements set forth herein, Baron Capital agrees it will vote all the
common shares of Prison Realty owned by it in favor of the Merger. Baron
Capital's obligation to vote in favor of the Merger shall be subject to the
fulfillment of the agreements set forth herein. The obligations of the Company
hereunder are subject to Baron Capital's favorable vote on the Merger. Baron
Capital agrees that
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in their public statements and documents disseminated regarding the Merger that
each of CCA and Prison Realty may state that Baron Capital has agreed to vote in
favor of the Merger.
3. Further Assurances. The parties agree that this Agreement should be
supplemented by such further documents in form and substance reasonably
satisfactory to the parties and as may be reasonably requested by the parties or
their counsel to give effect to the foregoing and the general intent thereof.
Such agreements will contain, in addition to the terms and conditions set forth
in this Agreement, such representations, warranties, covenants, indemnifications
and other terms and conditions deemed necessary to effectuate the transactions
contemplated thereby. The parties hereto hereby agree to act in good faith and
use reasonable efforts to consummate the transactions contemplate herein and to
take such other actions as may be required to facilitate the consummation of the
Merger.
4. Termination. This Agreement shall cease to be effective if the
Merger is not consummated on or before December 31, 1999.
5. Confidentiality. Except as required by applicable law or legal
process or as approved by the Company, Baron Capital and its representatives
shall maintain in confidence and not disclose to any third party any information
related to the Company or the Merger obtained in the course of the transaction.
The above restrictions shall not apply to information that (i) is or becomes
public (other than by reason of this paragraph), or (ii) was known or available
to Baron Capital or its representatives from a third party having a lawful right
to disclose such information.
6. Successors. This Agreement shall be binding upon each of the parties
and shall also be binding upon their respective successors or assigns, including
a transferee of all or substantially all its assets.
7. Governing Law. This Agreement shall be governed by laws of the State
of Tennessee as to interpretation, construction and performance, regardless of
the choice of law provisions of Tennessee or any other jurisdiction.
8. Amendments. This Agreement may not be modified or amended except by
a duly executed instrument in writing signed by the Company and Baron Capital.
9. Severability. If any provision of this Agreement shall be held
illegal, invalid or unenforceable, such illegality, invalidity or
unenforceability shall attach only to such provision and shall not in any manner
affect or render illegal, invalid or unenforceable any other provision of this
Agreement, and this Agreement shall be carried out as if any such illegal,
invalid or unenforceable provision were not contained herein.
10. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument. Delivery of an executed
counterpart of this Agreement by facsimile shall be
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equally effective as delivery of a manually executed counterpart. Any party
delivering an unexecuted counterpart of this Agreement by facsimile shall also
deliver a manually executed counterpart, but the failure to deliver a manually
executed counterpart shall not affect the validity, enforceability and binding
effect of this Agreement.
11. Interpretation. The provisions of this Agreement shall be
interpreted in areasonable manner to effect the intentions of the parties and
this Agreement.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed by its duly authorized officer on the day first above written.
BARON CAPITAL:
BARON CAPITAL GROUP, INC.,
a ________ corporation
By:_____________________________________
Its:____________________________________
COMPANY:
CORRECTIONS MANAGEMENT SERVICES
CORPORATION, a Tennessee corporation
By:_____________________________________
Its:____________________________________
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